10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X]	Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
[   ]	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2005

Commission File No. 1-8726

RPC, INC.

Delaware (State of Incorporation) 58-1550825 (I.R.S. Employer Identification No.)

2170 PIEDMONT ROAD, NE

ATLANTA, GEORGIA 30324

(404) 321-2140

Securities registered pursuant to Section 12(b) of the Act:

Title of each class COMMON STOCK, $0.10 PAR VALUE Name of each exchange on which registered NEW YORK STOCK EXCHANGE

Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. [  ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. [  ] Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Larger accelerated filer [   ] Accelerated filer [X] Non-accelerated filer [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

The aggregate market value of RPC, Inc. Common Stock held by non-affiliates on June 30, 2005, the last business day of the registrant’s most recently completed second fiscal quarter, was $230,796,363 based on the closing price on the New York Stock Exchange on June 30, 2005 of $11.28 per share.

RPC, Inc. had 64,743,051 shares of Common Stock outstanding as of February 24, 2006.

Documents Incorporated by Reference

Portions of the Proxy Statement for the 2006 Annual Meeting of Stockholders of RPC, Inc. are incorporated by reference into Part III, Items 10 through 14 of this report.

1

PART I

Throughout this report, we refer to RPC, Inc., together with its subsidiaries, as “we,” “us,” “RPC” or “the Company.”

Forward-Looking Statements

Certain statements made in this report that are not historical facts are “forward-looking statements” under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include, without limitation, statements that relate to our business strategy, plans and objectives, and our beliefs and expectations regarding future demand for our products and services and other events and conditions that may influence the oilfield services market and our performance in the future. Forward-looking statements made elsewhere in this report include without limitation statements regarding continued demand for natural gas and increases in gas-directed drilling activity, our expectations regarding continued increases in drilling activity and demand for our services, our ability to obtain other customers in the event of a loss of our largest customers, the adequacy of our insurance coverage, our expectation for continued strong financial performance and increased revenues in 2006, anticipated cash requirements and capital expenditures for 2006, the adequacy of our capital resources, estimates made with respect to our critical accounting policies, the effect of new accounting standards, our future investments in higher yielding assets and increased spending in 2006, our ability to fund capital requirements, opportunities for higher growth in selected markets, our ability to obtain additional customers, and improvements in business and industry conditions.

The words “may,” “will,” “expect,” “believe,” “anticipate,” “project,” “estimate,” and similar expressions generally identify forward-looking statements. Such statements are based on certain assumptions and analyses made by our management in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes to be appropriate. We caution you that such statements are only predictions and not guarantees of future performance and that actual results, developments and business decisions may differ from those envisioned by the forward-looking statements. See “Risk Factors” contained in Item 1A. for a discussion of factors that may cause actual results to differ from our projections.

Item 1. Business

Organization

RPC is a Delaware corporation originally organized in 1984 as a holding company for several oilfield services companies and is headquartered in Atlanta, Georgia. Effective February 28, 2001, RPC completed the spin-off of its powerboat manufacturing business through a distribution of shares of Marine Products Corporation (“Marine Products”) (NYSE:MPX).

Overview

RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oil and gas companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and in selected international markets. The services and equipment provided include, among others, (1) pressure pumping services, (2) snubbing services (also referred to as hydraulic workover services), (3) coiled tubing services, (4) nitrogen services, (5) the rental of drill pipe and other specialized oilfield equipment, and (6) firefighting and well control. RPC acts as a holding company for its operating units, Cudd Pressure Control, Cudd Pumping Services, Patterson Rental and Fishing Tools, Bronco Oilfield Services (acquired in April 2003), Thru-Tubing Solutions, Well Control School, and others. As of December 31, 2005, RPC had approximately 1,600 employees.

Business Segments

RPC’s service lines have been aggregated into two reportable oil and gas services business segments, Technical Services and Support Services, because of the similarities between the financial performance and approach to managing the service lines within each of the segments, as well as the economic and business conditions impacting their business activity levels. The Other business segment aggregates information concerning RPC’s business units that do not qualify for separate segment reporting, including an interactive training software developer (until its sale in May 2005) and an overhead crane fabricator (until its sale in April 2004).

2

Technical Services include RPC’s oil and gas service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer’s well. The demand for these services is generally influenced by customers’ decisions to invest capital toward initiating production in a new oil or natural gas well, improving production flows in an existing formation, or to address well control issues. This business segment consists primarily of pressure pumping, snubbing, coiled tubing, nitrogen, well control, down-hole tools, wireline, fluid pumping and casing installation services (until its sale in August 2005). The principal markets for this business segment include the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and international locations including primarily Africa, Canada, China, Latin America and the Middle East. Customers include major multi-national and independent oil and gas producers, and selected nationally owned oil companies.

Support Services include RPC’s oil and gas service lines that primarily provide equipment for customer use or services to assist customer operations. The equipment and services include drill pipe and related tools, pipe handling, pipe inspection and storage services, work platform marine vessels (until its sale in October 2004) and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. The principal markets for this segment include the United States, including the Gulf of Mexico, mid-continent and Rocky Mountain regions and international locations including primarily Canada, Latin America and the Middle East. Customers primarily include domestic operations of major multi-national and independent oil and gas producers, and selected nationally owned oil companies.

Technical Services

The following is a description of the primary service lines conducted within the Technical Services business segment:

Pressure Pumping. Pressure pumping services, which accounted for approximately 37 percent of 2005 revenues, 31 percent of 2004 revenues and 29 percent of 2003 revenues, are provided to customers throughout the Gulf Coast and mid-continent regions of the United States and are generally utilized to initiate or enhance production in existing customer wells. Pressure pumping services involve using complex, truck or skid-mounted equipment designed and constructed for each specific pumping service offered. The mobility of this equipment permits pressure pumping services to be performed in varying geographic areas. Principal materials utilized in the pressure pumping business include fracturing proppants, acid and bulk chemical additives. Generally, these items are available from several suppliers, and the Company utilizes more than one supplier for each item. Pressure pumping services offered include:

Fracturing — Fracturing services are performed to stimulate production of oil and natural gas by increasing the permeability of a formation. The fracturing process consists of pumping a fluid gel into a cased well at sufficient pressure to fracture the formation at desired depths. Sand, bauxite or synthetic proppant, which is suspended in the gel, is pumped into the fracture. When the pressure is released at the surface, the fluid gel returns to the well, but the proppant remain in the fracture, thus keeping it open so that oil and natural gas can flow through the fracture into the well. In some cases, fracturing is performed in formations with a high amount of carbonate rock by an acid solution pumped under pressure without a proppant or with small amounts of proppant.

Acidizing — Acidizing services are also performed to stimulate production of oil and natural gas, but they are used in wells that have undergone formation damage due to the buildup of various materials that block the formation. Acidizing entails pumping large volumes of specially formulated acids into reservoirs to dissolve barriers and enlarge crevices in the formation, thereby eliminating obstacles to the flow of oil and natural gas. Acidizing services can also enhance production in limestone formations.

Snubbing. Snubbing (also referred to as hydraulic workover services), which accounted for approximately 11 percent of 2005 revenues, 12 percent of 2004 revenues and 11 percent of 2003 revenues, involves using a hydraulic workover rig that permits an operator to repair damaged casing, production tubing and down-hole production equipment in a high-pressure environment. A snubbing unit makes it possible to remove and replace down-hole equipment while maintaining pressure in the well. Customers benefit because these operations can be performed without removing the pressure from the well, which stops production and can damage the formation, and because a snubbing rig can perform many applications at a lower cost than other alternatives. Because this service involves a very hazardous process that entails high risk, the snubbing segment of the oil and gas services industry is limited to a relatively few operators who have the experience and knowledge required to perform such services safely and efficiently.

Coiled Tubing. Coiled tubing services, which accounted for approximately 10 percent of 2005 revenues, 11 percent of 2004 and 2003 revenues, involve the injection of coiled tubing into wells to perform various applications and functions for use principally in well-servicing operations. Coiled tubing is a flexible steel pipe with a diameter of less than four inches manufactured in continuous lengths of thousands of feet and wound or coiled around a large reel. It can be inserted through existing production tubing and used to perform workovers without using a larger, more costly workover rig.

3

Principal advantages of employing coiled tubing in a workover operation include: (i) not having to “shut-in” the well during such operations, (ii) the ability to reel continuous coiled tubing in and out of a well significantly faster than conventional pipe, (iii) the ability to direct fluids into a wellbore with more precision, and (iv) enhanced access to remote or offshore fields due to the smaller size and mobility of a coiled tubing unit compared to a workover rig. There are several manufacturers of flexible steel pipe used in coiled tubing services, and the Company believes that its sources of supply are adequate.

Nitrogen. Nitrogen accounted for approximately eight percent of 2005 revenues and nine percent of 2004 and 2003 revenues. There are a number of uses for nitrogen, an inert, non-combustible element, in providing services to oilfield customers and industrial users outside of the oilfield. For our oilfield customers, nitrogen can be used to clean drilling and production pipe and displace fluids in various drilling applications. It also can be used to create a fire-retardant environment in hazardous blowout situations and as a fracturing medium for our fracturing service line. In addition, nitrogen can be complementary to our snubbing and coiled tubing service lines, because it is a non-corrosive medium and is frequently injected into a well using coiled tubing. Nitrogen is complementary to our pressure pumping service line as well, because foam-based nitrogen stimulation is appropriate in certain sensitive formations in which the fluids used in fracturing or acidizing would damage a customer’s well.

For non-oilfield industrial users, nitrogen can be used to purge pipelines and create a non-combustible environment. RPC stores and transports nitrogen and has a number of pumping unit configurations that inject nitrogen in its various applications. Some of these pumping units are set up for use on offshore platforms or inland waters. RPC purchases its nitrogen in liquid form from several suppliers and believes that these sources of supply are adequate.

Well Control. Cudd Pressure Control specializes in responding to and controlling oil and gas well emergencies, including blowouts and well fires, domestically and internationally. In connection with these services, Cudd, along with Patterson Services, has the capacity to supply the equipment, expertise and personnel necessary to restore affected oil and gas wells to production. In the last seven years, the Company has responded to well control situations in several international locations including Algeria, Argentina, Australia, Bolivia, Canada, Colombia, Egypt, India, Kuwait, Peru, Qatar, Taiwan, Trinidad and Venezuela.

The Company’s professional firefighting staff has more than 400 years of aggregate industry experience in responding to well fires and blowouts. This team of 17 experts responds to well control situations where hydrocarbons are escaping from a well bore, regardless of whether a fire has occurred. In the most critical situations, there are explosive fires, the destruction of drilling and production facilities, substantial environmental damage and the loss of hundreds of thousands of dollars per day in well operators’ production revenue. Since these events ordinarily arise from equipment failures or human error, it is impossible to predict accurately the timing or scope of this work. Additionally, less critical events frequently occur in connection with the drilling of new wells in high-pressure reservoirs. In these situations, the Company is called upon to supervise and assist in the well control effort so that drilling operations can resume as promptly as safety permits.

Down-hole Tools. ThruTubing Solutions (“TTS”), a division of the Company, provides services and proprietary down-hole motors and fishing tools to operators and service companies in drilling and production operations. TTS’ experience providing reliable tool services allows it to work in a pressurized environment with virtually any coiled tubing unit or snubbing unit that is equipped for the task.

Wireline Services. A wireline unit is a spooled wire that can be unwound and lowered into a well carrying various types of tools. Wireline services are used for a variety of purposes, such as accessing a well to assist in data acquisition or logging activities, fishing tool operations to retrieve lost or broken equipment, pipe recovery and remedial activities. In addition, wireline services are an integral part of the plug and abandonment process, near the end of the life cycle of a well.

Fishing. Fishing involves the use of specialized tools and procedures to retrieve lost equipment from a well. It is a service required by oil and gas operators who have lost equipment in a well. Oil and natural gas production from an affected well typically ceases until the lost equipment can be retrieved. In some cases, the Company creates customized tools to perform a fishing operation. The customized tools are maintained by the Company after the particular fishing job for future use if a similar need arises.

Support Services

The following is a description of the primary service lines conducted within the Support Services business segment:

Rental Tools. Rental tools accounted for approximately 10 percent of 2005 revenues, 11 percent of 2004 revenues and nine percent of 2003 revenues. The Company rents specialized equipment for use with onshore and offshore oil and

4

gas well drilling, completion and workover activities. The drilling and subsequent operation of oil and gas wells generally require a variety of equipment. The equipment needed is in large part determined by the geological features of the production zone and the size of the well itself. As a result, operators and drilling contractors often find it more economical to supplement their tool and tubular inventories with rental items instead of owning a complete inventory. The Company’s facilities are strategically located to serve the major staging points for oil and gas activities in the Gulf of Mexico, mid-continent region and Rocky Mountains.

Patterson Rental Tools offers a broad range of rental tools including:

Blowout Preventors	High Pressure Manifolds
Coflexip Hoses	Hydraulic Torque Wrenches
Drill Collars	Power Tongs
Drill Pipe	Pressure Control Equipment
Production Related Rental Tools	Test Pumps
Gravel Pack Equipment	Tubing
Handling Tools	Tubulars
Hevi-wate Pipe	Tubular Handling Tools

Pipe Inspection and Handling Services. Pipe inspection services involve the inspection and testing of the integrity of pipe used in oil and gas wells. These services are provided primarily at the Company’s inspection yards located on a water channel near Houston, Texas, and in Morgan City, Louisiana. Customers rely on tubular inspection services to avoid failure of in-service tubing, casing, flowlines, and drill pipe. Such tubular failures are expensive and, in some cases, catastrophic. Our facility in Houston, Texas is equipped with bulkhead waterfronts, large capacity cranes, specially designed forklifts and a computerized inventory system to serve a variety of storage and handling services for both oilfield and non-oilfield customers.

Well Control School. Well Control School provides industry and government accredited training for the oil and gas industry both in the United States and in several international locations. Well Control School provides this training in various formats including conventional classroom training, interactive computer training and mobile simulator training. Well Control School also develops customized training solutions for clients.

Energy Personnel International. Energy Personnel International provides drilling and production engineers, project management specialists and workover specialists on a consulting basis to the oil and gas industry to meet customers’ needs for staff engineering and wellsite management.

Refer to Note 12 in the Notes to the Consolidated Financial Statements for additional financial information on our business segments.

Industry

United States. RPC provides its services to its domestic customers through a network of facilities strategically located to serve the Gulf of Mexico, the mid-continent, the southwest and the Rocky Mountains production fields. Demand for RPC’s services in the U.S. tends to be extremely volatile and fluctuates with current and projected price levels of oil and natural gas and activity levels in the oil and gas industry. Customer activity levels are influenced by their decisions about capital investment toward the development and production of oil and gas reserves.

Due to aging oilfields and lower-cost sources of oil internationally, drilling activity in the U.S. has declined more than 67 percent from its peak in 1981. Record low drilling activity levels were experienced in 1986, 1992, 1999 (with April 1999 recording the lowest U.S. drilling rig count in the industry’s history) and again in 2002.

At the beginning of 2005, there were 1,242 domestic working drilling rigs, down four percent from the third quarter 2001 peak during that industry cycle. U.S. domestic drilling activity steadily rose during 2005 and peaked in the fourth quarter at a rig count of 1,491, which was 15 percent higher than the third quarter 2001 peak. At the end of 2005 the rig count was 1,471, an increase of over 18 percent compared to the beginning of 2005. The price of natural gas rose by 63 percent during 2005, and the price of oil rose by 34 percent. The increase in the domestic rig count was more highly correlated with the change in the price of natural gas, possibly due to the fact that the majority of U.S. drilling relates to natural gas rather than oil.

5

Gas drilling rigs have represented an increasing percentage of the total drilling rig count, and have represented at least 80 percent of the drilling rig count each year since 2001. In 2005, gas drilling rigs represented 86 percent of total drilling activity. Demand for natural gas is continuing to rise, primarily as a result of increased emphasis on gas-fired power generation. Also, unlike oil, foreign imports of natural gas do not compete with domestic production. This lack of foreign competition tends to keep prices high. Based on current demand levels for natural gas as well as the high oil and gas well depletion rates experienced over the past several years, it is anticipated that gas-directed drilling will represent at least 80 percent of the total drilling rig count in the foreseeable future. The demand for RPC’s services is driven more by gas-directed drilling than oil-directed drilling, because our services are more applicable to deeper, higher pressure wells, which tend to be the wells that produce natural gas.

Thus, in North America the demand for our services and products associated with natural gas development is currently more robust than demand related to oil drilling. Drilling activity and demand for our services have continued to increase and are expected to continue increasing with domestic economic improvements.

International. RPC has historically operated in several countries outside of the United States, although international revenues have never accounted for more than 10 percent of total revenues. Over the past several years, RPC has increased its focus on developing international opportunities. As a result of this focus, international revenues in most of our locations increased during 2005, and at the end of the year we began a new operation in Turkmenistan. However, overall international revenues declined by approximately 10 percent in 2005 compared to the prior year, due to a large decline in revenues from our operation in Kuwait. During 2005, RPC performed snubbing work in Cameroon, China, Gabon and Kuwait, among other countries. We also provided rental tools, well control services, downhole motors, fishing tool services and oilfield training to customers located in Algeria, Angola, Argentina, Australia, Bahrain, Bolivia, Canada, Chile, China, Ecuador, Equatorial Guinea, India, Indonesia, Mexico, Peru, Qatar, the United Kingdom and Venezuela. We continue to focus on the development of international opportunities in these and other markets.

RPC provides services to its international customers through branch locations or wholly-owned foreign subsidiaries. The international market is prone to political uncertainties, including the risk of civil unrest and conflicts. However, due to the significant investment requirement and complexity of international projects, customers’ drilling decisions relating to such projects tend to be evaluated and monitored with a longer-term perspective with regard to oil and natural gas pricing, and therefore tend to be more stable than most U.S. domestic operations. Additionally, the international market is dominated by major oil companies and national oil companies which tend to have different objectives and more operating stability than the typical independent oil and gas producer in the U.S. Predicting the timing and duration of contract work is not possible. Pursuing selective international opportunities for revenue growth continues to be a strong emphasis for RPC. Refer to Note 12 in the Notes to Consolidated Financial Statements for further information on our international operations.

Growth Strategies

RPC’s primary objective is to generate excellent long-term returns on investment through the effective and conservative management of its invested capital, thus yielding strong cash flow and asset appreciation. This objective will be pursued through strategic investments and opportunities designed to enhance the long-term value of RPC while improving market share, product offerings and the profitability of existing businesses. Growth strategies are focused on selected areas and markets in which we believe there exist opportunities for higher growth, market penetration, or enhanced returns achieved through consolidations or through providing proprietary value-added products and services. RPC intends to focus on specific market segments in which it believes that it has a competitive advantage or there exists significant growth potential.

RPC seeks to expand its service capabilities through a combination of internal growth, acquisitions, joint ventures and strategic alliances. Because of the fragmented nature of the oil and gas services industry, RPC believes a number of attractive acquisition opportunities exist. Although current price expectation reduce the near-term possibility of completing a transaction, we believe we generate better returns growing organically in service lines and geographic locations in which we have experience and presence.

Customers

Demand for RPC’s services and products depends primarily upon the number of oil and natural gas wells being drilled, the depth and drilling conditions of such wells, the number of well completions and the level of production enhancement activity worldwide. RPC’s principal customers consist of major and independent oil and natural gas producing companies. During 2005, RPC provided oilfield services to several hundred customers, none of which

6

accounted for more than 10 percent of consolidated revenues. While the loss of certain of RPC’s largest customers could have a material adverse effect on Company revenues and operating results in the near term, management believes RPC would be able to obtain other customers for its services in the event of a loss of any of its largest customers. Sales are generated by RPC’s sales force and through referrals from existing customers. With the exception of certain international customers, there are no long-term written contracts for services or equipment. Due to the short lead time between ordering services or equipment and providing services or delivering equipment, there is no significant sales backlog in most of our service lines.

Competition

RPC operates in highly competitive areas of the oilfield services industry. Our products and services are sold in highly competitive markets, and its revenues and earnings are affected by changes in prices for our services, fluctuations in the level of customer activity in major markets, general economic conditions and governmental regulation. RPC competes with many large and small oilfield industry competitors, including the largest integrated oilfield services companies. RPC believes that the principal competitive factors in the market areas that it serves are product and service quality and availability, reputation for safety and technical proficiency, and price.

The oil and gas services industry includes a small number of dominant global competitors including, among others, Halliburton Energy Services Group, a division of Halliburton Company, and Schlumberger Ltd., and a significant number of locally oriented businesses.

Facilities/Equipment

RPC’s equipment consists primarily of oil and gas services equipment used either in servicing customer wells or provided on a rental basis for customer use. Substantially all of this equipment is Company owned and unencumbered. RPC purchases oilfield service equipment from a limited number of manufacturers. These manufacturers of our oilfield service equipment may not be able to meet our requests for timely delivery during periods of high demand which may result in delayed deliveries of equipment and higher prices for equipment.

RPC both owns and leases regional and district facilities from which its oilfield services are provided to land-based and offshore customers. RPC’s principal executive offices in Atlanta, Georgia are leased. The Company has two primary administrative buildings, one in Houston, Texas that includes the Company’s operations, sales and marketing headquarters, and one in Houma, Louisiana that includes certain administrative functions. RPC believes that its facilities are adequate for its current operations but as the business continues to grow, we are evaluating the need for additional facilities. For additional information with respect to RPC’s lease commitments, see Note 9 of the Notes to Consolidated Financial Statements.

Governmental Regulation

RPC’s business is affected by state, federal and foreign laws and other regulations relating to the oil and gas industry, as well as laws and regulations relating to worker safety and environmental protection. RPC cannot predict the level of enforcement of existing laws and regulations or how such laws and regulations may be interpreted by enforcement agencies or court rulings, whether additional laws and regulations will be adopted, or the effect such changes may have on it, its businesses or financial condition.

In addition, our customers are affected by laws and regulations relating to the exploration for and production of natural resources such as oil and natural gas. These regulations are subject to change, and new regulations may curtail or eliminate our customers’ activities in certain areas where we currently operate. We cannot determine the extent to which new legislation may impact our customers’ activity levels, and ultimately, the demand for our services.

Intellectual Property

RPC uses several patented items in its operations, which management believes are important but are not indispensable to RPC’s success. Although RPC anticipates seeking patent protection when possible, it relies to a greater extent on the technical expertise and know-how of its personnel to maintain its competitive position.

Availability of Filings

RPC makes available, free of charge, on its website, www.rpc.net, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports on the same day as they are filed with the Securities and Exchange Commission.

7

1A. Risk Factors

Demand for our products and services is affected by the volatility of oil and natural gas prices.

Oil prices affect demand throughout the oil and natural gas industry, including the demand for our products and services. Our business depends in large part on the conditions of the oil and gas industry, and specifically on the capital investments of our customers related to the exploration and production of oil and natural gas. When these capital investments decline, our customers’ demand for our services declines.

Although the production sector of the oil and gas industry is less immediately affected by changing prices, and, as a result, less volatile than the exploration sector, producers react to declining oil and gas prices by curtailing capital spending, which would adversely affect our business. A prolonged low level of customer activity in the oil and gas industry will adversely affect the demand for our products and services and our financial condition and results of operations.

The relationship between the prices of oil and natural gas and our customers’ drilling and production activities may not be highly correlated in the future.

Historically, a rise in the prices of oil and natural gas has led to an immediate increase in our customers’ drilling and production activities as measured by the domestic rig count. However, this relationship has not been as strong in the recent past as it was historically, due in part to limited drilling rig capacity in the United States. For example, during 2005 the price of natural gas rose by 63 percent and the price of oil rose by 34 percent, but the drilling rig count only rose by 18 percent. If this correlation is weak in the future, then it is possible that increases in the prices of oil and natural gas will not lead to an increase in our customers’ activities, and our future operating results could be negatively impacted.

We may be unable to compete in the highly competitive oil and gas industry in the future.

We operate in highly competitive areas of the oilfield services industry. The products and services in our industry segments are sold in highly competitive markets, and our revenues and earnings may be affected by the following factors: changes in competitive prices, fluctuations in the level of activity in major markets, general economic conditions, and governmental regulation. We compete with the oil and gas industry’s many large and small industry competitors, including the largest integrated oilfield service providers. We believe that the principal competitive factors in the market areas that we serve are product and service quality and availability, reputation for safety, technical proficiency and price. Although we believe that our reputation for safety and quality service is good, we cannot assure you that we will be able to maintain our competitive position.

We may be unable to identify or complete acquisitions.

Acquisitions have been and will continue to be a key element of our business strategy. We cannot assure you that we will be able to identify and acquire acceptable acquisition candidates on terms favorable to us in the future. We may be required to incur substantial indebtedness to finance future acquisitions and also may issue equity securities in connection with such acquisitions. The issuance of additional equity securities could result in significant dilution to our stockholders. We cannot assure you that we will be able to integrate successfully the operations and assets of any acquired business with our own business. Any inability on our part to integrate and manage the growth from acquired businesses could have a material adverse effect on our results of operations and financial condition.

