RPC Q1 2025 Earnings Call Transcript

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Provided by Quartr
April 24, 2025

Key Takeaways

  • First Quarter Results: Revenue was stable at $333 million (down 1% from Q4 2024) with sequential EBITDA growth to $48.9 million (14.7% margin), driven by disciplined utilization despite pricing concessions and a 1% decline across non-pressure pumping lines.
  • Pentel Completions Acquisition: RPC closed the $245 million accretive purchase of Pentel, adding over $400 million in annualized revenue, boosting wireline to 23% of pro forma 2024 revenues and deepening blue-chip Permian Basin exposure.
  • Strong Balance Sheet and Liquidity: At quarter-end RPC held $327 million in cash, zero debt, generated $7.6 million in free cash flow after $32.3 million CapEx, and expects 2025 CapEx of $165–215 million inclusive of Pentel.
  • Strategic Capital Allocation: Management emphasizes disciplined CapEx focused on maintenance, high-cash-flow service lines, and opportunistic M&A aligned with blue-chip customers and margin improvement.
  • Macro Uncertainty: Tariff-driven trade risks and low $60 oil prices have heightened market volatility, but RPC cites confident liquidity, a secure dividend, and patient execution amid potential pricing and demand shifts.
AI Generated. May Contain Errors.
Earnings Conference Call
RPC Q1 2025
00:00 / 00:00

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Operator

Good morning, and thank you for joining us for RPC, Inc. First Quarter twenty twenty five Earnings Conference Call. Today's call will be hosted by Ben Palmer, President and CEO and Mike Schmidt, Chief Financial Officer. At this time, all participants are in a listen only mode. Following the presentation, we will conduct a question and answer session.

Operator

Instructions will be provided at this time for you to queue up for questions. I would like to advise everyone that this conference call is being recorded. I will now turn the call over to Mr. Schmidt.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Thank you, and good morning. Before we begin, I want to remind you that some of the statements that will be made on this call could be forward looking in nature and reflect a number of known and unknown risks. Please refer to our press release issued today along with our twenty twenty four ten ks and other public filings that outline those risks, all of which can be found on RPC's website at www.rpc.net. In today's earnings release and conference call, we'll be referring to several non GAAP measures of operating performance and liquidity. We believe these non GAAP measures allow us to compare performance consistently over various periods.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Our press release and our website contain reconciliations of these non GAAP measures to the most directly comparable GAAP measures. I'll now turn the call over to our President and CEO, Ben Palmer.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Thanks, Mike, and thank you for joining our call. Today, we will talk about our first quarter results and the acquisition we just closed in early April as well as share our views about the increasing tariff driven macro uncertainties. We are encouraged by the start of the year with respect to our financial performance and excited to bring Pentel into the RPC portfolio. Further, are confident that our strong balance sheet even following the funding of the acquisition provides a solid cushion in uncertain times while still affording us the ability to invest as attractive opportunities arise. First quarter results can be summarized as stable revenues with some EBITDA growth.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Recall that our fourth quarter held up relatively well in a sluggish market thus we weren't necessarily expecting a typical seasonal pickup heading into the first quarter. Nevertheless, we were pleased with our financial results especially sequential EBITDA growth. As we look across the service lines for the quarter, pressure pumping revenues were essentially flat sequentially and all other service lines in aggregate declined 1%. We worked diligently to drive utilization, though it did come with some pricing concessions. We are balancing the pricing and utilization strategy to service our customers while not performing work at levels that generate inadequate returns.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

We still see higher utilization within our frac assets for our Tier four DGBs where we have better visibility with dedicated customers and continue to deliver solid wellsite performance. On the other hand, demand and utilization remains challenging for Tier two diesel equipment. The spot and semi dedicated frac market are amply supplied with horsepower capacity and pricing remains highly competitive as OFS companies compete to maximize utilization. In the current frac pricing environment, capital investments must be rigorously evaluated and we suspect some smaller, less well capitalized competitors may disproportionately struggle to maintain asset quality and performance. Some may even exit the business.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

