Richard Hubbell - President and Chief Executive Officer Ben Palmer - Vice President, Chief Financial Officer and Treasure James Landers - Vice President, Corporate Finance.

Luke Lemoine - Capital One Securities John Daniel - Simmons & Company Rob MacKenzie - Iberia Capital Jeff Tillery - Tudor, Pickering & Holt Daniel Burke - Johnson Rice Marc Bianchi - Cowen Doug Dyer - Heartland Advisors Michael Marino - Stephens.

Good morning, and thank you for joining us for RPC Incorporated second quarter 2014 earnings conference call. Today's call will be hosted by Rick Hubbell, President and CEO; and Ben Palmer, Chief Financial Officer. Also present is Jim Landers, Vice President of Corporate Finance.

(Operator Instructions) Jim will get us started by reading the forward-looking disclaimer..

Thank you, and good morning. Before we begin our call today, I want to remind you that in order to talk about our company, we're going to mention a few things that are not historical facts. Some of the statements that we made on this call could be forward-looking in nature and reflect a number of known and unknown risks.

I'd like to refer you to our press release issued today, along with our 2013 10-K and other public filings, all of which outline those risks, you can find those on RPC's website at www.rpc.net.

I also need to tell you that in today's earnings release and conference call we'll be referring to EBITDA, which is a non-GAAP measure of operating performance. RPC uses EBITDA as a measure of operating performance because it allows us to compare performance consistently over various periods without regard to changes in our capital structure.

We're also required to use EBITDA to report compliance with financial covenants under our revolving credit facility. Our press release today and our website provide a reconciliation of EBITDA to net income, which is the nearest GAAP financial measure. Please review that disclosure, if you're interested in seeing how we calculate it.

If you've not received our press release and would like one, please visit our website, again at www.rpc.net for a copy. I will now turn the call over to our President and CEO, Rick Hubbell..

Thanks Jim. This morning we issued our earnings press release for RPC's second quarter of 2014. RPC's revenues for the quarter increased 27.4% compared to the second quarter of 2013.

Our revenues, which represented a quarterly record for RPC, increased due to higher activity levels, increased service intensity and a slightly larger fleet of revenue producing equipment. Sequentially, our revenues increased by 16%.

This increase was due to higher activity levels in all of our major service lines and the absence of winter weather challenges that negatively impacted first quarter results. Second quarter operating profit, net income and EBITDA, all improved both sequentially and year-over-year.

Yesterday, the Board of Directors declared a regular quarterly dividend of $0.1050 per share. Our CFO, Ben Palmer, will now review the financial results in more detail..

Thanks you, Rick. Second quarter revenues increased to $582.8 million compared to $457.6 million in the prior year. These higher revenues resulted primarily from higher activity levels in our major service lines, increasing service intensity in pressure pumping and a slightly larger fleet of revenue producing equipment.

EBITDA for the second quarter increased 33.2% to $160.4 million compared to $120.4 million for the same period last year. Operating profit for the quarter increased 51.8% to $103 million compared to $67.9 million in the prior year. Our diluted earnings per share were $0.29 compared to $0.19 in the prior year.

Despite pricing for our services not improvement, we generated record revenues. Consistently high activity levels, including strong utilization of personnel and equipment throughout the quarter coupled with concentration on service-intensive work benefited RPC's results.

Cost of revenues increased from $287.6 million in the second quarter of the prior year to $374.3 million, due primarily to higher activity levels and greater service intensity, again within our pressure pumping service line.

Cost of revenues as a percentage of revenues increased from 62.8% in the prior year to 64.2%, due to increased materials and transportation expenses. And as one example, we incurred increased logistics cost, because of rail interruptions, requiring us to use more expensive trucking for timely delivery of raw materials.

Selling, general and administrative expenses during the second quarters of 2014 and 2013 were $47.6 million. Accordingly, SG&A expenses as a percentage of revenues decreased from 10.4% last year to 8.2% this year.

