What changed in this filing

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Item 1. Financial Statements

2020-07-28 compared with 2020-05-01 · 208 added, 146 removed, 354 unchanged (50% of the section changed)

3 unchanged sentences

(in millions, except share amounts)

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Cash and cash equivalents $ 6.0 $ 6.9

1 unchanged sentence

Contract assets 1.1 1.2

Inventory 2.0 3.8

Prepaid expenses 1.8 5.3

3 unchanged sentences

Operating leases, right-of-use assets 5.3 6.5

Other assets 0.4 0.1

Total assets $ 248.1 $ 293.5

Liabilities and Stockholders' Equity

14 unchanged sentences

50,000,000 shares authorized;

no shares issued or outstanding as of March 31, 2020 and December 31, 2019

no shares issued or outstanding as of June 30, 2020 and December 31, 2019

Class A Common Stock, $ 0.01 par value, 100,000,000 shares authorized;

8,947,830 shares issued and 8,396,003 shares outstanding as of March 31, 2020 and 8,839,788 shares issued and 8,725,851 shares outstanding as of December 31, 2019, respectively

9,031,495 shares issued and 8,479,668 shares outstanding as of June 30, 2020 and 8,839,788 shares issued and 8,725,851 shares outstanding as of December 31, 2019

Class B Common Stock, $ 0.01 par value, 100,000,000 shares authorized;

6,866,154 shares issued and outstanding as of March 31, 2020 and December 31, 2019

Class A Common Stock held in treasury, at cost (551,827 shares)

6,866,154 shares issued and outstanding as of June 30, 2020 and December 31, 2019

Class A Common Stock held in treasury, at cost ( 551,827 shares as of June 30, 2020 and 113,937 as of December 31, 2019)

( 3.8 ) ( 0.7 )

Accumulated deficit ( 11.5 ) ( 8.1 )

1 unchanged sentence

Total controlling stockholders' equity 105.9 113.2

Non-controlling interest

Noncontrolling interest 89.3 89.8

Total stockholders' equity 195.2 203.0

4 unchanged sentences

(in millions, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended Six Months Ended

June 30, June 30,

2020 2019 2020 2019

High specification rigs $ 11.4 $ 33.1 $ 46.3 $ 64.8

11 unchanged sentences

Total operating expenses 38.8 80.3 115.8 163.4

Operating income

Operating income (loss) ( 8.1 ) 4.0 ( 4.1 ) 9.2

Other expenses

1 unchanged sentence

Total other expenses 0.8 1.9 1.9 3.2

Income before income tax expense

Net income attributable to non-controlling interests

Net income attributable to Ranger Energy Services, Inc.

Earnings per common share

Income (loss) before income tax expense ( 8.9 ) 2.1 ( 6.0 ) 6.0

Tax expense — 0.3 0.1 0.6

Net income (loss) ( 8.9 ) 1.8 ( 6.1 ) 5.4

Net income (loss) attributable to noncontrolling interests ( 4.0 ) 0.8 ( 2.7 ) 2.4

Net income (loss) attributable to Ranger Energy Services, Inc.

$ ( 4.9 ) $ 1.0 $ ( 3.4 ) $ 3.0

Earnings (loss) per common share

Basic $ ( 0.58 ) $ 0.12 $ ( 0.40 ) $ 0.35

Diluted $ ( 0.58 ) $ 0.10 $ ( 0.40 ) $ 0.29

Weighted average common shares outstanding

Basic 8,474,077 8,514,495 8,545,925 8,481,788

Diluted 8,474,077 15,412,431 8,545,925 15,361,162

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

2 unchanged sentences

(in millions, except share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019 2020 2019 2020 2019

Quantity Amount Quantity Amount

Shares, Class A Common Stock

2 unchanged sentences

Shares withheld for taxes on equity transactions ( 33,837 ) ( 37,765 ) — — ( 78,428 ) ( 40,019 ) — —

Issuance of Class A Common Stock to related party — 206,897 — — — 206,897 — —

Balance, end of period 9,031,495 8,717,026 $ 0.1 $ 0.1 9,031,495 8,717,026 $ 0.1 $ 0.1

8 unchanged sentences

Balance, beginning of period $ ( 6.6 ) $ ( 7.9 ) $ ( 8.1 ) $ ( 9.9 )

Net income attributable to controlling interest

Net income (loss) attributable to controlling interest ( 4.9 ) 1.0 ( 3.4 ) 3.0

Balance, end of period $ ( 11.5 ) $ ( 6.9 ) $ ( 11.5 ) $ ( 6.9 )

3 unchanged sentences

Shares withheld for taxes on equity transactions ( 0.2 ) ( 0.4 ) ( 0.3 ) ( 0.4 )

Impact of transactions affecting non-controlling interest

Issuance of Class A Common Stock to related party — 3.0 — 3.0

Benefit from reversal of valuation allowance — 0.6 — 0.6

Impact of transactions affecting noncontrolling interest 0.1 3.7 ( 2.1 ) 3.7

Balance, end of period $ 121.0 $ 119.9 $ 121.0 $ 119.9

1 unchanged sentence

Balance, beginning of period $ 110.0 $ 104.5 $ 113.2 $ 101.9

Net income attributable to controlling interest

Net income (loss) attributable to controlling interest ( 4.9 ) 1.0 ( 3.4 ) 3.0

Equity based compensation amortization 0.9 0.8 1.6 1.4

Shares withheld for taxes on equity transactions ( 0.2 ) ( 0.4 ) ( 0.3 ) ( 0.4 )

