What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-07-30 · 191 added, 157 removed, 325 unchanged (52% of the section changed)

21 unchanged sentences

Patriot Well Solutions (“Patriot”) Acquisition

During the three and six months ended June 30, 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 results of operations for the acquisition are included in the accompanying condensed consolidated statements of operations from the date of acquisition.

PerfX Wireline Services, LLC (“PerfX”) Acquisition

On July 8, 2021, the Company and certain of its subsidiaries executed an Asset Purchase Agreement with PerfX Wireline Services, LLC to acquire certain assets (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 (the “Secured Promissory Note”), which bears an interest rate of 8.5% per annum.

The Secured Promissory Note holds certain assets as collateral through the scheduled maturity date of January 31, 2024.

On May 14, 2021, the Company acquired all 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.

PerfX Wireline Services (“PerfX”) Acquisition

On July 8, 2021, the Company completed the acquisition 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 financial results of PerfX are included in the Completion and Other Services reporting segment.

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 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

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.

Basic Energy Acquisition

On September 15, 2021, Ranger Energy Acquisition, LLC, a wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement for certain assets of Basic and certain of its subsidiaries, 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.

Coronavirus (“COVID-19”)

The outbreak of the novel coronavirus (“COVID-19”) in the first quarter of 2020 and its continued spread across the globe 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.

The outbreak of COVID-19 in the first quarter of 2020 and its continued spread across the globe 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.

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

3 unchanged sentences

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 and has continued through the second quarter ended June 30, 2021;

The direct impact to the Company’s operations began to take affect at the close of the first quarter ended March 31, 2020 and has continued through the third quarter ended September 30, 2021;

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 date hereof.

5 unchanged sentences

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.

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 and natural gas prices to decline significantly and resulted in continued volatility in oil, natural gas and NGLs prices through the year ended December 31, 2020.

Since then, OPEC Plus has agreed to varying production levels in attempts to align production levels with demand as economies begin to reopen around the world, most recently agreeing to increase production by 400,000 barrels a day beginning in August 2021.

Since then, OPEC Plus has agreed to varying production levels in attempts to align production levels with demand as economies begin to reopen around the world.

There can be no assurance that the future actions, or inaction, of OPEC Plus or other major oil producers will not have material effects on commodity prices.

6 unchanged sentences

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

government has implemented a number of programs in the wake of the impacts of COVID-19, including the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), the largest relief package in U.S.

government has implemented a number of programs in the wake of the impacts of COVID-19, including the largest relief package in U.S.

history, and the Main Street Lending Program established by the Federal Reserve.

We qualified for limited aid under the CARES Act and have deferred payroll tax payments of $1.9 million as of June 30, 2021 under the CARES Act.

We qualified for limited aid under the CARES Act and have deferred payroll tax payments of $1.9 million as of September 30, 2021 under the CARES Act.

How We Evaluate Our Operations

18 unchanged sentences

The primary factors that have historically impacted, and will likely continue to impact, our actual aggregate well service rig hours for any specified period are:

which is influenced by changes in our fleet size and resulting rig availability, as well as weather, employee availability and related factors.

(i) customer demand, which is influenced by factors such as commodity prices, the complexity of well completion operations and technological advances in our industry, and (ii) our ability to meet such demand, which is influenced by changes in our fleet size and resulting rig availability, as well as weather, employee availability and related factors.

The primary factors that have historically impacted, and will likely continue to impact, the aggregate number of high-spec rigs in our fleet during any specified period are the extent and timing of changes in the size of our well service rig fleet to meet short-term and expected long-term demand, and our ability to successfully maintain a fleet capable of ensuring sufficient, but not excessive, rig availability to meet such demand.

21 unchanged sentences

Results of Operations

Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 compared to Three Months Ended September 30, 2020

The following is an analysis of our operating results.

See “—How We Evaluate Our Operations” for definitions of rig hours, rig utilization and other analogous information.

The significant declines in operational activity, across all segments, as well as corporate-related expenses are related to the deterioration of crude oil pricing and significantly reduced demand for our services since March 2020, primarily due to the effects of COVID-19, as described in “—Recent Events and Outlook.”

Three Months Ended

June 30, Variance

September 30, Variance

2021 2020 $ %

19 unchanged sentences

Net loss $ (9.1) $ (5.7) $ (3.4) 60 %

Revenues for the three months ended June 30, 2021 increased $19.3 million, or 63%, to $50.0 million from $30.7 million for the three months ended June 30, 2020.

Revenues for the three months ended September 30, 2021 increased $47.1 million, or 136%, to $81.7 million from $34.6 million for the three months ended September 30, 2020.

The change in revenues by segment was as follows:

High Specification Rigs.

High Specification Rig revenues for the three months ended June 30, 2021 increased $17.6 million, or 154%, to $29.0 million from $11.4 million for the three months ended June 30, 2020.

The increase in rig services revenue included a 104% increase in total rig hours to 50,100 for the three months ended June 30, 2021 from 24,600 for the three months ended June 30, 2020.

The increased rig hours attributed to a 109% increase in rig utilization.

The average revenue per rig hour increased 27% to $587 from $463 for the three months ended June 30, 2020.

High Specification Rig revenues for the three months ended September 30, 2021 increased $15.4 million, or 106%, to $29.9 million from $14.5 million for the three months ended September 30, 2020.

The increase in rig services revenue included an 70% increase in total rig hours to 51,200 for the three months ended September 30, 2021 from

30,200 for the three months ended September 30, 2020.

The increased rig hours attributed to an 82% increase in rig utilization.

The average revenue per rig hour increased 22% to $584 from $480 for the three months ended September 30, 2020.

Completion and Other Services.

Completion and Other Services revenues for the three months ended June 30, 2021 increased $2.1 million, or 12%, to $19.8 million from $17.7 million for the three months ended June 30, 2020.

The increase was attributable to our wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021.

The consolidated wireline activity accounted for approximately $0.3 million of the segment revenue increase, which includes $2.3 million of revenue from Patriot.

The increase in wireline services revenue included a 24% increase in average active wireline units to six units for the three months ended June 30, 2021 from five units for the three months ended June 30, 2020.

All other service lines also had comparable revenue increases.

Completion and Other Services revenues for the three months ended September 30, 2021 increased $31.9 million, or 169%, to $50.8 million from $18.9 million for the three months ended September 30, 2020.

The increase was attributable to our wireline business, which includes activity from the acquisitions of Patriot and PerfX during the three months ended September 30, 2021.

The consolidated wireline activity accounted for approximately $30.8 million of the segment revenue increase, which includes $5.7 million and $27.9 million of revenue from Patriot and PerfX, respectively.

The increase in wireline services revenue included a 239% increase in average active wireline units to twenty units for the three months ended September 30, 2021 from six units for the three months ended September 30, 2020.

Processing Solutions.

Processing Solutions revenues for the three months ended June 30, 2021 decreased $0.4 million, or 25%, to $1.2 million from $1.6 million for the three months ended June 30, 2020.

The decrease was primarily attributable to a decline in rental revenue related to our Mechanical Refrigeration Units (“MRU”), which was attributable to a decline in MRU utilization.

Our average MRU utilization for the three months ended June 30, 2021 and 2020, was 9% and 12%, respectively.

Processing Solutions revenues for the three months ended September 30, 2021 decreased $0.2 million, or 17%, to $1.0 million from $1.2 million for the three months ended September 30, 2020.

The decrease was primarily attributable to a decline in rental revenue related to our Mechanical Refrigeration Units (“MRU”).

Our average MRU utilization for the three months ended September 30, 2021 and 2020, was 4% and 9%, respectively.

Cost of services (excluding depreciation and amortization).

Cost of services for the three months ended June 30, 2021 increased $20.3 million, or 85%, to $44.1 million from $23.8 million for the three months ended June 30, 2020.

As a percentage of revenue, cost of services was 88% and 78% for the three months ended June 30, 2021 and 2020, respectively.

Cost of services for the three months ended September 30, 2021 increased $47.4 million, or 178%, to $74.0 million from $26.6 million for the three months ended September 30, 2020.

As a percentage of revenue, cost of services was 91% and 77% for the three months ended September 30, 2021 and 2020, respectively.

The change in cost of services by segment was as follows:

High Specification Rigs.

High Specification Rig cost of services for the three months ended June 30, 2021 increased $13.9 million, or 138% to $24.0 million from $10.1 million for the three months ended June 30, 2020.

The increase was primarily attributable to an increase in variable expenses, notably employee costs and repair and maintenance costs.

Additionally, the increase corresponds with the increase in rig hours and revenues.

High Specification Rig cost of services for the three months ended September 30, 2021 increased $12.8 million, or 104% to $25.1 million from $12.3 million for the three months ended September 30, 2020.

The increase was primarily attributable to an increase in variable expenses, notably employee costs and repair and maintenance costs associated with an increase in operational activity.

The cost increase corresponds with the increase in rig hours and revenues.

Completion and Other Services.

Completion and Other Services cost of services for the three months ended June 30, 2021 increased $5.9 million, or 44%, to $19.2 million from $13.3 million for the three months ended June 30, 2020.

The increase was primarily attributable to an increase in the wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021.

The consolidated wireline activity accounted for approximately $3.4 million of the segment cost of sales increase, which includes $2.8 million of costs related to Patriot.

Completion and Other Services cost of services for the three months ended September 30, 2021 increased $34.4 million, or 246%, to $48.4 million from $14.0 million for the three months ended September 30, 2020.

The increase was attributable to an increase in the wireline business, which includes activity from the acquisitions of Patriot and PerfX, during the three months ended September 30, 2021.

The consolidated wireline activity accounted for approximately $33.9 million of the segment cost of sales increase, which includes $5.8 million and $27.5 million of costs related to Patriot and PerfX.

The increase was primarily attributable to an increase in variable expenses related to employee costs and direct material costs across all service lines.

Processing Solutions.

Processing Solutions cost of services for the three months ended June 30, 2021 increased $0.5 million, or 125%, to $0.9 million from $0.4 million for the three months ended June 30, 2020.

Processing Solutions cost of services for the three months ended September 30, 2021 increased $0.2 million, or 67%, to $0.5 million from $0.3 million for the three months ended September 30, 2020.

The increase was primarily attributable to increased employee costs and costs associated with ancillary equipment.

General & Administrative.

General and administrative expenses for the three months ended June 30, 2021 increased $0.7 million, or 13%, to $6.2 million from $5.5 million.

The increase during the three months ended June 30, 2021 is attributable to increased professional fees related to the acquisition of Patriot.

General and administrative expenses for the three months ended September 30, 2021 increased $2.5 million, or 54%, to $7.1 million from $4.6 million.

The increase during the three months ended September 30, 2021 is attributable to increased professional fees related to the acquisitions of PerfX and Basic.

Depreciation and Amortization.

Depreciation and amortization for the three months ended June 30, 2021 decreased $1.3 million, or 14%, to $8.2 million from $9.5 million for the three months ended June 30, 2020.

The decrease is attributable to depreciation expense for fixed assets that were retired and disposed of during the trailing 12 months.

Depreciation and amortization for the three months ended September 30, 2021 increased $0.3 million, or 4%, to $8.7 million from $8.4 million for the three months ended September 30, 2020.

The increase is attributable to depreciation expense for fixed assets that were acquired during the three months ended September 30, 2021 associated with the Patriot and PerfX Acquisitions.

Interest Expense, net.

Interest expense, net for the three months ended June 30, 2021 decreased $0.1 million, or 13%, to $0.7 million from $0.8 million for the three months ended June 30, 2020.

The slight decrease to net interest expense was attributable to the reduction of the principal balance on our Encina Master Financing Agreement.

Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

Interest expense, net for the three months ended September 30, 2021 increased $0.4 million, or 50%, to $1.2 million from $0.8 million for the three months ended September 30, 2020.

The increase to net interest expense was attributable to the increased principal balance under the Credit Facility during the three months ended September 30, 2021.

Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020

The following is an analysis of our operating results.

See “—How We Evaluate Our Operations” for definitions of rig hours, rig utilization and other analogous information.

Six Months Ended

June 30, Variance

Nine Months Ended

September 30, Variance

2021 2020 $ %

19 unchanged sentences

Net loss $ (26.5) $ (11.8) $ (14.7) 125 %

Revenues for the six months ended June 30, 2021 decreased $23.4 million, or 21%, to $88.3 million from $111.7 million for the six months ended June 30, 2020.

Revenues for the nine months ended September 30, 2021 increased $23.7 million, or 16%, to $170.0 million from $146.3 million for the nine months ended September 30, 2020.

The change in revenues by segment was as follows:

High Specification Rigs.

High Specification Rig revenues for the six months ended June 30, 2021 increased $4.4 million, or 10%, to $50.7 million from $46.3 million for the six months ended June 30, 2020.

The increase in rig services revenue included a 7% increase in total rig hours to 93,300 for the six months ended June 30, 2021 from 87,000 for the six months ended June 30, 2020.

High Specification Rig revenues for the nine months ended September 30, 2021 increased $19.8 million, or 33%, to $80.6 million from $60.8 million for the nine months ended September 30, 2020.

The increase in rig services revenue included a 26% increase in total rig hours to 146,300 for the nine months ended September 30, 2021 from 117,200 for the nine months ended September 30, 2020.

The increased rig hours attributed to a 29% increase in rig utilization.

The average revenue per rig hour increased 2% to $543 from $531 for the six months ended June 30, 2020.

The average revenue per rig hour increased 6% to $551 from $518 for the nine months ended September 30, 2020.

Completion and Other Services.

Completion and Other Services revenues for the six months ended June 30, 2021 decreased $25.7 million, or 42%, to $35.3 million from $61.0 million for the six months ended June 30, 2020.

The decrease was primarily attributable to our wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021.

The wireline activity accounted for approximately $22.9 million of the segment revenue decrease, however includes $2.3 million of revenue from Patriot.

The decrease in wireline services revenue included a 24% decrease in average active wireline units to six units for the six months ended June 30, 2021 from eight units for the six months ended June 30, 2020.

All other service lines also had comparable revenue reductions.

Completion and Other Services revenues for the nine months ended September 30, 2021 increased $6.2 million, or 8%, to $86.1 million from $79.9 million for the nine months ended September 30, 2020.

The increase was primarily attributable to our wireline business, which includes activity from the acquisitions of Patriot and PerfX during the nine months ended September 30, 2021.

The wireline activity accounted for approximately $7.9 million of the segment revenue increase which includes $7.9 million and $27.9 million of revenue from Patriot and PerfX, respectively.

The increase in wireline services revenue included a 57% increase in average active wireline units to eleven units for the nine months ended September 30, 2021 from seven units for the nine months ended September 30, 2020.

Processing Solutions.

Processing Solutions revenues for the six months ended June 30, 2021 decreased $2.1 million, or 48%, to $2.3 million from $4.4 million for the six months ended June 30, 2020.

The decrease was primarily attributable to a decline in rental revenue related to our MRUs, which was attributable to a decline in MRU utilization.

Our average MRU utilization for the six months ended June 30, 2021 and 2020, was 9% and 15%, respectively.

The MRU utilization decrease was due to certain of our customer contracts that terminated during 2020, as scheduled, without renewal.

Processing Solutions revenues for the nine months ended September 30, 2021 decreased $2.3 million, or 41%, to $3.3 million from $5.6 million for the nine months ended September 30, 2020.

The decrease was primarily attributable to a decline in rental revenue related to our MRUs.

Our average MRU utilization for the nine months ended September 30, 2021 and 2020, was 7% and 13%, respectively.

Cost of services (excluding depreciation and amortization).

Cost of services for the six months ended June 30, 2021 decreased $8.7 million, or 10%, to $78.2 million from $86.9 million for the six months ended June 30, 2020.

As a percentage of revenue, cost of services was 89% and 78% for the six months ended June 30, 2021 and 2020, respectively.

Cost of services for the nine months ended September 30, 2021 increase $38.7 million, or 34%, to $152.2 million from $113.5 million for the nine months ended September 30, 2020.

As a percentage of revenue, cost of services was 90% and 78% for the nine months ended September 30, 2021 and 2020, respectively.

The change in cost of services by segment was as follows:

High Specification Rigs.

High Specification Rig cost of services for the six months ended June 30, 2021 increased $3.0 million, or 8% to $43.0 million from $40.0 million for the six months ended June 30, 2020.

High Specification Rig cost of services for the nine months ended September 30, 2021 increased $15.8 million, or 30% to $68.1 million from $52.3 million for the nine months ended September 30, 2020.

The increase was primarily attributable to an increase in variable expenses, notably employee costs and repair and maintenance costs.

1 unchanged sentence

Completion and Other Services.

Completion and Other Services cost of services for the six months ended June 30, 2021 decreased $11.2 million, or 25%, to $33.8 million from $45.0 million for the six months ended June 30, 2020.

The decrease was primarily attributable to a reduction in the wireline business, which includes activity from the acquisition of Patriot during the six months ended June 30, 2021.

The consolidated wireline activity accounted for approximately $10.8 million of the segment cost of sales decrease, which includes $2.8 million of costs related to Patriot.

The decrease was primarily attributable to a reduction in variable expenses related to employee costs and direct material costs across all service lines.

Completion and Other Services cost of services for the nine months ended September 30, 2021 increased $23.2 million, or 39%, to $82.2 million from $59.0 million for the nine months ended September 30, 2020.

The increase was primarily attributable to the wireline business, which includes activity from the acquisition of Patriot and PerfX during the nine months ended September 30, 2021.

The consolidated wireline activity accounted for approximately $23.1 million of the segment cost of services increase which includes $8.5 million and $27.5 million of costs related to Patriot and PerfX, respectively.

Processing Solutions.

Processing Solutions cost of services for the six months ended June 30, 2021 decreased $0.5 million, or 26%, to $1.4 million from $1.9 million for the six months ended June 30, 2020.

Processing Solutions cost of services for the nine months ended September 30, 2021 decreased $0.3 million, or 14%, to $1.9 million from $2.2 million for the nine months ended September 30, 2020.

The decrease was primarily attributable to a reduction in employee costs and costs associated with ancillary equipment rentals, corresponding with a decrease in revenue.

General & Administrative.

General and administrative expenses for the six months ended June 30, 2021 decreased $0.8 million, or 8%, to $9.7 million from $10.5 million.

During the six months ended June 30, 2020, general and administrative expenses included a gain on debt retirement of $2.1 million related to the settlement of the ESCO Seller’s Notes.

General and administrative expenses for the nine months ended September 30, 2021 increased $1.7 million, or 11%, to $16.8 million from $15.1 million.

During the nine months ended September 30, 2020, general and administrative expenses included a gain on debt retirement of $2.1 million related to the settlement of the ESCO Seller’s Notes.

The increase is further attributable to increased professional fees related to the acquisitions of PerfX and Basic.

Depreciation and Amortization.

Depreciation and amortization for the six months ended June 30, 2021 decreased $2.2 million, or 12%, to $16.2 million from $18.4 million for the six months ended June 30, 2020.

Depreciation and amortization for the nine months ended September 30, 2021 decreased $1.9 million, or 7%, to $24.9 million from $26.8 million for the nine months ended September 30, 2020.

The decrease is attributable to depreciation expense for fixed assets that were retired and disposed of during the trailing 12 months.

Interest Expense, net.

Interest expense, net for the six months ended June 30, 2021 decreased $0.6 million, or 32%, to $1.3 million from $1.9 million for the six months ended June 30, 2020.

Interest expense, net for the nine months ended September 30, 2021 decreased $0.2 million, or 7%, to $2.5 million from $2.7 million for the nine months ended September 30, 2020.

The decrease to net interest expense was attributable to the reduction of the principal balance on our Encina Master Financing Agreement.

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The following table presents reconciliations of net income (loss) to Adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S.

Three Months Ended June 30, 2021 compared to Three Months Ended June 30, 2020

Three Months Ended September 30, 2021 compared to Three Months Ended September 30, 2020

The following is an analysis of our Adjusted EBITDA.

Financial Information—Note 15—Segment Reporting” and “—Results of Operations” for further details.

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

High Specification Rigs Completion and Other Services Processing Solutions Other Total

5 unchanged sentences

Equity based compensation — — — 0.3 0.3

Gain on disposal of property and equipment — — — 0.5 0.5

Loss on retirement of debt — — — 0.2 0.2

Loss on disposal of property and equipment — — — — —

Severance and reorganization costs — — — 0.5 0.5

Acquisition related costs — — — 0.8 0.8

Legal fees and settlements — — — 0.9 0.9

Adjusted EBITDA $ 4.8 $ 2.4 $ 0.5 $ (4.4) $ 3.3

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

High Specification Rigs Completion and Other Services Processing Solutions Other Total

5 unchanged sentences

Equity based compensation — — — 1.1 1.1

Gain on disposal of property and equipment — — — (0.1) (0.1)

Loss on retirement of debt — — — — —

Loss on disposal of property and equipment 0.2 0.1 — — 0.3

Severance and reorganization costs — — — (0.4) (0.4)

Acquisition related costs — — — — —

Legal fees and settlements — — — — —

Adjusted EBITDA $ 2.4 $ 5.0 $ 0.9 $ (3.9) $ 4.4

6 unchanged sentences

Equity based compensation — — — (0.8) (0.8)

Gain on disposal of property and equipment — — — 0.6 0.6

Loss on retirement of debt — — — 0.3 0.3

Loss on disposal of property and equipment (0.2) — — — (0.2)

Severance and reorganization costs — — — 0.9 0.9

Acquisition related costs — — — 0.8 0.8

Legal fees and settlements — — — 0.9 0.9

Adjusted EBITDA $ 2.4 $ (2.5) $ (0.4) $ (0.5) $ (1.0)

Adjusted EBITDA for the three months ended June 30, 2021 decreased $1.2 million to $2.0 million from $3.2 million for the three months ended June 30, 2020.

Adjusted EBITDA for the three months ended September 30, 2021 decreased $1.0 million to $3.3 million from $4.4 million for the three months ended September 30, 2020.

The change by segment was as follows:

High Specification Rigs .

High Specification Rigs Adjusted EBITDA for the three months ended June 30, 2021 increased $3.3 million to $5.0 million from $1.7 million for the three months ended June 30, 2020, primarily due to increased revenues of $17.6 million, partially offset by a corresponding increase in cost of services of $13.9 million.

High Specification Rigs Adjusted EBITDA for the three months ended September 30, 2021 increased $2.4 million to $4.8 million from $2.4 million for the three months ended September 30, 2020, primarily due to increased revenues of $15.4 million, partially offset by a corresponding increase in cost of services of $12.8 million.

Completion and Other Services.

Completion and Other Services Adjusted EBITDA for the three months ended June 30, 2021 decreased $4.0 million to $0.6 million from $4.6 million for the three months ended June 30, 2020, primarily due to increased revenues of $2.1 million, offset by an increase in cost of services of $5.9 million.

Completion and Other Services Adjusted EBITDA for the three months ended September 30, 2021 decreased $2.5 million to $2.4 million from $5.0 million for the three months ended September 30, 2020, primarily due to increased revenues of $31.9 million, offset by an increase in cost of services of $34.4 million.

Processing Solutions .