Depreciation and amortization were $56.5 million during the second quarter of '14, an increase of 7.1% compared to $52.8 million in the prior year. Our Technical Services segment revenues for the quarter increased 28.4% compared to the prior year.

Operating profit for this segment increased 50.8% to $99.7 million or 18.3% of revenues compared to $66.1 million or 15.6% of revenues during the same period in the prior year. Revenues increased primarily due to higher activity levels in the service lines within this segment and operating profit increased primarily due to its cost leverage.

Our second quarter Support Services segment revenues increased 14.6% and operating profit increased 27.1% compared to the same period in the prior year. This improvement was due primarily to higher activity levels and improved job mix within the rental tool service line, which is the largest service line within this segment.

On a sequential basis, RPC's second quarter revenues increased to $582.8 million from $501.7 million in the first quarter. Cost of revenues increased from $330 million to $374.3 million, due to increased activity levels and growing service intensity.

Cost of revenues as a percentage of revenues decreased from 65.8% in the first quarter to 64.2% in the second quarter, due primarily to personnel cost leverage and lower maintenance and repair costs. SG&A expenses as a percentage of revenues were 8.2% in the second quarter, a decrease compared to 9.7% in the first quarter due to cost leverage.

RPC's effective tax rate decreased slightly to 39% [Technical Difficulty]..

Friends, sorry about that. We lost the call for reasons that we don't share of, but we're back. Ben Palmer was talking, making some sequential financial comments, and he's going to continue with those at this time..

Like I was talking, we were on the effective tax rate, which decreased slightly to 39% in the second quarter compared to 39.4%. RPC's sequential EBITDA increased to $160.4 million in the second quarter from $120.8 million in the first quarter, while the EBITDA margin increased to 27.5% from 24.1%.

Our Technical Services segment generated revenues of $544.4 million, 16.6% higher than revenues of $467 million in the prior quarter and an operating profit of $99.7 million compared to $64.9 million in the first quarter. Our operating margin in this segment increased to 18.3% of revenues from 13.9% in the first quarter.

Revenues increased primarily due to higher activity levels in the service lines within this segment and operating profit increased primarily due to fixed cost leverage. Revenues in our Support Services segment increased to 10.7%, due to improved activity in many of these service lines.

Support Services operating profit increased to $9 million in the second quarter compared to $7.5 million in the first quarter. Our operating margin in this segment was 23.4% in the second quarter compared to 21.5% in the first quarter.

RPC's pressure pumping fleet during the quarter grew slightly to 720,000 hydraulic horsepower, as we added a few pumps toward the end of the quarter. Second quarter 2014 capital expenditures were $72.5 million. A large percentage of these capital expenditures supported growth and maintenance in our pressure pumping service line.

RPC's projected full year 2014 capital expenditures remain at $375 million. We anticipate placing in service the bulk of the equipment related to our previously announced pressure pumping expansion plan in early 2015. At the completion of this expansion, our total available horsepower will be 920,000.

RPC's outstanding debt under its credit facility at June 30 was $131.4 million, an increase of $50.6 million compared to the end of the first quarter. This increase was due to working capital requirements associated with higher activity levels and higher capital expenditures during the second quarter.

Our ratio of debt-to-total capitalization was 11.4%. We remain conservatively capitalized, both by our historical standards and relative to our peers, and we have plenty of capacity for our fleet expansion and additional working capital requirements, as they may arise. With that, I'll turn it back over to Rick for some closing remarks..

Thank you, Ben. We are pleased with the improvements reflected in our second quarter 2014 financial results. RPC's activity levels increased throughout our operating regions and we believe that our customers value service providers like RPC with well-maintained equipment and capable logistics processes.

Our large operation in the Permian Basin continues to be a bright spot. As of last week, the Permian Basin rig count had increased 19% year-to-date in contrast to a flat year in 2013. In addition, the transition to more unconventional completion work in that market creates more opportunities for RPC services to be on-location longer.