Impact of transactions affecting non-controlling interest

Issuance of Class A Common Stock to related party — 3.0 — 3.0

Benefit from reversal of valuation allowance — 0.6 — 0.6

Repurchase of Class A Common Stock — — ( 3.1 ) —

Impact of transactions affecting noncontrolling interest 0.1 3.7 ( 2.1 ) 3.7

Balance, end of period $ 105.9 $ 113.2 $ 105.9 $ 113.2

Non-controlling interest

Noncontrolling interest

Balance, beginning of period $ 93.4 $ 91.7 $ 89.8 $ 90.1

Net income attributable to non-controlling interest

Net income (loss) attributable to noncontrolling interest ( 4.0 ) 0.8 ( 2.7 ) 2.4

Equity based compensation amortization — 0.1 0.1 0.1

Impact of transactions affecting non-controlling interest

Impact of transactions affecting noncontrolling interest ( 0.1 ) ( 3.7 ) 2.1 ( 3.7 )

Balance, end of period $ 89.3 $ 88.9 $ 89.3 $ 88.9

1 unchanged sentence

Balance, beginning of period $ 203.4 $ 196.2 $ 203.0 $ 192.0

Net income (loss) ( 8.9 ) 1.8 ( 6.1 ) 5.4

Equity based compensation amortization 0.9 0.9 1.7 1.5

Shares withheld for taxes on equity transactions ( 0.2 ) ( 0.4 ) ( 0.3 ) ( 0.4 )

Issuance of Class A Common Stock to related party — 3.0 — 3.0

Benefit from reversal of valuation allowance — 0.6 — 0.6

Repurchase of Class A Common Stock — — ( 3.1 ) —

4 unchanged sentences

(in millions)

Three months ended March 31,

Six Months Ended June 30,

Cash Flows from Operating Activities

Net income (loss) $ ( 6.1 ) $ 5.4

Adjustments to reconcile net income to net cash provided by operating activities:

6 unchanged sentences

Contract assets 0.1 ( 2.9 )

Inventory 1.4 ( 2.8 )

Prepaid expenses 3.5 1.4

Operating leases, right-of-use assets

Other assets ( 0.2 ) 0.9

Accounts payable ( 8.7 ) ( 0.6 )

Accrued expenses ( 10.4 ) 2.0

Operating lease, right-of-use obligations ( 1.1 ) —

Other long-term liabilities 0.5 1.1

5 unchanged sentences

Cash Flows from Financing Activities

Borrowings under line of credit facility

Principal payments on line of credit facility

Borrowings under Credit Facility 32.6 25.1

Principal payments on Credit Facility ( 37.6 ) ( 17.3 )

Principal payments on Encina Master Financing Agreement ( 5.0 ) ( 4.8 )

3 unchanged sentences

Shares withheld on equity transactions ( 0.3 ) ( 0.4 )

Net cash provided by financing activities

Increase in Cash and Cash equivalents

Net cash (used in) provided by financing activities ( 19.6 ) 0.4

Decrease in Cash and Cash equivalents ( 0.9 ) ( 0.9 )

Cash and Cash Equivalents, Beginning of Period 6.9 2.6

5 unchanged sentences

Additions to fixed assets through financing leases $ ( 1.0 ) $ ( 0.8 )

Initial non-cash operating lease right-of-use asset additions

Early termination of financing leases $ 0.7 $ —

Initial operating lease right-of-use asset additions $ — $ ( 8.3 )

Issuance of Class A Common Stock to related party $ — $ 3.0

The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.

4 unchanged sentences

(“Ranger, Inc.,” “Ranger,” or the “Company”) is a provider of onshore high specification (“high-spec”) well service rigs and complementary services in the United States.

The Company provides an extensive range of well site services to leading U.S.

The Company also provides an extensive range of well site services to leading U.S.

exploration and production (“E&P”) companies that are fundamental to establishing and maintaining the flow of oil and natural gas throughout the productive life of a well.

11 unchanged sentences

Ranger LLC is the sole managing member of Ranger Services and Torrent Services, and is responsible for all operational, management and administrative decisions relating to Ranger Services and Torrent Services’ business and consolidates the financial results of Ranger Services and Torrent Services and their subsidiaries.

Rec e nt Events

The recent outbreak of the novel coronavirus (“COVID-19”) has spread across the globe and has been declared a public health emergency by the World Health Organization and a National Emergency by the President of the United States.

The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has, and will likely continue to, adversely affect the operations of the Company’s business, as the significantly reduced global and national economic activity has resulted in reduced demand for oil and natural gas.

Recent Events

The outbreak of the novel coronavirus (“COVID-19”) has spread across the globe and has been declared a public health emergency by the World Health Organization and a National Emergency by the President of the United States.

The COVID-19 pandemic has resulted, and is likely to continue to result, in significant economic disruption and has, and is likely to continue to, adversely affect the operations of the Company’s business, as the significantly reduced global and national economic activity has resulted in reduced demand for oil and natural gas.

Federal, state and local governments mobilized to implement containment mechanisms to minimize impacts to their populations and economies.

Various containment measures, which included the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe drop in general economic activity and a resulting decrease in energy demand.

Various containment measures, which includes the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe drop in general economic activity and a resulting decrease in energy demand.

In addition, the global economy has experienced a significant disruption to global supply chains.

The extent of the COVID-19 outbreak on the Company’s operational and financial performance will significantly depend on certain developments, including the duration and spread of the outbreak and its continued impact on customer activity and third-party providers.

The direct impact to the Company’s operations began to take affect at the close of the first quarter ended March 31, 2020, however the full extent to which the COVID-19 outbreak may affect the Company’s financial conditions, results of operations or liquidity subsequent to the issuance of these financial statements is uncertain.

