8-K/A: RPC, Inc. Amends 8-K to Detail Financials of Pintail Alternative Energy Acquisition

RPC, Inc. has filed an amended Form 8-K/A to provide comprehensive financial statements and pro forma information regarding its recent acquisition of Pintail Alternative Energy L.L.C. for a total consideration of $245.0 million.

Summary

• RPC, Inc., through its wholly owned subsidiary Thru Tubing Solutions, Inc., completed the acquisition of Pintail Alternative Energy L.L.C. on April 1, 2025.
• The total consideration for the acquisition was $245.0 million, comprising $170.0 million in cash, $25.0 million in RPC common stock (4,545,454 restricted shares), and a $50.0 million secured note payable to Houston LP (Seller Note).
• A significant portion of the consideration, including the $25.0 million in stock and 50% of the Seller Note ($25.0 million), along with $28.1 million in Redistribution Payments, is contingent upon the continued employment of the Seller and certain Pintail employees for three years post-acquisition, accounted for as acquisition-related employment costs.
• The preliminary non-contingent merger consideration is estimated at $193.7 million, which includes the cash payment and the non-contingent portion of the Seller Note, adjusted for working capital.
• The acquisition resulted in preliminary goodwill of $32.6 million and other identifiable intangible assets of $96.9 million, primarily customer relationships ($86.8 million) and trade names/trademarks ($10.1 million).
• Pintail Alternative Energy L.L.C. reported revenues of $409.1 million and net income of $80.8 million for the year ended December 31, 2024.
• As of December 31, 2024, Pintail had total assets of $150.8 million, total liabilities of $56.4 million, and members' equity of $94.4 million.
• Pro forma combined financial information for the year ended December 31, 2024, shows combined revenues of $1.824 billion and net income of $126.8 million, with pro forma basic and diluted earnings per share of $0.58.
• The pro forma balance sheet as of December 31, 2024, indicates combined total assets of $1.492 billion, total liabilities of $414.4 million, and total stockholders' equity of $1.077 billion.

Sentiment

Score: 7

Explanation: The acquisition of a profitable company with strong cash flow is a positive strategic move for RPC, Inc., expanding its market presence and service offerings. However, the significant contingent employment costs and the preliminary nature of the pro forma financials introduce some uncertainty and potential future adjustments.

Positives

• Acquisition of Pintail Alternative Energy, a profitable entity with $80.8 million in net income and $409.1 million in revenues for 2024, is expected to enhance RPC's scale and service offerings.
• Pintail's strong cash flow from operating activities, reported at $87.3 million for 2024, indicates a healthy operational performance.
• The acquisition expands RPC's presence in the West Texas and New Mexico oil and gas markets, which are key regions for wireline and completion services.
• The pro forma combined financials show a significant increase in revenue and net income for the combined entity, indicating potential for enhanced financial performance.

Negatives

• A substantial portion of the acquisition consideration ($25.0 million in stock, $25.0 million of the Seller Note, and $28.1 million in Redistribution Payments) is contingent on continued employment, which is accounted for as acquisition-related employment costs rather than part of the purchase price, potentially impacting future expenses.
• Pintail has significant customer concentration, with four customers representing 69% of accounts receivable and five customers representing 78% of revenue as of December 31, 2024.
• Pintail also has vendor concentration, with one vendor representing 75% of accounts payable and 69% of cost of sales as of December 31, 2024.

Risks

• The oil and gas industry, in which Pintail operates, is highly volatile and susceptible to rapid commodity price changes, intense competitive pressure, and cyclical market patterns.
• Pintail's dependence on third-party pump-down perforation systems and other suppliers could pose a risk if alternative suppliers are not readily available or if pricing terms become unfavorable.
• The preliminary nature of the purchase price allocation and pro forma financial information means that actual results may differ materially from the assumptions, and revisions could be material during the 12-month measurement period.
• The contingent employment obligations tied to a significant portion of the consideration introduce a risk related to employee retention and future compensation expenses.

Future Outlook

The pro forma financial information is presented for informational purposes only and does not purport to represent the actual results of operations that the combined company would have achieved, nor is it intended to project future results. The finalization of the post-closing working capital adjustment is expected by the end of fiscal year 2025, and the purchase price allocation is subject to revision during a measurement period of up to twelve months from the closing date.

Management Comments

• Michael L. Schmit, Vice President and Chief Financial Officer, signed the report on behalf of RPC, Inc.

Industry Context

Pintail Alternative Energy L.L.C. provides wireline and completion services to oil and gas entities in West Texas and New Mexico. This acquisition by RPC, Inc., a company also operating in the oilfield services sector, signifies a strategic move to expand its capabilities and market presence within the highly volatile and cyclical oil and gas industry.

Comparison to Industry Standards

• The document does not provide specific comparable companies, projects, or results to assess the acquisition's performance against global benchmarks or industry standards.

Related Party Transactions

• Pintail Alternative Energy L.L.C. entered into two related party operating leases in July 2024: one for agricultural property and another for an office facility.

Stakeholder Impact

• Shareholders of RPC, Inc. will see an increase in the number of outstanding shares due to the issuance of 4,545,454 restricted common shares as part of the acquisition consideration.
• Employees of Pintail Alternative Energy L.L.C., particularly the Seller and certain key employees, are subject to continued employment obligations tied to significant contingent payments, impacting their compensation and retention.
• Creditors of RPC, Inc. will see an increase in long-term liabilities due to the $50.0 million Seller Note issued to Houston LP.
• Customers of both RPC and Pintail may benefit from an expanded service offering and potentially greater operational efficiencies from the combined entity.
• Suppliers to Pintail, especially the concentrated vendors, may experience changes in their relationship with the new combined entity.

Next Steps

• Finalization of the post-closing adjustment for Pintail's working capital by the end of fiscal year 2025.
• Completion of the final determination of fair value for acquired assets and assumed liabilities during the measurement period, which can extend up to twelve months from the Closing Date (April 1, 2025).

Key Dates

Keywords

RPC Inc, Pintail Alternative Energy, acquisition, merger, SEC filing, 8-K/A, pro forma financials, oil and gas services, wireline services, completion services, business combination, financial reporting