Our operations are affected by adverse weather conditions.

Our operations are directly affected by the weather conditions in several domestic regions, including the Gulf of Mexico, the Gulf Coast, the mid-continent and the Rocky Mountains. Hurricanes and other storms prevalent in the Gulf of Mexico and along the Gulf Coast during certain times of the year may also affect our operations, and severe hurricanes such as those that occurred in 2005 may affect our customers’ activities for a period of several years. While the impact of these storms may increase the need for certain of our services over a longer period of time, such storms can also decrease our customers’ activities immediately after they occur. Such hurricanes may also affect the prices of oil and natural gas by disrupting supplies in the short term, which may increase demand for our services in geographic areas not damaged by the storms. Prolonged rain or snow in our mid-continent locations may temporarily prevent our crews and equipment from reaching customer work sites. Due to seasonal differences in weather patterns, our crews may operate more days in some periods than others. Accordingly, our operating results may vary from quarter to quarter, depending on the impact of these weather conditions.

8

Our inability to attract and retain skilled workers may impair growth potential and profitability.

Our ability to remain productive and profitable will depend substantially on our ability to attract and retain skilled workers. Our ability to expand our operations is in part impacted by our ability to increase our labor force. The demand for skilled oilfield employees is high, and the supply is very limited. A significant increase in the wages paid by competing employers could result in a reduction in our skilled labor force, increases in the wage rates paid by us, or both. If either of these events occurred, our capacity and profitability could be diminished, and our growth potential could be impaired.

Our concentration of customers in one industry may impact overall exposure to credit risk.

Substantially all of our customers operate in the energy industry. This concentration of customers in one industry may impact our overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. We perform ongoing credit evaluations of our customers and do not generally require collateral in support of our trade receivables.

Our business has potential liability for litigation, personal injury and property damage claims assessments.

Our operations involve the use of heavy equipment and exposure to inherent risks, including blowouts, explosions and fires. If any of these events were to occur, it could result in liability for personal injury and property damage, pollution or other environmental hazards or loss of production. Litigation may arise from a catastrophic occurrence at a location where our equipment and services are used. This litigation could result in large claims for damages. The frequency and severity of such incidents will affect our operating costs, insurability and relationships with customers, employees and regulators. These occurrences could have a material adverse effect on us. We maintain what we believe is prudent insurance protection. We cannot assure you that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that our insurance coverage will be adequate to cover future claims and assessments that may arise.

Our operations may be adversely affected if we are unable to comply with regulatory and environmental laws.

Our business is significantly affected by stringent environmental laws and other regulations relating to the oil and gas industry and by changes in such laws and the level of enforcement of such laws. We are unable to predict the level of enforcement of existing laws and regulations, how such laws and regulations may be interpreted by enforcement agencies or court rulings, or whether additional laws and regulations will be adopted. The adoption of laws and regulations curtailing exploration and development of oil and gas fields in our areas of operations for economic, environmental or other policy reasons would adversely affect our operations by limiting demand for our services. We also have potential environmental liabilities with respect to our offshore and onshore operations, and could be liable for cleanup costs, or environmental and natural resource damage due to conduct that was lawful at the time it occurred, but is later ruled to be unlawful. We also may be subject to claims for personal injury and property damage due to the generation of hazardous substances in connection with our operations. We believe that our present operations substantially comply with applicable federal and state pollution control and environmental protection laws and regulations. We also believe that compliance with such laws has had no material adverse effect on our operations to date. However, such environmental laws are changed frequently. We are unable to predict whether environmental laws will, in the future, materially adversely affect our operations and financial condition. Penalties for noncompliance with these laws may include cancellation of permits, fines, and other corrective actions, which would negatively affect our future financial results.

Our international operations could have a material adverse effect on our business.

Our operations in various countries including, but not limited to, Africa, Canada, Latin America and the Middle East are subject to risk. These risks include, but are not limited to, political changes, expropriation, currency restrictions and changes in currency exchange rates, taxes, and boycotts and other civil disturbances. The occurrence of any one of these events could have a material adverse effect on our operations.

Our common stock price has been volatile.

Historically, the market price of common stock of companies engaged in the oil and gas services industry has been highly volatile. Likewise, the market price of our common stock has varied significantly in the past.

Our management has a substantial ownership interest, and public shareholders may have no effective voice in the management of the Company.

The Company has elected the “Controlled Corporation” exemption under Rule 303A of the New York Stock Exchange (“NYSE”) Company Guide. The Company is a “Controlled Corporation” because a group that includes the

9

Company’s Chairman of the Board, R. Randall Rollins and his brother, Gary W. Rollins, who is also a director of the Company, and certain companies under their control, controls in excess of fifty percent of the Company’s voting power. As a “Controlled Corporation,” the Company need not comply with certain NYSE rules including those requiring a majority of independent directors.

RPC’s executive officers, directors and their affiliates hold directly or through indirect beneficial ownership, in the aggregate, approximately 66 percent of RPC’s outstanding shares of common stock. As a result, these stockholders effectively control the operations of RPC, including the election of directors and approval of significant corporate transactions such as acquisitions and other matters requiring stockholder approval. This concentration of ownership could also have the effect of delaying or preventing a third party from acquiring control over the Company at a premium.

Our management has a substantial ownership interest, and the availability of the Company’s common stock to the investing public may be limited.

The availability of RPC’s common stock to the investing public may be limited to those shares not held by the executive officers, directors and their affiliates, which could negatively impact RPC’s stock trading prices and affect the ability of minority stockholders to sell their shares. Future sales by executive officers, directors and their affiliates of all or a portion of their shares could also negatively affect the trading price of our common stock.

Provisions in RPC’s Certificate of Incorporation and Bylaws may inhibit a takeover of RPC.

RPC’s certificate of incorporation, bylaws and other documents contain provisions including advance notice requirements for shareholder proposals and staggered terms of office for the Board of Directors. These provisions may make a tender offer, change in control or takeover attempt that is opposed by RPC’s Board of Directors more difficult or expensive.

Some of our equipment and several types of materials used in providing our services are available from a limited number of suppliers.

There are a limited number of suppliers for certain materials used in pressure pumping services, our largest service line. While these materials are generally available, supply disruptions can occur due to factors beyond our control. We purchase equipment provided by a limited number of manufacturers who specialize in oilfield service equipment. During periods of high demand, these manufacturers may not be able to meet our requests for timely delivery, resulting in delayed deliveries of equipment and higher prices for equipment. Such disruptions, delayed deliveries, and higher prices can limit our ability to provide services, or increase the costs of providing services, thus reducing our revenues and profits.

If the market conditions for our services remain strong, we may decide to seek outside financing to accomplish our growth strategy, and outside financing may not be available to us.

Our business requires a great deal of capital in order to maintain our equipment and increase our fleet of equipment to expand our operations. Historically, we have funded this growth through cash provided by operating activities, and a credit line provided by a bank. In the future, however, we may need to raise additional funds through public debt or equity financings to maintain our equipment and continue our growth. Such additional financing sources may not be available when we need them, or may not be available on favorable terms. If we fund our growth through the issuance of public equity, the holdings of shareholders will be diluted. If capital generated either by cash provided by operating activities or outside financing is not available or sufficient for our needs, we may be unable to maintain our equipment, expand our fleet of equipment, or take advantage of other potentially profitable business opportunities, which could reduce our future revenues and profits.

Item 1B. Unresolved Staff Comments

None.

10

Item 2. Properties

RPC owns or leases approximately 75 offices and operating facilities. The Company leases approximately 7,800 square feet of office space in Atlanta, Georgia that serves as its headquarters, a portion of which is allocated and charged to Marine Products Corporation. See “Related Party Transactions” contained in Item 7. The lease agreement on the headquarters is effective through May 2007. RPC believes its current operating facilities are suitable and adequate to meet current and reasonably anticipated future needs although as our business continues to grow we are evaluating the need for additional facilities. Descriptions of the major facilities used in our operations are as follows:

Owned Locations

Houma, Louisiana — Administrative office

Houston, Texas — Pipe storage terminal and inspection sheds

Houston, Texas — Operations, sales and administrative office

Morgan City, Louisiana — Pipe cleaning facility

Elk City, Oklahoma — Operations, sales and equipment storage yards

Rock Springs, Wyoming — Operations, sales and equipment storage yards

Leased Locations

Seminole, Oklahoma — Pumping services facility

Elk City, Oklahoma — Operations, sales and equipment storage yards

Kilgore, Texas — Pumping services facility

Item 3. Legal Proceedings

RPC is a party to various routine legal proceedings primarily involving commercial claims, workers’ compensation claims and claims for personal injury. RPC insures against these risks to the extent deemed prudent by its management, but no assurance can be given that the nature and amount of such insurance will, in every case, fully indemnify RPC against liabilities arising out of pending and future legal proceedings related to its business activities. While the outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty, management believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on RPC’s business or financial condition.

11

Item 4. Submission of Matters to a Vote of Security Holders

There were no matters submitted to a vote of security holders during the fourth quarter of 2005.

Item 4A. Executive Officers of the Registrant

Each of the executive officers of RPC was elected by the Board of Directors to serve until the Board of Directors’ meeting immediately following the next annual meeting of stockholders or until his or her earlier removal by the Board of Directors or his or her resignation. The following table lists the executive officers of RPC and their ages, offices, and terms of office with RPC.

Name and Office with Registrant	Age	Date First Elected to Present Office
R. Randall Rollins (1)	74	1/24/84
Chairman of the Board
Richard A. Hubbell (2)	61	4/22/03
President and  Chief Executive Officer
Linda H. Graham (3)	69	1/27/87
Vice President and  Secretary
Ben M. Palmer (4)	45	7/8/96
Vice President,  Chief Financial Officer and  Treasurer

(1) R. Randall Rollins began working for Rollins, Inc. (consumer services) in 1949. At the time of the spin-off of RPC from Rollins, in 1984, Mr. Rollins was elected Chairman of the Board and Chief Executive Officer of RPC. He remains Chairman of RPC and stepped down as the Chief Executive Officer effective April 22, 2003. He has served as Chairman of the Board of Marine Products Corporation (boat manufacturing) since it was spun-off in February 2001 and Chairman of the Board of Rollins, Inc. since October 1991. He is also a director of Dover Downs Gaming and Entertainment, Inc. and Dover Motorsports, Inc. and, until April 2004, he served as a director of SunTrust Banks, Inc. and SunTrust Banks of Georgia.

(2) Richard A. Hubbell has been the President of RPC since 1987 and Chief Executive Officer since April 22, 2003. He has also been the President and Chief Executive Officer of Marine Products Corporation since it was spun-off in February 2001. Mr. Hubbell serves on the Board of Directors for both of these companies.

(3) Linda H. Graham has been the Vice President and Secretary of RPC since 1987. She has also been the Vice President and Secretary of Marine Products Corporation since it was spun-off in February 2001. Ms. Graham serves on the Board of Directors for both of these companies.

(4) Ben M. Palmer has been the Vice President, Chief Financial Officer and Treasurer of RPC since 1996. He has also been the Vice President, Chief Financial Officer and Treasurer of Marine Products Corporation since it was spun-off in February 2001.

12

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

RPC’s common stock is listed for trading on the New York Stock Exchange under the symbol RES. At February 24, 2006, there were 64,743,051 shares of common stock outstanding and approximately 6,500 holders of record of common stock. The following table sets forth the high and low prices of RPC’s common stock for each quarter in the years ended December 31, 2005 and 2004:

	2005			2004
Quarter	High	Low	Dividends	High	Low	Dividends
First	$13.36	$9.33	$0.027	$5.45	$4.70	$0.013
Second	11.65	8.77	0.027	7.10	4.78	0.013
Third	17.58	11.10	0.027	7.98	6.07	0.013
Fourth	26.88	14.03	0.027	12.60	7.69	0.013

On January 24, 2006 the Board of Directors approved an increase in the quarterly cash dividend per common share, from $0.027 to $0.05, payable March 10, 2006 to stockholders of record at the close of business February 10, 2006. The Company expects to continue to pay cash dividends to the common stockholders, subject to the earnings and financial condition of the Company and other relevant factors.

Issuer Purchases of Equity Securities

Shares repurchased in the fourth quarter of 2005 are outlined below.

Period	Total Number of Shares (or Units) Purchased		Average Price Paid Per Share (or Unit)	Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs
Month #1
October 1, 2005 to October 31, 2005	1,772	(1)	$ 15.15	-	2,711,310
Month #2
November 1, 2005 to November 30, 2005	11,208	(1)	20.52	-	2,711,310
Month #3
December 1, 2005 to December 31, 2005	1,674	(1)	27.46	-	2,711,310
Totals	14,654		$ 20.67	-	2,711,310

(1)   All shares shown were tendered to the Company in connection with employee stock option exercises.

The Company’s Board of Directors announced a stock buyback program in March 1998 authorizing the repurchase of 7,875,000 shares in the open market. During the fourth quarter of 2005, there were no open market purchases of the Company’s shares. Currently the program does not have a predetermined expiration date.

13

Item 6. Selected Financial Data

The following table summarizes certain selected financial data of the Company. The historical information may not be indicative of the Company’s future results of operations. The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the Consolidated Financial Statements and the notes thereto included elsewhere in this document.

14

STATEMENT OF OPERATIONS DATA:

Years Ended December 31,	2005			2004			2003			2002			2001
	(in thousands, except employee and per share amounts)
Revenues	$	427,643		$	339,792		$	270,527		$	209,030		$	284,521
Cost of services rendered and goods sold		227,492			193,659			168,766			143,362			168,152
Selling, general and administrative expenses		75,478			65,871			52,268			44,852			52,873
Depreciation and amortization		39,129			34,473			33,094			31,242			25,434
Gain on disposition of assets, net (a)		(12,169	)		(5,551	)		(36	)		(1,597	)		(1,065	)
Operating profit (loss)		97,713			51,340			16,435			(8,829	)		39,127
Interest income (expense), net		950			(68	)		(153	)		(74	)		(65	)
Other income, net		2,077			1,931			1,288			749			2,061
Income (loss) from continuing operations before income taxes		100,740			53,203			17,570			(8,154	)		41,123
Income tax provision (benefit) (b)		34,256			18,430			6,677			(2,894	)		15,627
Income (loss) from continuing operations		66,484			34,773			10,893			(5,260	)		25,496
Income from discontinued operation, net of income taxes		—			—			—			—			1,486
Net income (loss) (b)	$	66,484		$	34,773		$	10,893		$	(5,260	)	$	26,982
Earnings (loss) per share — basic:
Income (loss) from continuing operations		1.05			0.55			0.17			(0.08	)		0.41
Income from discontinued operation		—			—			—			—			0.02
Net income (loss)	$	1.05		$	0.55		$	0.17		$	(0.08	)	$	0.43
Earnings (loss) per share — diluted:
Income (loss) from continuing operations		1.01			0.53			0.17			(0.08	)		0.40
Income from discontinued operation		—			—			—			—			0.02
Net income (loss)	$	1.01		$	0.53		$	0.17		$	(0.08	)	$	0.42
Dividends paid per share	$	0.11		$	0.05		$	0.04		$	0.04		$	0.05
OTHER DATA:
Operating margin percent		22.8	%		15.1	%		6.1	%		(4.2	%)		13.8	%
Net cash provided by continuing operations	$	66,362		$	50,374		$	50,631		$	27,556		$	55,938
Net cash used for investing activities		(62,415	)		(37,215	)		(34,670	)		(21,831	)		(46,357	)
Net cash used for financing activities		(20,774	)		(5,825	)		(5,192	)		(4,927	)		(4,283	)
Depreciation and amortization (c)		39,129			34,500			33,182			31,342			25,536
Capital expenditures	$	72,808		$	49,869		$	30,356		$	22,481		$	45,850
Employees at end of period		1,649			1,596			1,529			1,419			1,533
BALANCE SHEET DATA AT END OF YEAR:
Accounts receivable, net	$	107,428		$	75,793		$	53,719		$	40,168		$	46,928
Working capital		92,888			77,509			63,226			52,646			42,513
Property, plant and equipment, net		141,218			114,222			109,163			105,338			115,046
Total assets		311,785			262,942			226,864			195,954			202,402
Current portion of long-term debt (d)		—			2,700			1,110			552			1,390
Long-term debt (d)		—			2,100			4,800			2,410			2,937
Total stockholders’ equity	$	232,501		$	181,423		$	151,106		$	145,081		$	156,436

(a) Gain on disposition of assets, net in 2005 includes a $10.7 million pre-tax gain ($0.11 after tax per diluted share) on the sale of certain assets during third quarter of 2005. In 2004 the gain on disposition, net includes a $3.3 million pre-tax gain ($0.03 after tax per diluted share) on the sale of certain operating assets during the fourth quarter of 2004.

(b) During the fourth quarter of 2005, the income tax provision and net income reflect the receipt of tax refunds of $3.5 million related to the successful resolution of certain tax matters, which had a positive impact of $0.05 after tax per diluted share.

(c) Prior to the sale of our overhead crane fabricator in April 2004, depreciation and amortization differed from depreciation and amortization presented in the statements of operations.  This difference is due to depreciation related to the manufacturing of goods which was included in cost of services rendered and goods sold.

(d) In February 2005, the Company prepaid a $2.8 million promissory note. The remaining balance was paid in full upon maturity of a promissory note in July 2005.

15

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

The following discussion should be read in conjunction with “Selected Financial Data,” and the Consolidated Financial Statements included elsewhere in this document. See also “Forward-Looking Statements” on page 2.

RPC, Inc. (“RPC”) provides a broad range of specialized oilfield services primarily to independent and major oilfield companies engaged in exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and selected international locations. The Company’s revenues and profits are generated by providing equipment and services to customers who operate oil and gas properties and invest capital to drill new wells and enhance production or perform maintenance on existing wells.

Our key business and financial strategies are:

-   To focus our management resources on and invest our capital in equipment and geographic markets that we believe will earn high returns on capital, and maintain an appropriate capital structure.

-   To maintain a flexible cost structure that can respond quickly to volatile industry conditions and business activity levels.

-   To deliver equipment and services to our customers safely.

-   To maximize shareholder return by optimizing the balance between cash invested in the Company’s productive assets, the payment of dividends to shareholders, and the repurchase of our common stock on the open market.

-   To align the interests of our management and shareholders.

In assessing the outcomes of these strategies and RPC’s financial condition and operating performance, management generally reviews periodic forecast data, monthly actual results, and other similar information. We also consider trends related to certain key financial data, including revenues, utilization of our equipment and personnel, pricing for our services and equipment, profit margins, selling, general and administrative expenses, cash flows and the return on our invested capital. We continuously monitor factors that impact the level of current and expected customer activity levels, such as the price of oil and natural gas, changes in pricing for our services and equipment and utilization of our equipment and personnel. Our financial results are affected by geopolitical factors such as political instability in the petroleum-producing regions of the world, overall economic conditions and weather in the United States, the prices of oil and natural gas, and our customers’ drilling and production activities.

Current industry conditions include historically high, volatile natural gas prices, historically high, rising oil prices, and a steadily increasing domestic rig count. During 2005, the price of natural gas increased dramatically at the end of the third quarter as a result of the severe hurricanes in the Gulf of Mexico, which significantly disrupted U.S. natural gas production. The price of oil increased steadily during the year, due to increased worldwide demand and concerns about supply disruption in many of the world’s oil-producing regions. The rig count increased as well, but current and future increases are constrained by the available supply of domestic drilling rigs. These trends in 2005 resulted in increased utilization of our equipment and personnel followed by increased pricing for the Company’s services and equipment. Improved results have also allowed us to make higher capital expenditures, which has led to an increase in capacity for providing services to our customers.

The results of our strategies are reflected in our 2005 financial and operational performance. We generated record revenues and profitability in 2005 because of better industry conditions, increased capacity, improved pricing and growth in the utilization of our personnel and equipment. Revenues in 2005 of $427.6 million increased 25.9 percent compared to the prior year. The growth in revenues resulted primarily from increased capacity due to our expenditures for new equipment and maintenance on existing equipment, improved pricing for our equipment and services, and increased utilization consistent with higher customer activity levels. The increase in prices is partially attributable to the issuance of new price books during the third quarter of 2005. International revenues declined by 9.8 percent in 2005 compared to the prior year. Although international revenues increased in most of our locations due to our focus on developing international opportunities, these increases were offset by a large decline in revenues from our operation in Kuwait. This decline was due to the sporadic nature of our work in that country as well as other customer-imposed delays. We continue to focus on developing international growth opportunities; however, it is difficult to predict when contracts and projects will be initiated and their ultimate duration. Based on current industry conditions and trends during 2006 and our planned capital expenditures, we expect consolidated revenues for 2006 to increase compared to 2005, although the volatility in our industry makes accurate near-term forecasts unreliable.

16

In the third quarter we sold certain assets of the Company’s hammer, casing, laydown and casing torque-turn service lines generating proceeds of approximately $15.7 million and a pre-tax gain of approximately $10.7 million. This sale resulted in an after tax gain of approximately $7.1 million or $0.11 diluted earnings per share. Income before income taxes was $100.7 million in 2005 compared to $53.2 million in the prior year. The effective tax rate for 2005 was 34.0 percent compared to 34.6 percent in the prior year. The effective tax rates reflect tax benefits of 3.5 percent in 2005 related to income tax refunds and 3.2 percent in 2004 primarily related to adjustments for foreign tax credit carryovers and liabilities. Diluted earnings per share increased to $1.01 in 2005 compared to $0.53 for the prior year. Cash flows from operating activities were $66.4 million in 2005 compared to $50.4 million in the prior year, and cash and cash equivalents were $12.8 million at December 31, 2005, a decrease of $16.8 million compared to December 31, 2004. This decrease in cash and cash equivalents occurred despite improved operating results and higher proceeds from the sale of assets, primarily due to increased capital expenditures and increased share repurchases. As of December 31, 2005, we had no long-term debt.

Cost of services rendered and goods sold as a percentage of revenues decreased approximately 3.8 percentage points in 2005 compared to 2004. This improvement was due to higher equipment and personnel utilization, improved pricing and the leverage of our fixed costs over higher revenues.

Selling, general and administrative expenses as a percentage of revenues decreased by 1.7 percentage points to 17.7 percent, which was due primarily to the leverage of these costs over higher revenues. The costs increased due to additions to field administrative personnel consistent with higher activity levels, and costs to implement additional information technology to support operational efficiencies at higher activity levels.

Consistent with our strategy to selectively grow our capacity and maintain our existing fleet of high demand equipment, capital expenditures were $72.8 million in 2005. Although we currently expect capital expenditures to be approximately $100 million during 2006, the total amount of 2006 expenditures will depend primarily on equipment maintenance requirements, expansion opportunities and the ultimate delivery dates for equipment on order. We expect these expenditures to be primarily directed toward our larger, core service lines including pressure pumping, snubbing, nitrogen, and rental tools.

On October 25, 2005, RPC’s Board of Directors declared a three-for-two stock split of the Company’s common shares. The additional shares were distributed on December 12, 2005, to shareholders of record on November 11, 2005. All share, earnings per share, and dividends per share data presented throughout this document including the accompanying financial statements and management’s discussion and analysis have been adjusted to reflect this stock split.

Outlook

Drilling activity in the U.S. domestic oilfields, as measured by the rotary drilling rig count, has been stable or gradually increasing since the second quarter of 2002, and the overall domestic rig count during the first two months of 2006 is approximately 19 percent higher than in the comparable period in 2005. The price of oil has risen by approximately 32 percent and the price of natural gas has risen by approximately 27 percent during the first two months of 2006 as well. While the overall drilling rig count has increased, drilling activity in the Gulf of Mexico has steadily declined since the third quarter of 2001, which is unfavorable because of the Company’s historical presence in this geographic market. At the beginning of March, 2006 the Gulf of Mexico rig count was approximately 11 percent lower than in the comparable period in 2005, and much of this decline is attributable to the damage caused by the hurricanes in the third quarter of 2005. The Company has responded to the sustained increase in overall industry activity by making investments in our geographic market areas where we currently operate, but we have emphasized the more robust domestic markets and have made only selective investments in the Gulf of Mexico market. In spite of the current robust industry conditions, the Company understands that factors influencing the industry are unpredictable. Our response to the industry’s potential uncertainty is to maintain sufficient liquidity to withstand periodic industry downturns, and a balanced capital structure that allows us to expand during periods of industry expansion.