In addition to the COVID-19 outbreak, in March 2020, OPEC, Russia and certain other oil producing states, commonly referred to as “OPEC Plus,” failed to agree on a plan to cut production of oil and natural gas.

The extent of the COVID-19 outbreak on the Company’s operational and financial performance will continue to depend on certain developments, including the duration and spread of the outbreak and its continued impact on customer activity and third-party providers.

The direct impact to the Company’s operations began to take effect at the close of the first quarter ended March 31, 2020, and continued through the issuance of these condensed consolidated financial statements.

The full extent to which the COVID-19 outbreak may affect the Company’s financial conditions, results of operations or liquidity subsequent to the issuance of these condensed consolidated financial statements is uncertain.

At the time of this filing, cases of COVID-19 in the U.S.

were increasing rapidly, particularly in Texas, where we conduct significant operations.

The severe drop in economic activity, travel restrictions and other restrictions due to COVID-19 have had a significant negative impact on the demand for oil and gas.

In addition to the impact of the COVID-19 outbreak, in March 2020, OPEC, Russia and certain other oil producing states, commonly referred to as “OPEC Plus,” failed to agree on a plan to cut production of oil and natural gas.

Subsequently, Saudi Arabia announced plans to increase production to record levels and reduce the prices at which they sell oil and, in turn, Russia responded with threats to also increase production.

Collectively, these events created an unprecedented global oil and natural gas supply and demand imbalance, reduced global oil and natural gas storage capacity, caused oil prices to decline significantly and resulted in continued volatility in oil, natural gas and NGLs prices into the second quarter of 2020.

quarter of 2020.

On April 12, 2020, OPEC Plus agreed to cut oil production by 9.7 million barrels per day in May and June 2020;

Due to the significantly reduced demand for oil and natural gas as a result of the COVID-19 pandemic and the current oversupply of oil and natural gas in the market, available storage and capacity for the Company’s customers’ production may be limited or completely unavailable in the future.

In April 2020 , extreme shortages of transportation and storage capacity caused

the WTI oil futures price to go as low as a negative $37.63 per Bbl.

This negative pricing resulted from the holders of expiring front month oil purchase contracts being unable or unwilling to take physical delivery of crude oil and accordingly forced to make payments to purchasers of such contracts in order to transfer the corresponding purchase obligations.

In addition, companies in the United States have recently encouraged regulatory intervention to prorate production among operators to stabilize hydrocarbon production in the United States.

The Company cannot predict whether any of these activities will reduce the global supply and demand imbalance or whether, or when, oil and natural gas production and economic activities will return to normalized levels.

however, on July 15, 2020, OPEC Plus agreed to increase production by 1.6 million barrels per day starting in August 2020.

With the combined effects of the increased production levels earlier in 2020, the recent increase in production and the reduction in demand caused by COVID-19, the global oil and natural gas supply and demand imbalance persists and continues to have a significant adverse effect on the oil and gas industry.

The Company cannot predict whether, or when, the global supply and demand imbalance will be resolved or whether, or when, oil and natural gas production and economic activities will return to normalized levels.

In the absence of additional reductions to global production, oil, natural gas and NGLs prices could remain at current levels, or decline further, for an extended period of time.

5 unchanged sentences

If prolonged, such factors may also negatively affect the carrying values of the Company’s property and equipment and intangible assets.

At the close of the first quarter, the Company initiated cost reductions throughout the organization, including a reduction in the workforce and salary reductions.

Additionally, various other operational, travel and organizational expense reductions will continue to manage costs to preserve liquidity through the downturn.

We believe these actions will provide sufficient liquidity to finance our operations for twelve months post issuance of these consolidated financial statements.

We will continue to actively monitor the situation and may take further actions that alter business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of the Company’s employees, customers and stakeholders.

On March 12, 2020, the Company received a non-binding offer from CSL Capital Management, L.P.

and Bayou Holdings, proposing to acquire all of the outstanding shares of common stock of the Company not owned by CSL, Bayou Holdings and T.

(“CSL”) and Bayou Holdings, proposing to acquire all of the outstanding shares of common stock of the Company not owned by CSL, Bayou Holdings and T.

Rowe Price Associates, Inc.

in a cash merger transaction for $ 6.00 per share (the “Take Private Proposal”).

The Take Private Proposal continues to be reviewed, evaluated and negotiated by members of an independent special committee of the board of directors of the Company.

On May 11, 2020, CSL announced their decision to not pursue the possible acquisition of shares outstanding of Ranger at this time and abandoned the Take Private Proposal.

Note 2 — Summary of Significant Accounting Policies

7 unchanged sentences

The Company’s significant accounting policies are disclosed in Note 2 — Summary of Significant Accounting Policies of the Annual Report.

There have been no changes in such policies or the application of such policies during the three months ended March 31, 2020 .

There have been no changes in such policies or the application of such policies during the six months ended June 30, 2020.

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period.

Management uses historical and other pertinent information to determine these estimates.

25 unchanged sentences

The Company has not made any contract modifications as of the date of this report to transition to a different reference rate, however it will consider this guidance as future modifications are made.

With the exception of the standard above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to the Company’s condensed consolidated financial statements.

With the exception of the standards above, there have been no new accounting pronouncements not yet effective that have significance, or potential significance, to the Company’s condensed consolidated financial statements.

Note 3 — Property and Equipment, Net

1 unchanged sentence

Estimated Useful Life

March 31, 2020

December 31, 2019

(years) June 30, 2020 December 31, 2019

High specification rigs 20

$ 128.2 $ 127.2

High specification rigs machinery and equipment 5 - 10

Completions and other services machinery and equipment

Completion and other services machinery and equipment 5 - 10

Processing solutions machinery and equipment 3 - 30

Vehicles 3 - 15

Other property and equipment 5 - 25

3 unchanged sentences

Property and equipment, net $ 206.6 $ 218.9

Depreciation expense was $8.7 million and $8.3 million for the three months ended March 31, 2020 and 2019 , respectively.