We anticipate this recent and favorable development will continue. Our view of the domestic completion market continues to support the pressure pumping expansion plan, we announced at the end of the first quarter.

As we will receive this equipment and plan for it's placement into service, we remain focused on other critical elements of our business, including sourcing of raw materials, improving logistics, logistical processes and attracting and retaining the right people. All of these issues are becoming increasingly critical.

Thank you for joining us for RPC's conference call this morning. And at this time, we'll open up the lines to answer any questions you may have..

(Operator Instructions) We'll go to Luke Lemoine with Capital One Securities..

Jim, could you give us the revenue breakdown for the product lines?.

Sure, absolutely. Luke, this is for the quarter, and this is as a percentage of consolidated RPC revenue. Pressure pumping was 57.5%, thru tubing solutions was 15.2%, coiled tubing was 8.8%, snubbing or hydraulic workover was 3.6%, rental tools are going to go back up now, was 4.3%, and those are the top ones we need to talk about..

And then on the additional costs that you incurred in 2Q with the raw materials and transportation, how do you feel about your ability to pass these through in 3Q?.

In general, we've started to see raw materials cost increases and we feel good about our ability to pass those cost increases on. We're not seeing market indications that we can affect net pricing increases at this point, but we do believe that we can pass our cost increases along..

And then do you have a guess that how much the additional cost impacted Technical Services margins in 2Q?.

There was an impact, Luke, it was minor. If it were material, we would have called out and discussed it. We don't think it was huge..

So it's like tens of basis points?.

Sure..

And then just as you're kind of looking at the exit rate coming out of June, what you're saying maybe slightly up or a-third of your revs came in June?.

Sorry, Luke, I have suffered for three weeks for answering that question for one of our good friends and your colleague. I'm not going to answer it. It was a good quarter. It was a good quarter. And bad joke aside, it was a uniformly decent quarter..

We'll just look at it this way, pumping revs were, it looks like they were somewhere around $335 million for the quarter, nice increase quarter-on-quarter. It probably had a little, not much of a benefit for them, 10,000 horsepower you added.

Just kind of on an organic basis without any pricing, just assuming you picked up more efficiency in the third year, crews that are on 24/7, you got a full 24/7.

Do you still think you can increase pumping revs by maybe 10% or 15%?.

Yes. That's doable. Without pricing and without additional --.

No guarantees, but is the possibility..

And then one last one, the 10,000 horsepower at the end of the quarter, that should take you to 720,000 right?.

Correct..

We'll go next to John Daniel with Simmons & Company..

The 10% to 15% revenue increase that you did comment on for my dear friend Luke, I presume you're referring to sequential improvement and for Q3?.

He was asking if that was a potential without pricing an additional capacity. So that was utilization question, and the answer is yes..

With respect to margins, Jim, as you guys are addressing as well as others, the transportation issues, raw materials and so forth.

At this point would you -- is there any reason to see margins decline in Q3 and Q4 because of these challenges?.

John, there is no reason that we know of now. You and everybody else in the industry know how much more work and focus and how much more delicate it can be getting these issues taken care of, but based on everything we know, we don't see this causing margin declines at this point..

So that clearly will limit margin upside from here in the near term, a fair statement? It sounds like you're also not getting net -- you don't think you're going to get net pricing this quarter..

Right. With activity levels the bias is upward, but yes that's clearly a bottleneck to the pathway to much higher margins..

And then just two more from me. How much of the cost increase that you see now is raw material versus the transportation cost? And specifically we hear a lot about people, the third-party trucking companies jacking their prices to frac companies themselves.

And then wondering, sort of extrapolating here, do you have your own transportation fleet that moves the proppant from the rail site to the well location or are you using third-party providers? And just are your competitors using third-party providers versus internal? Are there any disadvantages by using third-party providers? A lot of questions there, but just trying to understand the situation..