17

Results of Operations

Years Ended December 31,	2005			2004			2003
Consolidated revenues	$	427,643		$	339,792		$	270,527
Revenues by business segment:
Technical	$	363,139		$	279,070		$	216,321
Support		64,487			56,917			43,909
Other		17			3,805			10,297
Consolidated operating profit	$	97,713		$	51,340		$	16,435
Operating profit by business segment:
Technical	$	84,048		$	47,027		$	22,433
Support		11,990			8,287			2,641
Other		(273	)		(975	)		(1,355	)
Corporate expenses		(10,221	)		(8,550	)		(7,320	)
Gain on disposition of assets, net		12,169			5,551			36
Net income	$	66,484		$	34,773		$	10,893
Earnings per share — diluted	$	1.01		$	0.53		$	0.17
Percentage of cost of services rendered and goods sold to revenues		53	%		57	%		62	%
Percentage of selling, general and administrative expenses to revenues		18	%		19	%		19	%
Percentage of depreciation and amortization expense to revenues		9	%		10	%		12	%
Effective income tax rate		34.0	%		34.6	%		38.0	%
Average U.S. domestic rig count		1,383			1,190			1,029
Average natural gas price (per thousand cubic feet (mcf))	$	8.86		$	5.88		$	5.41
Average oil price (per barrel)	$	56.61		$	41.35		$	31.23

Year Ended December 31, 2005 Compared To Year Ended December 31, 2004

Revenues. Revenues for 2005 increased $88 million or 25.9 percent compared to 2004. The Technical Services segment revenues for 2005 increased 30.1 percent from the prior year due primarily to increases in capacity driven by higher capital expenditures, improved utilization, and increased pricing driven by higher customer demand for our services. This increase was partially offset by the disposal of our casing installation services in the third quarter of 2005. The Support Services segment revenues for 2005 increased 13.3 percent from the prior year as a result of higher capacity, equipment utilization and increased pricing in rental tools, which is the largest service line within this segment. The growth in this segment was lower than the change in the domestic rig count and in Technical Services due to this segment’s exposure to the Gulf of Mexico, a region in which activity has been very weak since the hurricanes in the third quarter of 2005. In addition, these increases were also offset by the lack of revenues for 2005 from our marine liftboat division, which was sold in the fourth quarter of 2004. The marine liftboat division generated revenues of $3.3 million in 2004.

Domestic revenues increased during 2005 due to increased customer demand for our services, which we were able to meet with increases in capacity, utilization and improved pricing as a result of new price books issued during the third quarter of 2005. The average domestic rig count during 2005 was 16 percent higher than the same period in 2004. In addition, the average price of natural gas increased by approximately 51 percent and the average price of oil increased by approximately 37 percent during 2005 compared to the prior year. This increase in oil and gas prices and the resulting increase in drilling activity had a positive impact on our financial results. These increases were partially offset by continued weakness in the Gulf of Mexico market, which was especially weak in the third and fourth quarters as a result of the hurricanes that occurred in the third quarter. Foreign revenues decreased from $15.9 million in 2004 to $14.3 million in 2005 due to a large decline in our Kuwait operation. This decline was due to the sporadic nature of the contract as well as customer-imposed delays. This decline was offset by increases in almost all of our other international locations as well as the inception of a new contract in Turkmenistan. These increases were due to our increased focus on international business and our business development efforts.

18

Cost of services rendered and goods sold. Costs of services rendered and goods sold in 2005 was $227.5 million compared to $193.7 million in 2004, an increase of $33.8 million or 17.5 percent. The increase in these costs was due to the variable nature of many of these expenses, including compensation, materials and supplies, maintenance and repair, and fuel costs and the increase in the price of fuel. Cost of services rendered and goods sold, as a percent of revenues, decreased to 53.2 percent in 2005 from 57.0 percent in 2004 as a result of higher utilization of personnel and operating equipment, improved pricing, and the leveraging of fixed costs over higher revenues.

Selling, general and administrative expenses. Selling, general and administrative expensesincreased 14.6 percent to $75.5 million in 2005 compared to $65.9 million in 2004, however as a percentage of revenues, decreased 1.7 percentage points to 17.7 percent. The increase was primarily due to higher employment costs associated with additions to field administrative personnel to handle higher business activity levels and costs to implement additional information technology to support operational efficiencies.

Depreciation and amortization. Depreciation and amortization were $39.1 million in 2005, an increase of $4.6 million or 13.5 percent compared to $34.5 million in 2004. This increase in depreciation and amortization resulted from various capital expenditures made during recent quarters within Support Services and Technical Services. A larger percentage of the increase in depreciation and amortization was due to capital expenditures made in the Support Service segment than the Technical Service segment, despite its smaller relative revenues and total assets, because of investments made in the rental tools service line, the largest service line within Support Services, and a new Support Services operational facility that was constructed in 2005.

Gain on disposition of assets, net. Gain on the disposition of assets, net increased primarily due to the sale of certain assets of the hammer, casing, laydown and casing torque-turn service lines for net proceeds of $15.7 million which generated a pre-tax gain of $10.7 million, or $0.11 after tax gain per diluted share. The gain on disposition of assets in 2004 was due primarily to the pre-tax gain of $3.3 million on the sale of the domestic liftboat fleet which occurred during the fourth quarter of 2004. The remaining gain on disposition of assets, net in 2005 and 2004 also includes gains or losses related to various real property and equipment dispositions or sales to customers of lost or damaged rental equipment.

Other income,net. Other income, net in 2005 of $2.1 million primarily includes proceeds of approximately $1.3 million from a litigation settlement in the first quarter of 2005. The remaining other income, net in 2005 and 2004 also includes gains from various other legal and insurance claims.

Interest income (expense), net. Net interest income was $950 thousand in 2005 compared to net interest expense of $68 thousand in 2004. The increase in net interest income resulted primarily from the reduction in outstanding debt through annual principal payments made during 2004 and 2005, and $412 thousand of interest income related to income tax refunds received during the fourth quarter of 2005.

Income tax provision. The effective tax rate was 34.0 percent in 2005 and 34.6 percent in 2004. Adjustments of $3.5 million in 2005 resulted in an income tax benefit of 3.4 percent related to income tax refunds received primarily during the fourth quarter of 2005. Adjustments of $1.1 million in 2004 resulted in an income tax benefit of 3.2 percent primarily related to the recognition of previously reserved foreign tax credit carryovers and an adjustment to the liability for foreign taxes.

Net income and diluted earnings per share. Net income for 2005 was $66.5 million, or $1.01 earnings per diluted share. This included a $7.1 million after tax gain, or $0.11 per diluted share, related to the sale of the operating and intangible assets of the hammer, casing, laydown and casing torque-turn service lines. Net income for 2004 was $34.8 million or $0.53 earnings per diluted share, and included a pre-tax gain of $3.3 million related to the sale of the domestic liftboat fleet.

Year Ended December 31, 2004 Compared To Year Ended December 31, 2003

Revenues. Revenues for 2004 increased 25.6 percent compared to 2003. Domestic revenues increased due to higher customer drilling and production enhancement activity. Our growth in revenues was higher than the domestic rig count growth, principally because of the effect of increased international revenues, of an acquisition closed during 2003, and of our fishing tool service line which began operations in 2004. These increases were partially offset by continued weakness in the Gulf of Mexico market, exacerbated by the hurricanes in the area during the third quarter 2004, heavy rains during the fourth quarter impacting mid-continent operations, and the sale of one of our non-oilfield businesses during the second quarter of 2004.

The average price of natural gas increased 8.7 percent during 2004 compared to 2003, and the average price of oil increased 32.4 percent during the same period. The average U.S. domestic rig count increased by 15.6 percent during 2004 compared to 2003. This increase in oil and gas prices and resulting increase in drilling activity had a positive impact on our financial results. We believe that our activity levels are affected more by the price of natural gas than by the price of oil, because the majority of U.S. domestic drilling activity relates to natural gas, and many of our services are more

19

appropriate for gas wells than oil wells. The correlation between the changes in the price of oil and natural gas and U.S. domestic drilling activity were more highly correlated in 2004 than in 2003. This higher correlation is consistent with past industry cycles.

The Technical Services segment revenues for 2004 increased 29.0 percent due primarily to increased customer activity levels and demand for our services, additional equipment capacity, higher pricing levels in most of our service lines and a shift in the mix of pressure pumping work towards higher revenue generating jobs. The Support Services segment revenues for 2004 increased 29.6 percent as a result of higher equipment utilization, additional capacity and slightly higher pricing in rental tools, which is the largest service line within this segment, partially offset by lower utilization and reduced pricing for the marine liftboats.

Cost of services rendered and goods sold. Cost of services rendered and goods sold, as a percentage of revenues, decreased five percentage points in 2004 compared to 2003 as a result of improved operating leverage due to overall higher utilization of personnel and operating equipment, and better pricing. Cost of services rendered and goods sold increased 14.8 percent due primarily to increased direct employment costs, and variable operational expenses such as equipment maintenance, materials and supplies, sub-rental expense and fuel costs.

Selling, general and administrative expenses. Selling, general and administrative expenses increased by 26.0 percent to $65.9 million in 2004 from $52.3 million in 2003, however as a percentage of revenues, remained relatively stable at 19 percent. The increase was due to increased incentive compensation costs and increased headcount related to higher activity levels and the expansion of our safety program. The increase was also due to the implementation of additional information technology to support operational efficiencies at higher activity levels and an increase in bad debt expense.

Depreciation and amortization. Depreciation and amortization were $34.5 million in 2004, a 4.2 percent increase compared to $33.1 million in 2003. This increase in depreciation and amortization resulted from various maintenance and growth capital expenditures within Support Services and Technical Services, and from the effect of the acquisition completed during the second quarter of 2003. As a percentage of revenues these costs declined due to their fixed nature.

Gain on disposition of assets, net. In the fourth quarter of 2004, we sold the Company’s domestic liftboat fleet which generated a pre-tax gain of $3.3 million. This transaction generated proceeds of approximately $10 million. Gain on disposition of assets, net also includes gains in 2004 and 2003 related to miscellaneous real property dispositions and sales to customers of lost or damaged rental equipment.

Other income, net. Other income, net was $1.9 million in 2004 and $1.3 million in 2003 and primarily includes gains from various legal and insurance claim settlements.

Interest expense, net. Interest expense, net was $68 thousand in 2004 compared to $153 thousand in 2003.

Income tax provision. The effective tax rate in 2004 was 34.6 percent, a reduction from 38.0 percent in 2003, primarily because of an aggregate reduction in the tax provision of approximately $1.1 million related to the recognition of previously reserved foreign tax credit carryovers and an adjustment to the liabilities for foreign taxes.

Net income and diluted earnings per share. Net income for 2004 was $34.8 million, or $0.53 earnings per diluted share. This included the $2.2 million after tax gain, or $0.03 per diluted share, related to the sale of the liftboats and $1.1 million, or $0.02 per diluted share, related to the tax provision adjustments. Net income for 2003 was $10.9 million or $0.17 earnings per diluted share.

Liquidity and Capital Resources

Cash and Cash Flows

The Company’s cash and cash equivalents were $12.8 million as of December 31, 2005, $29.6 million as of December 31, 2004 and $22.3 million as of December 31, 2003.

The following table sets forth the historical cash flows for the year ended December 31:  

	(in thousands)
	2005			2004			2003
Net cash provided by operating activities		$66,362			$50,374			$50,631
Net cash used for investing activities		(62,415	)		(37,215	)		(34,670	)
Net cash used for financing activities		(20,774	)		(5,825	)		(5,192	)

20

2005

Cash provided by operating activities was $66.4 million compared to $50.4 million in 2004. The large improvement in operating results and increased gains on sale of assets was partially offset by higher working capital requirements and a lower cash contribution to the defined benefit pension plan in 2005 compared to 2004. Increased business activity levels and revenues resulted in increased accounts receivable and inventories which was partially offset by higher accounts payable. Also, the company received income tax refunds of $3.5 million in 2005 that did not occur in 2004.

Cash used for investing activities in 2005 increased by $25.2 million compared to 2004, primarily as a result of an increase in capital expenditures to increase capacity and maintain our existing equipment and an increase of $5.5 million in 2005 compared to 2004 in earnout payments for acquisitions. These increases were partially offset by higher proceeds from the sale of assets.

Cash used for financing activities in 2005 increased by $14.9 million compared to 2004, due to increased cost of open market share repurchases of Company common stock, a 100 percent increase in dividends paid to common shareholders, and principal repayments totaling $4.8 million during the first and third quarters of 2005.

2004

Cash provided by operating activities was $50.4 million in 2004 compared to $50.6 million in 2003. The large improvement in operating results was offset by a $4.2 million cash contribution to the defined benefit pension plan, receipt of large income tax refunds in 2003 that did not recur in 2004, and higher working capital requirements. Increased revenues resulted in an increase in accounts receivable which was partially offset by an increase in accounts payable and other liabilities.

Cash used in investing activities for 2004 increased by $2.5 million compared to 2003, primarily as a result of an increase in capital expenditures partially offset by an increase in proceeds from sale of property and equipment, including the sale of the liftboats, and a decrease in cash used for purchases of businesses. Cash used for purchases of businesses in 2004 includes earnout payments of $3.3 million related to 2003 operating results. Cash used for purchases of businesses in 2003 included a business acquisition; there were no earnout payments in 2003.

Cash used in financing activities for 2004 increased by $0.6 million compared to 2003, due to increases in dividends paid per share and debt service requirements, partially offset by increases in proceeds received from the exercise of stock options.

Financial Condition and Liquidity

The Company’s financial condition as of December 31, 2005, remains strong. We believe the liquidity provided by our existing cash and cash equivalents, our overall strong capitalization, and cash expected to be generated from operations, will provide sufficient capital to meet our requirements for at least the next twelve months. The portion of the credit facility that is not currently available supports letters of credit relating to self-insurance programs or contract bids.

Subsequent to year-end, the Company sought and received an increase in its available credit facility from $25 million to $50 million with a financial institution. As of December 31, 2005, $15.9 million of our facility was allocated to letters of credit supporting self-insurance programs or performance bonds. For additional information with respect to RPC’s credit facility, see Note 7 of the Notes to Consolidated Financial Statements.

The Company’s decisions about the amount of cash to be used for investing and financing purposes are influenced by its capital position, availability of credit facilities, and the expected amount of cash to be provided by operations. We believe our liquidity will continue to provide the opportunity to grow our asset base and revenues during periods with positive business conditions and strong customer activity levels.

Cash Requirements

Capital expenditures were $72.8 million in 2005, and we currently expect capital expenditures to be approximately $100 million in 2006. We expect these expenditures to be primarily directed towards revenue-producing equipment in our larger, core service lines including pressure pumping, snubbing, nitrogen, and rental tools. The actual amount of 2006 expenditures will depend primarily on equipment maintenance requirements, expansion opportunities, and equipment delivery schedules.

21

The Company’s Retirement Income Plan, a multiple employer trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to eligible employees. During the first quarter of 2005, the Company contributed $1.6 million to the pension plan. We expect that additional contributions to the defined benefit pension plan of approximately $1.1 million will be required in 2006 to achieve the Company’s funding objective.

The Company’s Board of Directors announced a stock buyback program on March 9, 1998 authorizing the repurchase of 7,875,000 shares. The Company expects to continue repurchasing outstanding common shares periodically based on market conditions and our capital allocation strategies. The program does not have a predetermined expiration date.

On January 24, 2006 the Board of Directors approved an increase in the quarterly cash dividend per common share, from $0.027 to $0.05, payable March 10, 2006 to stockholders of record at the close of business February 10, 2006. Based on the shares outstanding on December 31, 2005, the aggregate annual dividends expected to be paid would be approximately $12.9 million in 2006. The Company expects to continue to pay cash dividends to common stockholders, subject to the earnings and financial condition of the Company and other relevant factors.

In accordance with the respective purchase agreements, earnout payments to sellers of two businesses previously acquired by the Company have been paid on an annual basis and were paid on an interim period ending during 2005. The Company made earnout payments of $4.6 million in April 2005 related to 2004 operating results. Final earnout payments of $2.4 million in the second quarter of 2005 and $1.9 million in the fourth quarter of 2005 were made to the sellers of acquired businesses based on the results for the interim period ended June 30, 2005. As of December 31, 2005, all earnout obligations under these purchase agreements have been recognized and paid.

Contractual Obligations

The Company’s obligations and commitments that require future payments include a bank demand note, certain non-cancelable operating leases, purchase obligations and other long-term liabilities. The following table summarizes the Company’s significant contractual obligations as of December 31, 2005:

Contractual obligations	Payments due by period
(in thousands)	Total		Less than 1 year		1-3   years		3-5   years		More than 5 years
Long-term debt	$	—	$	—	$	—	$	—	$	—
Capital lease obligations		—		—		—		—		—
Operating leases (1)		6,644		2,221		3,512		529		382
Purchase obligations (2)		525		525		—		—		—
Other long-term liabilities (3)		5,912		5,912		—		—		—
Total contractual obligations	$	13,081	$	8,658	$	3,512	$	529	$	382

(1) Operating leases include agreements for various office locations, office equipment, and certain operating equipment.

(2) As part of the normal course of business the Company enters into purchase commitments to manage its various operating needs.

(3) Includes expected cash payments for long-term liabilities reflected on the balance sheet where the timing of the payments are known. These amounts include primarily known pension plan funding obligations and incentive compensation. These amounts exclude pension obligations with uncertain funding requirements and deferred compensation liabilities.

Inflation

The Company purchases its equipment and materials from suppliers who provide competitive prices. Due to the recent increases in activity in the domestic oilfield, the Company has experienced some upward wage pressures in the labor markets from which it hires employees. If inflation in the general economy increases, the Company’s costs for equipment, materials and labor could increase as well. Also the price of steel, for both the commodity and for products manufactured with steel, has increased dramatically due to increased worldwide demand. Although prices have moderated, they remain high by historical standards. This factor has affected the Company’s operations through delays in scheduled deliveries of new equipment and price quotations that were only valid for a limited period of time. If this factor continues, it is possible that the cost of the Company’s new equipment will increase which would result in higher capital expenditures and depreciation expense. RPC may not be able to recover such increased costs through price increases to its customers, thereby reducing the Company’s future profits.

Off Balance Sheet Arrangements

The Company does not have any material off balance sheet arrangements.

22

Related Party Transactions

Marine Products Corporation

Effective February 28, 2001, the Company spun-off the business conducted through Chaparral Boats, Inc. (“Chaparral”), RPC’s former powerboat manufacturing segment. RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral to Marine Products Corporation (a Delaware corporation) (“Marine Products”), a newly formed wholly-owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. In conjunction with the spin-off, RPC and Marine Products entered into various agreements that define the companies’ relationship.

In accordance with a Transition Support Services agreement, which may be terminated by either party, RPC provides certain administrative services, including financial reporting and income tax administration, acquisition assistance, etc., to Marine Products. Charges from the Company (or from corporations that are subsidiaries of the Company) for such services aggregated approximately $616,000 in 2005, $546,000 in 2004 and $496,000 in 2003. The Company’s directors are also directors of Marine Products and all of the executive officers are employees of both the Company and Marine Products.

The Tax Sharing and Indemnification Agreement provides for, among other things, the treatment of income tax matters for periods through February 28, 2001, the date of the spin-off, and responsibility for any adjustments as a result of audits by any taxing authority. The general terms provide for the indemnification for any tax detriment incurred by one party caused by the other party’s action. In accordance with the agreement, RPC transferred approximately $19,000 in 2004 to Marine Products for tax settlements.

Other

The Company periodically purchases in the ordinary course of business products or services from suppliers, who are owned by significant officers or shareholders, or affiliated with the directors of RPC. The total amounts paid to these affiliated parties were approximately $926,000 in 2005, $529,000 in 2004 and $1,058,000 in 2003. In addition, the overhead crane fabrication division of RPC (sold April 2004) recorded $171,000 in 2003 in revenues from the powerboat manufacturing segment that is now a subsidiary of Marine Products pursuant to the spin-off, related to the sale, installation and service of overhead cranes.

RPC receives certain administrative services and rents office space from Rollins, Inc. (a company of which Mr. R. Randall Rollins is also Chairman and which is otherwise affiliated with RPC). The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent totaled to $71,000 in 2005, $76,000 in 2004 and $105,000 in 2003.

Critical Accounting Policies

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, which require significant judgment by management in selecting the appropriate assumptions for calculating accounting estimates. These judgments are based on our historical experience, terms of existing contracts, trends in the industry, and information available from other outside sources, as appropriate. Senior management has discussed the development, selection and disclosure of its critical accounting estimates with the Audit Committee of our Board of Directors. The Company believes the following critical accounting policies involve estimates that require a higher degree of judgment and complexity:

Allowance for doubtful accounts — Substantially all of the Company’s receivables are due from oil and gas exploration and production companies in the United States, selected international locations and foreign, nationally owned oil companies. Our allowance for doubtful accounts is determined using a combination of factors to ensure that our receivables are not overstated due to uncollectibility. Our established credit evaluation procedures seek to minimize the amount of business we conduct with higher risk customers. Our customers’ ability to pay is directly related to their ability to generate cash flow on their projects and is significantly affected by the volatility in the price of oil and natural gas. Provisions for doubtful accounts are recorded in selling, general and administrative expenses. Accounts are written-off against the allowance for doubtful accounts when the Company determines that amounts are uncollectible and recoveries of amounts previously written off are recorded when collected. Significant recoveries will generally reduce the required provision in the period of recovery. Therefore, the provision for doubtful accounts can fluctuate significantly from period

23

to period. In 2003, the Company recorded two large recoveries of previously charged off amounts. There were no large recoveries in 2005 and 2004.

We record specific provisions when we become aware of a customer’s inability to meet its financial obligations to us, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, our estimates of the realizability of receivables would be further adjusted, either upward or downward.

The estimated allowance for doubtful accounts is based on our evaluation of the overall trends in the oil and gas industry, financial condition of our customers, our historical write-off experience, current economic conditions, and in the case of international customers, our judgments about the economic and political environment of the related country and region. In addition to reserves established for specific customers, we establish general reserves by using different percentages depending on the age of the receivables. Excluding the effect of the recoveries referred to above, the annual provisions for doubtful accounts have ranged from 0.06 percent to 0.40 percent of revenues over the last three years. Increasing or decreasing the estimated general reserve percentages by 0.50 percentage points as of December 31, 2005 would have resulted in a change of approximately $0.6 million to the allowance for doubtful accounts and a corresponding change to selling, general and administrative expenses.

Income taxes — The effective income tax rates were 34.0 percent in 2005, 34.6 percent in 2004, and 38.0 percent in 2003. Our effective tax rates vary due to changes in estimates of our future taxable income, fluctuations in the tax jurisdictions in which our earnings and deductions are realized, and favorable or unfavorable adjustments to our estimated tax liabilities related to proposed or probable assessments. As a result, our effective tax rate may fluctuate significantly on a quarterly or annual basis.

We establish a valuation allowance against the carrying value of deferred tax assets when we determine that it is more likely than not that the asset will not be realized through future taxable income. Such amounts are charged to earnings in the period in which we make such determination. Likewise, if we later determine that it is more likely than not that the net deferred tax assets would be realized, we would reverse the applicable portion of the previously provided valuation allowance. We have considered future market growth, forecasted earnings, future taxable income, the mix of earnings in the jurisdictions in which we operate, and prudent and feasible tax planning strategies in determining the need for a valuation allowance.

We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are recorded when identified, which is generally in the third quarter of the subsequent year for U.S. federal and state provisions. Deferred tax liabilities and assets are determined based on the differences between the financial and tax bases of assets and liabilities using enacted tax rates in effect in the year the differences are expected to reverse.

The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Our estimate for the potential outcome for any uncertain tax issue is highly judgmental. We believe we have adequately provided for any reasonably foreseeable outcome related to these matters. However, our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation on potential assessments expire. Additionally, the jurisdictions in which our earnings or deductions are realized may differ from our current estimates.

Insurance expenses — The Company self insures, up to certain policy-specified limits, certain risks related to general liability, workers’ compensation, vehicle and equipment liability. The cost of claims under these self-insurance programs is estimated and accrued using individual case-based valuations and statistical analysis and is based upon judgment and historical experience; however, the ultimate cost of many of these claims may not be known for several years. These claims are monitored and the cost estimates are revised as developments occur relating to such claims. The Company has retained an independent third party actuary to assist in the calculation of a range of exposure for these claims. As of December 31, 2005, the Company estimates the range of exposure to be from $8.6 million to $11.1 million. The Company has recorded liabilities at December 31, 2005 of approximately $9.9 million which represents management’s best estimate of probable loss.

Depreciable life of assets — RPC’s net property, plant and equipment at December 31, 2005 was $141.2 million representing 45.3 percent of the Company’s consolidated assets. Depreciation and amortization expenses for the year ended December 31, 2005 were $39.1 million, or 11.4 percent of total operating costs. Management judgment is required in the determination of the estimated useful lives used to calculate the annual and accumulated depreciation and amortization expense.

24

Property, plant and equipment are reported at cost less accumulated depreciation and amortization, which is generally provided on a straight-line basis over the estimated useful lives of the assets. The estimated useful life represents the projected period of time that the asset will be productively employed by the Company and is determined by management based on many factors including historical experience with similar assets. Assets are monitored to ensure changes in asset lives, are identified and prospective depreciation and amortization expense is adjusted accordingly. We have not made changes to the estimated lives of assets resulting in a material impact in the last three years.