As of March 31, 2020, the Company noted a decline in stock price due to the reduced demand and oversupply of oil and natural gas, which was an indication that the fair value of the Company’s long-lived assets could have fallen below their carrying values.

Depreciation expense was $ 9.3 million and $ 8.2 million for the three months ended June 30, 2020 and 2019, respectively, and $ 18.0 million and $ 16.5 million for the six months ended June 30, 2020 and 2019, respectively.

During the three and six months ended June 30, 2020, the Company noted a sustained decline in stock price due to the reduced demand and oversupply of oil and natural gas, which was an indication that the fair value of the Company’s long-lived assets could have fallen below their carrying values.

As a result, an impairment analysis was performed and it was determined that no impairment existed.

4 unchanged sentences

Estimated Useful Life

March 31, 2020

December 31, 2019

(years) June 30, 2020 December 31, 2019

Customer relationships 10 - 18

$ 11.4 $ 11.4

accumulated amortization ( 2.5 ) ( 2.1 )

Intangible assets, net $ 8.9 $ 9.3

Amortization expense was $0.2 million and $0.1 million for the three months ended March 31, 2020 and 2019 , respectively.

Amortization expense was $ 0.2 million and $ 0.2 million for the three months ended June 30, 2020 and 2019, respectively and $ 0.4 million and $ 0.3 million for the six months ended June 30, 2020 and 2019, respectively.

Amortization expense for the future periods is expected to be as follows (in millions):

For the twelve months ending March 31,

For the twelve months ending June 30, Amount

Thereafter 5.3

Note 5 — Accrued Expenses

Accrued expenses include the following (in millions):

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

Accrued payables $ 1.9 $ 8.3

6 unchanged sentences

The Company has operating leases, primarily for real estate and equipment, with terms that vary from 12 months to seven years , included in operating lease costs in the table below.

The operating leases are included in Operating leases, right-of-use assets, Other current liabilities and Operating leases, right-of-use obligations in the Condensed Consolidated Balance Sheet.

The operating leases are included in operating leases, right-of-use assets, other current liabilities and operating leases, right-of-use obligations in the Condensed Consolidated Balance Sheets.

Lease costs associated with yard and field offices are included in cost of services and executive offices are included in General and administrative costs in the Condensed Consolidated Statements of Operations.

Lease costs and other information related to operating leases for the three months ended March 31, 2020 and 2019 , are as follows (in millions):

Three Months Ended March 31,

Lease costs and other information related to operating leases for the three and six months ended June 30, 2020 and 2019, are as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Short-term lease costs $ 0.6 $ 1.1 $ 1.4 $ 3.3

1 unchanged sentence

Operating cash outflows from operating leases $ 0.7 $ 0.6 $ 1.4 $ 1.4

Weighted average remaining lease term

Weighted average remaining lease term 6.0 years 5.7 years

Weighted average discount rate 9.3 % 9.4 %

Aggregate future minimum lease payments under operating leases are as follows (in millions):

For the twelve months ending March 31,

For the twelve months ending June 30, Total

Thereafter 2.0

Total future minimum lease payments 7.1

7 unchanged sentences

The assets are amortized over the shorter of the estimated useful lives or over the lease term.

The finance leases are included in Property and equipment, net, Finance lease obligations, current portion and Finance lease obligations in the Condensed Consolidated Balance Sheet.

Lease costs and other information related to finance leases for the three months ended March 31, 2020 and 2019 , are as follows (in millions):

Three Months Ended March 31,

The finance leases are included in Property and equipment, net, Finance lease obligations, current portion and Finance lease obligations in the Condensed Consolidated Balance Sheets.

Lease costs and other information related to finance leases for the three and six months ended June 30, 2020 and 2019, are as follows (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Amortization of finance leases $ 1.4 $ 1.2 $ 2.8 $ 2.5

1 unchanged sentence

Financing cash outflows from finance leases $ 1.4 $ 1.2 $ 2.6 $ 2.2

Weighted average remaining lease term

Weighted average remaining lease term 1.5 years 1.8 years

Weighted average discount rate 4.0 % 4.5 %

Aggregate future minimum lease payments under finance leases are as follows (in millions):

For the twelve months ending March 31,

For the twelve months ending June 30, Total

Total future minimum lease payments 6.6

5 unchanged sentences

The aggregate carrying amounts, net of issuance costs, of the Company’s debt consists of the following (in millions):

March 31, 2020

December 31, 2019

June 30, 2020 December 31, 2019

ESCO Notes Payable $ — $ 5.8

1 unchanged sentence

Encina Master Financing Agreement 22.2 27.1

Total Debt 26.8 42.4

Current portion of long-term debt ( 10.0 ) ( 15.8 )

2 unchanged sentences

In connection with the IPO and the ESCO Leasing, LLC (“ESCO”) acquisition, both of which occurred on August 16, 2017, the Company issued $ 7.0 million of Seller’s Notes as partial consideration for the ESCO acquisition.

These notes included a note for $1.2 million , which was paid in August 2018 and a note for $5.8 million due in February 2019.

These notes included a note for $ 1.2 million, which was paid in August 2018 and a note for $ 5.8 million, which was settled during the six months ended June 30, 2020.

Both of these notes bore interest at 5.0 %, payable quarterly until their respective maturity dates.

2 unchanged sentences

Interest on the outstanding principal balance was accrued through the maturity date of the Note Payable.

