UPDATE 2-RPC Q2 profit tops Wall Street estimates

(Adds analyst comments, conference call details; updates share movement)

By Ajay Kamalakaran

BANGALORE, July 23 (Reuters) - Oilfield services company RPC Inc (RES.N) posted a quarterly profit that topped Wall Street estimates in the face of tough competitive pricing and higher costs, but believes it could transfer some of those costs to customers over the next couple of quarters.

The company has been challenged by higher costs but said in a conference call with analysts on Wednesday that it sees more opportunities to share costs with customers in the next three to six months.

"As utilization increases and pricing power switches back in favor of service companies, I think they'll be able to push along a lot of those costs," said Michael Drickamer, an analyst with Morgan Keegan & Co, who rates the stock "market perform".

The company posted second-quarter net income of $22.5 million, or 23 cents per share, compared with $23.8 million, or 24 cents a share, in the year-ago quarter.

Total revenue rose 25.5 percent to $214.7 million.

Analysts on average were expecting earnings of 16 cents a share, excluding items, on revenue of $203.5 million, according to Reuters Estimates.

"They definitely did have some improvement in the quarter, as there was better operational execution, but the big beat that you see is as much a function of low estimates or low expectations," Drickamer said.

He said RPC's disappointing first-quarter results caused analysts to lower their expectations.

In the first quarter, the company's earnings fell 6 cents short of estimates.

PRICING PRESSURE

RPC, which competes with larger rivals like Halliburton (HAL.N) and Schlumberger (SLB.N), was affected by the oversupply in the U.S. oil services market during the quarter.

The company faced margin pressures due to competitive pricing and operating cost increases, especially for fuel and certain materials and supplies used in providing services, RPC Chief Executive Richard Hubbell said in a statement.

Hubbell said in the conference call that the company wasn't counting on price stabilization, but Morgan Keegan analyst Drickamer said that overall industry trends would probably help the company.

"I think a rising tide lifts all boats and you have the major players in the industry saying that prices are stabilizing -- then there's a good chance that prices are stabilizing, which would be a positive for these guys," Drickamer said, referring to RPC.

He also added that many oil services companies would be shifting their equipment to Canada for summer drilling and that would help smaller companies like RPC.

RPC has operations in the Gulf of Mexico, the Midwest and the Rocky Mountain area.

Shares of RPC were flat at $17.35 during midday trade on the New York Stock Exchange. Earlier, they fell to an intra-day low of $16.83.

The S&P 1500 Energy Equipment & Services Industry Index .15GSPENS was down about 1.4 percent at 869.67. (Editing by Bernard Orr)