Defined benefit pension plan- In 2002, the Company ceased all future benefit accruals under the defined benefit plan, although the Company remains obligated to provide employees benefits earned through March 2002. The Company accounts for the defined benefit plan in accordance with the provisions of SFAS 87, “Employers’ Accounting for Pensions” and engages an outside actuary to calculate its obligations and costs. With the assistance of the actuary, the Company evaluates the significant assumptions used on a periodic basis including the estimated future return on plan assets, the discount rate, and other factors, and makes adjustments to these liabilities as necessary.

The Company chooses an expected rate of return on plan assets based on historical results for similar allocations among asset classes, the investments strategy, and the views of our investment adviser. Differences between the expected long-term return on plan assets and the actual return are amortized over future years. Therefore, the net deferral of past asset gains (losses) ultimately affects future pension expense. The Company’s assumption for the expected return on plan assets is 8.0 percent which is unchanged from the prior year.

The discount rate reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. In estimating this rate, the Company utilizes the Moody’s Aa long-term corporate bond yield with a yield adjustment made for the longer duration of the Company’s obligations. A lower discount rate increases the present value of benefit obligations. The Company determined a discount rate of 5.50 percent as of December 31, 2005, compared to a discount rate of 5.75 percent in 2004 and 6.25 percent in 2003.

In 2005, the change in the minimum pension liability within accumulated other comprehensive loss decreased stockholders’ equity by $987 thousand after tax. Holding all other factors constant, a decrease in the discount rate used to measure plan liabilities by 0.25 percentage points would result in an after tax increase of approximately $0.8 million in accumulated other comprehensive loss and an increase in the discount rate used to measure plan liabilities by 0.25 percentage points would result in an after tax decrease of approximately $0.7 million in accumulated other comprehensive loss.

The Company recognized pre-tax pension expense of $1.1 million in 2005, $1.2 million in 2004, and $1.6 million in 2003. Pension expense is anticipated to increase slightly to approximately $1.3 million in 2006. Holding all other factors constant, a change in the expected long-term rate of return on plan assets by 0.50 percentage points would result in an increase or decrease in pension expense of approximately $0.11 million in 2006. Holding all other factors constant, a change in the discount rate used to measure plan liabilities by 0.25 percentage points would result in an increase or decrease in pension expense of approximately $0.12 million in 2006.

New Accounting Standards

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company plans to adopt SFAS 151 in the first quarter of fiscal 2006, beginning on January 1, 2006. Adoption of SFAS 151 is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. Under SFAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods available are the modified prospective application and the modified retrospective application. Under the modified retrospective application, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The modified

25

prospective application requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the modified retrospective application would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. SFAS No. 123R states that the requirement is to adopt the provisions in the first interim or annual period beginning after June 15, 2005. However, the Securities and Exchange Commission (“SEC”) issued a new rule that allows companies to implement Statement No. 123R at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the interaction between SFAS 123R and certain SEC rules and regulations and provides the staff’s view regarding the valuation of shared-based payment arrangements for public companies. In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards” (“FAS 123R-3”). FAS 123R-3 provides for a practical transition election related to accounting for the tax effects of share-based payment awards to employees. Companies may elect either the guidance in SFAS No. 123R or this alternative transition method up to one year from the later of its initial adoption of SFAS No. 123R or the effective date of this FSP to make this one time election.

The Company will implement the provisions of SFAS 123R in the first quarter of 2006 using the modified prospective method. As permitted by SFAS No. 123, the Company currently uses APB 25’s intrinsic value method and recognizes no compensation cost for employee stock options. The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to employees and will continue to use the Black-Scholes model for option valuation. The impact of SFAS 123R would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in Note 1 to our audited financial statements, if we had adopted it earlier. SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.  The Company cannot estimate what those amounts will be in the future partly because the Company cannot predict the stock prices when i) the employees exercise non-qualified options or ii) the restricted stock vests.  Also, under the provision of FAS 123R, unearned compensation related to unvested restricted stock awards are not recorded. Accordingly, any remaining unearned compensation related to unvested restricted stock awards and the corresponding amount in paid-in capital will no longer be included in stockholders’ equity beginning January 1, 2006. Based on stock options and restricted stock granted to employees through December 31, 2005, the Company expects that the adoption of SFAS 123R on January 1, 2006, will reduce first quarter net income by approximately $170,000. See Note 10 for further information on the Company’s stock-based compensation plans. The cumulative amount of excess tax deductions related to share-based payment awards to employees computed in accordance with the provisions of SFAS 123R is approximately $660,000 as of December 31, 2005.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions” (“SFAS 153”). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for non-monetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. By focusing the exception on exchanges that lack commercial substance, SFAS 153 intends to produce financial reporting that more faithfully represents the economics of the transaction. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005 and the provisions are to be applied prospectively. The Company has adopted the provisions of SFAS 153 resulting in no material impact on its consolidated results of operations and financial condition.

FASB Staff Position (“FSP”) No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”), issued in December 2004, is intended to provide limited relief in the application of the indefinite reinvestment criterion due to ambiguities surrounding the implementation of the Act. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying FASB Statement No. 109.

The Company has completed its evaluation of FSP 109-2 and has repatriated earnings of approximately $1.2 million. The cash distribution will be treated as an extraordinary dividend and will qualify for the 85 percent Dividends Received Deduction (“DRD”) within the meaning of Code Section 965. The Company implemented its repatriation plan late in the fourth quarter of 2005 starting with the reinvestment of the money back into the United States.

In March 2005, the FASB issued FIN 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”), which requires an entity to recognize a liability for the fair value

26

of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 is effective for fiscal years ending after December 15, 2005 and has been adopted by the Company in the fiscal year ended December 31, 2005. Adoption of FIN 47 did not have a material impact on the consolidated results of operations and financial condition of the Company.

In May 2005, the FASB has issued FASB Statement No. 154, Accounting Changes and Error Corrections” (“SFAS 154”) which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” Among other changes, SFAS 154 requires that a voluntary change in accounting principle or a change required by a new accounting pronouncement that does not include specific transition provisions be applied retrospectively with all prior period financial statements presented based on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (1) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be termed a restatement.” SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005 with early adoption permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005. Accordingly, the Company plans to adopt the provisions of SFAS 154 in the first quarter of fiscal 2006, beginning on January 1, 2006 and does not expect it to have a material impact on its consolidated results of operations and financial condition of the Company.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

During the third quarter of 2005, RPC repaid its debt with a variable interest rate.  As of December 31, 2005, RPC is no longer exposed to any interest rate risk on debt. The Company is also subject to interest rate risk exposure through borrowings on its $25.0 million credit facility which was recently increased to $50 million subsequent to year end. As of December 31, 2005, there are no outstanding borrowings on our credit facilities. For additional information with respect to RPC’s long term debt, see Note 7 of the Notes to Consolidated Financial Statements.

27

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Stockholders of RPC, Inc.:

The management of RPC, Inc. is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. RPC, Inc. maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that assets are safeguarded against loss or unauthorized use and that the financial records are adequate and can be relied upon to produce financial statements in accordance with accounting principles generally accepted in the United States of America. The internal control system is augmented by written policies and procedures, an internal audit program and the selection and training of qualified personnel. This system includes policies that require adherence to ethical business standards and compliance with all applicable laws and regulations.

There are inherent limitations to the effectiveness of any controls system. A controls system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the controls system are met. Also, no evaluation of controls can provide absolute assurance that all control issues and any instances of fraud, if any, within the Company will be detected. Further, the design of a controls system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. The Company intends to continually improve and refine its internal controls.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operations of our internal control over financial reporting as of December 31, 2005 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management’s assessment is that RPC, Inc. maintained effective internal control over financial reporting as of December 31, 2005.

The independent registered public accounting firm, Grant Thornton LLP, has audited the consolidated financial statements as of and for the year ended December 31, 2005, and has also issued their report on management’s assessment of the Company’s internal control over financial reporting, included in this report on page 29.

/s/ Richard A. Hubbell	/s/ Ben M. Palmer
Richard A. Hubbell President and Chief Executive Officer	Ben M. Palmer Chief Financial Officer and Treasurer

Atlanta, Georgia

March 8, 2006

28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Board of Directors and Stockholders of RPC, Inc.

We have audited management’s assessment included in Management’s Report on Internal Control Over Financial Reporting included in RPC Inc.’s Form 10-K for 2005 that RPC, Inc. (a Delaware corporation) maintained effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  RPC, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting.  Our responsibility is to express an opinion on management’s assessment and an opinion on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.  Our audit included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.  We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.  A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management’s assessment that RPC, Inc. maintained effective internal control over financial reporting as of December 31, 2005, is fairly stated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued by the COSO.  Also in our opinion, RPC, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of RPC, Inc. and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2005 and our report dated March 8, 2006 expressed an unqualified opinion on those financial statements.

/s/ GRANT THORNTON LLP

Atlanta, Georgia

March 8, 2006

29

Item 8. Financial Statements and Supplementary Data

CONSOLIDATED BALANCE SHEETS

RPC, INC. AND SUBSIDIARIES

(in thousands except share information)

December 31,	2005			2004
ASSETS
Cash and cash equivalents	$	12,809		$	29,636
Accounts receivable, net		107,428			75,793
Inventories		13,298			10,587
Deferred income taxes		5,304			6,144
Prepaid expenses and other current assets		4,004			3,638
Current assets		142,843			125,798
Property, plant and equipment, net		141,218			114,222
Goodwill and other intangibles, net		24,114			20,183
Other assets		3,610			2,739
Total assets	$	311,785		$	262,942
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	30,437		$	23,389
Accrued payroll and related expenses		11,903			10,842
Accrued insurance expenses		3,695			3,875
Accrued state, local and other taxes		2,585			2,183
Income taxes payable		791			113
Current portion of long-term debt		-			2,700
Other accrued expenses		544			5,187
Current liabilities		49,955			48,289
Long-term accrued insurance expenses		6,168			6,451
Long-term debt		-			2,100
Long-term pension liability		13,614			11,379
Deferred income taxes		8,758			11,945
Other long-term liabilities		789			1,355
Total liabilities		79,284			81,519
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $0.10 par value, 1,000,000 shares authorized, none issued
Common stock, $0.10 par value, 79,000,000 shares authorized, 64,452,506 and 64,823,051 shares issued and outstanding in 2005 and 2004, respectively		6,445			6,482
Capital in excess of par value		19,235			25,165
Retained earnings		219,907			160,189
Deferred compensation		(5,391	)		(3,527	)
Accumulated other comprehensive loss		(7,695	)		(6,886	)
Total stockholders’ equity		232,501			181,423
Total liabilities and stockholders’ equity	$	311,785		$	262,942

The accompanying notes are an integral part of these statements.

30

CONSOLIDATED STATEMENTS OF OPERATIONS

RPC, INC. AND SUBSIDIARIES

(in thousands except per share data)

Years ended December 31,	2005			2004			2003
REVENUES	$	427,643		$	339,792		$	270,527
COSTS AND EXPENSES:
Cost of services rendered and goods sold		227,492			193,659			168,766
Selling, general and administrative expenses		75,478			65,871			52,268
Depreciation and amortization		39,129			34,473			33,094
Gain on disposition of assets, net		(12,169	)		(5,551	)		(36	)
Operating profit		97,713			51,340			16,435
Interest income (expense), net		950			(68	)		(153	)
Other income, net		2,077			1,931			1,288
Income before income taxes		100,740			53,203			17,570
Income tax provision		34,256			18,430			6,677
Net income	$	66,484		$	34,773		$	10,893
EARNINGS PER SHARE
Basic	$	1.05		$	0.55		$	0.17
Diluted	$	1.01		$	0.53		$	0.17
Dividends paid per share	$	0.11		$	0.05		$	0.04

The accompanying notes are an integral part of these statements.

31

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

RPC, INC. AND SUBSIDIARIES

(in thousands)

Three Years Ended	Comprehensive			Common Stock					Capital in Excess of				Deferred			Retained			Accumulated Other Comprehensive
December 31, 2005	Income (Loss)			Shares			Amount		Par Value				Compensation			Earnings			Loss			Total
Balance, December 31, 2002				42,911		$	4,291		$	25,001		$	(1,186	)	$	120,805		$	(3,830	)	$	145,081
Stock issued for stock incentive plans, net				29			3			233			110			—			—			346
Stock purchased and retired				(189	)		(20	)		(1,850	)		—			—			—			(1,870	)
Stock issued in connection with purchase of business				179			18			1,982			—			—			—			2,000
Net income	$	10,893					—			—			—			10,893			—			10,893
Minimum pension liability, net of taxes of $1,534		(2,503	)				—			—			—			—			(2,503	)		(2,503	)
Unrealized gain on securities, net of taxes of $20		33																	33			33
Comprehensive income	$	8,423
Dividends declared							—			—			—			(2,874	)		—			(2,874	)
Three-for-two stock split				21,479			2,149			(2,149	)											—
Balance, December 31, 2003				64,409			6,441			23,217			(1,076	)		128,824			(6,300	)		151,106
Stock issued for stock incentive plans, net				354			36			4,282			(2,451	)		—			—			1,867
Stock purchased and retired				(170	)		(17	)		(2,312	)		—			—			—			(2,329	)
Net income	$	34,773					—			—			—			34,773			—			34,773
Minimum pension liability, net of taxes of $370		(605	)				—			—			—			—			(605	)		(605	)
Unrealized gain on securities, net of taxes of $12		19																	19			19
Comprehensive income	$	34,187
Dividends declared							—			—			—			(3,408	)		—			(3,408	)
Three-for-two stock split				230			22			(22	)											—
Balance, December 31, 2004				64,823			6,482			25,165			(3,527	)		160,189			(6,886	)		181,423
Stock issued for stock incentive plans, net				417			42			5,397			(1,864	)		—			—			3,575
Stock purchased and retired				(739	)		(74	)		(11,332	)		—			—			—			(11,406	)
Net income	$	66,484					—			—			—			66,484			—			66,484
Minimum pension liability, net of taxes of $605		(987	)				—			—			—			—			(987	)		(987	)
Unrealized gain on securities, net of taxes of $108		178																	178			178
Comprehensive income	$	65,675
Dividends declared							—			—			—			(6,766	)		—			(6,766	)
Three-for-two stock split				(48	)		(5	)		5												—
Balance, December 31, 2005				64,453		$	6,445		$	19,235		$	(5,391	)	$	219,907		$	(7,695	)	$	232,501

The accompanying notes are an integral part of these statements.

32

CONSOLIDATED STATEMENTS OF CASH FLOWS

RPC, Inc. and Subsidiaries

(in thousands)

Years ended December 31,	2005			2004			2003
OPERATING ACTIVITIES
Net income	$	66,484		$	34,773		$	10,893
Non-cash charges (credits) to earnings:
Depreciation and amortization and other non-cash charges		40,390			35,054			33,182
Gain on disposition of assets		(12,169	)		(5,551	)		(36	)
Deferred income tax (benefit) provision		(1,851	)		(756	)		5,401
Changes in current assets and liabilities:
Accounts receivable		(31,635	)		(22,074	)		(13,551	)
Income taxes receivable		-			4,472			4,554
Inventories		(2,445	)		(530	)		(455	)
Prepaid expenses and other current assets		(81	)		41			(117	)
Accounts payable		7,048			3,786			7,323
Income taxes payable		796			113			-
Accrued payroll and related expenses		1,061			2,316			885
Accrued insurance expenses		(180	)		1,023			(1,263	)
Accrued state, local and other taxes		402			520			4
Other accrued expenses		(381	)		391			(962	)
Changes in working capital		(25,415	)		(9,942	)		(3,582	)
Changes in other assets and liabilities:
Pension liabilities		643			(2,568	)		2,003
Accrued insurance expenses		(283	)		595			2,273
Other non-current assets		(871	)		(875	)		103
Other non-current liabilities		(566	)		(356	)		394
Net cash provided by operating activities		66,362			50,374			50,631
INVESTING ACTIVITIES
Capital expenditures		(72,808	)		(49,869	)		(30,356	)
Purchase of businesses		(8,836	)		(3,310	)		(6,210	)
Proceeds from sale of assets		19,229			15,964			1,896
Net cash used for investing activities		(62,415	)		(37,215	)		(34,670	)
FINANCING ACTIVITIES
Payment of dividends		(6,766	)		(3,408	)		(2,874	)
Payments on debt		(4,800	)		(1,110	)		(552	)
Cash paid for common stock purchased and retired		(10,268	)		(1,728	)		(1,870	)
Proceeds received upon exercise of stock options		1,060			421			104
Net cash used for financing activities		(20,774	)		(5,825	)		(5,192	)
Net (decrease) increase in cash and cash equivalents		(16,827	)		7,334			10,769
Cash and cash equivalents at beginning of year		29,636			22,302			11,533
Cash and cash equivalents at end of year	$	12,809		$	29,636		$	22,302

The accompanying notes are an integral part of these statements.

33

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 1: Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of RPC, Inc. and its wholly-owned subsidiaries (“RPC” or the “Company”). All significant intercompany accounts and transactions have been eliminated.

Nature of Operations

RPC provides a broad range of specialized oilfield services and equipment primarily to independent and major oil and gas companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest and Rocky Mountain regions, and in selected international markets. The services and equipment provided include Technical Services such as pressure pumping services, snubbing services (also referred to as hydraulic workover services), coiled tubing services, nitrogen services, and firefighting and well control, and Support Services such as the rental of drill pipe and other specialized oilfield equipment and oilfield training.

Dividends

On January 24, 2006, the Board of Directors approved an increase in the quarterly cash dividend per common share, from $0.027 to $0.05, payable March 10, 2006 to stockholders of record at the close of business February 10, 2006.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates are used in the determination of the allowance for doubtful accounts, income taxes, accrued insurance expenses, depreciable lives of assets, and pension liabilities.

Revenues

RPC recognizes revenue when an agreement exists, prices are determinable, services and products are delivered and collectibility is reasonably assured.

Reclassifications

Certain prior year balances have been reclassified to conform with the current year presentation.

Concentration of Credit Risk

Substantially all of the Company’s customers are engaged in the oil and gas industry. This concentration of customers may impact overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. The Company provided oilfield services to several hundred customers, none of which accounted for more than 10 percent of consolidated revenues.

Cash and Cash Equivalents

Highly liquid investments with original maturities of three months or less when acquired are considered to be cash equivalents. RPC maintains cash equivalents and investments in one or more large, well-capitalized financial institutions, and RPC’s policy restricts investment in any securities rated less than “investment grade” by national rating services.

34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Investments

Investments classified as available-for-sale are stated at their fair values, with the unrealized gains and losses, net of tax, reported in a separate component of stockholders’ equity. The cost of securities sold is based on the specific identification method. Realized gains and losses, declines in value judged to be other than temporary, interest, and dividends with respect to available-for-sale securities are included in interest income. The Company did not realize any gains on securities during 2005, 2004 and 2003 on its available for sale securities. In 2004, the Company reclassed approximately $59,000 from other comprehensive income as a result of the securities that are held in a Supplemental Retirement Plan being classified as trading. This reclassification of securities from available-for-sale to trading was due to a change in the frequency of participant directed investment choices. The investment income earned on trading securities is presented in other income on the consolidated statement of operations.

Management determines the appropriate classification of investments at the time of purchase and re-evaluates such designations as of each balance sheet date.

Accounts Receivable

The majority of the Company’s accounts receivable are due principally from major and independent oil and natural gas exploration and production companies. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable are considered past due after 60 days and are stated at amounts due from customers, net of an allowance for doubtful accounts.

Allowance for Doubtful Accounts

Accounts receivable are carried at the amount owed by customers, reduced by an allowance for estimated amounts that may not be collectible in the future. The estimated allowance for doubtful accounts is based on our evaluation of industry trends, financial condition of our customers, our historical write-off experience, current economic conditions, and in the case of our international customers, our judgments about the economic and political environment of the related country and region. Accounts are written off against the allowance for doubtful accounts when the Company determines that amounts are uncollectible and recoveries of previously written-off accounts are recorded when collected.

Inventories

Inventories, which consist principally of (i) products that are consumed in RPC’s services provided to customers, (ii) spare parts for equipment used in providing these services and (iii) manufactured components and attachments for equipment used in providing services, are recorded at the lower of weighted average cost or market value. Market value is determined based on replacement cost for material and supplies and net realizable value for work in process and finished goods. The Company regularly reviews inventory quantities on hand and records provisions for excess or obsolete inventory based primarily on its estimated forecast of product demand, market conditions, production requirements and technological developments.

Property, Plant and Equipment

Property, plant and equipment, including software costs, are reported at cost less accumulated depreciation and amortization, which is generally provided on a straight-line basis over the estimated useful lives of the assets. Annual depreciation and amortization expense is computed using the following useful lives: operating equipment, 3 to 10 years; buildings and leasehold improvements, 15 to 30 years; furniture and fixtures, 5 to 7 years; software, 5 years; and vehicles, 3 to 5 years. The cost of assets retired or otherwise disposed of and the related accumulated depreciation and amortization are eliminated from the accounts in the year of disposal with the resulting gain or loss credited or charged to income from operations. Expenditures for additions, major renewals, and betterments are capitalized. Expenditures for restoring an identifiable asset to working condition or for maintaining the asset in good working order constitute repairs and maintenance and are expensed as incurred.

RPC records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the

35

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

carrying amount of those assets. The Company periodically reviews the values assigned to long-lived assets, such as property, plant and equipment and other assets, to determine if any impairments should be recognized. Management believes that the long-lived assets in the accompanying balance sheets have not been impaired.

Goodwill and Other Intangibles

Goodwill represents the excess of the purchase price over the fair value of net assets of businesses acquired. Earnout payments to sellers of acquired businesses may have to be paid in accordance with the respective agreements on an annual or interim basis and are recorded as goodwill when the earnout payment amounts are determinable. For additional information with respect to earnout payments, see Note 2 of the Notes to Consolidated Financial Statements. The carrying amount of goodwill was $24,093,000 at December 31, 2005 and $20,133,000 at December 31, 2004. Goodwill is reviewed annually for impairment in accordance with the provisions of Statement of Financial Accounting Standard (“SFAS”) No. 142, “Goodwill and Other Intangible Assets.” In reviewing goodwill for impairment, potential impairment is measured by comparing the estimated fair value of a reporting unit with its carrying value. Based upon the results of these analyses, the Company has concluded that no impairment of its goodwill has occurred.

Other intangibles primarily represent non-compete agreements related to businesses acquired. Non-compete agreements are amortized on a straight-line basis over the period of the agreement, as this method best estimates the ratio that current revenues bear to the total of current and anticipated revenues. The carrying amount and accumulated amortization for non-compete agreements are as follows:

	December 31,
	2005			2004
Non-compete agreements	$	300,000		$	450,000
Less: accumulated amortization		(290,016	)		(411,691	)
	$	9,984		$	38,309

Amortization of non-compete agreements was approximately $28,000 in 2005, $40,000 in 2004, and $40,000 in 2003.

Insurance Expenses

RPC self insures, up to certain policy-specified limits, certain risks related to general liability, workers’ compensation, vehicle and equipment liability, and employee health insurance plan costs. The estimated cost of claims under these self-insurance programs is estimated and accrued as the claims are incurred (although actual settlement of the claims may not be made until future periods) and may subsequently be revised based on developments relating to such claims. The portion of these estimated outstanding claims expected to be paid more than one year in the future is classified as long-term accrued insurance expenses.

Income Taxes

Deferred tax liabilities and assets are determined based on the difference between the financial and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company establishes a valuation allowance against the carrying value of deferred tax assets when the Company determines that it is more likely than not that the asset will not be realized through future taxable income.

Defined Benefit Pension Plan

The Company has a defined benefit pension plan that provides monthly benefits upon retirement at age 65 to eligible employees. See Note 10 for a full description of this plan and the related accounting and funding policies.

Share Repurchases

The Company records the cost of share repurchases in stockholders’ equity as a reduction to common stock to the extent of par value of the shares acquired and the remainder is allocated to capital in excess of par value.

36

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Earnings per Share

SFAS No. 128, “Earnings Per Share,” requires a basic earnings per share and diluted earnings per share presentation. The two calculations differ as a result of the dilutive effect of stock options and time lapse restricted and performance restricted shares included in diluted earnings per share, but excluded from basic earnings per share. A reconciliation of the weighted shares outstanding is as follows:

	2005		2004		2003
Basic		63,368,188		63,696,290		63,832,833
Dilutive effect of stock options and restricted shares		2,304,722		1,447,868		898,478
Diluted		65,672,910		65,144,158		64,731,311

Fair Value of Financial Instruments

The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable and debt. The carrying value of cash, accounts receivable and accounts payable approximate their fair value due to the short-term nature of such instruments. The carrying value of debt as of December 31, 2004 approximated fair value since the interest rates are market based and are generally adjusted annually.