During the three months ended March 31, 2020 , the Company paid $3.8 million to settle the note and any unpaid interest, and recognized a gain on the retirement of debt of $2.1 million , which is included in the unaudited interim Condensed Consolidated Statement of Operations within General and administrative expenses.

During the six months ended June 30, 2020, the Company paid $ 3.8 million to settle the note and any unpaid interest, in full, and recognized a gain on the retirement of debt of $ 2.1 million, which is included in the Condensed Consolidated Statement of Operations within General and administrative expenses.

Please see Note 12 — Commitments and Contingencies for further details.

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The Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the value of the Company’s eligible accounts receivable less certain reserves.

During the three months ended March 31, 2020, the Company borrowed against the Credit Facility such that the available borrowings were less than $6.25 million , causing dominion to revert to the Administrative Agent.

For 30 consecutive days, the Company was required to either (a) maintain available borrowings of no less than the greater of $6.25 million and 12.5% of the lesser of (x) the maximum revolver amount and (y) the borrowing base (which approximated $3.9 million as of March 31, 2020 ) or (b) have no revolver drawings and available cash of at least $20.0 million for dominion to revert back to the Company.

While the Company is subject to cash dominion, the Administrative Agent is permitted to take control of the Company’s bank accounts and sweep cash to an account of the Administrative Agent on a daily basis.

Therefore, the total borrowings under the Credit Facility, and related issuance costs, were reclassified to current maturities of long-term debt as of March 31, 2020.

Such calculation is submitted, in the form of a borrowing base certificate, to the Administrative Agent within ten business days of the preceding month end.

The Credit Facility includes cash dominion provisions that permits the Administrative Agent to sweep cash daily from the Company’s bank accounts into an account of the Administrative Agent to repay the Company’s obligations under the Credit Facility.

Such dominion is triggered when excess availability is less than the greater of $ 6.25 million and 12.5 % of the lesser of (x) the maximum revolver amount and (y) the borrowing base as of such date of determination.

When the Company is subject to dominion, for 30 consecutive days it is required to either (a) maintain excess availability in excess of the greater of $ 6.25 million and 12.5 % of the lesser of (x) the maximum revolver amount and (y) the borrowing base as of such date of determination and no event of default has occurred and is continuing or (b) have no revolver drawings and available cash of at least $ 20.0 million for dominion to revert back to the Company.

During the three months ended March 31, 2020, the Company borrowed against the Credit Facility causing dominion to revert to the Administrative Agent, however after the 30 consecutive day period, as defined above, dominion reverted back to the Company in April 2020.

The borrowings under the Credit Facility, and related issuance costs, were included in long-term debt, net in the Condensed Consolidated Balance Sheets as of June 30, 2020, as the Company was not subject to dominion.

The Credit Facility is scheduled to mature on August 16, 2022.

See Note 14 — Subsequent Events for further details.

The applicable margin for the London Interbank Offered Rate (“LIBOR”) loans ranges from 1.5% to 2.0% and the applicable margin for Base Rate loans ranges from 0.5% to 1.0% , in each case, depending on Ranger LLC’s average excess availability under the Credit Facility.

The applicable margin for the LIBOR loan was 1.75% and the applicable margin for Base Rate loans was 0.75% as of March 31, 2020 .

The weighted average interest rate for the borrowings under the Credit Facility was 3.4% as of March 31, 2020 .

As of March 31, 2020 , under the Credit Facility, the Company borrowed $21.3 million , had a borrowing capacity of $31.5 million , with a residual $10.2 million available for borrowing.

The Company was in compliance with the Credit Facility covenants as of March 31, 2020 .

The Company capitalized fees of $0.7 million associated with the Credit Facility, which are included in the unaudited interim Condensed Consolidated Balance Sheets as a discount to the Credit Facility.

The applicable margin for the LIBOR loans ranges from 1.5 % to 2.0 % and the applicable margin for Base Rate loans ranges from 0.5 % to 1.0 %, in each case, depending on Ranger LLC’s average excess availability under the Credit Facility.

The applicable margin for the LIBOR loan was 1.75 % and the applicable margin for Base Rate loans was 0.75 % as of June 30, 2020.

The weighted average interest rate for the borrowings under the Credit Facility was 3.1 % for the six months ended June 30, 2020.

Under the Credit Facility, the total loan capacity was $ 15.8 million, which was based on a borrowing base certificate in effect as of June 30, 2020.

The Company had outstanding borrowings of $ 5.0 million under the Credit Facility, leaving a residual $ 10.8 million available for borrowings as of June 30, 2020.

The Company made a cash payment of $ 5.0 million on the Credit Facility in July 2020, such that there were no borrowings under the Credit Facility as of July 22, 2020.

The Company was in compliance with the Credit Facility covenants as of June 30, 2020.

The Company capitalized fees of $ 0.7 million associated with the Credit Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the Credit Facility.

Such fees will be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations.

Unamortized debt issuance costs as of March 31, 2020 was $0.4 million .

Unamortized debt issuance costs as of June 30, 2020 was $ 0.4 million.

Encina Master Financing and Security Agreement ( “ Financing Agreement ” )

5 unchanged sentences

The Financing Agreement is secured by a lien on certain high-spec rig assets.

As of March 31, 2020 , the aggregate principal balance outstanding under the Financing Agreement was $25.2 million .

As of June 30, 2020, the aggregate principal balance outstanding under the Financing Agreement was $ 22.7 million.

The total borrowings under the Financing Agreement were borrowed in three tranches, where the amounts outstanding are payable ratably over 48 months from the time of each borrowing.

The three tranches mature in July 2022, November 2022 and January 2023.