Processing Solutions Adjusted EBITDA for the three months ended June 30, 2021 decreased $0.9 million to $0.3 million from $1.2 million for the three months ended June 30, 2020, due to decreased revenues of $0.4 million, and increased cost of services of $0.5 million.

Other Adjusted EBITDA for the three months ended June 30, 2021 decreased $0.4 million to a loss of $3.9 million from a loss of $4.3 million for the three months ended June 30, 2020.

Processing Solutions Adjusted EBITDA for the three months ended September 30, 2021 decreased $0.4 million to $0.5 million from $0.9 million for the three months ended September 30, 2020, due to decreased revenues of $0.2 million, and increased cost of services of $0.2 million.

Other Adjusted EBITDA for the three months ended September 30, 2021 decreased $0.5 million to a loss of $4.4 million from a loss of $3.9 million for the three months ended September 30, 2020.

The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Completion and Other Services or Processing Solutions.

Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021 compared to Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2021

High Specification Rigs Completion and Other Services Processing Solutions Other Total

5 unchanged sentences

Equity based compensation — — — 2.1 2.1

Gain on retirement of debt — — — — —

Gain on disposal of property and equipment — — — 0.1 0.1

Gain (loss) on retirement of debt — — — 0.2 0.2

Gain (loss) on disposal of property and equipment — — — 0.1 0.1

Severance and reorganization costs — — — (0.6) (0.6)

Acquisition related costs — — — 1.4 1.4

Legal fees and settlements $ — $ — $ — $ 0.9 $ 0.9

Adjusted EBITDA $ 12.5 $ 3.9 $ 1.4 $ (12.7) $ 5.1

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

High Specification Rigs Completion and Other Services Processing Solutions Other Total

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Equity based compensation — — — 2.8 2.8

Gain on retirement of debt — — — (2.1) (2.1)

Gain on disposal of property and equipment — — — (0.3) (0.3)

Gain (loss) on retirement of debt — — — (2.1) (2.1)

Gain (loss) on disposal of property and equipment 0.2 0.1 — (0.3) —

Severance and reorganization costs 0.4 0.2 — — 0.6

Acquisition related costs — — — — —

Legal fees and settlements $ — $ — $ — $ — $ —

Adjusted EBITDA $ 9.1 $ 21.2 $ 3.4 $ (14.7) $ 19.0

6 unchanged sentences

Equity based compensation — — — (0.7) (0.7)

Gain on retirement of debt — — — 2.1 2.1

Gain on disposal of property and equipment — — — 0.4 0.4

Gain (loss) on retirement of debt — — — 2.3 2.3

Gain (loss) on disposal of property and equipment (0.2) (0.1) — 0.4 0.1

Severance and reorganization costs (0.4) (0.2) — (0.6) (1.2)

Acquisition related costs — — — 1.4 1.4

Legal fees and settlements $ — $ — $ — $ 0.9 $ 0.9

Adjusted EBITDA $ 3.4 $ (17.3) $ (2.0) $ 2.0 $ (13.9)

Adjusted EBITDA for the six months ended June 30, 2021 decreased $12.8 million to $1.8 million from $14.6 million for the six months ended June 30, 2020.

Adjusted EBITDA for the nine months ended September 30, 2021 decreased $13.9 million to $5.1 million from $19.0 million for the nine months ended September 30, 2020.

The change by segment was as follows:

High Specification Rigs .

High Specification Rigs Adjusted EBITDA for the six months ended June 30, 2021 increased $1.0 million to $7.7 million from $6.7 million for the six months ended June 30, 2020, primarily due to increased revenues of $4.4 million, partially offset by a corresponding increase in cost of services of $3.0 million.

High Specification Rigs Adjusted EBITDA for the nine months ended September 30, 2021 increased $3.4 million to $12.5 million from $9.1 million for the nine months ended September 30, 2020, primarily due to increased revenues of $19.8 million, partially offset by a corresponding increase in cost of services of $15.8 million.

Completion and Other Services.

Completion and Other Services Adjusted EBITDA for the six months ended June 30, 2021 decreased $14.7 million to $1.5 million from $16.2 million for the six months ended June 30, 2020, primarily due to decreased revenues of $25.7 million, partially offset by a decrease in cost of services of $11.2 million.

Completion and Other Services Adjusted EBITDA for the nine months ended September 30, 2021 decreased $17.3 million to $3.9 million from $21.2 million for the nine months ended September 30, 2020, primarily due to increase revenues of $6.2 million, partially offset by an increase in cost of services of $23.2 million.

Processing Solutions .

Processing Solutions Adjusted EBITDA for the six months ended June 30, 2021 decreased $1.6 million to $0.9 million from $2.5 million for the six months ended June 30, 2020, primarily due to decreased revenues of $2.1 million, partially offset by a decrease in cost of services of $0.5 million.

Other Adjusted EBITDA for the six months ended June 30, 2021 decreased $2.5 million to a loss of $8.3 million from a loss of $10.8 million for the six months ended June 30, 2020.

Processing Solutions Adjusted EBITDA for the nine months ended September 30, 2021 decreased $2.0 million to $1.4 million from $3.4 million for the nine months ended September 30, 2020, primarily due to decreased revenues of $2.3 million, partially offset by a decrease in cost of services of $0.3 million.

Other Adjusted EBITDA for the nine months ended September 30, 2021 increased $2.0 million to a loss of $12.7 million from a loss of $14.7 million for the nine months ended September 30, 2020.

The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Completion and Other Services or Processing Solutions.

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Our primary sources of liquidity are cash generated from operations and borrowings under our Credit Facility.

As of June 30, 2021, we had total liquidity of $16.2 million, consisting of $3.4 million of cash on hand and availability under our Revolving Credit Facility of $12.8 million.

As of June 30, 2021, our borrowing base under the Credit Facility was $22.5 million compared to $10.8 million and $20.7 million as of June 30, 2020 and December 31, 2020, respectively, as a result of slightly increased operational activity and accounts receivable balances.

As of September 30, 2021, we had total liquidity of $10.6 million, consisting of $2.8 million of cash on hand and availability under our Revolving Credit Facility of $7.8 million.

As of September 30, 2021, our borrowing base under the Revolving Credit Facility was $37.5 million compared to $10.4 million and $20.7 million as of September 30, 2020 and December 31, 2020, respectively, as a result of increased operational activity and accounts receivable balances.

We strive to maintain financial flexibility and proactively monitor potential capital sources to meet our investment and target liquidity requirements and to permit us to manage the cyclicality associated with our business.

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The following table presents our cash flows for the periods indicated:

Six Months Ended June 30, Change

Nine Months Ended September 30, Change

2021 2020 $ %

(in millions)

Net cash (used in) provided by operating activities $ (4.1) $ 24.2 $ (28.3) (117) %

Net cash provided by operating activities $ 23.4 $ 27.3 $ (3.9) (14) %

Net cash used in investing activities (5.9) (5.6) (0.3) (5) %

Net cash provided by (used in) financing activities 9.6 (19.6) 29.2 (149) %

Net cash provided by financing activities 24.5 (25.2) 49.7 (197) %

Net change in cash $ 42.0 $ (3.5) $ 45.5 (1,300) %

Operating Activities

Net cash used in operating activities increased $28.3 million to cash used of $4.1 million for six months ended June 30, 2021 compared to cash provided of $24.2 million for the six months ended June 30, 2020.

The change in cash flows from operating activities is primarily attributable to a decrease in gross margins and operating income for the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

The use of working capital cash decreased $15.6 million to a use of $6.3 million for the six months ended June 30, 2021, compared to cash generated of $9.0 million for the six months ended June 30, 2020.

Net cash provided by operating activities decreased $3.9 million to cash provided of $23.4 million for nine months ended September 30, 2021 compared to cash provided of $27.3 million for the nine months ended September 30, 2020.

The change in cash flows from operating activities is primarily attributable to a decrease in gross margins and operating income for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

The use of working capital cash increased $12.4 million to cash generated of $20.8 million for the nine months ended September 30, 2021, compared to cash generated of $8.4 million for the nine months ended September 30, 2020.

Investing Activities

Net cash used in investing activities decreased $0.6 million from a use of cash of $5.5 million for the six months ended June 30, 2020.

Net cash used in investing activities decreased $0.3 million from a use of cash of $5.6 million for the nine months ended September 30, 2020.

The change in cash flows from investing activities is attributable to a significant reduction in capital expenditures during the trailing twelve months due to the economic events that took place in the industry.

Financing Activities

Net cash provided by financing activities increased $29.2 million from a use of cash of $19.6 million for the six months ended June 30, 2020.

During the six months ended June 30, 2021, we entered into sale-leaseback transactions related to certain of our fixed assets, coupled with additional net borrowings under the Credit Facility.

Net cash provided by financing activities increased $49.7 million from a use of cash of $25.2 million for the nine months ended September 30, 2020.

During the nine months ended September 30, 2021, new debt was added in connection with the PerfX Acquisition and the incremental revolving credit facility was utilized for working capital needs related to the newly acquired businesses.

Additionally, during the nine months ended September 30, 2021, we entered into sale-leaseback transactions related to certain of our fixed assets.

Supplemental Disclosures

During the six months ended June 30, 2021, the Company acquired Patriot by issuing $7.7 million of Class A Common Stock.

Additionally, we entered into installment agreements, thereby increasing our current and long-term obligations by $1.1 million and added fixed assets of $0.7 million, all of which were non-cash additions

During the nine months ended September 30, 2021, the Company acquired Patriot and PerfX by issuing $16.4 million of Class A Common Stock and an $11.4 million Secured Promissory Note.

Additionally, we entered into installment agreements, thereby increasing our current and long-term debt obligations by $1.4 million and added fixed assets of $1.1 million for finance leases and $0.1 million for capital expenditures, all of which were non-cash additions.

Working Capital

Our working capital, which we define as total current assets less total current liabilities, was $10.4 million as of June 30, 2021 compared to $2.7 million as of December 31, 2020.

The working capital has increased due to increased activity, as well as the working capital attributable to Patriot.

Our working capital, which we define as total current assets less total current liabilities, was $0.7 million as of September 30, 2021, compared to $2.7 million as of December 31, 2020.

The working capital has decreased due to the Revolving Credit Facility being classified as current maturities of long-term debt, partially offset by increased operational activity and working capital attributable to PerfX and Patriot.

The Company’s Revolving Credit Facility will be classified as current maturities of long-term debt indefinitely.

Our Debt Agreements

Credit Facility

In August 2017, we entered into a $50.0 million 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 Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the value of our eligible accounts receivable less certain reserves.

The Credit Facility 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 our average excess availability under the Credit Facility.

The applicable margins for each of the loans are re-determined as of the first day of each calendar quarter.

The applicable margins for the LIBOR and Base Rate loans were 2.1% and 4.3%, respectively, as of June 30, 2021.

The weighted average interest rate for the borrowings under the Credit Facility was 2.6% during 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 is $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.

Covenants and Other Restrictions

In addition, the Credit Facility restricts our ability to make distributions on, or redeem or repurchase, our equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Facility and either (a) excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 22.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $10.0 million or (b) if our fixed charge coverage ratio is at least 1.0x on a pro forma basis, excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 17.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $7.0 million.

If the foregoing threshold under clause (b) is met, we may not make such distributions (but may make certain other distributions, including under clause (a) above) prior to the earlier of the date that is (a) 12 months from closing or (b) the date that our fixed charge coverage ratio is at least 1.0x for two consecutive quarters.

Our Credit Facility generally permits us to make distributions required under the Tax Receivable Agreement (“TRA”), but a “Change of Control” under the TRA constitutes an event of default under our Credit Facility, and our Credit Facility does not permit us to make payments under the TRA upon acceleration of our obligations thereunder unless no event of default exists or would result therefrom and we have been in compliance with the fixed charge coverage ratio for the most recent 12-month period on a pro forma basis.

Our Credit Facility also requires us to maintain a fixed charge coverage ratio of at least 1.0x if our liquidity is less than $10.0 million, until our liquidity is at least $10.0 million for 30 consecutive days.

We are not subject to a fixed charge coverage ratio if we have no drawings under the Credit Facility and have at least $20.0 million of qualified cash.

The Credit Facility contains events of default customary for facilities of this nature, including, but not limited, to:

• events of default resulting from our failure or the failure of any guarantors to comply with covenants and financial ratios;

• the occurrence of a change of control;

• the institution of insolvency or similar proceedings against us or any guarantor;

• the occurrence of a default under any other material indebtedness we or any guarantor may have.

Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the Credit Facility, the lenders are able to declare any outstanding principal of our Credit Facility debt, together with accrued and unpaid interest, to be immediately due and payable and exercise other remedies.

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 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

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

The amount available to be provided by the Lender to us 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 to acquire certain capital equipment.

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

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.

The Financing Agreement is secured by a lien on certain of our high specification rig assets.

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.

In no event will LIBOR fall below 1.5%.

The Financing Agreement 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 June 30, 2021.

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 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 (the “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 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.

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 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 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.

Sale-Leaseback Transactions

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.

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 2% 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.

ESCO Notes Payable

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 $5.8 million, which was settled in March 2020.

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.

Tax Receivable Agreement (“TRA”)

With respect to obligations we expect to incur under our TRA (except in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, other forms of business combination or other changes of control or we have available cash but fail to make payments when due), generally we may elect to defer payments due under the TRA if we do not have available cash to satisfy our payment obligations under the TRA or if our contractual obligations limit our ability to make these payments.

Any such deferred payments under the TRA generally will accrue interest.

In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA.

In certain cases,

payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA.

We intend to account for any amounts payable under the TRA in accordance with ASC 450, Contingencies.

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• to the extent we have recorded a deferred tax asset for an increase in tax basis to which a benefit is no longer expected to be realized due to lower future taxable income, we will reduce the deferred tax asset with a valuation allowance.

On October 1, 2021, in connection with the Basis Acquisition, pursuant to the Tax Receivable Termination and Settlement 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 shares of Class A Common Stock issued 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.

Critical Accounting Policies and Estimates

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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 2. Management’s Discussion and Analysis