New Accounting Standards

In November 2004, the FASB issued SFAS No. 151, “Inventory Costs—An Amendment of ARB No. 43, Chapter 4” (“SFAS 151”). SFAS 151 amends the guidance in ARB No. 43, Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). Among other provisions, the new rule requires that items such as idle facility expense, excessive spoilage, double freight, and rehandling costs be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal” as stated in ARB No. 43. Additionally, SFAS 151 requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. SFAS 151 is effective for fiscal years beginning after June 15, 2005. The Company plans to adopt SFAS 151 in the first quarter of fiscal 2006, beginning on January 1, 2006. Adoption of SFAS 151 is not expected to have a material impact on the Company’s consolidated results of operations and financial condition.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” (“SFAS 123”) and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees.” SFAS 123R requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The pro forma disclosures previously permitted under SFAS 123 will no longer be an alternative to financial statement recognition. Under SFAS 123R, the Company must determine the appropriate fair value model to be used for valuing share-based payments, the amortization method for compensation cost and the transition method to be used at date of adoption. The transition methods available are the modified prospective application and the modified retrospective application. Under the modified retrospective application, prior periods may be restated either as of the beginning of the year of adoption or for all periods presented. The modified prospective application requires that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the modified retrospective application would record compensation expense for all unvested stock options and restricted stock beginning with the first period restated. SFAS No. 123R states that the requirement is to adopt the provisions in the first interim or annual period beginning after June 15, 2005. However, the Securities and Exchange Commission (“SEC”) issued a new rule that allows companies to implement Statement No. 123R at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) regarding the interaction between SFAS 123R and certain SEC rules and regulations and provides the staff’s view regarding the valuation of shared-based payment arrangements for public companies. In November 2005, the FASB issued FASB Staff Position (“FSP”) FAS 123R-3, “Transition Election Related to Accounting for the Tax Effects of Share-Based Payment Awards” (“FAS 123R-3”). FAS 123R-3 provides for a practical transition election related to accounting for the tax effects of share-based payment awards to employees. Companies may elect either the guidance in SFAS No. 123R or this alternative transition method up to one year from the later of its initial adoption of SFAS No. 123R or the effective date of this FSP to make this one time election.

The Company will implement the provisions of SFAS 123R in the first quarter of 2006 using the modified prospective method. As permitted by SFAS No. 123, the Company currently uses APB 25’s intrinsic value method and recognizes no compensation cost for employee stock options. The Company currently utilizes a standard option pricing model (i.e., Black-Scholes) to measure the fair value of stock options granted to employees and will continue to use the Black-Scholes model for option valuation. The impact of SFAS 123R would have approximated the impact of SFAS No. 123 as described in the disclosure of pro forma net income and earnings per share in Note 1 to our audited financial statements, if we had adopted it

37

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

earlier. SFAS No. 123R also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption.  The Company cannot estimate what those amounts will be in the future partly because the Company cannot predict the stock prices when i) the employees exercise non-qualified options or ii) the restricted stock vests.  Also, under the provision of FAS 123R, unearned compensation related to unvested restricted stock awards are not recorded. Accordingly, any remaining unearned compensation related to unvested restricted stock awards and the corresponding amount in paid-in capital will no longer be included in stockholders’ equity beginning January 1, 2006. Based on stock options and restricted stock granted to employees through December 31, 2005, the Company expects that the adoption of SFAS 123R on January 1, 2006, will reduce first quarter net income by approximately $170,000. See Note 10 for further information on the Company’s stock-based compensation plans. The cumulative amount of excess tax deductions related to share-based payment awards to employees computed in accordance with the provisions of SFAS 123R is approximately $660,000 as of December 31, 2005.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets—An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions” (“SFAS 153”). The amendments made by SFAS 153 are based on the principle that exchanges of nonmonetary assets should be measured based on the fair value of the assets exchanged. Further, the amendments eliminate the narrow exception for non-monetary exchanges of similar productive assets and replace it with a broader exception for exchanges of nonmonetary assets that do not have commercial substance. Previously, Opinion 29 required that the accounting for an exchange of a productive asset for a similar productive asset or an equivalent interest in the same or similar productive asset should be based on the recorded amount of the asset relinquished. By focusing the exception on exchanges that lack commercial substance, SFAS 153 intends to produce financial reporting that more faithfully represents the economics of the transaction. SFAS 153 is effective for the fiscal periods beginning after June 15, 2005 and the provisions are to be applied prospectively. The Company has adopted the provisions of SFAS 153 resulting in no material impact on its consolidated results of operations and financial condition.

FASB Staff Position (“FSP”) No. 109-2, “Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004” (“FSP 109-2”), issued in December 2004, is intended to provide limited relief in the application of the indefinite reinvestment criterion due to ambiguities surrounding the implementation of the Act. The Jobs Act was enacted on October 22, 2004. FSP 109-2 states that an enterprise is allowed time beyond the financial reporting period of enactment to evaluate the effect of the Jobs Act on its plan for reinvestment or repatriation of foreign earnings for purposes of applying FASB Statement No. 109.

The Company has completed its evaluation of FSP 109-2 and has repatriated earnings of approximately $1.2 million. The cash distribution will be treated as an extraordinary dividend and will qualify for the 85 percent Dividends Received Deduction (“DRD”) within the meaning of Code Section 965. The Company implemented its repatriation plan late in the fourth quarter of 2005 starting with the reinvestment of the money back into the United States.

In March 2005, the FASB issued FIN 47, “Accounting for Conditional Asset Retirement Obligations, an interpretation of FASB Statement No. 143” (“FIN 47”), which requires an entity to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. FIN 47 is effective for fiscal years ending after December 15, 2005 and has been adopted by the Company in the fiscal year ended December 31, 2005. Adoption of FIN 47 did not have a material impact on the consolidated results of operations and financial condition of the Company.

In May 2005, the FASB has issued FASB Statement No. 154, “Accounting Changes and Error Corrections” (“SFAS 154”) which replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” Among other changes, SFAS 154 requires that a voluntary change in accounting principle or a change required by a new accounting pronouncement that does not include specific transition provisions be applied retrospectively with all prior period financial statements presented based on the new accounting principle, unless it is impracticable to do so. SFAS 154 also provides that (1) a change in method of depreciating or amortizing a long-lived nonfinancial asset be accounted for as a change in estimate (prospectively) that was effected by a change in accounting principle, and (2) correction of errors in previously issued financial statements should be termed a “restatement.” SFAS 154 is effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005 with early adoption permitted for accounting changes and correction of errors made in fiscal years beginning after June 1, 2005. Accordingly, the Company plans to adopt the provisions of SFAS 154 in the first quarter of

38

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and

Years ended December 31, 2005, 2004 and 2003

fiscal 2006, beginning on January 1, 2006 and does not expect it to have a material impact on its consolidated results of operations and financial condition of the Company.

Stock-Based Compensation

RPC accounts for the stock incentive plan using the intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees.” RPC records deferred compensation related to the restricted stock grants based on the fair market value of the shares at the issue date and amortizes such amounts ratably over the vesting period for the shares. Fair value of restricted shares granted was $3,151,000 in 2005, $3,273,000 in 2004, and $132,000 in 2003. RPC recorded amortization of deferred compensation totaling $1,259,000 in 2005, $822,000 in 2004, and $241,000 in 2003 related to these restricted stock grants.

If RPC had accounted for the stock incentive plans in accordance with the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” the total fair value of awards granted would be amortized over the vesting period of the awards, and RPC’s reported net income and diluted net income per share would have been as follows:

Years ended December 31,	2005			2004			2003
(in thousands)
Net income — as reported	$	66,484		$	34,773		$	10,893
Add: Stock-based employee compensation expense included in reported net income, net of related tax effect		781			510			150
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effect		(1,859	)		(1,193	)		(957	)
Pro forma net income	$	65,406		$	34,090		$	10,086
Pro forma income per share would have been as follows:
Basic - as reported	$	1.05		$	0.55		$	0.17
Basic - pro forma	$	1.03		$	0.54		$	0.16
Diluted - as reported	$	1.01		$	0.53		$	0.17
Diluted - pro forma	$	1.00		$	0.52		$	0.16

The Company has computed, for pro forma disclosure purposes, the value of all options granted during 2003 using the Black-Scholes option pricing model as prescribed by SFAS No. 123 using the following weighted average assumptions for grants:

	2005	2004	2003
Risk-free interest rate	N/A	N/A		1.1	%
Expected dividend yield	N/A	N/A		1	%
Expected lives	N/A	N/A		7 years
Expected volatility	N/A	N/A		43-46	%

There were no options granted to RPC employees in 2005 and 2004. The total fair value of options granted to RPC employees were $2,534,000 in 2003.

Three-for-Two Stock Split

On October 25, 2005, RPC’s Board of Directors declared a three-for-two stock split of the Company’s common shares. The additional shares were distributed on December 12, 2005, to shareholders of record on November 11, 2005. All share, earning per share, and dividends per share data presented in the accompanying financial statements have been adjusted to reflect this stock split.

39

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 2: Acquisitions

On April 1, 2003, RPC purchased all of the assets of Bronco Oilfield Services, Inc. (“Bronco”), a privately-held company, specializing in surface pressure control services and equipment. The acquisition was accounted for under the purchase method of accounting. Pro forma results of operations have not been presented for this acquisition because the effect was not material to the Company. The results of operations of the acquisition are included in the Company’s consolidated statements of operations from the date of acquisition. Goodwill related to the acquisition has been assigned to the Technical Services segment.

A summary of the Company’s purchase transaction is included in the following table (in thousands, except share amounts):

Entity Name and Description of Business Acquired	Date	Consideration	Inventory	Operating Equipment and Vehicles	Goodwill	Form of Consideration
Bronco Oilfield Services, Inc. (Production Rental Equipment)	4/03	$11,033	$395	$8,189	$2,449	• $5,533 in cash • 179,191 restricted shares valued at $2,000 • $3,500 in promissory note payable in five annual installments plus interest at 6 percent fixed rate • Potential earnout

The consolidated statement of cash flows for the year ended December 31, 2003 excludes the $3.5 million of promissory notes payable and the $2.0 million common stock issued in connection with the Bronco acquisition. Earnout payments to sellers of acquired businesses are paid in accordance with the respective agreements on an annual or interim basis and are recorded as goodwill when the earnout payment amounts are determinable. The Company made earnout payments of $4,600,000 in April 2005 related to 2004 operating results. Final earnout payments of $2,400,000 in the second quarter of 2005 and $1,900,000 in the fourth quarter of 2005 were made to the sellers of acquired business based on the results for the interim period ended June 30, 2005. Earnout payments made to sellers of acquired businesses totaled $3,310,000 in 2004, based on 2003 operating results. There were no earnouts paid in 2003, based on 2002 operating results. As of December 31, 2005, all earnout obligations under these purchase agreements have been recognized and paid.

Note 3: Accounts Receivable

Accounts receivable, net consist of the following:

December 31,	2005			2004
(in thousands)
Trade receivables:
Billed	$	91,635		$	61,068
Unbilled		18,878			16,502
Other receivables		995			799
Total		111,508			78,369
Less: Allowance for doubtful accounts		(4,080	)		(2,576	)
Accounts receivable, net	$	107,428		$	75,793

Trade receivables relate to sale of our services and products, for which credit is extended based on the customer’s credit history. Other receivables consist primarily of amounts due from purchasers of company property and rebates from suppliers.

Changes in the Company’s allowance for doubtful accounts are as follows:

40

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Years Ended December 31,	2005			2004
(in thousands)
Beginning balance	$	2,576		$	2,539
Bad debt expense		1,618			1,155
Accounts written-off		(230	)		(1,329	)
Recoveries		116			211
Ending balance	$	4,080		$	2,576

Note 4: Inventories

Inventories are $13,298,000 at December 31, 2005 and $10,587,000 at December 31, 2004 and consist of raw materials and supplies.

Note 5: Property, Plant and Equipment

Property, plant and equipment are presented at cost net of accumulated depreciation and consist of the following:

December 31,	2005		2004
(in thousands)
Land	$	5,085	$	5,022
Buildings and leasehold improvements		31,836		31,509
Operating equipment		257,030		234,647
Capitalized software		12,651		12,212
Furniture and fixtures		3,080		2,938
Vehicles		63,413		51,869
Construction in progress		3,699		2,407
Gross property, plant and equipment		376,794		340,604
Less: accumulated depreciation		235,576		226,382
Net property, plant and equipment	$	141,218	$	114,222

Depreciation expense was $39,100,000 in 2005, $34,397,000 in 2004 and $32,901,000 in 2003. There are no capital leases outstanding as of December 31, 2005 and December 31, 2004.

41

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 6: Income Taxes

The following table lists the components of the provision (benefit) for income taxes:

Years ended December 31,	2005			2004			2003
(in thousands)
Current provision:
Federal	$	31,563		$	16,028		$	925
State		4,305			2,300			164
Foreign		239			858			187
Deferred (benefit) provision:
Federal		(1,890	)		(1,210	)		4,975
State		39			454			426
Total income tax provision	$	34,256		$	18,430		$	6,677

Reconciliation between the federal statutory rate and RPC’s effective tax rate is as follows:

Years ended December 31,	2005			2004			2003
Federal statutory rate		35.0	%		35.0	%		35.0	%
State income taxes, net of federal benefit		2.9			3.4			3.1
Tax credits		(1.1	)		(3.0	)		(2.1	)
Federal and state refunds		(3.4	)		(0.6	)		-
Adjustments to foreign tax liabilities		(0.7	)		(1.2	)		-
Other		1.3			1.0			2.0
Effective tax rate		34.0	%		34.6	%		38.0	%

Significant components of the Company’s deferred tax assets and liabilities are as follows:

December 31,	2005			2004
(in thousands)
Deferred tax assets:
Self-insurance	$	4,106		$	4,312
Pension		5,238			4,399
State net operating loss carryforwards		1,802			1,875
Bad debts		1,629			1,065
Accrued payroll		787			1,081
Stock-based compensation		980			520
Foreign tax credit		657			1,292
All others		296			247
Valuation allowance		(1,945	)		(2,451	)
Gross deferred tax assets		13,550			12,340
Deferred tax liabilities:
Depreciation		(15,168	)		(16,971	)
Goodwill		(1,606	)		(1,049	)
All others		(230	)		(121	)
Gross deferred tax liabilities		(17,004	)		(18,141	)
Net deferred tax liabilities	$	(3,454	)	$	(5,801	)

42

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Historically, undistributed earnings of the Company’s foreign subsidiaries were considered indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes was recorded. Deferred taxes are provided for earnings outside the United States when those earnings are not considered indefinitely reinvested.

The American Jobs Creation Act of 2004 created a temporary incentive for U.S. multinationals to repatriate accumulated income earned outside the United States. As a result, the Company revisited its policy of indefinite reinvestment of foreign earnings and repatriated approximately $1.1 million in 2005. The Company recorded a one-time income tax provision of $65,000 attributable to these earnings.

The Company filed amended federal and state tax returns for the years 1999, 2000 and 2001 to claim higher deductions for certain expenses and additional foreign tax credits representing potential tax benefits. During the fourth quarter of 2005, the Company received tax refunds totaling approximately $4.0 million including $400,000 of interest recorded as interest income. Of the tax refunds received, $3.1 million was recorded in 2005 as a tax provision reduction because such amounts had not been previously recorded due to uncertainty surrounding the amount and timing of the tax benefits to be realized.

As of December 31, 2005, the Company has remaining foreign tax credit carryforwards of approximately $657,000 that expire in 2012 and 2013. During 2005, the Company recognized $0.6 million of previously unutilized foreign tax credits generated in prior years. As of December 31, 2004, the valuation allowance and deferred tax assets were increased by $1.3 million to reflect foreign tax credit carryforwards and a corresponding valuation allowance on a gross rather than a net basis. The valuation allowance for these foreign tax credit carryforwards has been established because the Company does not expect to utilize these credit carryforwards.

As of December 31, 2005, the Company has net operating loss carryforwards related to state income taxes of approximately $41.6 million that expire in 2006 through 2025. A valuation allowance of approximately $1.3 million, representing the tax affected amount of loss carryforwards that the Company does not expect to utilize, has been established against the corresponding deferred tax asset.

Total income tax payments (refunds), net were $36,031,000 in 2005, $14,692,000 in 2004 and $(3,263,000) in 2003.

Note 7: Long-Term Debt

The Company has access to a $25 million credit facility with a financial institution encompassing letters of credit and a demand note. The credit facility requires interest payments monthly on outstanding advances generally at LIBOR plus a margin ranging between 0.875% and 1.50%.  Any outstanding advances are due upon demand by the lender and the facility remains outstanding until cancelled by either party. Under this facility, there were letters of credit relating to self-insurance programs and contract bids outstanding for $15,892,000 as of December 31, 2005 and $15,067,000 as of December 31, 2004. Subsequent to December 31, 2005, the Company increased the credit facility from $25 million to $50 million.

Cash interest paid was approximately $204,000 in 2005, $309,000 in 2004 and $79,000 in 2003. The long-term debt of RPC as of December 31, 2004 is summarized as follows:

Type	Maturity Dates	Range of Interest Rates	2004
(in thousands)
Notes payable related to acquisitions:	2005-2008	6%	$ 2,800
	2005	Prime	2,000
			4,800
Less: current portion			2,700
Long-term debt			$ 2,100

In February 2005, the Company prepaid a $2.8 million promissory note. The remaining note related to an acquisition was paid in full upon maturity in July 2005.

43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 8: Accumulated Other Comprehensive (Loss) Income

Accumulated other comprehensive (loss) income consists of the following (in thousands):

	Minimum Pension   Liability			Unrealized   Gain (Loss) On Securities			Total
Balance at December 31, 2003	$	(6,478	)	$	178		$	(6,300	)
Change during 2004:
Before-tax amount		(975	)		125			(850	)
Tax (expense) benefit		370			(47	)		323
Reclassification adjustment, net of taxes		-			(59	)		(59	)
Total activity in 2004		(605	)		19			(586	)
Balance at December 31, 2004		(7,083	)		197			(6,886	)
Change during 2005:
Before-tax amount		(1,592	)		286			(1,306	)
Tax (expense) benefit		605			(108	)		497
Total activity in 2005		(987	)		178			(809	)
Balance at December 31, 2005	$	(8,070	)	$	375		$	(7,695	)

Note 9: Commitments and Contingencies

Lease Commitments - Minimum annual rentals, principally for noncancelable real estate leases with terms in excess of one year, in effect at December 31, 2005, are summarized in the following table:

(in thousands)
2006	$	1,783
2007		1,594
2008		1,203
2009		715
2010		396
Thereafter		515
Total rental commitments	$	6,206

Total rental expense charged to operations was approximately $5,252,000 in 2005, $4,203,000 in 2004 and $4,120,000 in 2003.

Income Taxes - The amount of income taxes the Company pays is subject to ongoing audits by federal and state tax authorities, which often result in proposed assessments. Other long-term liabilities, which were $789,000 as of December 31, 2005 and $1,355,000 as of December 31, 2004, consist primarily of the Company’s estimated liabilities for the probable assessments payable.

Litigation - RPC is a party to various routine legal proceedings primarily involving commercial claims, workers’ compensation claims and claims for personal injury. RPC insures against these risks to the extent deemed prudent by its management, but no assurance can be given that the nature and amount of such insurance will, in every case, fully indemnify RPC against liabilities arising out of pending and future legal proceedings related to its business activities. While the outcome of these lawsuits, legal proceedings and claims cannot be predicted with certainty, management, after consultation with legal counsel, believes that the outcome of all such proceedings, even if determined adversely, would not have a material adverse effect on the Company’s business or financial condition.

44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 10: Employee Benefit Plans

Defined Benefit Pension Plan

The Company’s Retirement Income Plan, a trusteed defined benefit pension plan, provides monthly benefits upon retirement at age 65 to substantially all employees with at least one year of service prior to 2002. As of February 28, 2001, the plan became a multiple employer plan, with Marine Products as an adopting employer.

In 2002, the Company’s Board of Directors approved a resolution to cease all future retirement benefit accruals under the defined benefit pension plan. In lieu thereof, the Company began providing enhanced benefits in the form of cash contributions for certain longer serviced employees that had not reached the normal retirement age of 65 as of March 31, 2002. The contributions are discretionary and made annually based on continued employment over a seven year period beginning in 2002. These discretionary contributions are made to either a non-qualified Supplemental Retirement Plan (“SERP”) established by the Company or to the 401(k) plan for each employee that is entitled to the enhanced benefit. The expense related to the enhanced benefits was $390,000 for 2005, $415,000 for 2004 and $479,000 for 2003.

The Company permits selected highly compensated employees to defer a portion of their compensation into the nonqualified SERP. The SERP assets are marked to market and totaled $1,967,000 as of December 31, 2005 and $994,000 as of December 31, 2004. The SERP assets are reported in other assets on the balance sheet and changes related to the fair value of assets are recorded in the consolidated statement of operations as part of other income, net. The SERP deferrals and the contributions are recorded on the balance sheet in pension liabilities with any change in the fair value of the liabilities recorded as compensation cost in the statement of operations.

45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

The following table sets forth the funded status of the retirement income plan and the amounts recognized in RPC’s consolidated balance sheets:

December 31,	2005			2004
(in thousands)
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	31,270		$	28,970
Service cost		—			—
Interest cost		1,744			1,747
Amendments		—			—
Actuarial loss		2,013			1,711
Benefits paid		(1,226	)		(1,158	)
Benefit obligation at end of year	$	33,801		$	31,270
CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year	$	20,888		$	16,611
Actual return on plan assets		1,082			1,259
Employer contribution		1,600			4,176
Benefits paid		(1,226	)		(1,158	)
Fair value of plan assets at end of year		22,344			20,888
Funded status		(11,458	)		(10,382	)
Unrecognized net loss		13,017			11,425
Net prepaid benefit cost	$	1,559		$	1,043

The accumulated benefit obligation for the defined benefit pension plan at December 31, 2005 and 2004 has been disclosed above. The Company uses a December 31 measurement date for its qualified plan.

Pursuant to the provisions of SFAS No. 87, “Employers’ Accounting for Pensions,” the Company recorded an additional pretax minimum pension liability of $1,592,000 in 2005 and $975,000 in 2004. As there were no previously unrecognized prior service costs as of December 31, 2005 and 2004, the full amount of the adjustments, net of taxes, are reflected as a reduction of stockholders’ equity. Amounts recognized in the consolidated balance sheets consist of:

December 31,	2005			2004
(in thousands)
Net prepaid benefit cost	$	1,559		$	1,043
Minimum pension liability		(13,017	)		(11,425	)
SERP employer contributions		(1,054	)		(738	)
SERP employee deferrals		(1,102	)		(259	)
Net amount recognized	$	(13,614	)	$	(11,379	)

RPC’s funding policy is to contribute to the defined benefit pension plan the amount required, if any, under the Employee Retirement Income Security Act of 1974. RPC contributed $1,600,000 in 2005 and $4,176,000 in 2004. 

46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

The components of net periodic benefit cost are summarized as follows:

Years ended December 31,	2005			2004			2003
(in thousands)
Service cost for benefits earned during the period	$	—		$	—		$	—
Interest cost on projected benefit obligation		1,744			1,747			1,937
Expected return on plan assets		(1,714	)		(1,445	)		(1,363	)
Net amortization and deferral		1,054			922			1,027
Curtailments		—			—			—
Net periodic benefit cost	$	1,084		$	1,224		$	1,601

The weighted average assumptions as of December 31 used to determine the projected benefit obligation and net benefit cost were as follows:

December 31,	2005			2004			2003
Projected Benefit Obligation:
Discount rate		5.500	%		5.750	%		6.250	%
Rate of compensation increase		N/A			N/A			N/A
Net Benefit Cost:
Discount rate		5.750	%		6.250	%		6.875	%
Expected return on plan assets		8.000	%		8.000	%		8.000	%
Rate of compensation increase		N/A			N/A			N/A

The Company’s expected return on assets assumption is derived from a detailed periodic assessment conducted by its management and its investment adviser. It includes a review of anticipated future long-term performance of individual asset classes and consideration of the appropriate asset allocation strategy given the anticipated requirements of the plan to determine the average rate of earnings expected on the funds invested to provide for the pension plan benefits. While the study gives appropriate consideration to recent fund performance and historical returns, the rate of return assumption is derived primarily from a long-term, prospective view. Based on its recent assessment, the Company has concluded that its expected long-term return assumption of eight percent is reasonable.

At December 31, 2005 and 2004, the Plan’s assets were comprised of listed common stocks and U.S. Government and corporate securities. The Plan’s weighted average asset allocation at December 31, 2005 and 2004 by asset category along with the target allocation for 2006 are as follows:

Asset Category	Target Allocation for 2006		Percentage of Plan Assets as of December 31, 2005		Percentage of Plan Assets as of December 31, 2004
Equity Securities		48.9%		48.3		51.2%
Debt Securities — Core Fixed Income		27.2%		28.7		29.5%
Tactical — Fund of Equity and Debt Securities		5.4%		2.6		2.7%
Real Estate		5.4%		5.4		5.1%
Other		13.1%		15.0		11.5%
Total		100.0%		100.0%		100.0%

The Company’s investment strategy for its defined benefit pension plan is to maximize the long-term rate of return on plan assets within an acceptable level of risk in order to minimize the cost of providing pension benefits. The investment policy establishes a target allocation for each asset class, which is rebalanced as required. The Company utilizes a number of investment approaches, including individual marketable securities, equity and fixed income funds in

47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

which the underlying securities are marketable, and debt funds to achieve this target allocation. The Company expects to contribute approximately $1,100,000 to the defined benefit pension plan in 2006.