Borrowings under the Financing Agreement bear interest at a rate per annum equal to the sum of 8.0% plus LIBOR, which was 1.5% , as of March 31, 2020 .

Under the terms of the Financing Agreement, in no event will LIBOR fall below 1.5% and it requires that the Company maintain leverage ratios of 2.5 to 1.0 .

The Company was in compliance with the covenants under the Financing Agreement as of March 31, 2020 .

The Company capitalized fees of $0.9 million associated with the Financing Agreement, which are included in the unaudited Interim Condensed Consolidated Balance Sheets as a discount to the long term debt.

Such fees will be amortized through maturity and are included in Interest Expense, net in the unaudited interim Condensed Consolidated Statements of Operations.

Unamortized debt issuance costs as of March 31, 2020 was $0.6 million .

Borrowings under the Financing Agreement bear interest at a rate per annum equal to the sum of 8.0 % plus LIBOR, which was 1.5 % as of June 30, 2020.

Under the terms of the Financing Agreement, in no event will LIBOR fall below 1.5 % and it requires the Company to maintain a leverage ratio of 2.5 to 1.0 .

The Company was in compliance with the covenants under the Financing Agreement as of June 30, 2020.

The Company capitalized fees of $ 0.9 million associated with the Financing Agreement, which are included in the Condensed Consolidated Balance Sheets as a discount to the long term debt.

Such fees will be amortized through maturity and are included in Interest Expense, net in the Condensed Consolidated Statements of Operations.

Unamortized debt issuance costs as of June 30, 2020 was $ 0.5 million.

Debt Obligations and Scheduled Maturities

As of March 31, 2020 , aggregate future principal payments of total debt are as follows (in millions):

For the twelve months ending March 31,

As of June 30, 2020, aggregate future principal payments of total debt are as follows (in millions):

For the twelve months ending June 30, Total

Note 8 — Equity

Equity-Based Compensation

In 2017, the Company adopted the Ranger Energy Services, Inc.

2017 Long Term Incentive Plan (the “2017 Plan”).

The Company has granted shares of restricted stock (“restricted shares”) and performance-based restricted stock units (“performance stock units”) under the 2017 Plan.

Restricted Stock Awards

During the three months ended March 31, 2019, there were 495,750 restricted shares granted with an aggregate value of $3.9 million .

As of March 31, 2020 , there was an aggregate $3.5 million of unrecognized expense related to restricted shares issued which is expected to be recognized over a weighted average period of 1.5 years .

During the three and six months ended June 30, 2020, the Company granted 465,304 restricted shares with an aggregate value of $ 2.0 million.

During the six months ended June 30, 2019, the Company granted 495,750 restricted shares with an aggregate value of $ 3.9 million.

As of June 30, 2020, there was an aggregate $ 4.5 million of unrecognized expense related to restricted shares issued which is expected to be recognized over a weighted average period of 2.0 years.

Performance Stock Units

During the three months ended March 31, 2019, the Company granted 105,920 target shares of market based performance restricted stock units at a relative and absolute grant date fair value of approximately $11.96 per share and $9.50 per share, respectively, to certain employees.

The market based performance restricted stock units cliff vest on March 21, 2022.

As defined in the Ranger Energy Services, Inc.

2017 Long Term Incentive Plan, the performance criteria applicable to the performance awards is measured at a relative and absolute shareholder return, which measures the Company’s total shareholder return as compared to the total shareholder return of the defined peer group.

As of March 31, 2020 , there was an aggregate $0.9 million of unrecognized compensation cost related to performance stock units which is expected to be recognized over a weighted average period of 1.5 years .

The performance criteria applicable to performance stock units that have been granted by the Company are based on relative total shareholder return, which measures the Company’s total shareholder return as compared to the total shareholder return of a designated peer group, and absolute total shareholder return.

Generally, the performance stock units are subject to a three -year performance period.

During the three and six months ended June 30, 2020, the Company granted 121,262 target shares of market based performance stock units at a relative and absolute grant date fair value of approximately $ 6.33 per share and $ 3.62 per share, respectively, which are expected to vest on April 3, 2023.

During the six months ended June 30, 2019, the Company granted 105,920 target shares of market based performance stock units at a relative and absolute grant date fair value of approximately $ 11.96 per share and $ 9.50 per share, respectively, which are expected to vest on March 21, 2022.

As of June 30, 2020, there was an aggregate $ 1.3 million of unrecognized compensation cost related to performance stock units which is expected to be recognized over a weighted average period of 1.9 years.

Share Repurchases

During the three months ended March 31, 2020, the Company repurchased 344,827 shares of the Company’s Class A Common Stock for an aggregate $2.4 million in a privately negotiated transaction with ESCO.

During the six months ended June 30, 2020, the Company repurchased 344,827 shares of the Company’s Class A Common Stock for an aggregate $ 2.4 million in a privately negotiated transaction with ESCO.

Please see Note 12 — Commitments and Contingencies for further details.

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Share repurchases may take place from time to time on the open market or through privately negotiated transactions.

duration of the share repurchase program is 12 months and may be accelerated, suspended or discontinued at any time without notice.

During the three months ended March 31, 2020, the Company repurchased 93,063 shares of the Company’s Class A Common Stock for an aggregate $0.7 million under the previously announced share repurchase program.

The duration of the share repurchase program was 12 months and could have been accelerated, suspended or discontinued at any time without notice.

During the six months ended June 30, 2020, the Company repurchased 93,063 shares of the Company’s Class A Common Stock for an aggregate $ 0.7 million.

Refer to “Part II, Item 2.

