Business Segment Information

12 Months Ended

Dec. 31, 2016

Business Segment Information

Business Segment Information

Note 12: Business Segment Information

RPC’s reportable segments are the same as its operating segments. RPC manages its business as either services offered on the well site with equipment and personnel (Technical Services) or services and equipment offered off the well site (Support Services). The businesses under Technical Services generate revenue based on equipment, personnel operating the equipment and the materials utilized to provide the service. They are all managed, analyzed and reported based on the similarities of the operational characteristics and costs associated with providing the service. The businesses under Support Services are primarily able to generate revenue through one source, which is either a hard asset or a personnel resource. Selected overhead including centralized support services and regulatory compliance are classified under Corporate.

Technical Services include RPC’s oil and gas services 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 operating segment consists primarily of pressure pumping, downhole tools, coiled tubing, snubbing, nitrogen, well control, wireline and fishing. The services offered under Technical Services are high capital and personnel intensive businesses. The common drivers of operational and financial success of these service lines include diligent equipment maintenance, strong logistical processes, and appropriately trained personnel who function well in a team environment. The Company considers all of these service to be closely integrated oil and gas well servicing businesses, and makes resource allocation and performance assessment decisions based on this operating segment as a whole across these various services. The principal markets for this segment include the United States, including the Gulf of Mexico, the mid-continent, southwest, Rocky Mountain and Appalachian regions, and international locations including primarily Argentina, Canada, Gabon, Bolivia, China, Mexico and the Middle East. Customers include major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

Support Services include all of the services that provide (i) equipment for customers’ use on the well site without RPC personnel and (ii) services that are provided in support of customer operations off the well site such as class room and computer training, and other consulting services. The primary drivers of operational success for equipment provided for customers’ use on the well site without RPC personnel are offering safe, high quality and in-demand equipment appropriate for the well design characteristics. The drivers of operational success for the other Support Services relate to meeting customer needs off the well site and competitive marketing of such services. The equipment and services offered include drill pipe and related tools, pipe handling, pipe inspection and storage services, and oilfield training and consulting services. The demand for these services tends to be influenced primarily by customer drilling-related activity levels. The equipment and services offered include drill pipe and related tools, pipe handling, inspection and storage services, and oilfield training services. The principal markets for this segment include the United States, including the Gulf of Mexico, the mid-continent and Appalachian regions, and selected international locations. Customers include domestic operations of major multi-national and independent oil and gas producers, and selected nationally-owned oil companies.

The Company’s Chief Operating Decision Maker (“CODM”) assesses performance and makes resource allocation decisions regarding, among others, staffing, growth and maintenance capital expenditures and key initiatives based on operating segments outlined above.

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. Gains or losses on disposition of assets are reviewed by the CODM on a consolidated basis, and accordingly the Company does not report gains or losses at the segment level. Inter-segment revenues are generally recorded in segment operating results at prices that management believes approximate prices for arm’s length transactions and are not material to operating results.

Summarized financial information concerning RPC’s reportable segments for the years ended December 31, 2016, 2015 and 2014 are shown in the following table:

(in thousands)	Technical Services			Support Services			Corporate			Loss on disposition of assets, net			Total
2016
Revenues	$	679,654		$	49,320		$	—		$	—		$	728,974
Operating (loss)		(203,804	)		(26,021	)		(17,037	)		7,920			(238,942	)
Capital expenditures		28,380			2,928			2,630			—			33,938
Depreciation and amortization		191,181			25,606			471			—			217,258
Identifiable assets		733,008			76,876			225,568			—			1,035,452
2015
Revenues	$	1,175,293		$	88,547		$	—		$	—		$	1,263,840
Operating (loss)		(132,982	)		(2,363	)		(14,515	)		(6,417	)		(156,277	)
Capital expenditures		155,361			11,055			1,010			—			167,426
Depreciation and amortization		237,778			32,697			502			—			270,977
Identifiable assets		976,761			108,262			152,071			—			1,237,094
2014
Revenues	$	2,180,457		$	156,956		$	—		$	—		$	2,337,413
Operating profit (loss)		390,004			42,510			(16,113	)		(15,472	)		400,929
Capital expenditures		342,932			27,148			1,422			—			371,502
Depreciation and amortization		198, 636			31,578			599			—			230,813
Identifiable assets		1,514,084			157,688			87,586			—			1,759,358

The following summarizes selected information between the United States and all international locations combined for the years ended December 31, 2016, 2015 and 2014. 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,	2016		2015		2014
(in thousands)
United States Revenues	$	677,755	$	1,191,704	$	2,249,260
International Revenues		51,219		72,136		88,153
	$	728,974	$	1,263,840	$	2,337,413