We are certainly hearing more about pumping equipment for sale at low prices. We believe these are mostly assets with limited useful lives indicating that some providers are opting to monetize and exit rather than maintain and reinvest. We see this as a positive potentially tightening frac supply and leading to firmer pricing, but this may take some time to play out. Our 2025 plans still do not include a new frac fleet, though if and when we invest in incremental frac equipment, we would expect to retire older fleets. Looking at our nonpressure pumping service lines, combined revenues were down 1% sequentially in the first quarter with no individual service line up or down a significant amount.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

In short, it was a fairly stable quarter across most of the business. Downhole Tools revenues were flat. Several of our regions delivered solid growth in the quarter but were offset by some unusual weather disruptions in the Rocky Mountains and other regions. Our new drill and unplugged products continue to gain early traction in the market and we're pleased with the response, but these are still too small to move the needle on our overall financial results. We look forward to more progress and we'll share updates on key milestones as appropriate.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Coiled tubing was down a few points in the quarter, cementing was flat and rental tools had a nice gain, up about 7% as that business did see a noticeable bounce to begin the new year. From a strategic standpoint, we believe bolstering these less capital intensive service lines with organic investments and acquisitions will help drive growth, improve our customer mix and reduce volatility in our financial results. And with that, I'll segue into the Pentel Completions acquisition. We have been talking increasingly in recent quarters about our optimism for executing acquisitions. We have assessed several potential transactions since acquiring Spendicor in 2023, and we were very pleased with our ultimate outcome, acquiring Pantail in an accretive transaction.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

The total purchase price was $245,000,000 comprised of $170,000,000 in cash, a $50,000,000 seller note and $25,000,000 of issued stock. While we had ample cash to fund the total purchase price, we believe the note and stock provide increased alignment and incentives as we move forward together. Pentel is a leading wireline perforation services provider offering some of the newest and most efficient high performance conventional and electric equipment in the industry with more than 30 active fleets. It has a fairly concentrated customer base of blue chip E and Ps, and all of its operations serve the Permian Basin. The Pentel management team is well regarded in the industry, having established a reputation for delivering outstanding customer service in a safe and efficient way with low emissions.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Pentel generated $4.00 $9,000,000 in revenues in 2024. We believe it has reached critical mass and expect revenues to trend with the overall market. This customer retention is a testament to the strength of its relationships and consistent wellsite performance. We note that quarterly revenue was in the $100,000,000 range in each quarter last year with no discernible seasonality or year long directional trend in their top line results. We have not disclosed specifically profitability measures.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

However, our general expectation is for EBITDA margins to continue to track at about 20% plus or minus a few points. Pentel will maintain its operational approach and we expect a relatively light integration with most of our efforts focused on back office support and financial reporting. Its day to day operations will remain largely unchanged and the management team will remain focused on serving its customers. With respect to the strategic rationale of the deal, you may recall that during our fourth quarter call, we highlighted several strategic imperatives to executing on our goals: improve margins and execution and optimize our assets increase operational scale through M and A rebalance our portfolio with a focus on high cash flow generating service lines and strengthen our customer mix by increasing our focus on blue chip E and Ps given industry consolidation. Pentel is very well aligned with those imperatives.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Adding over $400,000,000 of revenue certainly adds operational scale and meaningful share in wireline. Pentel is also a high cash flow producing business with relatively low capital intensity, and its exclusive focus on blue chip customers is something we find very appealing. This acquisition is a great fit with our strategic direction as we continue to expand our completion services capabilities and focus on overall company growth and free cash flow. Looking at our 24 revenues, pro form a with the addition of Pentail, pressure pumping was 32%, wireline increased from 1% to 23%, downhole tools was 21%, coiled tubing was 7% and cementing was 6%. All other businesses together would represent approximately 11.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Furthermore, the Pentel transaction would move our Permian concentration up to approximately 60% of total revenues. With that, Mike will now discuss the quarter's financial results as well as some notes on the Pentel transaction.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Thanks Ben. Shifting to the first quarter financial results with sequential comparisons to the fourth quarter of twenty twenty four. Revenues decreased 1% to $333,000,000 Breaking down our operating segments, Technical Services which represented 94% of our total first quarter revenues was down 1%. Support services which represented 6% of our total first quarter revenues were up 1%. The following is a breakdown of our first quarter revenues for our top five service lines.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Pressure pumping was 40.1%, downhole tools 28.2%, coiled tubing 9.6%, cementing 8.3%, rental tools 4.6. Together these accounted for approximately 91% of our total revenues. Cost of revenues excluding depreciation and amortization decreased by $6,400,000 to $243,900,000 or 3% during the first quarter. The lower cost of revenues can be mainly accounted for by lower expenses in three categories. First, transportation and fuel declined due to job mix as we provided less fuel to our customers.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