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Customer Concentrations

For the three months ended March 31, 2020 , two customers, EOG Resources and Concho Resources, Inc., accounted for 18% and 17% of the Company’s consolidated revenue, respectively.

As of March 31, 2020 , approximately 28% of the accounts receivable balance was due from these customers.

For the three months ended March 31, 2019 , three customers, EOG Resources, Concho Resources, Inc.

and Sable Resources Land, LLC, accounted for 16% , 12% and 12% of the Company’s consolidated revenues, respectively.

As of March 31, 2019 , approximately 49% of the accounts receivable balance was due from these customers.

For the three months ended June 30, 2020, two customers, EOG Resources and Concho Resources, Inc., accounted for 23 % and 18 %, respectively, of the Company’s consolidated revenues.

For the six months ended June 30, 2020, the same two customers each accounted for 19 % of the Company’s consolidated revenues.

As of June 30, 2020, approximately 18 % of the accounts receivable balance was due from these customers.

For the three months ended June 30, 2019, two customers, EOG Resources and Concho Resources, Inc., accounted for 17 % and 15 %, respectively, of the Company’s consolidated revenues.

For the six months ended June 30, 2019, two customers, EOG Resources and Concho Resources, Inc., accounted for 17 % and 14 %, respectively, of the Company’s consolidated revenues.

As of June 30, 2019, approximately 19 % of the accounts receivable balance was due from these customers.

Note 10 — Income Taxes

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The effective U.S.

federal income tax rate applicable to the Company for the three months ended March 31, 2020 and 2019 was 5.9% and 7.1% , respectively.

federal income tax rate applicable to the Company for the six months ended June 30, 2020 and 2019 was 0.0 % and 11.3 %, respectively.

The Company is subject to the Texas Margin Tax that requires tax payments at a maximum statutory effective rate of 0.75 % on the taxable margin of each taxable entity that does business in Texas.

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however, a full valuation allowance has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes.

Total income tax expense for the three months ended March 31, 2020 differed from amounts computed by applying the U.S.

federal statutory tax rates to pre-tax income primarily due to changes in the valuation allowance related to current period pre-tax book income and the impact of permanent differences between book and taxable income attributable to non-controlling interest.

Total income tax expense for the three and six months ended June 30, 2020 and 2019 differed from amounts computed by applying the U.S.

federal statutory tax rates to pre-tax income or loss primarily due to changes in the valuation allowance related to pre-tax book income or loss and the impact of permanent differences between book and taxable income or loss attributable to noncontrolling interest.

The effective tax rate includes a rate benefit attributable to the fact that Ranger LLC operates as a limited liability company treated as a partnership for federal and state income tax purposes and as such, is not subject to federal and state income taxes, except for the State of Texas for which Ranger LLC files with the Company.

Accordingly, the portion of earnings attributable to non-controlling interest is subject to tax when reported as a component of the non-controlling interest’s taxable income.

Accordingly, the portion of earnings attributable to noncontrolling interest is subject to tax when reported as a component of the noncontrolling interest’s taxable income.

The Company is subject to the following material taxing jurisdictions:

the United States and Texas.

As of March 31, 2020 , the Company has no current tax years under audit.

As of June 30, 2020, the Company has no current tax years under audit.

The Company remains subject to examination for federal income taxes and state income taxes for tax years 2018, 2017 and 2016.

The Company has evaluated all tax positions for which the statute of limitations remains open and believes that the material positions taken would more likely than not be sustained upon examination.

Therefore, as of March 31, 2020 , the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.

Therefore, as of June 30, 2020, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.

The Coronavirus, Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws.

For the three months ended March 31, 2020, there were no material tax impacts to the unaudited interim condensed consolidated financial statements as it relates to COVID-19 measures.

For the three and six months ended June 30, 2020, there were no material tax impacts to the condensed consolidated financial statements as it relates to COVID-19 measures, although, the Company has deferred payroll tax payments through December 31, 2020.

The Company will continue to monitor additional guidance issued by the U.S.

Treasury Department, the Internal Revenue Service and others.

Note 11 — Earnings per Share

Earnings per share is based on the amount of net income allocated to the shareholders and the weighted average number of shares outstanding during the period for each class of Common Stock.

Three Months Ended March 31,

Income (numerator):

Net income attributable to Ranger Energy Services, Inc.

Net income attributable to Class A Common Stock

Net income attributable to Ranger Energy Services, Inc.

Note 11 — Earnings (Loss) per Share

Earnings (loss) per share is based on the amount of net income (loss) allocated to the shareholders and the weighted average number of shares outstanding during the period for each class of Common Stock.

The numerator and denominator used to compute earnings (loss) per share were as follows (in millions, except share and per share data):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Income (loss) (numerator):

Net income (loss) attributable to Ranger Energy Services, Inc.

$ ( 4.9 ) $ 1.0 $ ( 3.4 ) $ 3.0

Net income (loss) attributable to Class A Common Stock $ ( 4.9 ) $ 1.0 $ ( 3.4 ) $ 3.0

Net income (loss) attributable to Ranger Energy Services, Inc.

$ ( 4.9 ) $ 1.0 $ ( 3.4 ) $ 3.0

Effect of noncontrolling interest, net of tax — 0.5 — 1.4

Net income attributable to Class A Common Stock

Net income (loss) attributable to Class A Common Stock $ ( 4.9 ) $ 1.5 $ ( 3.4 ) $ 4.4

Weighted average shares (denominator):

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Weighted average number of shares - diluted 8,474,077 15,412,431 8,545,925 15,361,162

Basic income per share

Diluted income per share

During the three months ended March 31, 2020 and 2019, the Company excluded 0.7 million and 1.0 million equity-based awards in calculating diluted earnings per share, as the effect was anti-dilutive.

