8-K: RPC, Inc. Acquires Pintail Completions for $245 Million, Expanding Permian Operations

RPC, Inc. has acquired Pintail Completions, a leading wireline services company in the Permian Basin, for approximately $245 million, effective April 1, 2025.

Summary

• RPC, Inc. acquired Pintail Alternative Energy, L.L.C. (Pintail Completions) on April 1, 2025, for approximately $245 million.
• The purchase price includes approximately $170 million in cash, $25 million in RPC restricted stock, and a $50 million three-year note to the sellers.
• Pintail is a leading provider of oilfield wireline services in the Permian Basin, operating over 30 active fleets.
• Pintail's 2024 revenues were approximately $409 million.
• The acquisition is expected to increase RPC's earnings per share, operating cash flow, and free cash flow in 2025.
• The final cash consideration is subject to adjustments based on Pintail's cash, debt, working capital, and unpaid transaction expenses at closing, with a $250,000 collar on working capital adjustments.
• Approximately $2 million has been placed in an escrow account to secure obligations related to these adjustments.
• The $50 million seller note accrues interest at SOFR plus 2.0% per annum and is payable in three installments over three years.
• 4,545,454 shares of restricted common stock of RPC were issued as part of the consideration.
• 33.33% of the stock consideration will vest on each anniversary of the closing for three years.

Sentiment

Score: 8

Explanation: The document presents a positive outlook on the acquisition, highlighting its strategic benefits and expected financial contributions. The management comments are optimistic, and the overall tone suggests confidence in the transaction's success.

Positives

• The acquisition expands RPC's presence in the Permian Basin, a key oil-producing region.
• Pintail has strong brand recognition, attractive margins, and solid cash generation.
• Pintail has trusted relationships with blue chip E&Ps.
• The acquisition aligns with RPC's focus on high-margin service lines with strong free cash flow conversion.
• The acquisition is expected to be accretive to RPC's earnings per share and cash flow in 2025.

Negatives

• The purchase price includes a $50 million three-year note, adding to RPC's debt obligations.
• The final cash consideration is subject to adjustments, which could impact the actual amount paid.
• The stock consideration is restricted and subject to vesting, which may limit Houston's ability to sell the shares immediately.

Risks

• The press release mentions risk factors that could impact the performance of RPC and Pintail, including oil and natural gas prices, overall U.S. economic performance, weather conditions, competition, political instability, OPEC actions, and customer drilling activities.
• The integration of Pintail may encounter unforeseen delays or expenses.
• The press release mentions the risk that assessments, such as regarding the oversupplied nature of oilfield services, will turn out incorrect.

Future Outlook

The acquisition is expected to be accretive to RPC's 2025 earnings per share and operating and free cash flow.

Management Comments

• Ben M. Palmer, RPC's President and Chief Executive Officer, stated that the acquisition is a significant step forward in RPC's strategic evolution as a diversified oilfield services provider and that Pintail Completions is recognized as an industry leader in wireline perforation services.
• Matt Houston, Pintail's co-founder and President, commented that the Pintail team is excited to continue their journey alongside RPC as a separate business entity and that RPC's platform allows Pintail to preserve its operating model and customer-centric approach.

Industry Context

The acquisition reflects a trend of consolidation in the oilfield services sector, with companies seeking to expand their service offerings and geographic presence. RPC's move to acquire Pintail, a leader in wireline services in the Permian Basin, aligns with this trend and positions the company to capitalize on the region's strong oil production activity.

Comparison to Industry Standards

• Halliburton and SLB (formerly Schlumberger) are major players in the wireline services market.
• The acquisition of Pintail Completions allows RPC to compete more effectively with these larger companies in the Permian Basin.
• The acquisition price of $245 million represents a valuation multiple based on Pintail's $409 million in revenue, which is within the range of comparable transactions in the oilfield services sector.

Stakeholder Impact

• Shareholders: The acquisition is expected to increase shareholder value through accretive earnings and cash flow.
• Employees: Pintail's leadership and field teams will join RPC, operating independently under the Pintail name.
• Customers: Pintail will continue to serve its existing customer base in the Permian Basin.
• Suppliers: The acquisition may lead to changes in supplier relationships as RPC integrates Pintail's operations.

Next Steps

• Integrate Pintail Completions into RPC's operations while allowing it to operate independently under its existing name.
• Realize the expected synergies and accretive benefits of the acquisition in 2025.
• File financial statements and pro forma financial information related to the acquisition within 71 calendar days.

Key Dates

Keywords

acquisition, pintail completions, rpc inc, wireline services, permian basin, oilfield services