This typically carries little to no profit so it's actually a positive margin impact for us. Second is lower material and supplies. As the mix of our jobs changes quarter to quarter, so does the amount of sand and chemicals we supply on these jobs. Lastly, we noted in the fourth quarter that insurance costs were elevated. The same level of expense did not repeat this quarter, thus contributing to a modest sequential improvement in the first quarter.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

SG and A expenses were $42,500,000 up from $41,200,000 as a percentage of revenues increased 50 basis points to 12.8%, reflecting increased IT modernization project expenses and slightly lower revenues. Our first quarter tax rate was 27.2% more in line with our normalized tax rate. Recall that our fourth quarter of twenty twenty four tax rate was unusually low due to the impact of tax planning strategies and interest received on past refunds. Notably, we had higher sequential EBITDA. The increase in tax rate drove a slight sequential net income decline compared to Q4 'twenty four.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Diluted EPS of $06 in the first quarter was flat versus the fourth quarter. EBITDA was $48,900,000 up from $46,100,000 with EBITDA margin increasing 100 basis points sequentially to 14.7%. For the quarter, operating cash flow was $39,900,000 and after CapEx of $32,300,000 free cash flow was 7,600,000.0 At quarter end, we had $327,000,000 in cash and no debt on the balance sheet. During the quarter, we paid $8,700,000 in dividends. Regarding the 2025 capital spending expectations, we now project $165,000,000 to $215,000,000 inclusive of Pintail for the next nine months, mostly related to maintenance.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Shifting now to some Pintail modeling notes. Pintail closed after the first quarter, so there was no material P and L, balance sheet or cash flow impact from the deal in our results. We are not providing explicit accretion guidance for the transaction, but we do expect it to be accretive to EPS and cash flow for 2025. Based on our comments, you should be able to make reasonable projections for revenues and EBITDA, which will be in large part influenced by overall OFS market conditions. Beyond the EBITDA impact, please note a few other modeling items.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

CapEx for Pintel will likely be up to $20,000,000 on an annualized basis with depreciation expected to approximate annualized CapEx. We will lose interest on the $170,000,000 cash portion of the transaction funding as well as incur incremental interest expense on the $50,000,000 seller note. It has a floating rate of SOFR plus 200 basis points. Lastly, based on the share price immediately before April 1, we issued approximately 4,500,000.0 shares. We will complete purchase accounting in the coming months and note that certain future expenses impacted by the purchase price allocation and related valuation, including the amortization of intangible assets, were not contemplated in these figures.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

On another topic, you may have seen the company has filed an s three registration statement with the SEC, which includes registering the Rollins family control group shares. The Rollins family has been a longtime shareholder with ongoing representation on our board. They have always been supportive of the company and we do not believe this changes that relationship. We view the registration of the Control Group shares as good corporate housekeeping. I'll now turn it back over to Ben for some closing remarks.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Thank you, Mike.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

To wrap up, I want to touch on the macro environment. We've entered a period of high uncertainty and limited visibility with respect to tariffs and their impact on inflation and the economy in general. Tariffs in the current form will likely push equipment prices higher, put even more pressure on the industry to be disciplined with capital spending. More broadly, the potential economic impact from tariffs and trade disputes increases uncertainty and contributed to oil prices falling to the low $60 range. Oil at these prices makes it difficult for some customers to justify continued completion activities at prior levels, but only time will tell.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