The Company estimates that the future benefits payable for the defined benefit pension plan over the next ten years are as follows:

(in thousands)
2006	$1,370
2007	1,450
2008	1,557
2009	1,598
2010	1,681
2011-2015	9,422

401(k) Plan

RPC sponsors a defined contribution 401(k) plan that is available to substantially all full-time employees with more than six months of service. This plan allows employees to make tax-deferred contributions from one to 25 percent of their annual compensation, not exceeding the permissible contribution imposed by the Internal Revenue Code. RPC matches 50 percent of each employee’s contributions that do not exceed six percent of the employee’s compensation, as defined by the plan. Employees vest in the RPC contributions after three years of service. The charges to expense for the Company’s contributions to the 401(k) plan were approximately $1,150,000 in 2005, $990,000 in 2004 and $884,000 in 2003.

Stock Incentive Plans

On January 25, 1994, RPC adopted a 10-year Employee Stock Incentive Plan (the “1994 Plan”) under which shares of common stock were reserved for issuance including 2,250,000 shares in 1994 and an additional 3,600,000 shares in 1997. This plan expired in January 2004 and provided for the issuance of various forms of stock incentives. On April 27, 2004, the Company adopted a new 10-year Stock Incentive Plan (the “2004 Plan”) under which 3,375,000 shares of common stock have been reserved for issuance. This plan provides for the issuance of various forms of stock incentives, including, among others, incentive and non-qualified stock options and restricted stock. As of December 31, 2005, 2,624,625 shares were available for grants under the 2004 Plan.

Stock Options

Transactions involving the RPC stock options were as follows:

	Total   Shares			Weighted Average  Price
Outstanding December 31, 2002		1,940,845			$4.73
Granted		1,434,375			4.25
Canceled		(33,932	)		5.27
Exercised		(37,039	)		2.78
Outstanding December 31, 2003		3,304,249			$4.54
Granted		-			-
Canceled		(82,890	)		5.41
Exercised		(325,494	)		3.14
Outstanding December 31, 2004		2,895,865			$4.67
Granted		-			-
Canceled		(110,081	)		4.75
Exercised		(456,674	)		4.81
Outstanding December 31, 2005		2,329,110			$4.64

 

48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Options exercised during 2005 include transactions that involved exchange of shares and cash. The fair value of shares tendered to exercise employee stock options totaled approximately $1,138,000 in 2005 and $602,000 in 2004 and has been excluded from the consolidated statement of cash flows. There were no expirations of stock options during 2005, 2004 and 2003. As of December 31, 2005, the options outstanding and the range of exercise prices together with the weighted-average remaining contractual life are as follows:

	Number of Options				Weighted Average Exercise Prices				Weighted Average Remaining Contractual Life
Range of Exercise Prices	Total		Exercisable		Total		Exercisable
$1.74		68,104		68,104	$	1.74	$	1.74		0.1 years
$2.69 - $4.04		190,952		171,909	$	2.75	$	2.75		2.6 years
$4.22 - $6.33		2,070,054		1,031,230	$	4.91	$	5.21		5.8 years
		2,329,110		1,271,243	$	4.64	$	4.69		5.4 years

	2005		2004		2003
Exercisable at December 31,		1,271,243		1,380,852		1,171,637
Weighted average exercise price of exercisable options	$	4.69	$	4.60	$	4.20

Restricted Stock

RPC has granted employees two forms of restricted stock: time lapse restricted and performance restricted.

Time lapse restricted shares

Time lapse restricted shares vest after certain stipulated number of years from the grant date, depending on the terms of the issue. The Company has issued time lapse restricted shares that vest over ten years in prior years; however, in 2005 and 2004 the Company issued time lapse restricted shares that vest in 20 percent increments starting with the second anniversary of the grant, over the six year period beginning on the date of grant. Grantees receive all dividends declared and retain voting rights for the granted shares.

Units granted under these restricted stock programs totaled 275,625 in 2005, 479,250 in 2004, and 56,250 in 2003. Employees forfeited 4,500 shares in 2005, 41,265 shares in 2004 and 25,538 shares in 2003. Compensation cost on restricted shares is recorded at the fair value on the date of issuance and amortized ratably over the respective vesting periods. Shares of restricted stock that vested and were released to the applicable employees totaled 25,335 in 2005, 313,200 in 2004 and 0 in 2003. The tax benefit aggregating $53,000 in 2005, $208,000 in 2004 and $0 in 2003 for compensation tax deductions in excess of compensation expense was credited to capital in excess of par value.

The agreements under which the restricted stock is issued provide that shares awarded may not be sold or otherwise transferred until restrictions established under the stock plans have lapsed. Upon termination of employment from RPC or, in certain cases, termination of employment from Marine Products or Chaparral, shares with restrictions must be returned to RPC.

Performance restricted shares

The performance restricted shares are granted, but not earned and issued, until certain five-year tiered performance criteria are met. The performance criteria are predetermined market prices of RPC stock. On the date the stock appreciates to each level (determination date), 20 percent of performance shares are earned. Once earned, the performance shares vest five years from the determination date. After the determination date, the grantee will receive all dividends declared and also voting rights to the shares. Under the plans, employees earned performance shares totaling 13,500 shares in 2005, 33,750 shares in 2004 and 6,750 shares in 2003.

49

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

Note 11: Related Party Transactions

Marine Products Corporation

Effective February 28, 2001, the Company spun-off the business conducted through Chaparral Boats, Inc. (“Chaparral”), RPC’s former powerboat manufacturing segment. RPC accomplished the spin-off by contributing 100 percent of the issued and outstanding stock of Chaparral to Marine Products Corporation (a Delaware corporation) (“Marine Products”), a newly formed wholly-owned subsidiary of RPC, and then distributing the common stock of Marine Products to RPC stockholders. In conjunction with the spin-off, RPC and Marine Products entered into various agreements that define the companies’ relationship.

In accordance with a Transition Support Services agreement, which may be terminated by either party, RPC provides certain administrative services, including financial reporting and income tax administration, acquisition assistance, etc., to Marine Products. Charges from the Company (or from corporations that are subsidiaries of the Company) for such services aggregated approximately $616,000 in 2005, $546,000 in 2004 and $496,000 in 2003. The Company’s directors are also directors of Marine Products and all of the executive officers are employees of both the Company and Marine Products.

The Tax Sharing and Indemnification Agreement provides for, among other things, the treatment of income tax matters for periods through February 28, 2001, the date of the spin-off, and responsibility for any adjustments as a result of audits by any taxing authority. The general terms provide for the indemnification for any tax detriment incurred by one party caused by the other party’s action. In accordance with the agreement, RPC transferred approximately $19,000 in 2004 to Marine Products for tax settlements.

Other

The Company periodically purchases in the ordinary course of business products or services from suppliers, who are owned by significant officers or shareholders, or affiliated with the directors of RPC. The total amounts paid to these affiliated parties were approximately $926,000 in 2005, $529,000 in 2004 and $1,058,000 in 2003. In addition, the overhead crane fabrication division of RPC (sold April 2004) recorded $171,000 in 2003 in revenues from the powerboat manufacturing segment that is now a subsidiary of Marine Products pursuant to the spin-off, related to the sale, installation and service of overhead cranes.

RPC receives certain administrative services and rents office space from Rollins, Inc. (a company of which Mr. R. Randall Rollins is also Chairman and which is otherwise affiliated with RPC). The service agreements between Rollins, Inc. and the Company provide for the provision of services on a cost reimbursement basis and are terminable on six months notice. The services covered by these agreements include office space, administration of certain employee benefit programs, and other administrative services. Charges to the Company (or to corporations which are subsidiaries of the Company) for such services and rent aggregated to $71,000 in 2005, $76,000 in 2004 and $105,000 in 2003.

Note 12: Business Segment Information

RPC’s service lines have been aggregated into two reportable oil and gas services segments — Technical Services and Support Services — because of the similarities between the financial performance and approach to managing the service lines within each of the segments, as well as the economic and business conditions impacting their business activity levels. The Other business segment includes information concerning RPC’s business units that do not qualify for separate segment reporting. These business units include an interactive training software developer, prior to its disposition in May 2005, and an overhead crane fabricator, prior to its disposition in April 2004. Corporate includes selected administrative costs incurred by the Company.

Technical Services include RPC’s oil and gas service lines that utilize people and equipment to perform value-added completion, production and maintenance services directly to a customer’s well. These services include pressure pumping services, snubbing, coiled tubing, nitrogen pumping, well control consulting and firefighting, down-hole tools, wireline, and fluid pumping services. These Technical Services are primarily used in the completion, production

50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

and maintenance of oil and gas wells. The principal markets for this segment include the United States, including the Gulf of Mexico, the mid-continent, southwest and Rocky Mountain regions, and international locations including primarily Africa, Canada, China, Latin America and the Middle East. Customers include major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

Support Services include RPC’s oil and gas service lines that primarily provide equipment for customer use or services to assist customer operations. The equipment and services include drill pipe and related tools, pipe handling, inspection and storage services, and oilfield training services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. The principal markets for this segment include the United States, including the Gulf of Mexico and the mid-continent regions, and international locations, including primarily Canada, Latin America, and the Middle East. Customers include domestic operations of major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

In August of 2005, RPC generated approximately $15.7 million in cash proceeds related to the sale of certain assets of its hammer, casing, laydown and casing torque-turn service lines with a net book value of approximately $5.0 million. These service lines, previously reported in the Technical Services segment, were closely integrated with the operations of other Company service lines. Therefore, the pre-tax gain of $10.7 million on this sale has been included in the gain on disposition of assets, net.

The accounting policies of the reportable segments are the same as those described in Note 1 to these consolidated financial statements. RPC evaluates the performance of its segments based on revenues, operating profits and return on invested capital.

Summarized financial information concerning RPC’s reportable segments for the years ended December 31, 2005, 2004 and 2003 are shown in the following table.

	Technical Services		Support Services		Other			Corporate			Gain on disposition of assets, net		Total
(in thousands)
2005
Revenues	$	363,139	$	64,487	$	17		$	—		$	—	$	427,643
Operating profit (loss)		84,048		11,990		(273	)		(10,221	)		12,169		97,713
Capital expenditures (1)		43,626		28,280		—			902			—		72,808
Depreciation and amortization		27,510		10,453		—			1,166			—		39,129
Identifiable assets		192,172		88,067		—			31,546			—		311,785
2004
Revenues	$	279,070	$	56,917	$	3,805		$	—		$	—	$	339,792
Operating profit (loss)		47,027		8,287		(975	)		(8,550	)		5,551		51,340
Capital expenditures (1)		34,765		14,026		—			1,078			—		49,869
Depreciation and amortization		25,161		7,785		302			1,252			—		34,500
Identifiable assets		145,196		69,399		661			47,686			—		262,942
2003
Revenues	$	216,321	$	43,909	$	10,297		$	—		$	—	$	270,527
Operating profit (loss)		22,433		2,641		(1,355	)		(7,320	)		36		16,435
Capital expenditures (1)		19,445		8,234		37			2,640			—		30,356
Depreciation and amortization		24,382		7,220		336			1,244			—		33,182
Identifiable assets		111,718		65,026		5,051			45,069			—		226,864

 

(1) Excludes assets acquired as part of purchases of new businesses during the year.

51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

RPC, Inc. and Subsidiaries

Years ended December 31, 2005, 2004 and 2003

The following summarizes selected information between the United States and all international locations combined for the years ended December 31, 2005, 2004 and 2003. The revenues are presented based on the location of the use of the product or service. Assets related to international operations are less than 10 percent of RPC’s consolidated assets, and therefore are not presented.

Years ended December 31,	2005		2004		2003
(in thousands)
United States Revenues	$	413,315	$	323,910	$	263,684
International Revenues		14,328		15,882		6,843
	$	427,643	$	339,792	$	270,527

52

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of disclosure controls and procedures - The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to its management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, December 31, 2005 (the “Evaluation Date”), the Company carried out an evaluation, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures. Based upon this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at a reasonable assurance level as of the Evaluation Date.

Management’s report on internal control over financial reporting — Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Management’s report on internal control over financial reporting is included on page 28 of this report. Grant Thornton LLP, the Company’s independent registered public accounting firm, has audited management’s assessment of the effectiveness of internal control as of December 31, 2005 and issued a report thereon which is included on page 29 of this report.

Changes in internal control over financial reporting - Management’s evaluation of changes in internal control did not identify any changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other Information

On March 10, 2006, the Company entered into an Amended and Restated Credit Agreement with SunTrust Bank. This credit agreement provides the Company with access to a $50,000,000 credit facility encompassing letters of credit and a demand note. As of March 10, 2006, there were letters of credit totaling $15,900,000 outstanding under the credit facilities relating to the Company’s self-insurance programs and contract bids. The Company has no amounts outstanding under the demand note. The Company has agreed to pay a letter of credit fee on the face amount of each letter of credit issued under the credit facility equal to 50 basis points per annum. Interest accrues for amounts advanced under the credit facility at a variable rate which approximates, at the Company’s option, the higher of the lender’s prime rate or the Federal Funds rate plus 50 basis points, or LIBOR plus a margin ranging between 0.875% and 1.50% depending upon the ratio of the Company’s funded debt to its earnings before interest, taxes, depreciation and amortization. The credit facility is unsecured. Any outstanding advances are due upon demand by the lender and the facility remains outstanding until cancelled by either party.

53

PART III

Item 10. Directors and Executive Officers of the Registrant

Information concerning directors and executive officers will be included in the RPC Proxy for its 2006 Annual Meeting of Stockholders, in the section titled “Election of Directors.” This information is incorporated herein by reference. Information about executive officers is contained on page 12 of this document.

Audit Committee and Audit Committee Financial Expert

Information concerning the Audit Committee of the Company and the Audit Committee Financial Expert(s) will be included in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders, in the section titled “Corporate Governance and Board of Directors Compensation, Committees and Meetings.” This information is incorporated herein by reference.

Code of Ethics

RPC, Inc. has a Code of Business Conduct that applies to all employees. In addition, the Company has a Supplemental Code of Business Conduct and Ethics for Directors, the Principal Executive Officer and Principal Financial and Accounting Officer. Both of these documents are available on the Company’s website at www.rpc.net. Copies are available at no charge by writing to Attention: Human Resources, RPC Inc., 2170 Piedmont Road, N.E., Atlanta, GA 30324.

Section 16(a) Beneficial Ownership Reporting Compliance

Information regarding compliance with Section 16(a) of the Exchange Act will be included under “Section 16(a) Beneficial Ownership Reporting Compliance” in the Company’s Proxy Statement for its 2006 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 11. Executive Compensation

Information concerning executive compensation will be included in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders, in the section titled, “Executive Compensation.” This information is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Information concerning security ownership will be included in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders, in the sections titled, “Capital Stock” and “Election of Directors.” This information is incorporated herein by reference.

Information regarding RPC’s equity compensation plans including plans approved by security holders and plans not approved by security holders will be included in the section titled, “Executive Compensation” in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders, which is incorporated herein by reference.

Item 13. Certain Relationships and Related Party Transactions

Information concerning certain relationships and related party transactions will be included in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders, in the sections titled, “Certain Relationships and Related Party Transactions” and “Compensation Committee Interlocks and Insider Participation.” This information is incorporated herein by reference.

Item 14. Principal Accounting Fees and Services

Information regarding principal accountant fees and services will be included in the section titled, “Independent Public Accountants” in the RPC Proxy Statement for its 2006 Annual Meeting of Stockholders. This information is incorporated herein by reference.

54

PART IV

Item 15. Exhibits and Financial Statement Schedules

Consolidated Financial Statements, Financial Statement Schedule and Exhibits.

1. Consolidated financial statements listed in the accompanying Index to Consolidated Financial Statements and Schedule are filed as part of this report.

2. The financial statement schedule listed in the accompanying Index to Consolidated Financial Statements and Schedule is filed as part of this report.

3. Exhibits listed in the accompanying Index to Exhibits are filed as part of this report. The following such exhibits are management contracts or compensatory plans or arrangements:

10.1 2004 Stock Incentive Plan (incorporated herein by reference to Appendix B to the Registrant’s definitive Proxy Statement filed on March 24, 2004).

10.6 Form of stock option grant agreement (incorporated herein by reference to Exhibit 10.1 to Form 10-Q filed on November 2, 2004).

10.7 Form of time lapse restricted stock grant agreement (incorporated herein by reference to Exhibit 10.2 to Form 10-Q filed on November 2, 2004).

10.8 Form of performance restricted stock grant agreement (incorporated herein by reference to Exhibit 10.3 to Form 10-Q filed on November 2, 2004).

10.9 Summary of ‘at will’ compensation arrangements with the Executive Officers.

10.10 Summary of compensation arrangements with the Directors (incorporated herein by reference to Exhibit 10.10 to the Form 10-K filed on March 16, 2005)

10.11 Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.11 to the Form 10-K filed on March 16, 2005).

55

Exhibits (inclusive of item 3 above):

Exhibit Number	Description
3.1	Restated certificate of incorporation of RPC, Inc. (incorporated herein by reference to exhibit 3.1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 1999).
3.2	Bylaws of RPC, Inc. (incorporated herein by reference to Exhibit 3.2 to the Form 10-Q filed on May 5, 2004).
4	Form of Stock Certificate (incorporated herein by reference to the Annual Report on Form 10-K for the fiscal year ended December 31, 1998).
10.1	2004 Stock Incentive Plan (incorporated herein by reference to Appendix B to the Registrant’s definitive Proxy Statement filed on March 24, 2004).
10.2	Agreement Regarding Distribution and Plan of Reorganization, dated February 12, 2001, by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.2 to the Form 10-K filed on February 13, 2001).
10.3	Employee Benefits Agreement dated February 12, 2001, by and between RPC, Inc., Chaparral Boats, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.3 to the Form 10-K filed on February 13, 2001).
10.4	Transition Support Services Agreement dated February 12, 2001 by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.4 to the Form 10-K filed on February 13, 2001).
10.5	Tax Sharing Agreement dated February 12, 2001, by and between RPC, Inc. and Marine Products Corporation (incorporated herein by reference to Exhibit 10.5 to the Form 10-K filed on February 13, 2001).
10.6	Form of stock option grant agreement (incorporated herein by reference to Exhibit 10.1 to the Form 10-Q filed on November 2, 2004).
10.7	Form of time lapse restricted stock grant agreement (incorporated herein by reference to Exhibit 10.2 to the Form 10-Q filed on November 2, 2004).
10.8	Form of performance restricted stock grant agreement (incorporated herein by reference to Exhibit 10.3 to the Form 10-Q filed on November 2, 2004).
10.9	Summary of ‘at will’ compensation arrangements with the Executive Officers.
10.10	Summary of compensation arrangements with the Directors  (incorporated herein by reference to Exhibit 10.10 to the Form 10-K filed on March 16, 2005).
10.11	Supplemental Retirement Plan (incorporated herein by reference to Exhibit 10.11 to the Form 10-K filed on March 16, 2005).
10.12	Amended and Restated Credit Agreement dated as of March 10, 2006, between the Company and SunTrust Bank.
21	Subsidiaries of RPC
23.1	Consent of Grant Thornton LLP.
23.2	Consent of Ernst & Young LLP.
24	Powers of Attorney for Directors.
31.1	Section 302 certification for Chief Executive Officer
31.2	Section 302 certification for Chief Financial Officer
32.1	Section 906 certifications for Chief Executive Officer and Chief Financial Officer

56

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RPC, Inc.

/s/ Richard A. Hubbell
Richard A. Hubbell

President and Chief Executive Officer

(Principal Executive Officer)

March 13, 2006

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Name	Title	Date
/s/ Richard A. Hubbell
Richard A. Hubbell	President and Chief Executive Officer (Principal Executive Officer)	March 13, 2006
/s/ Ben M. Palmer
Ben M. Palmer	Chief Financial Officer (Principal Financial and Accounting Officer)	March 13, 2006

The Directors of RPC (listed below) executed a power of attorney, appointing Richard A. Hubbell their attorney-in-fact, empowering him to sign this report on their behalf.

R. Randall Rollins, Director	James B. Williams, Director
Wilton Looney, Director	James A. Lane, Jr., Director
Gary W. Rollins, Director	Linda H. Graham, Director
Henry B. Tippie, Director	Bill J. Dismuke, Director

/s/ Richard A. Hubbell 

Richard A. Hubbell

Director and as Attorney-in-fact

March 13, 2006

57

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS, REPORTS AND SCHEDULE

The following documents are filed as part of this report.

FINANCIAL STATEMENTS AND REPORTS	PAGE
Management’s Report on Internal Control Over Financial Reporting	28
Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting	29
Consolidated Balance Sheets as of December 31, 2005 and 2004	30
Consolidated Statements of Operations for the three years ended December 31, 2005	31
Consolidated Statements of Stockholders’ Equity for the three years ended December 31, 2005	32
Consolidated Statements of Cash Flows for the three years ended December 31, 2005	33
Notes to Consolidated Financial Statements	34 - 52
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (for 2005 and 2004)	59
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements (for 2003)	60

SCHEDULE
Schedule II — Valuation and Qualifying Accounts	58

Schedules not listed above have been omitted because they are not applicable or the required information is included in the consolidated financial statements or notes thereto.

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

RPC, Inc. and Subsidiaries

	For the years ended December 31, 2005, 2004 and 2003
(in thousands)		Balance at Beginning of Period		Charged to Costs and Expenses			Net (Deductions) Recoveries				Balance at End of Period
Year ended December 31, 2005
Allowance for doubtful accounts		$	2,576	$	1,618		$	(114	)	(1)	$	4,080
Deferred tax asset valuation allowance		$	2,451	$	129		$	(635	)	(2)	$	1,945
Year ended December 31, 2004
Allowance for doubtful accounts		$	2,539	$	1,155		$	(1,118	)	(1)	$	2,576
Inventory reserves		$	134	$	0		$	(134	)	(3)	$	0
Deferred tax asset valuation allowance		$	977	$	190		$	1,284		(2)	$	2,451
Year ended December 31, 2003
Allowance for doubtful accounts		$	2,461	$	(765	)	$	843		(1)	$	2,539
Inventory reserves		$	130	$	55		$	(51	)	(3)	$	134
Deferred tax asset valuation allowance		$	978	$	0		$	(1	)		$	977

(1) Deductions in the allowance for doubtful accounts principally reflect the write-off of previously reserved accounts net of recoveries.

(2) In 2005, the deduction totaling $635,000 in the valuation allowance reflects the estimated amount of previously reserved foreign tax credit carryforwards expected to be realized. In 2004, the valuation allowance was increased $1,292,000 to reflect foreign tax credit carryforwards on a gross rather than a net basis. Amount includes addition of $1,770,000 representing previously unutilized foreign tax credits generated in prior years and a deduction of $478,000 for those credits utilized during 2004.

(3) Deductions in the reserve for inventory obsolescence and adjustment principally reflect the sale or disposal of related inventory. Balance represented allowance for inventory held by a subsidiary which was sold during the second quarter of 2004.

58

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON CONSOLIDATED FINANCIAL STATEMENTS

Board of Directors and Stockholders of RPC, Inc.

We have audited the accompanying consolidated balance sheets of RPC, Inc. (a Delaware corporation) and subsidiaries as of December 31, 2005 and 2004, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2005. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of RPC, Inc. and subsidiaries as of December 31, 2005 and 2004, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2005 in conformity with accounting principles generally accepted in the United States of America.

Our audits were conducted for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole.  The Schedule II for the years ended December 31, 2005 and 2004, listed in the Index, is presented for purposes of additional analysis and is not a required part of the basic financial statements.  This schedule has been subjected to the auditing procedures applied in the audits of the basic consolidated financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic consolidated financial statements taken as a whole.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of RPC, Inc.’s internal control over financial reporting as of December 31, 2005, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated March 8, 2006 expressed an unqualified opinion.

/s/ GRANT THORNTON LLP

Atlanta, Georgia

March 8, 2006

59

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

RPC, Inc.

We have audited the accompanying consolidated statements of operations, stockholders’ equity and comprehensive income (loss) and cash flows of RPC, Inc. and Subsidiaries for the year ended December 31, 2003. Our audit also included the financial statement schedule for the year ended December 31, 2003, listed in the Index at Item 15(a). These financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated results of operations of RPC, Inc. and Subsidiaries and their cash flows for the year ended December 31, 2003, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule for the year ended December 31, 2003, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

/s/ Ernst & Young LLP   

Atlanta, Georgia

February 27, 2004, except for the matter discussed in the last

paragraph of Note 1, as to which the date is March 6, 2006

60

SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

Quarters ended	March 31		June 30		September 30		December 31
(in thousands except per share data)
2005
Revenues	$	92,330	$	101,945	$	115,801	$	117,567
Net income	$	9,927	$	11,910	$	23,107	$	21,540	(1)
Net income per share — basic:	$	0.15	$	0.19	$	0.37	$	0.34
Net income per share — diluted:	$	0.15	$	0.18	$	0.35	$	0.33	(1)
2004
Revenues	$	80,002	$	85,426	$	88,721	$	85,643
Net income	$	5,801	$	7,474	$	10,237	$	11,261	(2)
Net income per share — basic:	$	0.09	$	0.12	$	0.16	$	0.18
Net income per share — diluted:	$	0.09	$	0.11	$	0.16	$	0.17	(2)

(1) The fourth quarter reflects receipt of $3.1 million in tax refunds related to the successful resolution of certain tax matters, which had a positive impact of $0.05 after tax per diluted share. Also reflected during the fourth quarter 2005 is the gain on sale of certain assets of the hammer, casing, laydown and casing torque-turn service lines which generated a pre-tax gain of $10.7 million, or $0.11 after-tax gain per diluted share.

(2) In the fourth quarter of 2004, net income included a $2.2 million after tax gain, or $0.03 per diluted share, related to the sale of liftboats, and $1.1 million, or $0.02 per diluted share, related to tax provision adjustments.

61

EX-10.9

Exhibit 10.9 

Summary of Compensation Arrangements with Executive Officers

As of February 28, 2006

The following summarizes the current compensation and benefits received by the Chief Executive Officer of RPC, Inc. (“the Company”) and the Company’s other most highly compensated executive officers (the “Named Executive Officers”) as of February 28, 2006. Compensation paid with respect to fiscal 2005 will be described in the Company’s 2006 Proxy Statement.

This document is intended to be a summary of existing oral, at will arrangements, and in no way is intended to provide any additional rights to any of the Named Executive Officers.

Base Salaries

The 2006 annual base salaries for the Company’s Named Executive Officers as of February 28, 2006 are as follows:

R. Randall Rollins, Chairman of the Board	$400,000
Richard A. Hubbell, President and Chief Executive Officer	$500,000
Linda H. Graham, Vice President and Secretary	$135,000
Ben M. Palmer, Vice President, Chief Financial Officer and Treasurer	$175,000

Discretionary Bonuses

All of the Named Executive Officers are eligible for annual cash bonuses which are awarded on an entirely discretionary basis, following a review by the Company’s Compensation Committee of the performance of the Company and the executives for the relevant year. The Compensation Committee’s decisions are based upon broad performance objectives. The bonus program focuses on the achievement of short-term objectives. Bonus decisions are made based on a review of net income, budget objectives, and other individual-specific performance objectives. The performance objectives considered by the Committee relate to each executive officer improving the contribution of their functional area of responsibility to further enhance the earnings of the Company.

Discretionary bonuses are not made subject to any plan or program, written or unwritten. No specific performance criteria are established in advance, and no specific ranges for bonuses are established in advance. Bonuses for a particular fiscal year are generally determined during the first quarter of the following fiscal year and paid at the discretion of the Compensation Committee.

Bonuses were paid in the first quarter of 2006 for the year ended December 31, 2005 and totaled $1,252,500 for all of the executive officers, based on improved financial performance of the Company in 2005 compared to 2004. As previously reported, discretionary bonuses for 2005 were paid to each of the Named Executives in the first quarter of 2006 as follows:

R. Randall Rollins, Chairman of the Board	$500,000
Richard A. Hubbell, President and Chief Executive Officer	$492,500
Linda H. Graham, Vice President and Secretary	$60,000
Ben M. Palmer, Vice President, Chief Financial Officer and Treasurer	$200,000

Stock Options and Other Equity Awards

The Named Executive Officers are eligible to receive options and restricted stock under the Company’s stock incentive plan, in such amounts and with such terms and conditions as determined by the Committee at the time of grant. The Company’s stock incentive plans and standard forms of option and restricted stock grant agreements are filed as exhibits to this Form 10-K.

Supplemental Retirement Plan

Salary and Bonus Deferrals

All of the Named Executive Officers are eligible to participate in the Company’s Supplemental Retirement Plan (“Plan”). Messrs. Rollins and Hubbell, declined to participate in the Company’s Plan with respect to fiscal year 2006. Mr. Palmer and Ms. Graham have elected to participate in the Company’s Plan. Ms. Graham also participates in the Supplemental Retirement Plan of Marine Products Corporation (“MPC”), which is described in an exhibit to the Form 10-K of MPC for fiscal year 2005.

The Plan allows participants to defer up to 25% of base salary and up to 50% of annual bonus and commissions, subject to an overall maximum of $500,000 in any given year, and other terms and conditions set forth in the Plan.

Company Contributions

The  Company  makes  certain  "Enhanced  Benefit Contributions"  under the Plan on behalf of certain Participants of long service to the Company who were 40 - 65 years of age or older on December  31,  2002.  The Company  makes  the  "Enhanced  Benefit  Contributions"  (as  disclosed  in  the Company's  last filed  annual  proxy  statement)  in lieu of the  benefits  that previously  accrued under the RPC, Inc.  Retirement Income Plan.  Additional benefits ceased to accrue under the RPC, Inc.  Retirement Income Plan effective March 31, 2002.  Enhanced Benefit Contributions are made annually, for a maximum of seven years, subject to the Participant's continued employment with the Company.

Mr. Hubbell is the only Named Executive Officer who receives an Enhanced Benefit Contribution under the Company's Plan, which totals $26,262.31 per year. The Company has retained absolute discretion to reduce the amount of Enhanced Benefit Contributions at any time for any reason, and may elect not to make any such contributions at all. The Company currently expects that Mr. Hubbell's last Enhanced Benefit Contribution will be made with respect to fiscal year 2008.

In addition to the Enhanced Benefit Contributions, the Company may make discretionary contributions on behalf of a Participant under the Plan in any amount and at any time.  The  Company  has no  obligation  to  make  any  such discretionary contribution,  has no current plans to make such a contribution on behalf of any Named Executive Officer,  and has never made any such contribution under the Supplemental Retirement Plan since its creation in August of 2002.

A copy of the Plan is filed as an exhibit to this Form 10-K. The material terms and conditions of the Plan are more particularly described in the Company’s Form 8-K filed with the U.S. Securities and Exchange Commission on December 23, 2004.

Automobile Usage

Mr. Hubbell is entitled to the use of a Company owned automobile. The automobile is self-insured and maintained by the Company. The Company also pays all fuel expenses. Mr. Hubbell’s personal use of the automobile is treated as taxable income for federal and state income tax purposes. His personal use of the automobile is valued at approximately $690 per month. Mr. Palmer receives an automobile allowance of $700 per month in addition to reimbursement of fuel expenses.

Other Benefits

The Named Executive Officers are eligible to participate in the Company’s regular employee benefit programs, including the 401(k) plan with Company match, group life insurance, group medical and dental coverage and other group benefit plans. All of the Named Executives are eligible for the Retirement Income Plan that was frozen in March 2002. See Supplemental Retirement Plan above for further discussion.

All of the Named Executive Officers are also executive officers of MPC and receive compensation from that company. Disclosure regarding such compensation can be found in MPC’s filings with the Securities and Exchange Commission.

EX-10.12

Exhibit 10.12

AMENDED AND RESTATED CREDIT AGREEMENT

dated as of March 10, 2006

between

RPC, INC.

as Borrower

and

SUNTRUST BANK

as Lender

TABLE OF CONTENTS

	Page
ARTICLE I.DEFINITIONS; CONSTRUCTION	1
Section 1.01Definitions	1
Section 1.02 Accounting Terms and Determination	7
ARTICLE II.AMOUNT AND TERMS OF THE FACILITY	7
Section 2.01 Loans and Note	7
Section 2.02 Procedure for Loans	7
Section 2.03 Repayment of Loans	8
Section 2.04 Interests on Loans; Letter of Credit Fee	8
Section 2.05 Computation of Interest	8
Section 2.06 Increased Costs	8
Section 2.07 Funding Indemnity	9
Section 2.08 Payments Generally	9
Section 2.09 Letters of Credit	10
ARTICLE III.MISCELLANEOUS	12
Section 3.01 Conditions To Effectiveness	12
Section 3.02 Representations and Warranties	12
Section 3.03 Notices	14
Section 3.04 Waivers; Amendments	15
Section 3.05 Expenses; Indemnification	15
Section 3.06 Successors and Assigns	16
Section 3.07 Governing Law; Jurisdiction; Consent to Service of Process16	16
Section 3.08 Waiver of Jury Trial	17
Section 3.09 Right of Setoff	17
Section 3.10 Counterparts; Integration	18
Section 3.11 Survival	18
Section 3.12 Severability	18
Section 3.13 Interest Rate Limitation	18
Section 3.14 No Novation	19
Section 3.15 Patriot Act	19

Exhibits

Exhibit A-Pricing Grid

Exhibit B -                Form of Amended and Restated Demand Note

-i-

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

THIS AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”)is made and entered into as of March 10, 2006, by and between RPC, INC., a Delaware corporation (the “Borrower”) and SUNTRUST BANK, a Georgia banking corporation (the “Lender”).

W I T N E S S E T H:

WHEREAS, the Borrower and the Lender entered into that certain Credit Agreement dated as of March 19, 2003 (the “Original Agreement”) pursuant to which the Lender established a $25,000,000 credit facility in favor of the Borrower;

WHEREAS, the Borrower has requested that the Lender increase the credit facility from $25,000,000 to $50,000,000; and

WHEREAS, the Borrower and the Lender have agreed to increase the amount of the facility on an uncommitted basis, to amend the Original Agreement in certain other respects, and to restate the Original Agreement in its entirety as so increased and amended.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Borrower and the Lender agree as follows:

ARTICLE I.

DEFINITIONS; CONSTRUCTION

Section 1.01Definitions. In addition to the other terms defined herein, the following terms used herein shall have the meanings herein specified (to be equally applicable to both the singular and plural forms of the terms defined):

“Adjusted LIBO Rate” shall mean, with respect to each Interest Period for a Eurodollar Loan, the rate per annum obtained by dividing (i) LIBOR for such Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve Percentage.

“Applicable Margin” shall mean, with respect to all Eurodollar Loans outstanding on any date, the percentage determined by reference to the applicable Total Funded Debt to EBITDA Ratio in effect on such date as set forth on Exhibit A attached hereto.

“Base Rate” shall mean the higher of (i) the per annum rate which the Lender publicly announces from time to time to be its prime lending rate, as in effect from time to time, and (ii) the Federal Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%). The Lender’s prime lending rate is a reference rate and does not necessarily

1

represent the lowest or best rate charged to customers. The Lender may make commercial loans or other loans at rates of interest at, above or below the Lender’s prime lending rate. Each change in the Lender’s prime lending rate shall be effective from and including the date such change is publicly announced as being effective.

“Borrower” shall have the meaning in the introductory paragraph hereof.

“Business Day” shall mean (i) any day other than a Saturday, Sunday or other day on which commercial banks in Atlanta, Georgia are authorized or required by law to close and (ii) if such day relates to a borrowing of, a payment or prepayment of principal or interest on, a conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with respect to any of the foregoing, any day on which dealings in Dollars are carried on in the London interbank market.

“Capital Lease Obligations” shall mean all obligations to pay rent or other amounts under any lease (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“Change In Law” shall mean (i) the adoption of any applicable law, rule or regulation after the date of this Agreement or (ii) any change of any applicable law, rule or regulation that occurs after the date of this Agreement.

“Consolidated EBITDA” shall mean, for the Borrower and its Subsidiaries for any period, an amount equal to the sum of (a) Consolidated Net Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, (i) Consolidated Interest Expense, (ii) income tax expense determined on a consolidated basis in accordance with GAAP, (iii) depreciation and amortization determined on a consolidated basis in accordance with GAAP and (iv) all other non-cash charges, determined on a consolidated basis in accordance with GAAP in each case for such period.

“Consolidated Interest Expense” shall mean, for the Borrower and its Subsidiaries for any period, the sum of (i) total cash interest expense determined on a consolidated basis in accordance with GAAP, including without limitation the interest component of any payments in respect of Capital Lease Obligations capitalized or expensed during such period(whether or not actually paid during such period)plus (ii) the net amount payable (or minus the net amount receivable) under Hedging Agreements during such period (whether or not actually paid or received during such period).

“Consolidated Net Income” shall mean, for the Borrower and its Subsidiaries for any period, the net income (or loss) of the Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, but excluding therefrom (to the extent otherwise included therein) (i) any extraordinary gains or losses, (ii) any gains attributable to write-ups of assets and (iii) any equity interest of the Borrower or any Subsidiary of the Borrower in the unremitted earnings of any Person that is not a Subsidiary and (iv) any income

2

(or loss) of any Person accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary on the date that such Person’s assets are acquired by the Borrower or any Subsidiary.

“Consolidated Total Funded Debt” shall mean, as of any date, all Indebtedness of the Borrower and its Subsidiaries described in the definition of “Indebtedness”, including, without limitation, all Loans.

“Default” shall mean the Borrower’s failure to pay the Note on the Termination Date.

“Dollar(s)” and the sign “$” shall mean lawful money of the United States of America.

“Eurodollar” when used in reference to any Loan, refers to whether such Loan bears interest at a rate determined by reference to the Adjusted LIBO Rate.

“Eurodollar Reserve Percentage” shall mean the aggregate of the reserve percentage (including, without limitation, any emergency, supplemental, special or other marginal reserves) expressed as a decimal (rounded upwards to the next 1/100^th of 1%) in effect on any day to which the Lender is subject with respect to the Adjusted LIBO Rate pursuant to regulations issued by the Board of Governors of the Federal Reserve System (or any Governmental Authority succeeding to any of its principal functions) with respect to eurocurrency funding (currently referred to as “eurocurrency liabilities” under Regulation D). Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to the Lender under Regulation D. The Eurodollar Reserve Percentage shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Facility” shall mean the $50,000, 000 line of credit established by the Lender to the Borrower on an uncommitted basis for the making of Loans and/or the issuance of Letters of Credit in the sole discretion of the Lender.

“Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards, if necessary, to the next 1/100^th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with member banks of the Federal Reserve System arranged by Federal funds brokers, as published by the Federal Reserve Bank of New York on the next succeeding Business Day or if such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be the average rounded upwards, if necessary, to the next 1/100th of 1% of the quotations for such day on such transactions received by the Lender from three Federal funds brokers of recognized standing selected by the Lender.

“GAAP” shall mean generally accepted accounting principles in the United States applied on a consistent basis and subject to the terms of Section 1.02.

3

“Governmental Authority” shall mean the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

“Hedging Agreements” shall mean interest rate swap, cap or collar agreements, interest rate future or option contracts, currency swap agreements, currency future or option contracts, commodity agreements and other similar agreements or arrangements designed to protect against fluctuations in interest rates, currency values or commodity values.

“Indebtedness” of any Person shall mean, without duplication (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds (excluding performance bonds), debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business; provided, that, trade payables overdue by more than 120 days shall be included in this definition except to the extent that any of such trade payables are being disputed in good faith and by appropriate measures), (iv) all obligations of such Person under any conditional sale or other title retention agreement(s) relating to property acquired by such Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations, contingent or otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit, (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i) through (v) above, (viii) all Indebtedness of a third party secured by any lien or other type of security interest on property owned by such Person, whether or not such Indebtedness has been assumed by such Person, (ix) all obligations of such Person, contingent or otherwise, to purchase, redeem, retire or otherwise acquire for value any common stock of such Person, (x) Off-Balance Sheet Liabilities, and (xi) all obligations under any Hedging Agreement.The Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer, except to the extent that the terms of such Indebtedness provide that such Person is not liable therefor.

“Interest Period” shall mean, with respect to any Eurodollar Loan, a period of one, two, three or six months, as the Borrower may request and the Lender may approve in its sole discretion; provided, that:

(i)the initial Interest Period for any such Loan shall commence on the date of such Loan and each Interest Period occurring thereafter in respect of such

Loan shall commence on the day on which the next preceding Interest Period expires;

(ii)if any Interest Period would otherwise end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day, unless such Business Day falls in another calendar month, in which case such Interest Period would end on the next preceding Business Day; and

(iii)any Interest Period which begins on the last Business Day of a calendar month or on a day for which there is no numerically corresponding day in the

4

calendar month at the end of such Interest Period shall end on the last Business Day of such calendar month.

“LC Disbursement” shall mean a payment made by the Lender pursuant to a Letter of Credit.

“LC Documents” shall mean the Letters of Credit and all applications, agreements and instruments relating to the Letters of Credit.

“LCExposure” shall mean, at any time, the sum of (i) the aggregate undrawn amount of all outstanding Letters of Credit at such time, plus (ii) the aggregate amount of all LC Disbursements that have not been reimbursed by or on behalf of the Borrower at such time.

“Letter of Credit” shall mean any letter of credit issued pursuant to Section 2.09 by the Lender for the account of the Borrower under the Facility.

“LIBOR” shall mean, for any applicable Interest Period with respect to any Eurodollar Loan, the rate per annum for deposits in Dollars for a period equal to such Interest Period appearing on the display designated as Page 3750 on the Telerate Service (or such other page on that service or such other service designated by the British Bankers’ Association for the display of such Association’s Interest Settlement Rates for Dollar deposits) as of 11:00 a.m. (London, England time) on the day that is two Business Days prior to the first day of the Interest Period or if such Page 3750 is unavailable for any reason at such time, the rate which appears on the Reuters Screen ISDA Page as of such date and such time; provided, that if the Lender determines that the relevant foregoing sources are unavailable for the relevant Interest Period, LIBOR shall mean the rate of interest determined by the Lender to be the average (rounded upward, if necessary, to the nearest 1/100^th of 1%) of the rates per annum at which deposits in Dollars are offered to the Lender two (2) Business Days preceding the first day of such Interest Period by leading banks in the London interbank market as of 10:00 a. m. (Atlanta, Georgia time) for delivery on the first day of such Interest Period, for the number of days comprised therein and in an amount comparable to the amount of the Eurodollar Loan of the Lender.

“Loan” shall mean a loan made by the Lender to the Borrower under the Facility, which may either be a Base Rate Loan or a Eurodollar Loan.

“Loan Documents” shall mean, collectively, this Agreement, the Note, the LC Documents, any Hedging Agreement between the Borrower and the Lender in connection with the Facility and any and all other instruments, agreements, documents and writings executed in connection with any of the foregoing.

“Material Adverse Effect” shall mean, with respect to any event, act, condition or occurrence of whatever nature (including any adverse determination in any litigation, arbitration, or governmental investigation or proceeding), whether singly or in conjunction with any other event or events, act or acts, condition or conditions, occurrence or occurrences whether or not related, a material adverse change in, or a material adverse effect on, (i) the business, results of operations, financial condition, assets, liabilities or prospects of the Borrower or of the Borrower

5

and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to perform any of its obligations under the Loan Documents, (iii) the rights and remedies of the Lender under any of the Loan Documents or (iv) the legality, validity or enforceability of any of the Loan Documents.

“Note” shall mean the Amended and Restated Demand Note of the Borrower payable to the order of the Lender in substantially the form of Exhibit B.

“Obligations” shall mean all amounts owing by the Borrower to the Lender pursuant to or in connection with this Agreement or any other Loan Document, including without limitation, all principal, interest (including any interest accruing after the filing of any petition in bankruptcy or the commencement of any insolvency, reorganization or like proceeding relating to the Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding), all reimbursement obligations, fees, expenses, indemnification and reimbursement payments, costs and expenses (including all fees and expenses of counsel to the Lender incurred pursuant to this Agreement or any other Loan Document), whether direct or indirect, absolute or contingent, liquidated or unliquidated, now existing or hereafter arising hereunder or thereunder, together with all renewals, extensions, modifications or refinancings thereof.

“Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase obligation or liability of such Person with respect to accounts or notes receivable sold by such Person, (ii) any liability of such Person under any sale and leaseback transactions which do not create a liability on the balance sheet of such Person, (iii) any liability of such Person under any so-called “synthetic” lease transaction or (iv) any obligation arising with respect to any other transaction which is the functional equivalent of or takes the place of borrowing but which does not constitute a liability on the balance sheet of such Person.

“Payment Office” shall mean the office of the Lender located at 303 Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to which the Lender shall have given written notice to the Borrower.

“Person” shall mean any individual, partnership, firm, corporation, association, joint venture, limited liability company, trust or other entity, or any Governmental Authority.

“Regulation D” shall mean Regulation D of the Board of Governors of the Federal Reserve System, as the same may be in effect from time to time, and any successor regulations.

“Requirement of Law” for any Person shall mean the articles or certificate of incorporation and bylaws or other organizational or governing documents or such Person, and any law, treaty, rule or regulation, or determination of a Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject.

“Subsidiary” shall mean, with respect to any Person (the “parent”), any corporation, partnership, joint venture, limited liability company, association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated

6

financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, partnership, joint venture, limited liability company, association or other entity (i) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power, or in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held, or (ii) that is, as of such date, otherwise controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent. Unless otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of the Borrower.

“Termination Date” shall mean the date on which the Lender makes demand on the Borrower for payment of all amounts outstanding under this Agreement.

“Total Funded Debt to EBITDA Ratio” shall mean, as of any date of determination, the ratio of (i) Consolidated Total Funded Debt as of such date to (ii) Consolidated EBITDA measured for the four fiscal quarter period ending on or immediately prior to such date.

Section 1.02Accounting Terms and Determination. Unless otherwise defined or specified herein, all accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied on a basis consistent with the most recent audited consolidated financial statement of the Borrower.

ARTICLE II.

AMOUNT AND TERMS OF THE FACILITY

Section 2.01Loans and Note. (a) Upon receipt of a written request for a Loan hereunder in accordance with Section 2.02, the Lender may in its sole discretion make such Loan to the Borrower; provided that the Lender shall have no obligation or commitment to make any Loan or to renew any Loan at the end of an applicable Interest Period, notwithstanding that the Lender may have previously renewed such Loan or any other Loan. If the Lender agrees to make the requested Loan, the Borrower may then elect either a Eurodollar Loan or a Base Rate Loan.

(b) The Borrower’s obligation to pay the principal of, and interest on, the Loans shall be evidenced by the records of the Lender and by the Note. The entries made in such records and/or on the schedule annexed to the Note shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded;provided, that the failure or delay of the Lender in maintaining or making entries into any such record or on such schedule or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans (both principal and unpaid accrued interest) in accordance with the terms of this Agreement.

Section 2.02Procedure for Loans. TheBorrowershall request a Loan from the Lenderprior to 10:00a.m., Atlanta, Georgia time, on the requesteddate of theborrowing in

7

the case of a Base Rate Loan and two (2) Business Days prior to the date of borrowing in the case of a Eurodollar Loan. Such request shall include (i) the principal amount of such Loan and (ii) the duration of the Interest.Period (in the case of a Eurodollar Loan).

Section 2.03Repayment of Loans. The outstanding principal amount of eachLoan shall be due and payable(together with accrued and unpaid interest thereon) on theearlierof the last day of the Interest Period applicable to such Loan or ON DEMAND.

Section 2.04Interest on Loans; Letter of Credit Fee. (a) The Loans shall accrue interest (i) in the case of a Eurodollar Loan, at theAdjusted LIBO Rateplus the Applicable Margin or (ii) in the case of Base Rate Loan, at the applicable Base Rate. The Borrower agrees to pay interest on the earlier of (A) ON DEMAND or (B) with respect to a Eurodollar Loan, on the last day of the applicable Interest Period (provided that if any Interest Period exceeds 3 months, then interest will be payable on the last day of the third month after the first day of such Interest Period, and on the last day of such Interest Period) or with respect to a Base Rate Loan, on the last day of each calendar month. Should a Default occur, the Borrower shall pay interest at a default rate of the interest rate then in effect plus two percent (2%) per annum.

(b) The Borrower agrees to pay a letter of credit fee on the face amount of each Letter of Credit equal to 0.50% per annum, payable in advance upon the issuance of such Letter of Credit and on each anniversary of such issuance.

Section 2.05Computation of Interest.  All computations of interest hereunder shall be made on the basis of a year of 360 days for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest or fees are payable (to the extent computed on the basis of days elapsed). Each determination by the Lender of an interest amount hereunder shall be made in good faith and, except for manifest error, shall be final, conclusive and binding for all purposes.

Section 2.06Increased Costs

(a) If any Change in Law shall:

(i)impose, modify or deem applicable any reserve, special deposit or similar requirement that is not otherwise included in the determination of the Adjusted LIBO Rate hereunder against assets of, deposits with or for the account of, or credit extended by, the Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or

(ii)impose on the Lender or the eurodollar interbank market any other condition affecting this Agreement or any Eurodollar Loans made by the Lender;

and the result of the foregoing is to increase the cost to the Lender of making, continuing or maintaining a Eurodollar Loan or to increase the cost to the Lender of issuing any Letter of Credit or to reduce the amount received or receivable by the Lender hereunder (whether of

8

principal, interest or any other amount), then the Borrower shall promptly pay, upon written notice from and demand by the Lender, within five Business Days after the date of such notice and demand, additional amount or amounts sufficient to compensate the Lender for such additional costs incurred or reduction suffered.