We do not have any internal assets or resources trying to move proppant from rail sites or transloads to the well site, but we think that's a disadvantage. There maybe periods where it is a disadvantage, but there will be periods where we'll be glad we don't have it. So there is no act of discussion about trying to bring that in-house any time soon.

Our experience is capital flows to where there is demand and demands stays high, there will be more trucks available to move proppant, and we'd rather not take on that burden or that capital risk.

And relative to what's increasing more, I would say, we haven't looked at specifically, but my guess is it's probably an equal impact between the cost of materials and trucking, but neither is noticeably different than the other..

And then the last one from me. And thank you for the time. The obvious question that we're hearing from folks is, you've got a lot of horsepower on order, others are just starting to add capacity, and yet we're now seeing the challenges at the logistics. More and more people are striding it in terms of the cost and challenges and so forth.

I'm just wondering, just did you get opined a little bit about your ability to effectively deploy that horsepower, yet in light of these growing challenges. Does that give you any cause for concern, I guess? And I'll leave at that..

Well, cause for concern, you know it's never easy. There is never an obvious answer on the timing of doing these things. We still think it was a good decision. We look forward to getting the equipment. We think, again there will be challenges, but we think we can meet them head-on.

As I've talked about the trucking and talked about the availability of raw materials, again they will become available, whether it's immediately when our equipments are here or whether it's shortly thereafter or shortly before its here. There will be more material made available, I expect. And we'll just focus on the blocking and the tackling.

And hopefully with our focus, we can do as well or maybe a little better than some of the other folks out there..

John, we have done these expansions a few times now over the past seven years. Each time we've learned something. And in percent we're not taking any of this lightly, but in percentage terms, it's not like we're doubling the fleet.

We just have to keep doing what we've been doing it and do a little more of it, but we're mindful of shortages of things and we just keep focusing on it..

And we'll go next to Rob MacKenzie with Iberia Capital..

Talk to me a little bit, if you will, about increasing frac fleet size. That's something that's been an emerging topic once again here in the industry. I know you guys couple of quarters ago added to your fleet in the Bakken and elsewhere.

Where are your frac fleet sizes in terms of horsepower kind of on a year-over-year basis, in terms of growth? And where do you see that trending? I guess the gist of my question is how much of the incremental horsepower adds by people are going to be soaked up adding just bulking up existing fleets to where they need to be versus actually adding new cruise..

Rob, this is Jim. We understand the question. In general, we were kind of an earlier adopter of having a larger fleet running at a lower speeds and having less downtime for maintenance and equipment failures, and so that's continuing. I don't have any specific commentary. We'll work on it and get back to you, if we need to.

But turning to specific commentary on, in the same region having a fleet that is bigger than it was in that same region in previous year. I mean, and you know dynamics as well or better than we do, where fleet sizes were big, and where they are now. But in general, we are not adding incremental existing fleet year-over-year for the same job.

Now, if you're talking about 24 hour work, you do need to add a little more equipment, but it's not something that we think as a big move of a needle in any regard..

Any update since you mentioned it on the percentage of your fleet, either fleet-wide or in the Permian that's in 24 hour ops right now?.

Yes. This time last quarter, we would have told you and did you tell you, there is about a-third of the fleet that was capable and ready and working on 24-hour basis. Today that number is around a little over 40%..

Coming back to the pricing conversation if I may, what are your internal expectations, if you don't mind sharing it with us, how net pricing will develop going forward? I understand, we haven't really seen much yet, but we're hearing anecdotes about that and we know people are pushing price, when does it start to stick?.

I don't know, at this point with really no contracts of the type that we had between early 2010 and the end of 2013, it's a very transactional business. So we do try that whenever we can. We want to hear the customer and we talk about increasing cost and that sort of thing. But in terms of net pricing that's really supply demand driven issue.