News flow and market developments are dynamic in the current environment. We as well as OFS competitors and upstream and downstream players in the value chain will have to navigate these uncertainties as we assess investment commitments. However, despite some mild turbulence and unknowns, few things remain unchanged. Our balance sheet is strong, our dividend is secure, we have ample liquidity to ride out volatility and still capitalize on opportunities as they arise. We believe the company has an attractive mix of service lines and brands, customers and geographic presences and will execute our strategy with patience and discipline, including our pursuit of additional acquisitions.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

On a separate note, we'd like to welcome Steve Lewis to our Board of Directors after being elected this week. Steve retired from the law firm Troutman Pepper, formerly Troutman Sanders, in 2023, where he had served in various leadership roles, including chairman and CEO. At the same time, Gary Rollins and Pam Rollins have retired from our board. We thank them for their years of contributions, leadership and service. In an often volatile market, our discipline remains consistent with a focus on financial stability and long term shareholder returns.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

I also want to thank all our employees who work tirelessly to deliver high levels of service and value to our customers. Thanks for joining us this morning. And at this time, we'd be happy to address any questions you may have.

Operator

And your first question comes from the line of Stephen Gengaro with Stifel. Please go ahead.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Morning.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Steve, if you may be on mute.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

I'm a

Operator

Please go ahead.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Can you hear me?

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Now we can. Now we can.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

There you go. Operator didn't like me. The when we you talked a little bit about this, I think, on the prepared remarks. But when we think about the pressure pumping market in general, are you seeing like what are you seeing in sort of pricing conversations? And are you seeing any differences kind of versus prior periods of softness in the market?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Think I understand the question. You know, each one of these cycles are different, yet they're they're very much the same. I think some of what's happening is, again, with all the uncertainty about what's going on and the fact that things could, in fact, flip back, I think our customers are scrambling. They're trying to respond to their potential impact with lower oil prices. So they're trying to do what they can.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Service companies like us are trying to hang in there and do the best we can to try to be accommodating to our customers yet. We're trying to maintain our business as well. So I don't know that the discussions are completely different, but I think circumstances are perhaps a bit different and that may, you know, impact slightly those discussions. But it's all about, you know, the the give and take in trying to, reach hopefully a decent place for both parties.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Okay, great. And then following Pintail, can you just kind of remind us when you think about capital allocation, kind of what the priorities are? And when you're looking at M and A, what are sort of the two or three most important criteria you look for?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Well, obviously, want accretive transactions. We certainly adding to existing businesses that we have that have good strong brands is certainly a criteria. But again, looking for customers, we want more exposure to the larger customers that should translate into more steady business, less volatility. Also looking for companies, service lines that have good free cash flow generating capability. We all know that pressure pumping is a very large part of the overall well completion cost, but it is highly competitive right now.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

We still are committed to that business, but we're looking to grow in some other service lines and with brands that that brands with good management teams that can produce some good free cash flow. So that's really our priority. Exposure to E and P customers and businesses with good free cash flow potential at prices that better be accretive to our results.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Great. Thanks. And then the one the one final one was when and I'm just I don't want to give you the wrong numbers here. But when we when we think about the the Pintail business, I think it was running kind of close to about 90,000,000 in revenue a quarter based on the info that was disclosed. Is that about the right starting point right now as we think about layering it in?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Stephen, we said in our earlier comments that they did a little over $400,000,000 in 2024, and each quarter was right at 100,000,000 So I think 100,000,000 more or less or whatever. They've kind of, as we indicated, they've kind of reached their critical mass. So but certainly not completely oblivious or can't avoid the overall market forces that are in place. But in round numbers, probably closer to 100.

Stephen Gengaro
Stephen Gengaro
Managing Director at Stifel Financial Corp

Great. All right. Thank you for the details.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Thank you. Appreciate your questions.

Operator

Your next question comes from the line of Don Crist with Johnson Rice. Please go ahead.

Don Crist
Research Analyst at Johnson Rice & Company L.L.C.

Good morning, How are you all today?

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Good morning, Don.

Don Crist
Research Analyst at Johnson Rice & Company L.L.C.

Are you seeing any shift in kind of customer activity? And I know pressure pumping is generally a large topic of discussion. But in your other service lines, are you seeing any shift away from high CapEx projects, I. E, new wells and new pads towards workovers or anything like that, that may have a bigger impact to E and P's cash flows with smaller dollars?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

That's a reasonable question, Don. I think it's a little bit early, to to know that, or or to to have a whole lot of, feedback on that. That that certainly seems reasonable. And in prior cycles, that type of shift has occurred. So we're certainly watching for that sort of thing. Good question.

Don Crist
Research Analyst at Johnson Rice & Company L.L.C.

And on a on a typical job kinda timeline, like, what what is your visibility normally? I mean, if you're either, you know, fracking a well or a pad rather, do you have visibility on the next two pads or just the next pad? Like, when is that decision point made normally, in normal kind of business cycle to where we can kind of forecast, how far out you know kind of what you're gonna be doing?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Well, our frac business historically, you and others know, has been more of the spot market and semi dedicated. So it depends on the size of the customer and the nature of the type of work we're doing. Typically, the semi dedicated customers, we have some visibility for months at a time, maybe not a year or more, but we certainly typically have some level of visibility. Spot market, much less so. But we do have a calendar.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

We watch the calendar. We maintain the calendar. We're always trying to work, minimize the white space, be that with a dedicated customer, semi dedicated or spot. So it just depends on on on the customer. Some of our other service lines that have more dedicated work, you know, the visibility is a bit a bit longer.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

As you can imagine, though, customers are right now, you know, they are looking at different alternatives. And as we see it right now, kind of looking ahead, early in the second quarter, things look to be relatively stable. It's hard enough. Again, uncertainty is the word of the day or the time right now. Know that there are discussions going on, and we'll just have to wait and see and get prepared for and then react to whatever happens.

Don Crist
Research Analyst at Johnson Rice & Company L.L.C.

Okay. And one of your competitors reported last night and talked about a kind of uptick in gas directed activity, whether it be in the Eagle Ford or Mid Continent or other places. Are you seeing any pickup yet? Or is that still a couple of months down

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

the road, do you think? I think probably a little further down the road. We are hearing a little bit. We do have exposure to some natural gas focused basins, especially with our downhole tools business. It was very traditionally strong natural gas plays.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Our downhole tools business is very well equipped to be able to move people and equipment around very easily and quickly. So having those operating locations in place, we'll be able to jump very quickly on to opportunities with that service line and a couple of our other service lines. Less so for pressure pumping, we do have some Thanks, Doug. Appreciate it.

Operator

Your next question comes from the line of John Daniel with Daniel Energy Partners. Please go ahead.

John Daniel
Founder & CEO at Daniel Energy Partners

Hey, Ben. Thanks for including me. Just just a couple of quick ones. I think in your prepared remarks, noted some of your some of the older pumping equipment out there is being sold by presumably some of your competitors. I'm just curious if you can talk about is that whether it's frac equipment or other assets in your portfolio, do you guys see a need to sell assets?

John Daniel
Founder & CEO at Daniel Energy Partners

Just your thoughts on that on that equipment reentering the market.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

What was the very end of your comment?

John Daniel
Founder & CEO at Daniel Energy Partners

Well, if some of your peers, I think you know, have sold or are trying to sell some of their older Tier two equipment, others or smaller companies are selling assets just to try to generate cash. You guys clearly don't need to generate cash because your balance sheet is fine. But I'm just curious if you could broadly speak about, you know, what you're seeing in terms of who's buying some of that equipment. Just just your thoughts on that that side of the market.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