During the three months ended March 31, 2019, included in the diluted earnings per share are 206,897 shares associated with a related party liability.

Basic income (loss) per share $ ( 0.58 ) $ 0.12 $ ( 0.40 ) $ 0.35

Diluted income (loss) per share $ ( 0.58 ) $ 0.10 $ ( 0.40 ) $ 0.29

During the three and six months ended June 30, 2020, the Company excluded 0.9 million of equity-based awards and 6.9 million shares of Common Stock issuable upon conversion of the Company’s Class B Common Stock in calculating diluted loss per share, as the effect was anti-dilutive.

Note 12 — Commitments and Contingencies

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During the year ended December 31, 2018, the Company provided notice to ESCO that the Company sought to be indemnified for breach of contract.

The Company exercised the right to stop payments of the remaining principal balance of $5.8 million on the Seller's Notes and any unpaid interest, pending resolution of certain indemnification claims.

During the three months ended March 31, 2020 , the Company paid an aggregate of $6.2 million to ESCO, of which $3.8 million was paid to settle the Seller’s Note, and any unpaid interest, and $2.4 million was paid to repurchase shares of the Company’s Class A Common Stock.

The Company exercised its right to stop payments of the remaining principal balance of $ 5.8 million on the Seller's Notes and any unpaid interest, pending resolution of certain indemnification claims.

During the six months ended June 30, 2020, the Company paid an aggregate of $ 6.2 million to ESCO, of which $ 3.8 million was paid to settle the Seller’s Note, and any unpaid interest, and $ 2.4 million was paid to repurchase shares of the Company’s Class A Common Stock.

Please see “Note 7 — Debt” and “Note 8 — Equity” for further details of the debt and equity settlements.

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The Company incurs costs, indicated as Other, that are not allocable to any of the operating segments or lines of business and include corporate general and administrative expenses as well as depreciation of office furniture and fixtures and other corporate assets.

Segment information as of March 31, 2020 and December 31, 2019 and for the three months ended March 31, 2020 and 2019 is as follows (in millions):

Three months ended March 31, 2020

High Specification Rigs

Completion and Other Services

Processing Solutions

Segment information as of June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 is as follows (in millions):

High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended June 30, 2020

Revenues $ 11.4 $ 17.7 $ 1.6 $ — $ 30.7

Cost of services 10.1 13.3 0.4 — 23.8

Depreciation and amortization 5.2 2.6 1.3 0.4 9.5

Operating income

Operating income (loss) ( 3.9 ) 1.8 ( 0.1 ) ( 5.9 ) ( 8.1 )

Interest expense, net — — — 0.8 0.8

Net income (loss) ( 3.9 ) 1.8 ( 0.1 ) ( 6.7 ) ( 8.9 )

Capital expenditures $ ( 0.3 ) $ 0.5 $ 0.2 $ 0.3 $ 0.7

As of March 31, 2020

Six Months Ended June 30, 2020

Revenues $ 46.3 $ 61.0 $ 4.4 $ — $ 111.7

Cost of services 40.0 45.0 1.9 — 86.9

Depreciation and amortization 10.5 5.3 1.9 0.7 18.4

Operating income (loss) ( 4.2 ) 10.7 0.6 ( 11.2 ) ( 4.1 )

Interest expense, net — — — 1.9 1.9

Net income (loss) ( 4.2 ) 10.7 0.6 ( 13.2 ) ( 6.1 )

Capital expenditures $ 4.3 $ 1.7 $ 0.4 $ 0.3 $ 6.7

As of June 30, 2020

Property and equipment, net $ 125.7 $ 36.6 $ 38.9 $ 5.4 $ 206.6

Three Months Ended March 31, 2019

High Specification Rigs

Completion and Other Services

Processing Solutions

Total assets $ 155.9 $ 45.4 $ 40.1 $ 6.7 $ 248.1

High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended June 30, 2019

Revenues $ 33.1 $ 46.3 $ 4.9 $ — $ 84.3

Cost of services 28.7 35.0 1.9 — 65.6

Depreciation and amortization 4.8 2.9 0.5 0.2 8.4

Operating income

Operating income (loss) ( 0.4 ) 8.4 2.5 ( 6.5 ) 4.0

Interest expense, net — — — 1.9 1.9

Net income (loss) ( 0.4 ) 8.4 2.5 ( 8.7 ) 1.8

Capital expenditures $ 1.2 $ 1.8 $ 2.4 $ — $ 5.4

Six Months Ended June 30, 2019

Revenues $ 64.8 $ 97.9 $ 9.9 $ — $ 172.6

Cost of services 56.1 72.9 4.1 — 133.1

Depreciation and amortization 9.6 5.7 1.0 0.5 16.8

Operating income (loss) ( 0.9 ) 19.3 4.8 ( 14.0 ) 9.2

Interest expense, net — — — 3.2 3.2

Net income (loss) ( 0.9 ) 19.3 4.8 ( 17.8 ) 5.4

Capital expenditures $ 4.0 $ 3.6 $ 6.5 $ 0.5 $ 14.6

As of December 31, 2019

Property and equipment, net $ 132.2 $ 40.8 $ 40.5 $ 5.4 $ 218.9

Note 14 — Subsequent Events

As of April 29, 2020, the Company maintained available borrowings under the Credit Facility of at least $6.25 million for 30 consecutive days;

therefore cash dominion has reverted back to the Company.

As of April 29, 2020 the Company had borrowings of $8.9 million with available borrowings of $15.8 million under the Credit Facility.

Total assets $ 186.1 $ 57.4 $ 42.6 $ 7.4 $ 293.5

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements