What changed in this filing

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Item 1. Financial Statements

2021-11-05 compared with 2021-07-30 · 219 added, 132 removed, 442 unchanged (44% of the section changed)

Financial Statements

Financial Statements (Unaudited)

RANGER ENERGY SERVICES, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Cash and cash equivalents $ 2.8 $ 2.8

Restricted cash 42.0 —

Accounts receivable, net 57.6 25.9

4 unchanged sentences

Property and equipment, net 196.8 189.4

Goodwill 1.8 —

Intangible assets, net 8.0 8.5

18 unchanged sentences

50,000,000 shares authorized;

no shares issued or outstanding as of June 30, 2021 and December 31, 2020

no shares issued or outstanding as of September 30, 2021 and December 31, 2020

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

10,682,388 shares issued and 10,130,560 shares outstanding as of June 30, 2021;

11,716,996 shares issued and 11,165,168 shares outstanding as of September 30, 2021;

9,093,743 shares issued and 8,541,915 shares outstanding as of December 31, 2020

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

6,866,154 shares issued and outstanding as of June 30, 2021 and December 31, 2020

6,866,154 shares issued and outstanding as of September 30, 2021 and December 31, 2020

Class A Common Stock held in treasury at cost;

551,828 treasury shares as of June 30, 2021 and December 31, 2020

551,828 treasury shares as of September 30, 2021 and December 31, 2020

( 3.8 ) ( 3.8 )

5 unchanged sentences

Total liabilities and stockholders' equity $ 338.9 $ 240.6

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

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

RANGER ENERGY SERVICES, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except share and per share amounts)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

28 unchanged sentences

Diluted 11,011,864 8,506,781 9,714,508 8,532,788

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

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

RANGER ENERGY SERVICES, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in millions, except share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020 2021 2020 2021 2020

4 unchanged sentences

Shares withheld for taxes on equity transactions ( 15,824 ) ( 2,881 ) — — ( 139,927 ) ( 81,309 ) — —

Share issuance for acquisition 1,256,000 — — — 1,256,000 — — —

Share issuance for acquisitions 900,000 — — — 2,156,000 — — —

Balance, end of period 11,716,996 9,080,589 $ 0.1 $ 0.1 11,716,996 9,080,589 $ 0.1 $ 0.1

40 unchanged sentences

Balance, end of period $ 175.9 $ 190.6 $ 175.9 $ 190.6

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

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

RANGER ENERGY SERVICES, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash Flows from Operating Activities

Net loss $ ( 26.5 ) $ ( 11.8 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

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

Depreciation and amortization 24.9 26.8

Equity based compensation 2.1 2.8

Gain on debt retirement — ( 2.1 )

(Gain) Loss on debt retirement 0.2 ( 2.1 )

Other costs, net 1.2 3.0

7 unchanged sentences

Accrued expenses 23.8 ( 9.9 )

Other current liabilities 40.2 —

Operating lease, right-of-use obligations 1.1 ( 1.4 )

Other long-term liabilities 0.2 1.1

Net cash (used in) provided by operating activities ( 4.1 ) 24.2

Net cash provided by operating activities 23.4 27.3

Cash Flows from Investing Activities

1 unchanged sentence

Proceeds from disposal of property and equipment 0.4 0.8

Purchase of business, net of cash received ( 3.5 ) —

Purchase of businesses, net of cash received ( 2.4 ) —

Net cash used in investing activities ( 5.9 ) ( 5.6 )

2 unchanged sentences

Principal payments on Credit Facility ( 52.5 ) ( 42.9 )

Borrowings under Eclipse M&E 12.5 —

Deferred financing costs on Eclipse ( 2.4 ) —

Principal payments on Secured Promissory Note ( 0.6 ) —

Principal payments on Encina Master Financing Agreement ( 17.7 ) ( 7.5 )

5 unchanged sentences

Repurchase of Class A Common Stock — ( 3.1 )

Net cash provided by (used in) financing activities 9.6 ( 19.6 )

Increase (decrease) in Cash and Cash equivalents 0.6 ( 0.9 )

Cash and Cash Equivalents, Beginning of Period 2.8 6.9

Cash and Cash Equivalents, End of Period $ 3.4 $ 6.0

Net cash provided by financing activities 24.5 ( 25.2 )

Increase in cash, cash equivalents and restricted cash 42.0 ( 3.5 )

Cash, cash equivalents and restricted cash, Beginning of Period 2.8 6.9

Cash, cash equivalents and restricted cash, End of Period $ 44.8 $ 3.4

Supplemental Cash Flow Information

2 unchanged sentences

Capital expenditures $ ( 0.1 ) $ 0.1

Additions to fixed assets through financing leases $ ( 0.7 ) $ ( 1.0 )

Additions to fixed assets through installment purchases and financing leases $ ( 2.5 ) $ ( 1.0 )

Issuance of Class A Common Stock for acquisition $ ( 16.4 ) $ —

Secured Promissory Note $ ( 11.4 ) $ —

Early termination of financing leases $ — $ 1.3

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

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

RANGER ENERGY SERVICES, INC.

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 — Organization and Business Operations

16 unchanged sentences

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.

Basic Energy (“Basic”) Acquisition

On September 15, 2021, Ranger Energy Acquisition, LLC, a Delaware corporation and wholly owned subsidiary of the Company entered into an Asset Purchase Agreement for certain assets of Basic and certain of its subsidiaries (the “Basic Sellers”), closing on October 1, 2021.

The Company purchased assets associated with Basic’s well servicing, fishing and rental, coiled tubing operations, and rolling stock assets required to support the operating assets being purchased and real property locations inclusive of, but not limited to, real property owned in New Mexico, Oklahoma and Texas.

The Company paid $ 36.65 million in cash to Basic, subject to normal closing adjustments and assumed liabilities.

See Note 16 — Subsequent Events for further details.

Coronavirus (“COVID-19”)

The outbreak of the novel 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.

3 unchanged sentences

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 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.

2 unchanged sentences

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 natural gas liquids (“NGLs”) prices through the second quarter of 2021.

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.

Factors deriving from the COVID-19 response, as well as the oil oversupply, that have or may negatively impact sales, liquidity and gross margins in the future include, but are not limited to:

5 unchanged sentences

At the close of the first quarter of 2020, the Company initiated cost reductions throughout the organization, including a reduction in the workforce and salary reductions.

However, during the second quarter of 2021 certain employee salaries were reinstated.

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

4 unchanged sentences

Basis of Presentation

The consolidated balance sheet as of December 31, 2020 has been derived from audited financial statements and the unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

The consolidated balance sheet as of December 31, 2020 has been derived from audited financial statements and the Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S.

GAAP”) for interim financial information and the Securities and Exchange Commission’s (the “SEC”) instructions to Form 10-Q and Article 10 of Regulation S-X.

Accordingly, certain notes and other information have been condensed or omitted.

The unaudited condensed consolidated financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results of operations for the interim periods.

The Condensed Consolidated Financial Statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for the fair presentation of the results of operations for the interim periods.

These interim financial statements should be read in conjunction with the consolidated financial statements and related notes for the years ended December 31, 2020 and 2019, included in the Annual Report filed on Form 10-K for the year ended December 31, 2020 (the “Annual Report”).

2 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 six months ended June 30, 2021.

Restricted Cash

The Company’s restricted cash consisted of cash the Company was contractually obligated to utilize for the purchase of the Basic Energy assets and related transactions costs.

The Company completed the Basic Energy Acquisition on October 1, 2021 and included this purchase as a liability in Other current liabilities in the Condensed Consolidated Balance Sheets.

On October 1, 2021, the Company issued Series A Preferred Stock in connection with the receipt of the restricted cash.

See Note 16 — Subsequent Events for further details.

Use of Estimates

5 unchanged sentences

• Depreciation and amortization of property and equipment and intangible assets;

• Assets acquired and liabilities assumed in business combinations;

• Impairment of property and equipment and intangible assets;

23 unchanged sentences

Note 3 — Business Combinations

The Company completed two acquisitions during the nine months ended September 30, 2021 with both purchases accounted for using the acquisition method of accounting under the FASB Accounting Standards Codification 805, Business Combinations (“ASC 805”).

The results of operations for each of the acquisitions are included in the accompanying Condensed

Consolidated Statements of Operations from the respective date of each acquisition.

Under the acquisition method of accounting, the assets and liabilities have been recorded at their respective estimated fair values as of the date of completion of the acquisition and reported into Ranger’s Condensed Consolidated Balance Sheets.

The preliminary purchase price assessment remains an ongoing process and is subject to change for up to one year subsequent to the closing date of the acquisition.

Patriot Well Solutions (“Patriot”) Acquisition

On May 14, 2021, the Company and certain of its subsidiaries completed the acquisition of Patriot (the “Patriot Acquisition”), a provider of wireline evaluation and intervention services that operate in the Permian, Denver-Julesburg and Powder River Basins and Bakken Shale.

The purchase was accounted for using the acquisition method of accounting under FASBs Accounting Standards Codification 805, Business Combinations (“ASC 805”).

The results of operations for the acquisition are included in the accompanying condensed consolidated statements of operations from the date of acquisition.

As consideration for the Patriot Acquisition, pursuant to the Membership Interest Purchase Agreement, the Company paid an aggregate of $ 11.0 million, which included 1.3 million shares of Class A Common Stock and cash payments of $ 3.3 million, net of cash acquired.

On May 14, 2021, the Company acquired all of the outstanding stock of Patriot, a provider of wireline evaluation and intervention services that operate in the Permian, Denver-Julesburg and Powder River Basins and Bakken Shale.

As consideration for the Patriot Acquisition the Company paid an aggregate of $ 11.0 million, which included 1.3 million shares of Class A Common Stock and cash payments of $ 3.3 million, net of cash acquired.

The financial results of Patriot are included in the Completion and Other Services reporting segment.

The pro forma results of operations for the Patriot Acquisition is not presented because the pro forma effects, individually and in the aggregate, are not material to the Company’s consolidated results of operations.

PerfX Wireline Services (“PerfX”) Acquisition

On July 8, 2021, the Company acquired all of the outstanding stock of PerfX, a provider of wireline services that operate in Williston, North Dakota and Midland, Texas.

Following the acquisition of PerfX, the Company significantly expanded its scale and scope of the existing wireline business, which now includes production services.

The aggregate consideration was $ 20.1 million, which included 1,000,000 shares of Class A Common Stock and a Secured Promissory Note of $ 11.4 million.

The Class A Common Stock issuance includes 100,000 shares that will be issued by the Company on the 12-month anniversary of the acquisition date.

The Secured Promissory Note bears an interest rate of 8.5 % per annum and holds certain assets as collateral through the scheduled maturity date of January 31, 2024.

Refer to “Note 9 — Debt” for further details related to the Secured Promissory Note.

The PerfX purchase price includes a warrant to acquire a 30% ownership in the XConnect Business (“XConnect”), which expires on July 8, 2031.

XConnect is the manufacturer of a perforating gun system developed by the PerfX sellers alongside the PerfX wireline service business.

The warrant requires the Company to maintain a specific minimum level of purchases of XConnect’s manufactured products.

Should the Company fail to maintain the specified minimum level of purchases, a forfeiture event would occur.

The Company may elect to cure the forfeiture event through a cash payment to XConnect.

If the Company elects to not cure the forfeiture event, the ownership percentage would reduce to 15%.

Upon the occurrence of a second uncured forfeiture event, the warrant is deemed to be cancelled.

The following table presents the fair value of assets acquired and liabilities assumed in accordance with ASC 805 (in millions):

Accounts receivable 4.6

Inventory 2.4

Prepaid and other current assets 0.9

Property and equipment 17.6

Total assets acquired 26.5

Accounts payable 5.4

Accrued expenses 1.0

Total liabilities assumed 6.4

Allocated purchase price $ 20.1

The following is supplemental pro-forma revenue, operating loss, net loss and loss per share had the PerfX Acquisition occurred as of January 1, 2020 (in millions):

Nine Months Ended September 30,

Revenue $ 224.9 $ 225.0

Operating loss $ ( 27.2 ) $ ( 13.9 )

Net loss $ ( 30.1 ) $ ( 20.8 )

Basic and diluted loss per share $ ( 1.90 ) $ ( 1.20 )

The supplemental pro forma information presented above are being provided for information purposes only and may not necessarily reflect the future results of operations of the Company or what the results of operations would have been had the

Company owned and operation the PerfX Acquisition assets since January 1, 2020.

There were no material non-recurring pro-forma adjustments present.

The financial results of PerfX are included in the Completion and Other Services reporting segment.

The Company reported revenue and operating income during the three and nine months ended September 30, 2021 that included approximately $ 27.9 million and $ 0.5 million, respectively.

The transaction costs related to the PerfX Acquisition approximated $ 0.7 million.

Note 4 — Property and Equipment, Net

1 unchanged sentence

Estimated Useful Life

(years) June 30, 2021 December 31, 2020

(years) September 30, 2021 December 31, 2020

High specification rigs 20 $ 127.2 $ 127.2

8 unchanged sentences

Property and equipment, net $ 196.8 $ 189.4

Depreciation expense was $ 8.0 million and $ 9.3 million for the three months ended June 30, 2021 and 2020, respectively, and $ 15.8 million and $ 18.0 million for the six months ended June 30, 2021 and 2020, 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.

Please see “Note 1 — Organization and Business Operations—Recent Events” for additional information regarding the macroeconomic environment and “Part I, Item 8.

Financial Statements and Supplementary Data — Note 2 — Summary of Significant Accounting Policies — Significant Accounting Policies — Long-Lived Asset Impairment” of the Annual Report for the Company’s policy of testing long-lived assets for impairments.

Depreciation expense was $ 8.6 million and $ 8.2 million for the three months ended September 30, 2021 and 2020, respectively, and $ 24.4 million and $ 26.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Note 5 — Goodwill and Intangible Assets

During the three and six months ended June 30, 2021, the Company recognized $ 1.8 million of goodwill in connection with the Patriot Acquisition.

Definite lived intangible assets are comprised of the following (in millions):

Estimated Useful Life

(years) June 30, 2021 December 31, 2020

(years) September 30, 2021 December 31, 2020

Customer relationships 10 - 18

2 unchanged sentences

Intangible assets, net $ 8.0 $ 8.5

Amortization expense was $ 0.2 million for both of the three months ended June 30, 2021 and 2020, and $ 0.4 million for both of the six months ended June 30, 2021 and 2020.

Amortization expense was $ 0.1 million and $ 0.2 million for the three months ended September 30, 2021 and 2020 respectfully.

Amortization expense was $ 0.5 million and $ 0.6 million for the nine months ended September 30, 2021 and 2020, respectively.

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

For the twelve months ending June 30, Amount

For the twelve months ending September 30, Amount

Thereafter 4.4

1 unchanged sentence

Accrued expenses include the following (in millions):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Accrued payables $ 19.0 $ 2.7

8 unchanged sentences

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 and six months ended June 30, 2021 and 2020, are as follows (in millions):

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

Lease costs and other information related to operating leases for the three and nine months ended September 30, 2021 and 2020, are as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

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

For the twelve months ending June 30,

For the twelve months ending September 30,

Thereafter 0.7

9 unchanged sentences

The finance leases are included in Property and equipment, net, Other current liabilities and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

Lease costs and other information related to finance leases for the three and six months ended June 30, 2021 and 2020, are as follows (in millions):

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

Lease costs and other information related to finance leases for the three and nine months ended September 30, 2021 and 2020, are as follows (in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

5 unchanged sentences

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

For the twelve months ending June 30, Total

For the twelve months ending September 30, Total

Total future minimum lease payments 3.8

4 unchanged sentences

Note 8 — Other Financing Liabilities

During the three and six months ended June 30, 2021, the Company entered into an agreement to sell a parcel of land and a building attached thereto, and subsequently leased back the property.

During the nine months ended September 30, 2021, the Company entered into an agreement to sell a parcel of land and a building attached thereto, and subsequently leased back the property.

The Company received cash of $ 12.1 million from the sale and the lease has a 15 year term with an annual rent escalation of two percent per annum.

During the six months ended June 30, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently leased back such assets and received cash of $ 3.5 million to be paid over 18 to 60 months.

The sale of the fixed assets during the three and six months ended June 30, 2021, did not qualify for sale accounting, therefore these leases were classified as finance leases and no gain or loss was recorded.

During the nine months ended September 30, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently leased back such assets and received cash of $ 3.5 million to be paid over 18 to 60 months.

These sales did not qualify for sale accounting, therefore these leases were classified as finance leases and no gain or loss was recorded.

The net book value of the assets remained in property and equipment, net and are depreciating over their original useful lives.

As of June 30, 2021, aggregate future lease payments of the financing liabilities are as follows (in millions):

For the twelve months ending June 30, Total

As of September 30, 2021, aggregate future lease payments of the financing liabilities are as follows (in millions):

For the twelve months ending September 30,

Thereafter 9.8

2 unchanged sentences

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

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Credit Facility $ — $ 7.2

Encina Master Financing Agreement — 17.3

Eclipse Loan and Security Agreement 39.5 —

Installment Purchases 1.1 —

Promissory Note — —

Secured Promissory Note 10.7 —

Total Debt 51.3 24.5

2 unchanged sentences

Credit Facility

On August 16, 2017, Ranger Services, entered into a $ 50.0 million senior secured revolving credit facility (the “Credit Facility”) by and among certain of Ranger’s subsidiaries, as borrowers, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”).

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

The Company’s eligible accounts receivable serves as collateral for the borrowings under the Credit Facility and is scheduled to mature in August 2022.

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 margins for the LIBOR loan was 2.1 % and the Base Rate loan was 4.3 % as of June 30, 2021.

The weighted average interest rate for the borrowings under the Credit Facility was 2.6 % for the six months ended June 30, 2021.

The applicable margin for the LIBOR and Base Rate loans will decrease to 1.75 % and 0.75 % effective July 1, 2021 due to an increase in the average availability.

Under the Credit Facility, the total loan capacity was $ 22.5 million, which was based on a borrowing base certificate in effect as of June 30, 2021.

The Company had outstanding borrowings of $ 9.7 million under the Credit Facility, leaving a residual $ 12.8 million available for borrowings as of June 30, 2021.

The Company was in compliance with the Credit Facility covenants as of June 30, 2021.

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

Unamortized debt issuance costs as of June 30, 2021 was $ 0.2 million.

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

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

The weighted average interest rate for the borrowings under the Credit Facility was 2.3 % for the nine months ended September 30, 2021.

The Credit Facility was extinguished as of September 30, 2021 in connection with the Eclipse Loan Security Agreement, which is described further below.

Encina Master Financing and Security Agreement

On June 22, 2018, the Company entered into a Master Financing and Security Agreement (the “Financing Agreement”) with Encina Equipment Finance SPV, LLC (the “Lender”).

The amount available to be provided by the Lender to the Company under the Financing Agreement was contemplated to be not less than $ 35.0 million, and not to exceed $ 40.0 million.

The first financing was required to be in an amount up to $ 22.0 million, which was used by the Company to acquire certain capital equipment.

Subsequent to the first financing, the Company borrowed an additional $ 17.8 million, net of expenses and in two tranches, under the Financing Agreement.

The Company utilized the additional net proceeds to acquire certain capital equipment.

The Company received an aggregate of $ 40 million to acquire certain capital equipment.

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

Borrowings under the Financing Agreement bore interest at a rate per annum equal to the sum of 8.0 % plus LIBOR, which was 1.5 % as of September 30, 2021.

The outstanding balance of the Financing Agreement was paid in full as of September 30, 2021 in connection with the Eclipse Loan and Security Agreement.

Please see below for further details.

Eclipse Loan and Security Agreement

On September 27, 2021, the Company entered into a loan and security agreement with Eclipse Business Capital LLC (“EBC”) and Eclipse Business Capital SPV, LLC, as administrative agent providing the Company with a senior secured credit facility in an aggregate principal amount of $ 77.5 million (the “EBC Credit Facility”), consisting of (i) a revolving credit facility in an aggregate principal amount of up to $ 50.0 million (the “Revolving Credit Facility”), (ii) a machinery and equipment term loan facility in an aggregate principal amount of up to $ 12.5 million (the “M&E Term Loan Facility”) and (iii) a term loan B facility in an aggregate principal amount of up to $ 15.0 million (the “Term Loan B Facility”).

The Company capitalized fees of $ 2.7 million associated with the EBC Credit Facility, which are included in the Condensed Consolidated Balance Sheets as a discount to the EBC Credit Facility.

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

The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of September 30, 2021.

Revolving Credit Facility

The Revolving Credit Facility was drawn in part on September 27, 2021, to repay existing Credit Facility, and to pay for the fees, costs and expenses incurred in connection with the EBC Credit Facility.

The undrawn portion of the Revolving Credit Facility is available to fund working capital and other general corporate expenses and for other-permitted uses, including the financing of permitted investments and restricted payments.

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

The Company’s eligible accounts receivable serves as collateral for the borrowings under the Revolving Credit Facility and is scheduled to mature in September 2025.

The Revolving Credit Facility includes a subjective acceleration clause and cash dominion provisions that permits the administrative agent to sweep cash daily from certain bank accounts into an account of the administrative agent to repay the Company’s obligations under the Revolving Credit Facility.

Therefore, the borrowings of the Revolving Credit Facility will be classified as current maturities of long-term debt indefinitely.

Under the Revolving Credit Facility, the total loan capacity was $ 37.5 million, which was based on a borrowing base certificate in effect as of September 30, 2021.

The Company had outstanding borrowings of $ 29.7 million under the Revolving Credit Facility, leaving a residual $ 7.8 million available for borrowings as of September 30, 2021.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum equal to 5 % in excess of the LIBOR Rate and 4 % in excess of the Base Rate through April 1, 2022.

The weighted average applicable margin for the loan was 6.0 % for the three months ended September 30, 2021.

M&E Term Loan Facility

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $ 12.5 million where the monthly installments commence on March 1, 2022.

Borrowings under the M&E Term Loan Facility bear interest at a rate per annum equal to 8 % in excess of the LIBOR Rate and 7 % in excess of the Base Rate.

The weighted average interest rate for the loan was 9.0 % for the three months ended September 30, 2021.

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

As of June 30, 2021, the aggregate principal balance outstanding under the Financing Agreement was $ 12.7 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 June 30, 2021.

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, 2021.

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 continue to 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, 2021 was $ 0.3 million.

The M&E Term Loan Facility is scheduled to mature in September 2025.

Any principal amounts repaid may not be reborrowed.

On September 27, 2021, the M&E Term Loan Facility was drawn in full to repay existing Encina Master Financing Agreement and Credit Facility.

On October 1, 2021, the Term Loan B, was finalized in connection with the closing of the Basic Acquisition.

Borrowings under Term Loan B bear interest at a rate per annum equal to 12 % in excess of the LIBOR Rate and 11 % in excess of the Base Rate.

Term Loan B is scheduled to mature in September 2022.

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

As of September 30, 2021, the Term Loan B Facility was undrawn and on October 1, 2021, the Term Loan B was drawn in full to repay borrowings under the Revolving Credit Facility.

Any principal amounts repaid may not be reborrowed.

Secured Promissory Note

In connection with the PerfX Acquisition, on July 8, 2021, Bravo Wireline, LLC, a wholly owned subsidiary of Ranger, entered into a security agreement with Chief Investments, LLC, as administrative agent, for the financing of certain assets acquired.

Certain of the assets acquired serve as collateral under the Secured Promissory Note.

As of September 30, 2021, the aggregate principal balance outstanding was $ 10.7 million.

Borrowings under the Secured Promissory Note bear interest at a rate of 8.5 % per annum and is scheduled to mature in January 2024.

Other Installment Purchases

During the three and six months ended June 30, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral.

As of June 30, 2021, the aggregate principal balance outstanding under the Installment Agreements was $ 1.0 million and is payable ratably over 36 months from the time of each purchase.

During the three and nine months ended September 30, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral.

As of September 30, 2021, the aggregate principal balance outstanding under the Installment Agreements was $ 1.1 million and is payable ratably over 36 months from the time of each purchase.

The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.

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These notes included a note for $ 5.8 million, which was settled in March 2020.

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.

During the nine months ended September 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.

Debt Obligations and Scheduled Maturities

As of June 30, 2021, aggregate future principal payments of total debt are as follows (in millions):

For the twelve months ending June 30, Total

As of September 30, 2021, aggregate future principal payments of total debt are as follows (in millions):

For the twelve months ending September 30, Total

Note 10 — Equity

Series A Preferred Stock

On September 9, 2021, the Company’s board of directors authorized 6,000,001 shares of a series of the Company’s existing preferred stock designated as “Series A Preferred Stock”.

The Preferred Stock is not entitled to voting rights or dividends, or other distributions from the Company.

In the event of liquidation, dissolution or winding up Ranger Energy Services, Inc., holders of Preferred Stock are entitled to receive assets of Ranger prior to any distribution of assets to Common Stockholders.

There were no shares issued or outstanding as of September 30, 2021.

See Note 16 — Subsequent Events for further details.

Equity-Based Compensation

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The Company has granted RSAs, which generally vest in three equal annual installments beginning on the first anniversary date of the grant.

During the three and six months ended June 30, 2021, the Company granted 500,073 restricted shares with an aggregate value of $ 3.0 million.

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

As of June 30, 2021, there was an aggregate $ 4.7 million of unrecognized expense related to restricted shares issued which are expected to be recognized over a weighted average period of 1.9 years.

During the three and nine months ended September 30, 2021, the Company granted 145,215 restricted shares and 645,288 restricted shares, respectively, with an aggregate value of $ 4.2 million.

During the three and nine months ended September 30, 2020, the Company granted 649,039 restricted shares with an aggregate fair value of $ 2.5 million.

As of September 30, 2021, 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 1.9 years.

Performance Stock Units

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

During the three and six months ended June 30, 2021, the Company granted 145,270 target shares of market based performance stock units at a relative and absolute grant date fair value of approximately $ 9.24 and $ 7.45 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on March 15, 2024.

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 $ 6.33 per share and $ 3.62 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on April 3, 2023.

As of June 30, 2021, there was an aggregate $ 1.8 million of unrecognized compensation cost related to performance stock units which are expected to be recognized over a weighted average period of 1.9 years.

During the three and nine months ended September 30, 2021, the Company granted 100,942 target shares and 246,212 target shares, respectively, of market based performance stock units at a relative and absolute grant date fair value of approximately $ 9.24 and $ 7.45 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on March 15, 2024.

During the three and nine months ended September 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 $ 6.33 per share and $ 3.62 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on April 3, 2023.

As of September 30, 2021, there was an aggregate $ 1.4 million of unrecognized compensation cost related to performance stock units which are expected to be recognized over a weighted average period of 2.0 years.

Share Repurchases

During the six months ended June 30, 2020, the Company repurchased 344,828 shares of the Company’s Class A Common Stock for an aggregate $ 2.4 million in a privately negotiated transaction with ESCO.

During the nine months ended September 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.

See Note 14 — Commitments and Contingencies for further details.

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The duration of the share repurchase program was 12 months and therefore ended in June 2020.

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.

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

Note 11 — Risk Concentrations

Customer Concentrations

For the three months ended June 30, 2021, two customers, EOG Resources and ConocoPhillips, accounted for 20 % and 14 %, respectively, of the Company’s consolidated revenues.

For the six months ended June 30, 2021, the same two customers accounted for 22 % and 12 %, respectively, of the Company’s consolidated revenues.

As of June 30, 2021, approximately 28 % of the net 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 September 30, 2021, two customers, EOG Resources (“EOG”) and Pioneer Natural Resources (“Pioneer”), accounted for 16 % and 12 %, respectively, of the Company’s consolidated revenues.

For the nine months ended September 30, 2021, three customers, EOG, Pioneer and Conoco Phillips accounted for 19 %, 11 % and 11 %, respectively, of the Company’s consolidated revenues.

As of September 30, 2021, approximately 32 % of the net accounts receivable balance was due from these three customers.

For the three months ended September 30, 2020, two customers, EOG and Concho Resources, Inc., accounted for 24 % and 16 %, respectively, of the Company’s consolidated revenues.

For the nine months ended September 30, 2020, the same two customers each accounted for 20 % and 18 % of the Company’s consolidated revenues.

As of September 30, 2020, approximately 27 % of the accounts receivable balance was due from these customers.

Note 12 — Income Taxes

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The effective U.S.

federal income tax rate applicable to the Company for the six months ended June 30, 2021 and 2020 was ( 1.7 )% and 0.0 %, respectively.

federal income tax rate applicable to the Company for the nine months ended September 30, 2021 and 2020 was ( 0.2 )% and ( 0.8 )%, 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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The VA 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 and six months ended June 30, 2021 and 2020 differed from amounts computed by applying the U.S.

Total income tax expense for the three and nine months ended September 30, 2021 and 2020 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.

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the United States and Texas.

As of June 30, 2021, the Company has no current tax years under audit.

As of September 30, 2021, 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 2019, 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 June 30, 2021, the Company had not established any reserves for, nor recorded any unrecognized benefits related to, uncertain tax positions.

Therefore, as of September 30, 2021, 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 and six months ended June 30, 2021, there were no material tax impacts to the condensed consolidated financial statements as it relates to COVID-19 measures.

However, the Company has deferred payroll tax payments of $ 1.9 million as of June 30, 2021, where 50% of the deferral is due by December 31, 2021.

For the three and nine months ended September 30, 2021, there were no material tax impacts to the Condensed Consolidated Financial Statements as it relates to COVID-19 measures.

However, the Company has deferred payroll tax payments of $ 1.9 million as of September 30, 2021, where 50% of the deferral is due by December 31, 2021.

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

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

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Diluted loss per share $ ( 0.51 ) $ ( 0.38 ) $ ( 1.63 ) $ ( 0.77 )

During the three and six months ended June 30, 2021 and 2020, the Company excluded approximately 1.3 million and 0.9 million of equity-based awards, respectively.

During the three and nine months ended September 30, 2021 and 2020, the Company excluded approximately 1.1 million and 1.3 million of equity-based awards, respectively.

For all periods presented in the table above, the Company excluded 6.9 million shares of Common Stock issuable upon conversion of the Company’s Class B Common Stock in calculating diluted loss per share.

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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 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.

During the nine months ended September 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 9 — Debt” and “Note 10 — Equity” for further details of the debt and equity settlements.

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The Company’s high-spec rigs facilitate operations throughout the lifecycle of a well, including (i) completion, (ii) workover, (iii) well maintenance and (iv) decommissioning.

The Company provides these advanced well services to E&P companies, particularly to those operating in unconventional oil and natural gas reservoirs and requiring technically and operationally advanced services.

The Company provides these advanced well services to E&P companies, particularly to those operating in unconventional oil and natural gas reservoirs and

requiring technically and operationally advanced services.

The Company’s high-spec rigs are designed to support growing U.S.

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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 June 30, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020 is as follows (in millions):

Segment information as of September 30, 2021 and December 31, 2020 and for the three and nine months ended September 30, 2021 and 2020 is as follows (in millions):

High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Revenues $ 29.9 $ 50.8 $ 1.0 $ — $ 81.7

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Capital expenditures $ 2.2 $ 0.7 $ 0.1 $ — $ 3.0

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

Revenues $ 80.6 $ 86.1 $ 3.3 $ — $ 170.0

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Capital expenditures $ 4.6 $ 1.8 $ 0.1 $ — $ 6.5

As of June 30, 2021

As of September 30, 2021

Property and equipment, net $ 106.8 $ 49.5 $ 35.7 $ 4.8 $ 196.8

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High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Revenues $ 14.5 $ 18.9 $ 1.2 $ — $ 34.6

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Capital expenditures $ 0.2 $ 0.3 $ 0.1 $ — $ 0.6

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Revenues $ 60.8 $ 79.9 $ 5.6 $ — $ 146.3

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Note 16 — Subsequent Events

PerfX Wireline Services, LLC (“PerfX”) Acquisition

On July 8, 2021 (the “Acquisition Date”), the Company and certain of its subsidiaries, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with PerfX Wireline Services, LLC, a Nevada limited liability company (the “PerfX Acquisition”).

As consideration for the assets acquired pursuant to the Asset Purchase Agreement, the Company issued 1,000,000 shares of Class A Common Stock, in addition to a Secured Promissory Note of $ 11.4 million, which bears an interest rate of 8.5 % per annum and holds certain assets as collateral through the scheduled maturity date of January 31, 2024.

The PerfX Acquisition will be accounted for using the acquisition method of accounting in accordance with ASC 805.

Basic Energy Acquisition

On September 15, 2021, Ranger Energy Acquisition, LLC entered into an Asset Purchase Agreement for certain assets of the Basic Sellers, closing on October 1, 2021.

The Company did not acquire any assets of Basic in the State of California or any assets of Basic’s water logistic assets.

The Company paid $ 36.65 million in cash to Basic, subject to normal closing adjustments and assumed liabilities.

The Basic Energy Acquisition will be accounted for using the acquisition method of accounting in accordance with ASC 805.

The results of operations for the acquisition will be included in the accompanying Condensed Consolidated Statements of Operations from the acquisition date.

The initial accounting for the PerfX Acquisition has not yet been completed, however management expects to finalize during the year ending December 31, 2021.

The initial accounting for the Basic Energy Acquisition has not yet been completed.

Tax Receivable Agreement (“TRA”) Termination and Class B Common Stock Redemption

On October 1, 2021, in connection with the Basic Acquisition, pursuant to the Tax Receivable Termination and Settlement Agreement (the “TRA Termination Agreement”), dated as of September 10, 2021, certain stockholders of the Company redeemed outstanding units in Ranger LLC, and the Company redeemed the corresponding shares of its Class B Common Stock, in each case, for an equivalent number of shares of Class A Common Stock.

The Company issued 376,185 shares of Class A Common Stock upon redemption of the Ranger LLC Units and Class B Common Stock pursuant to the TRA Termination Agreement were issued and sold in reliance upon an exemption from the registration requirements of the Securities Act pursuant to Section 4(a)(2) thereof.

Following the redemptions, no shares of Class B Common Stock are issued and outstanding.

Series A Preferred Stock - Issuance

On October 1, 2021, the Company consummated the private placement under the Securities Purchase dated September 10, 2021, with certain accredited investors of 6.0 million shares of Series A Convertible Preferred Stock, (the “Preferred Stock”), in exchange for cash consideration in an aggregate amount of $ 42.0 million.

The Preferred Stock will automatically convert into Class A Common Stock, following receipt of stockholder approval and effectiveness of the registration statement.

In connection with the issuance of the Preferred Stock, the Company received $ 42.0 million on September 30, 2021.

The cash is included in restricted cash with a corresponding offset in other current liabilities within the Condensed Consolidated Balance Sheets.

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