It's a good question. Again, we have, as we indicated, have seen some opportunities. I don't know who might be buying that. We have rarely, over the years, found an opportunity that we were comfortable trying to make investments in a used piece of equipment. We have done a little bit of that, but not in a whole small way.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Maybe kind of thinking about the question too, we talked about the fact that we monitor our equipment and when it comes to end of life or inefficient operations or whatever for frac, we look move those assets out. We don't like to stack them up. In the last year or two when that need or opportunity arose, we've been able to reallocate some of those assets to other of our service lines that can use that type of equipment. It can be very it can contribute very nicely to the other service lines. So we've done some of that.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

If we were to sell our equipment, we've been very diligent about trying to make sure it can or doesn't reenter the frac market. So that could include selling it overseas or being able to disassemble the parts and try to distribute it that way. So we're very keenly aware of trying to introduce any more equipment that can be competitive in the market.

John Daniel
Founder & CEO at Daniel Energy Partners

Okay. Next one is on CapEx, quickly. Q1 CapEx, let's call it, low-30s, which means you're underspending relative to the guidance here on the low end, if you will. What's the what would you need to see to sort of accelerate that spend in the back half of the year? And is there more of a chance that, you know, we would see that CapEx dollars be allocated to, you know, further accretive M and A opportunities?

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Hey, John. This is Mike. Yeah. I think it will just it'll be based on market conditions overall. We're we're looking to spend the CapEx we need to to maintain our equipment.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

Or if there is something accretive, you know, we we'll spend spend the money on that as well. But we are really looking at trying to to see what we're real really going to need to spend to meet all our customer needs for the year. Because no one knows really what's happening overall Sure. The macro conditions out there. So we've we've really, you know, pushed back or or asked our businesses to really look at whether they need to do that this year or if we can hold off next year just so we also aren't spending all our cash on equipment that we're not gonna get a good return on in the short term so that we still have a strong balance sheet so we, you know, can do further acquisitions also.

Michael Schmit
Michael Schmit
CFO & Corporate Secretary at RPC

So, you know, we we are still projecting to probably pick up a little bit of spending as the year goes on. But, that kinda gives a little bit of color as to how we think think about it. I don't know, Ben, do you want

John Daniel
Founder & CEO at Daniel Energy Partners

add else?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Yeah. I was just gonna say, John, I think, yeah, the first quarter number just there was a little bit of managing there trying to, you know, obviously not spend where we don't need to spend. But I think it was just sort of the timing worked out to where it was a relatively low annualized spend that was, I think just the way everything fell out in terms of

John Daniel
Founder & CEO at Daniel Energy Partners

Got it. And then one quick final one for me. As the year unfolds with the uncertainty, presume you're going see lots of M and A opportunities. And just given Pentel's strong presence in the Permian, would you say that you're you're would you be more inclined to be focused on further consolidating the Permian market, you know, not just say wireline, but other services? Or are you sort of somewhat agnostic and willing to look at other basins?

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

I think that's a good question. We're not we're agnostic or we're open to opportunities in other basins as well. And again, with the impending expected opportunities in the natural gas basins, now may be a good time. Before things really do pick up big time, maybe there's an opportunity to pick something up that has exposure to some of those other basins that we can take advantage of. So I think we're looking at talking about several things.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

It's our discussions are not all around. We need to focus on the Permian. Our discussions are around. Let's look for appropriate opportunities. And each company and each business and each service line and each brand has different attributes. So we're open. We're open.

Operator

This concludes our question and answer session. I will now turn the call back over to Ben Palmer.

Ben Palmer
Ben Palmer
CEO, President & Director at RPC

Okay. Well, thank you all for listening in and your questions. We appreciate it, and I hope you have a good rest of the day and look forward to catching up. Take care.

Operator

Today's call will be available for replay on rpc.net within two hours following the completion of the call. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Executives
    • Michael Schmit
      Michael Schmit
      CFO & Corporate Secretary
    • Ben Palmer
      Ben Palmer
      CEO, President & Director
Analysts
    • Stephen Gengaro
      Managing Director at Stifel Financial Corp
    • Don Crist
      Research Analyst at Johnson Rice & Company L.L.C.
    • John Daniel
      Founder & CEO at Daniel Energy Partners
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