It could come at any time, I'm afraid. I've listened to what our peers have said. We don't know any better than other people. And when calendars get full, and as customer start to ask you, when you're available rather than telling you when to be available. Those are all indications that we can eventually get some price increase.

But is it going to happen in August or November or next February, I'm afraid, we just don't have any good insight for you..

Said another way, I think our biggest opportunities to improve our profitability is on our processes, on our procurement and our logistics. That's a better near-term opportunity than net pricing..

And then, I guess, a final question, a follow-up coming back to the sequential revenue growth. You guys talked about possibly 10% to 15% sequentially in the third quarter.

Is that counting the new equipment that's being delivered here shortly or just including the incremental adds in 2Q?.

That would be the fleet that's currently configured, because the question that was put to us was with no additional fleet and with no pricing or additional capacity, was that possible? And the answer was, yes. So that was a utilization question..

We'll go next to Jeff Tillery with Tudor, Pickering & Holt..

Jim, just a follow-up on that question, is 10% to 15% comment on pressure pumping revenue potential? I mean the lever there, is that principally more 24-hour work or just a calendar getting stacked more fully? I'm just curious, what the driver of that is?.

I think more of it, Jeff, has been is we had nice relatively consistent utilization throughout the quarter, but it could be better. I think its customers allowing us to work and consistently and avoiding interruptions, and so therefore being able to get our consistency in our processes down.

I've talked before about the volatility of the work, it still amazes me. We're still in that period.

I think the industry customers, we working with our customers, for everybody to win-win, we've got to get to the point where the work is more predictable and steady and scheduled, so everybody can execute and create and achieve the efficiencies that everybody is looking for.

So I think this 10% to 15% that we've thrown out there could be achieved, again, if it was just fewer interruptions, the work again was more consistent and steady. It was relatively consistent compared to the last few quarters, but still could be better.

So in my mind that's the way I would describe that we could capture that additional revenue potential is, again, through more steady work and better coordination with our customers. And then, being ready, when we're ready and vice versa, and being able to get as many stages and as we can..

And I want to make sure I understand is, is the 10% to 15% what could happen as these things progress or what you think is going to happen in the third quarter?.

Could happen, it's potential..

And as I think about just the frac calendar more broadly for the second half of the year.

I guess what is your visibility? How far out is it? And how does that compare versus what you've seen at other busy times?.

Well, it looks good. I mean from a practical point of view, it's booked out as far as it needs to be or can be. So it's pretty cool. We've said this before, in the spot market, unlike the way things used to be years ago, jobs are longer and more service intense. It was easier to manage when a job was four hours long.

Not only was that job easier to do, but if that job slipped for whatever reason, you might be able to find another short duration job to cover it. Now, we're in an environment of one that's very transaction oriented and spot-market oriented, but the jobs are long in duration.

So if one gets pushed for some reason like weather or other issues, unrelated to the service provider, you've lost four or five days, and it maybe hard to replace that. So that's the catalyst for the sort of sporadic nature of the work right now..

And then, the last question I had is just, is there any movement either on the part of your customers or on the part of Cudd in terms of wanting to go back towards the more contracted model for frac?.

Yes. Well, wanting to. Yes, at the right kind of pricing. And customers have started talk about that, but the pricing isn't where it needs to be right now..

We'll take our next question from Daniel Burke with Johnson Rice..

Given your fleet distribution, I would assume commentary on logistical challenges is focused pretty specifically on the Permian.

But could you describe maybe whether or not those challenges are more broad-based in the Permian market?.

Daniel, actually, it's kind of the opposite. Because of our presence in the Permian and the well-developed infrastructure there, we have fewer, I won't say no problems, we have fewer problems, and it's easier to accomplish. In some of the other areas, where logistical challenges are worst, more difficult.

And I'm not giving anything away by saying the Marcellus and the Bakken have been more difficult logistically. The Eagle Ford shale has been more difficult than average, now it's probably better. But it would not actually be the Permian..

