Mid cap oil and gas services stock RPC Inc (NYSE: RES) is the second most shorted stock on the NYSE with short interest of 57.72% according toHighshortinterest.com. RPC Inc provides a broad range of specialized oilfield services and equipment primarily to independent and major oilfield companies engaged in the exploration, production and development of oil and gas properties throughout the United States, including the Gulf of Mexico, mid-continent, southwest, Appalachian and Rocky Mountain regions, and in selected international markets.RPC Inc was spun off from Rollins Inc (NYSE: ROL) in 1984 when the oilfield sector was in another severe cyclical downturn.
Right now, RPC Incs technical chart is showing conflicting trend lines with shares up another 2.61% to $19.28 on Monday:
RPC Inc doesnt issue much in the way of news for investors and the shorts alike. In late April, RPC Inc announced that Q1 revenues increased 57.7% to $298.1 million due to higher activity levels, improved pricing and increasing service intensity in our Technical Services segment and more specifically our pressure pumping and downhole tools services. Net income was $3.6 million versus anet loss of $32.5 million. The CEO made extensive positive comments:
“Industry activity accelerated during the first quarter of 2017. The average U.S. domestic rig count during the first quarter of 2017 was 744, an increase of 37.0 percent compared to the same period in 2016, and a 26.3 percent increase compared to the fourth quarter of 2016. The average price of natural gas during the first quarter was $3.01 per Mcf, an increase of 54.4 percent compared to the prior year but a slight decrease compared to the fourth quarter of 2016. The average price of oil during the first quarter was $51.69 per barrel, a 17.9 percent increase compared to the prior year and a 4.9 percent increase compared to the fourth quarter of 2016. At the end of the first quarter of 2017, the U.S. domestic rig count had increased by more than 100 percent during the 10 months since the rig count’s historical low, which represents the fastest pace of industry recovery in U.S. history.
“RPC generated strong financial results in the first quarter of 2017 because we were able to meet increased demand with well-maintained equipment, staffed with trained crews, and supported by strong logistical processes. In particular, the continued trend of increasing service intensity of completion activities generated strong demand this quarter especially in our Technical Services segment and pressure pumping in particular. Because of continued indications of high demand and improved pricing during the near term, we began to reactivate idle pressure pumping equipment at the end of the first quarter. We will continue to reactivate our idle pressure pumping fleet based on customer demand. The financial performance of Support Services and our other Technical Services lagged that of pressure pumping during the first quarter, due in part to continued high supply of service equipment, as well as completion delays caused by shortages of skilled personnel.
“We ended the first quarter of 2017 in a strong financial position with $104.5 million in cash. The decline in our cash balance during the quarter resulted from increased working capital requirements of higher activity levels and $11.7 million in capital expenditures, directed towards routine maintenance of existing equipment. We currently forecast modest capital expenditures during the remainder of 2017, and believe that our existing cash balance and projected operating cash flows will be adequate for our cash needs during the remainder of this year.
It would appear the easy money to be made from shorting oil and gas services stocks would be over with and a short squeeze is far more likely at this point in time.