(b) If the Lender shall have determined that on or after the date of this Agreement any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on the Lender’s capital (or on the capital of the Lender’s parent corporation) as a consequence of its obligations hereunder or underor in respect of any Letter of Credit to a level below that which the Lender or the Lender’s parent corporation could have achieved but for such Change in Law (taking into consideration the Lender’s policies or the policies of the Lender’s parent corporation with respect to capital adequacy) then, from time to time, within five (5) Business Days after receipt by the Borrower of written demand by the Lender, the Borrower shall pay to the Lender such additional amounts as will compensate the Lender or the Lender’s parent corporation for any such reduction suffered.

(c) A certificate of the Lender setting forth the amount or amounts necessary to compensate the Lender or its parent corporation, as the case may be, specified in paragraph (a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive, absent manifest error. The Borrower shall pay the Lender such amount or amounts within 10 days after receipt thereof.

(d) Failure or delay on the part of the Lender to demand compensation pursuant to this Section shall not constitute a waiver of the Lender’s right to demand such compensation.

Section 2.07Funding Indemnity. In the event of (a) the payment of any principal of a Eurodollar Loan other than on the last day of the Interest Period applicable thereto (including as a result of an Default) or (b) the failure by the Borrower to borrow any Eurodollar Loan on the date agreed upon in any applicable notice (regardless of whether such notice is withdrawn or revoked), then, in any such event, the Borrower shall compensate the Lender, within five (5) Business Days after written demand from the Lender, for any loss, cost or expense attributable to such event. Such loss, cost or expense shall be deemed to include an amount determined by the Lender to be the excess, if any, of (A) the amount of interest that would have accrued on the principal amount of such Eurodollar Loan if such event had not occurred at the Adjusted LIBO Rate applicable to such Eurodollar Loan for the period from the date of such event to the last day of the then current Interest Period therefor (or in the case of a failure to borrow, for the period that would have been the Interest Period for such Eurodollar Loan) over (B) the amount of interest that would accrue on the principal amount of such Eurodollar Loan for the same period if the Adjusted LIBO Rate were set on the date such Eurodollar Loan was prepaid or the date on which the Borrower failed to borrow such Eurodollar Loan. A certificate as to any additional amount payable under this Section 2.09 submitted to the Borrower by the Lender shall be conclusive, absent manifest error.

Section 2.08Payments Generally. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC

9

Disbursements, or otherwise) prior to 12:00 noon (Atlanta, Georgia time), on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Lender at its Payment Office. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be made payable for the period of such extension. All payments hereunder shall be made in Dollars.

Section 2.09Letters of Credit.

(a) At the request of the Borrower, the Lender may, in its sole discretion, issue Letters of Credit for the account of the Borrower on terms (including the expiration date) that are acceptable to the Lender in its sole discretion. Notwithstanding the foregoing, it is understood that Letters of Credit may only be issued for working capital, insurance-related or performance bond purposes.

(b) To request the issuance of a Letter of Credit (or any amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall give the Lender irrevocable written notice at least three (3) Business Days prior to the requested date of such issuance specifying the date (which shall be a Business Day) such Letter of Credit is to be issued (or amended, extended or renewed, as the case may be), the expiration date of such Letter of Credit, the amount of such Letter of Credit, the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; provided, that the Borrower agrees that the Lender has no commitment or obligation to issue, renew or extend any Letter of Credit. In addition to the satisfaction of the conditions in Article III, the issuance of such Letter of Credit (or any amendment which increases the amount of such Letter of Credit) will be subject to the further conditions that such Letter of Credit shall be in such form and contain such terms as the Lender shall approve and that the Borrower shall have executed and delivered any additional applications, agreements and instruments relating to such Letter of Credit as the Lender shall reasonably require; provided, that in the event of any conflict between such applications, agreements or instruments and this Agreement, the terms of this Agreement shall control.

(c) The Lender shall examine all documents purporting to represent a demand for payment under a Letter of Credit promptly following its receipt thereof. The Lender shall notify the Borrower of such demand for payment and whether the Lender has made or will make a LC Disbursement thereunder; provided, that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Lender with respect to such LC Disbursement. The Borrower shall be irrevocably and unconditionally obligated to reimburse the Lender for any LC Disbursements paid by the Lender in respect of such drawing, without presentment, demand or other formalities of any kind.

(d) On the Termination Date, or if any Default shall occur and be continuing on the Business Day that the Borrower receives notice from the Lender demanding the deposit of

10

cash collateral pursuant to this paragraph, the Borrower shall deposit in an account with the Lender, in the name of the Lender and for the benefit of the Lender, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided, that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, with demand or notice of any kind, upon the occurrence of a Default. Such deposit shall be held by the Lender as collateral for the payment and performance of the obligations of the Borrower under this Agreement. The Lender shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. The Lender may invest such deposits, which investments shall be made at the option and sole discretion of the Lender and at the Borrower’s risk and expense. Any portion of the deposits that is not invested shall be deposited into an interest-bearing demand deposit account by the Lender. Interest and profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Lender to reimburse itself for LC Disbursements for which it had not been reimbursed and to the extent so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower under this Agreement.

(e) The Borrower’s obligation to reimburse LC Disbursements hereunder shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under all circumstances whatsoever and irrespective of any of the following circumstances:

(i)Any lack of validity or enforceability of any Letter of Credit or this Agreement;

(ii)The existence of any claim, set-off, defense or other right which the Borrower or any Subsidiary of the Borrower may have at any time against a

beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom any such beneficiary or transferee may be acting), the Lender or any other Person, whether in connection with this Agreement or the Letter of Credit or any document related hereto or thereto or any unrelated transaction;

(iii)Any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein

being untrue or inaccurate in any respect;

(iv)Payment by the Lender under a Letter of Credit against presentation of a draft or other document to the Lender that does not comply with the terms of

such Letter of Credit;

(v)Any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section,

constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder; or

11

(vi)The existence of a Default.

The Lender shall not have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to above), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Lender; provided, that the foregoing shall not be construed to excuse the Lender from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Lender’s failure to exercise care when determining whether drafts or other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree, that in the absence of gross negligence or willful misconduct on the part of the Lender (as finally determined by a court of competent jurisdiction), the Lender shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented that appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Lender may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(f) Each Letter of Credit shall be subject to the Uniform Customs and Practices for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500, as the same may be amended from time to time, and, to the extent not inconsistent therewith, the governing law of this Agreement set forth in Section 3.07.

ARTICLE III.

MISCELLANEOUS

Section 3.01Conditions To Effectiveness. The Lender shall receive, prior tomaking the initial Loan and prior to issuing the initial Letter of Credit hereunder the following: (a) this Agreement and the Note duly executed by theBorrower, (b) in the case of a Letter of Credit, an application in form and substance satisfactory to the Lender and (c) certified board resolutions and an incumbency certificate in form and substance satisfactory to the Lender. In addition, prior to the making of any Loan or the issuance of any Letter of Credit the Borrower shall be deemed to have made the representations and warranties set forth in Section 3.02.

Section 3.02Representations and Warranties.

(a) Existence; Power. The Borrower (i) is duly organized, validly existing and in good standing as a corporation under the laws of the jurisdiction of its organization, (ii) has all

12

requisite power and authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and is in good standing, in each jurisdiction where such qualification is required, except where a failure to be so qualified could not reasonably be expected to result in a Material Adverse Effect.

(b) Organizational Power; Authorization. The execution, delivery and performance by the Borrower of the Loan Documents to which it is a party are within the Borrower’s organizational powers and have been duly authorized by all necessary organizational, and if required, stockholder, action. This Agreement has been duly executed and delivered by the Borrower, pursuant to a resolution of the board of directors of the Borrower, and constitutes, and each other Loan Document to which the Borrower is a party, when executed and delivered by the Borrower, will constitute, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the enforcement of creditors’ rights generally and by general principles of equity.

(c) Governmental Approvals; No Conflicts. The execution, delivery and performance by the Borrower of this Agreement (a) do not require any consent or approval of, registration or filing with, or any action by, any Governmental Authority, except those as have been obtained or made and are in full force and effect or where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, (b) will not violate any applicable law or regulation or the charter, by-laws or other organizational documents of the Borrower or any judgment or order of any Governmental Authority binding on the Borrower, and (c) will not violate or result in a default under any indenture, material agreement or other material instrument binding on the Borrower or any of its assets or give rise to a right thereunder to require any payment to be made by the Borrower.

(d) Compliance with Laws and Agreements. The Borrower is in compliance with (a) all applicable laws, rules, regulations and orders of any Governmental Authority, and (b) all indentures, agreements or other instruments binding upon it or its properties, except where noncompliance, either singly or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(e) Investment Company Act, Etc. The Borrower is not (a) an “investment company”, as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, (b) a “holding company” as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended or (c) otherwise subject to any other regulatory scheme limiting its ability to incur debt.

(f) Taxes. The Borrower and each other Person for whose taxes the Borrower could become liable have timely filed or caused to be filed all Federal income tax returns and all other material tax returns that are required to be filed by them, and have paid all taxes shown to be due and payable on such returns or on any assessments made against it or its property and all other taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, except (i) to the extent the failure to do so would not have a Material Adverse Effect or (ii) where the same are currently being contested in good faith by appropriate proceedings and

13

for which the Borrower has set aside on its books adequate reserves. The charges, accruals and reserves on the books of the Borrower in respect of such taxes are adequate, and no tax liabilities that could be materially in excess of the amount so provided are anticipated.

(g) Disclosure. The Borrower has disclosed to the Lender all agreements, instruments, and corporate or other restrictions to which the Borrower is subject, and all other matters known to any of them, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the financial statements, certificates or other written information furnished by or on behalf of the Borrower to the Lender in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by any other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, taken as a whole, in light of the circumstances under which they were made, not misleading; provided, that with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

Section 3.03Notices.

(a) Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications to any party herein to be effective shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

To the Borrower:	RPC, Inc.
	2170 Piedmont Road, NE Atlanta, Georgia 30324 Attention: Ben Palmer Telecopy Number: 404-321-5483
To the Lender:	SunTrust Bank
	303 Peachtree Street, N.E., 3rd Floor Atlanta, Georgia 30308 Attention: Brad Staples Telecopy Number: 404-588-8833

Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All such notices and other communications shall, when transmitted by overnight delivery, or faxed, be effective when delivered for overnight (next-day) delivery, or transmitted in legible form by facsimile machine, respectively, or if mailed, upon the third Business Day after the date deposited into the mails or if delivered, upon delivery; provided, that notices delivered to the Lender shall not be effective until actually received by the Lender at its address specified in this Section.

14

(b) Any agreement of the Lender herein to receive certain notices by telephone or facsimile is solely for the convenience and at the request of the Borrower. The Lender shall be entitled to rely on the authority of any Person purporting to be a Person authorized by the Borrower to give such notice and the Lender shall not have any liability to the Borrower or other Person on account of any action taken or not taken by the Lender in reliance upon such telephonic or facsimile notice. The obligation of the Borrower to repay the Loans and all other Obligations hereunder shall not be affected in any way or to any extent by any failure of the Lender to receive written confirmation of any telephonic or facsimile notice or the receipt by the Lender of a confirmation which is at variance with the terms understood by the Lender to be contained in any such telephonic or facsimile notice.

Section 3.04Waiver; Amendments.

(a) No failure or delay by the Lender in exercising any right or power hereunder or under the Note, and no course of dealing between the Borrower and the Lender, shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power or any abandonment or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power hereunder or thereunder. The rights and remedies of the Lender hereunder and under the Note are cumulative and are not exclusive of any rights or remedies provided by law. No waiver of any provision of this Agreement or the Note or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Lender may have had notice or knowledge of such Default at the time.

(b) No amendment or waiver of any provision of this Agreement or the other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower and the Lender and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

Section 3.05Expenses; Indemnification.

(a) The Borrower shall pay (i) all reasonable, out-of-pocket costs and expenses of the Lender (including, without limitation, the reasonable fees, charges and disbursements of both outside and in-house counsel) in connection with the preparation and administration of the Loan Documents and any amendments, modifications or waivers thereof (whether or not the transactions contemplated in this Agreement or any other Loan Document shall be consummated), and (ii) all out-of-pocket costs and expenses (including, without limitation, the reasonable fees, charges and disbursements of both outside and in-house counsel) incurred by the Lender in connection with the enforcement or protection of its rights in connection with this Agreement, including its rights under this Section, or in connection with the Loans made or any Letters of Credit issued hereunder, including all such out-of-pocket expenses

15

incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

(b) The Borrower shall indemnify the Lender and its directors, officers, employees, agents and advisors (each, an “Indemnitee”) against, and hold each of them harmless from, any and all costs, losses, liabilities, claims, damages and related expenses, including the fees, charges and disbursements of any counsel for the Lender, which may be incurred by or asserted against any Indemniteearising out of, in connection with or as a result of (i) the execution or delivery of this Agreement or any other agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of any of the transactions contemplated hereby or (ii) any Loan or Letter of Credit or any actual or proposed use of the proceeds therefrom (including any refusal by the Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit); provided, that the Borrower shall not be obligated to indemnify any Indemnitee for any of the foregoing arising out of the Indemnitee’s gross negligence or willful misconduct as determined by a court of competent jurisdiction in a final and nonappealable judgment.

(c) The Borrower shall pay, and hold the Lender harmless from and against, any and all present and future stamp, documentary, and other similar taxes with respect to this Agreement and any other Loan Documents, any collateral described therein, or any payments due thereunder, and save the Lender harmless from and against any and all liabilities with respect to or resulting from any delay or omission to pay such taxes.

(d) To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against Lender, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out of, in connection with or as a result of, this Agreement or any agreement or instrument contemplated hereby, the transactions contemplated therein, any Loan or the Letter of Credit or the use of proceeds thereof.

(e) All amounts due under this Section shall be payable promptly after written demand therefor.

Section 3.06Successors and Assigns. The provisions of this Agreement shallbe binding upon and inure to the benefit of the parties hereto and their respectivesuccessors andassigns, except that the Borrower may not assign or transfer any of its rights hereunderwithoutthe prior written consent of the Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void).

Section 3.07Governing Law; Jurisdiction; Consent to Service of Process.

(a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF GEORGIA.

16

(b) The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the United States District Court of the Northern District of Georgia, and of any state court of the State of Georgia located in Fulton County and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Loan Document or the transactions contemplated hereby or thereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Georgia state court or, to the extent permitted by applicable law, such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any right that the Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or its properties in the courts of any jurisdiction.

(c) The Borrower irrevocably and unconditionally waives any objection which it may now or hereafter have to the laying of venue of any such suit, action or proceeding described in paragraph (b) of this Section and brought in any court referred to in paragraph (b) of this Section. Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

(d) Each party to this Agreement irrevocably consents to the service of process in the manner provided for notices in Section 3.03. Nothing in this Agreement or in any other Loan Document will affect the right of any party hereto to serve process in any other manner permitted by law.

Section 3.08WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 3.09Right of Setoff. In addition to any rights now or hereafter granted under applicable law and not by way of limitation of any such rights, the Lender shall have the right, at any time or from time to time upon the occurrence and during the continuance of a

17

Default, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, to set off and apply against all deposits (general or special, time or demand, provisional or final) of the Borrower at any time held or other obligations at any time owing by the Lender to or for the credit or the account of the Borrower against any and all Obligations held by the Lender, irrespective of whether the Lender shall have made demand hereunder and although such Obligations may be unmatured. The Lender agrees promptly to notify the Borrower after any such set-off and any application made by the Lender; provided, that the failure to give such notice shall not affect the validity of such set-off and application.

Section 3.10Counterparts; Integration. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by telecopy), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. This Agreement and the other Loan Documents constitute the entire agreement among the parties hereto and thereto regarding the subject matters hereof and thereof and supersede all prior agreements and understandings, oral or written, regarding such subject matters.

Section 3.11Survival. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitment has not expired or terminated. The provisions of Sections 2.12, 2.13, and 3.03 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof. All representations and warranties made herein, in the certificates, reports, notices, and other documents delivered pursuant to this Agreement shall survive the execution and delivery of this Agreement and the other Loan Documents, and the making of the Loans.

Section 3.12Severability. Any provision of this Agreement or any other Loan Document held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without affecting the legality, validity or enforceability of the remaining provisions hereof or thereof; and the illegality, invalidity or unenforceability of a particular provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

Section 3.13Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which may be treated as interest on such Loan under applicable law

18

(collectively, the “Charges”), shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which may be contracted for, charged, taken, received or reserved by the Lender in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate to the date of repayment, shall have been received by the Lender.

Section 3.14. No Novation. This Agreement merely amends, modifies and restates the indebtedness, liabilities and obligations evidenced by the Original Agreement and does not constitute, and it is the express intent of the Borrower and the Lender that this Agreement does not effect, a novation of the existing indebtedness, liabilities, and obligations incurred by the Borrower pursuant to the Original Agreement. Such indebtedness, liabilities and obligations continue to remain outstanding and are amended and modified only to the extent this Agreement amends and modifies the Original Agreement.

Section 3.15.Patriot Act. The Lender hereby notifies the Borrower that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Lender to identify the Borrower in accordance with the Patriot Act. The Borrower shall, and shall cause each of its Subsidiaries to, provide to the extent commercially reasonable, such information and take such other actions as are reasonably requested by the Lender in order to assist the Lender in maintaining compliance with the Patriot Act.

[Signatures on Following Page]

19

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed under seal in the case of the Borrower by their respective authorized officers as of the day and year first above written.

RPC, INC.

By: /s/ BEN M. PALMER 

Ben M. Palmer

Vice President, Chief Financial Officer,

and Treasurer

[SEAL]

SUNTRUST BANK

By: /s/ STACY M. LEWIS

Stacy M. Lewis

Vice President, Corporate and Investment Banking

EXHIBIT A

PRICING GRID

Total Funded Debt to EBITDA	Less than 0.75:1	Greater than or equal to 0.75:1,  and less than 1.50:1	1.50:1 or greater
LIBOR Margin	0.875%	1.25%	1.50%

EXHIBIT B

AMENDED AND RESTATED DEMAND NOTE

Atlanta, Georgia March 10, 2006

FOR VALUE RECEIVED, the undersigned, RPC, INC., a Delaware corporation with an address of 2170 Piedmont Road, NE, Atlanta, Georgia 30324 (the “Borrower”), promises to pay to the order of SUNTRUST BANK, a Georgia banking corporation (“Lender”; Lender, together with any other holder hereof, sometimes referred to herein as the “Holder”), the principal sum of FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) or so much thereof as may be from time to time disbursed hereunder, together with accrued interest on the unpaid principal balance hereof as hereafter provided, in lawful money of the United States of America, ON DEMAND in accordance with the terms and conditions of that certain Amended and Restated Revolving Credit Agreement, dated as of March 10, 2006, by and between the Borrower and the Lender (the “Credit Agreement”; terms capitalized but not otherwise defined herein shall have the meanings assigned to them in the Credit Agreement).

This Note shall immediately become due and payable, without notice or demand, upon the filing of any petition or the commencement of any proceeding by or against the Borrower for relief under bankruptcy or insolvency laws, or any law relating to the relief of debtors, readjustment or indebtedness, debtor reorganization, or composition or extension of debt.

The failure or forbearance of the Holder to exercise any right hereunder, or otherwise granted by law or another agreement, shall not affect or release the liability of the Borrower, and shall not constitute a waiver of such right unless so stated by the Holder in writing. The Borrower agrees that the Holder shall have no responsibility for the collection or protection of any property securing this Note, and expressly consents that the Holder may from time to time, without notice, waive its rights with respect to any property or indebtedness, and release any guarantor or other obligor from liability, without releasing the Borrower from any liability to the Holder.

Should legal action or an attorney at law be utilized to collect any amount due hereunder, the Borrower promises to pay all costs of collection, including reasonable attorneys’ fees.

This Note is issued in accordance with, and is entitled to the benefits of, the Credit Agreement. THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF GEORGIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES. This Note and all powers of attorney executed in connection herewith constitute the entire

B-1

understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto.

This Note amends, modifies and restates the indebtedness, liabilities and obligations evidenced by that certain Demand Note dated March 19, 2003 (the “Original Note”) and in addition, increases the principal amount of the Original Note, but does not constitute, and it is the express intent of the Borrower and the Lender that this Note does not effect, a novation of the existing indebtedness, liabilities, and obligations incurred by the Borrower pursuant to the Original Note. Such indebtedness, liabilities and obligations continue to remain outstanding and are amended and modified only to the extent this Note amends, modifies and increases the amount of the Original Note.

PRESENTMENT AND NOTICE OF DISHONOR ARE HEREBY WAIVED BY THE BORROWER.

Execution under hand and seal on the date set forth above.

RPC, INC.

By: /s/ BEN M. PALMER

Ben M. Palmer

Vice President, Chief Financial Officer, and Treasurer

 

    [SEAL] 

B-2

EX-21

Exhibit 21

SUBSIDIARIES OF RPC, INC.

NAME	STATE OF INCORPORATION
RPC Crane Liquidation, LLC	Texas
Cudd Pressure Control, Inc.	Delaware
Cudd Pumping Services, Inc.	Delaware
International Training Services, Inc.	Georgia
Patterson Services, Inc.	Delaware
Patterson Truck Line, Inc.	Louisiana
RPC Energy de Mexico	Ciudad del Carmen, Mexico
RPC Energy International, Inc.	Delaware
RPC Energy Services of Canada, Ltd	New Brunswick, Canada
RPC Investment Company	Delaware
RPC Waste Management Services, Inc.	Georgia
Well Control School de Venezuela, SA	Venezuela
Bronco Oilfield Services, Inc.	Delaware
RPC Energy Services (Chengdu) Ltd.	Chengdu, Sichuan P.R. China

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We have issued our reports dated March 8, 2006, accompanying the consolidated financial statements and schedule and on Internal Control Over Financial Reporting included in the Annual Report of RPC, Inc. on Form 10-K for the year ended December 31, 2005. We hereby consent to the incorporation by reference of said reports in the Registration Statements of RPC, Inc. on Forms S-8 (File No. 333-40223, effective November 14, 1997 and File No. 333-117836, effective July 30, 2004).

/s/ Grant Thornton LLP

Atlanta, Georgia

March 8, 2006

EX-23.2

EXHIBIT 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in the Registration Statements listed below of RPC, Inc. of our report dated February 27, 2004 (except for the matter discussed in the last paragraph of Note 1, as to which the date is March 6, 2006), with respect to the consolidated financial statements and schedule of RPC, Inc. included in the Annual Report (Form 10-K) for the year ended December 31, 2005.

Form S-8 Registration Statement No. 333-117836

Form S-8 Registration Statement No. 333-40223

/s/ Ernst & Young LLP

Atlanta, Georgia

March 6, 2006

EX-24

Exhibit 24

 POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ Wilton Looney                                   

Wilton Looney, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ Bill J. Dismuke                                   

Bill J. Dismuke, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ Gary W. Rollins                                   

Gary W. Rollins, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ Henry B. Tippie                                   

Henry B. Tippie, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ James A. Lane, Jr.                                   

James A. Lane, Jr., Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ James B. Williams                                   

James B. Williams, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ Linda H. Graham                                   

Linda H. Graham, Director

Exhibit 24

POWER OF ATTORNEY

Know All Men By These Presents, that the undersigned constitutes and appoints Richard A. Hubbell as his true and lawful attorney-in-fact and agent in any and all capacities to sign filings by RPC, Inc. on Form 10-K, Annual Reports and any and all amendments thereto (including post-effective amendments) and to file the same, with all exhibits, and any other documents in connection therewith, with the Securities and Exchange Commission.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney, in the capacities indicated, as of this     10th     day of      March     2006.

/s/ R. Randall Rollins                                   

R. Randall Rollins, Director

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, Richard A. Hubbell, President and Chief Executive Officer of registrant, certify that:

1.       I have reviewed this annual report on Form 10-K of RPC, Inc.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.       Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 13, 2006	/s/ Richard A. Hubbell
	Richard A. Hubbell
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

I, Ben M. Palmer, Vice President, Chief Financial Officer, and Treasurer certify that:

1.       I have reviewed this annual report on Form 10-K of RPC, Inc.;

2.       Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.       Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.       The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.       Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.       Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.       Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.       Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.       The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a.       All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.       Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 13, 2006	/s/ Ben M. Palmer
	Ben M. Palmer
	Vice President, Chief Financial Officer, and Treasurer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORTS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

To the best of their knowledge the undersigned hereby certify that the Annual Report on Form 10-K of RPC, Inc. for the period ended December 31, 2005, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. Sec. 78m) and that the information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of RPC, Inc.

Date: March 13, 2006	/s/ Richard A. Hubbell
	Richard A. Hubbell
	President and Chief Executive Officer
	(Principal Executive Officer)
Date: March 13, 2006	/s/ Ben M. Palmer
	Ben M. Palmer
	Vice President, Chief Financial Officer and Treasurer
	(Principal Financial and Accounting Officer)