This was asked in another way, but I'll try anyway. Technical Services incrementals were mid-40% in the quarter.

In any sense, were you pumping incrementals higher or lower than average or I'm assuming probably about equivalent?.

Pumping incrementals were, let's just say, with the average probably..

And then, a last one from me, smaller segment, but could you elaborate on what you meant by improved job mix within the rental tools line?.

Sure. Just a job mix that includes more blowout preventers, and we've done I think a pretty good job of certifying our blowout preventers in accordance with the new standards. So those are in higher demand than non-certified blowout preventers. And so that's been helpful to us during the quarter..

And we'll go next to Marc Bianchi with Cowen..

Couple of questions. First on the increased proppant volumes that you're pumping, and is that at least with some of the other companies, I suspect the case with you, that does dilute the percentage margin that you realize in your pumping business.

Can you tell us maybe in your opinion, how far long we are in that process? Have we sort of leveled off in the sort of proppant per stage or proppant intensity? And how do you see that affecting percentage margins going forward?.

Marc, that's a good question there. There is a whole mosaic of things that play there. I mean my best answer, and others can chime in, is that for certain kinds of works, some of the really good service intensive work, we're probably pumping as much proppant per stage as we can, but that job mix could shift, where we would end up pumping.

That's really kind of a good job with a whole lot of proppant per stage. We could do more of those. I'm not an engineer and I can't tell you when the point of diminishing marginal returns hits on pounds of proppant per stage.

Clearly, it's going up, and what you've alluded to is the fact that -- I think you're alluding to the fact that we yield more operating profit dollars, but other things equaled, if you're just passing through or just charging for the volume or passing through cost increases, the margins themselves would decline.

The reason I said that's coming to comp getting mosaic is that margins have improved, because we are working hard, and so we're getting leverage on cost and that sort of thing. But good question, yet I do not know the answer..

Yes, I will, I guess, chime in. I don't know that the trend is shaking out yet. We did see during the quarter, have seen for the last few quarters more service intensity, pounds per stage, that sort of thing. And whether that's peak or not, that's hard to say.

And when we look across our different operating locations, some were up sequentially, some were down sequentially. So it's hard to say. It's customer-specific. Now, they and we are experimenting and looking at different treatment options. And again, I'm not sure that that trend has played out yet..

And then, just a follow-up unrelated on the capacity adds that you've got between now and the beginning of the 2015.

Can you give us your latest thinking on timing, maybe by quarter for that additional capacity, and where that is likely going at this point?.

Mark, the schedule looks pretty good and is really consistent with what we have thought about and what we disclosed earlier. And by that, I mean that we really are going to get a lot of the equipment towards the end of the third quarter and end of the fourth quarter, as far as we know right now.

We've also done this a few times and know that things do slip and they are critical components perhaps that have to wait for. So we still think that we're going to get it in the fourth quarter and into the first quarter before it's effectively in service and working..

And the dynamic that, in terms of even internally trying to come up, certainly we wouldn't be talking about a lot of specifics here.

But internally we even look at and think about what the timing of this equipment coming can we realistically, we can be prepared for it to work in the fourth quarter, but are we going to have a holiday slowdown or not, are we going to have a winter weather that's going to impact the first quarter, but to Jim's point, we are right now pointing towards the fact that we think we will be capable of deploying it by early '15.

And we'll just have to see how much progress we can make with again fourth quarter customer discussions lining things up and whether that is working very early '15 pretty intensely or whether it kind of spills into kind of middle, late first quarter and the second quarter of next year.

So I mean we'll be prepared in doing everything we can to get it working sooner rather than later. But again, holidays and weather will have a lot of impact on that..

And we'll go next to Doug Dyer with Heartland Advisors..

Just a quick one with regard to the transportation of sand.

Do you enter into long-term contracts, so that you have capacity available to do that or is all of the hauling on spot?.

For the most part, it's spot..

Yes..

We'll now take a follow-up from John Daniel with Simmons & Company..

Just a couple of more. Jim, you mentioned that job calendar is full in Q3.

If you think about the calendar today, how does it compare relative to what you had in Q2 during the quarter?.

During Q2, it is a bit better now. I want to emphasize, that doesn't mean revenue will be better, it just means the calendar is better right now..

Because I'm not trying to get a revenue number here for me, just so you know. I'm just trying to understand, because last quarter it was pretty full too, and jobs do get push for various reasons.

I'm just trying to understand as jobs in Q2 may have been pushed, how much of that was tied to the inability to get the raw materials versus customers just deciding to-go-golf and not get a job done that day..

There was very little opportunity cost on the revenue side from not having raw materials to do the job. It was, as Ben mentioned earlier, transportation and things like that that there is very little actual lost revenue, because we didn't have proppant..

And an unrelated question too.

Are there pumps in your fleet today, the legacy vintage stuff that doesn't go through another rebuild process and potentially gets retired in the next year or so?.

That's a good question. We've talked about that during the quarter. Not to our knowledge right now. We have some truck chassis from late-70s. We have a blender that was built in 1990. At some point a reasonable company will look at some and say, it's not a time to rebuild this again, just let it go.

But I don't have any knowledge of that kind of retirement of assets coming up..

And then the final one from me. Some of your smaller peers were adding capacity both on the frac and coiled side.

Have you seen any indications of higher employee turnover at this point within your organization?.

Yes. But the answer has always been, yes -- but yes, certainly..

I mean, I know it's always high, but is it higher?.

Yes. I don't know if it's higher now, but we continue to be impacted by that, but we always have..

We'll go next to Michael Marino with Stephens..

On the horsepower to get to 920,000, just a clarification, do you guys think that could be kind of -- that amount of horsepower could be generating revenue by when, kind of middle of Q1 next year? Is that how to think about it?.

This is Ben. I think it is possible that that incremental fleet add, if there is minimal holiday slowdown and no winter impact, it could be working similarly to our legacy fleet by the middle of the first quarter. Will it be? I don't know. But it could be. The equipment will be coming in.

Again, a lot of its going to be coming in kind of late, late third quarter, during fourth quarter, and so just were all of those factors fall, that's were the revenue will began. But rest assure that we're working hard to get it working as soon as possible..

But that's a reasonable timeline.

I mean middle of Q1 is the reasonable timeline to have it all out there?.

It will all be out there, how intensely, will it be working that's the unknown..

And then, just is a follow-up on that. Have you already designated basins to which you would add or -- I mean what I'm trying to figure out is you talked about some pretty big variances across basins from a logistic standpoint.

Does adding scale and horsepower does that help, so maybe these additions come in basins other than the Permian or just trying to understand how the additional horsepower maybe affects the logistical hurdles and scale and margins across different basins?.

Well, to the extent that additional horsepower requires additional raw materials, it does help -- it does not help, it hurts. As we get bigger and are approaching the way some of the bigger guys work, do we have more buying power with our suppliers? Absolutely, or at least probably. So I think there is some puts and takes there.

I don't know what the net is..

I was going to say, have you decided what basins you would add to?.

Yes, I was going to mention that. We do have preliminary targeted areas, but still plenty of time to adjust that before they actually land. So some of that will depend upon, again, customer negotiations and potential commitments and things like that.

But I guess suffice it to say at this point that it's going to be spread somewhat similarly to where we're spread today, but we can adjust that over the next quarter..

And with no further questions in the queue at this time, I would like to turn the conference back to Jim Landers for any additional or closing remarks..

Thank you, operator. And folks we apologize once again for our technical problem here. But we appreciate everybody staying with us and we appreciate the participation and enjoyed the questions. Everyone, have a good day. Thanks..

That does conclude today's presentation. We thank you for your participation. As a reminder, today's conference call will be replayed on www.rpc.net within two hours following the completion of this call..