What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-03-30 compared with 2021-02-26 · 347 added, 206 removed, 589 unchanged (48% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ( BDO USA, LLP;

Houston, Texas;

PCAOB ID # 243 )

CONSOLIDATED BALANCE SHEETS

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Note 2—Summary of Significant Accounting Policies

Note 3 — Business Combinations

Note 4 —Property and Equipment

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Note 7 —Leases

Note 8 — Other Finance Leases

Note 10 —Equity

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and the Shareholders of

To the Board of Directors and the Stockholders of

Ranger Energy Services, Inc.

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We have audited the accompanying consolidated balance sheets of Ranger Energy Services, Inc.

and its subsidiaries (collectively, the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

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Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform an audit of internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal controls over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

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Houston, Texas

February 26, 2021

March 30, 2022

RANGER ENERGY SERVICES, INC.

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Accrued expenses 30.3 9.3

Finance lease obligations, current portion 2.5 5.1

Other financing liability, current portion 2.2 —

Long-term debt, current portion 44.1 10.0

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Operating leases, right-of-use obligations 5.8 5.2

Finance lease obligations 1.3 3.6

Other financing liability 12.5 —

Long-term debt, net 18.4 14.5

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50,000,000 shares authorized;

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

6,000,001 Series A shares issued and outstanding as of December 31, 2021;

no shares issued and outstanding as of December 31, 2020

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

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

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

no shares and 6,866,154 shares issued and outstanding as of December 31, 2021 and 2020, respectively

Class A Common Stock held in treasury at cost;

551,828 treasury shares and 113,937 treasury shares as of December 31, 2020 and 2019, respectively

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

( 3.8 ) ( 3.8 )

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High specification rigs $ 140.1 $ 82.5

Completion and other services 98.5 184.3

Processing solutions 6.8 20.5

Wireline services 117.9 79.0

Processing solutions and ancillary services 35.1 26.3

Total revenues 293.1 187.8

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High specification rigs 118.8 71.5

Completion and other services 73.7 139.0

Processing solutions 2.7 9.2

Wireline services 115.6 57.0

Processing solutions and ancillary services 28.9 19.4

Total cost of services 263.3 147.9

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Depreciation and amortization 36.8 35.0

Gain on debt retirement ( 2.1 ) —

Total operating expenses 333.6 205.0

Operating income (loss) ( 15.1 ) 12.4

Other expenses

Operating loss ( 40.5 ) ( 17.2 )

Other income and expenses

Interest expense, net 4.8 3.4

Total other expenses 3.4 5.8

Income (loss) before income tax expense ( 18.5 ) 6.6

Income tax expense — 2.2

Net income (loss) ( 18.5 ) 4.4

Net income (loss) attributable to non-controlling interests ( 8.2 ) 2.6

(Gain) loss on debt retirement 0.2 ( 2.1 )

Gain on bargain purchase, net of tax ( 37.2 ) —

Total other income and expenses ( 32.2 ) 1.3

Loss before income tax expense ( 8.3 ) ( 18.5 )

Income tax benefit ( 6.2 ) —

Net loss ( 2.1 ) ( 18.5 )

Net loss attributable to non-controlling interests ( 10.7 ) ( 8.2 )

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

$ 8.6 $ ( 10.3 )

Earnings (loss) per common share

Income (loss) per common share

Basic $ 0.73 $ ( 1.21 )

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Quantity Amount

Series A Preferred Stock

Balance, beginning of period — — — —

Issuance of Series A Preferred Stock 6,000,001 — 0.1 —

Balance, end of period 6,000,001 — $ 0.1 $ —

Shares, Class A Common Stock

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Shares withheld for taxes on equity transactions ( 147,313 ) ( 86,155 ) — —

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

Issuance of shares in connection with acquisitions 2,156,000 — — —

Issuance Class A Common Stock in connection with TRA Termination 376,185 — — —

Share redemption to Class A Common Stock from related party 6,866,154 — 0.1 $ —

Balance, end of period 18,981,172 9,093,743 $ 0.2 $ 0.1

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Balance, beginning of period 6,866,154 6,866,154 $ 0.1 $ 0.1

Share redemption to Class A Common Stock from related party ( 6,866,154 ) — ( 0.1 ) —

Balance, end of period — 6,866,154 $ — $ 0.1

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Balance, beginning of period $ ( 18.4 ) $ ( 8.1 )

Net income (loss) attributable to controlling interest ( 10.3 ) 1.8

Income (loss) attributable to controlling interest 8.6 ( 10.3 )

Benefit from release of valuation allowance 1.5 —

Tax step-up related to non-controlling interest exchange 0.3 —

Balance, end of period $ ( 8.0 ) $ ( 18.4 )

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Balance, beginning of period $ 123.9 $ 121.8

Issuance of Series A Preferred Stock 41.9 —

Equity based compensation 3.2 3.6

Shares withheld for taxes on equity transactions ( 1.2 ) ( 0.3 )

Issuance of Class A Common Stock in connection with acquisitions 16.4 —

Issuance of Class A Common Stock to related party 3.8 —

Benefit from reversal of valuation allowance — 1.4

Impact of transactions affecting non-controlling interest 72.2 ( 1.2 )

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Net income (loss) attributable to controlling interest 8.6 ( 10.3 )

Issuance of Series A Preferred Stock 42.0 —

Equity based compensation 3.2 3.6

Shares withheld for taxes on equity transactions ( 1.2 ) ( 0.3 )

Issuance of Class A Common Stock in connection with acquisitions 16.4 —

Issuance of Class A Common Stock to related party 3.8 —

Benefit from reversal of valuation allowance — 1.4

Benefit from release of valuation allowance 1.5 —

Tax step-up related to non-controlling interest exchange 0.3 —

Impact of transactions affecting non-controlling interest 72.2 ( 1.2 )

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Balance, beginning of period $ 82.9 $ 89.8

Net income (loss) attributable to non-controlling interest ( 8.2 ) 2.6

Net loss attributable to non-controlling interest ( 10.7 ) ( 8.2 )

Equity based compensation — 0.1

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Balance, beginning of period $ 184.8 $ 203.0

Net income (loss) ( 18.5 ) 4.4

Net loss ( 2.1 ) ( 18.5 )

Issuance of Series A Preferred Stock 42.0 —

Equity based compensation 3.2 3.7

Shares withheld for taxes on equity transactions ( 1.2 ) ( 0.3 )

Issuance of Class A Common Stock in connection with acquisitions 16.4 —

Issuance of Class A Common Stock to related party 3.8 —

Benefit from reversal of valuation allowance — 1.4

Tax related step-up related to non-controlling interest exchange 1.5 —

Impact of transactions affecting non-controlling interest 0.3 —

Repurchase of Class A Common Stock — ( 3.1 )

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Cash Flows from Operating Activities

Net income (loss) $ ( 18.5 ) $ 4.4

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

Net loss $ ( 2.1 ) $ ( 18.5 )

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

Gain on bargain purchase, net of tax ( 37.2 ) —

Deferred income tax benefit ( 6.2 ) —

Depreciation and amortization 36.8 35.0

Equity based compensation 3.2 3.7

Gain on debt retirement ( 2.1 ) —

(Gain) loss on debt retirement 0.2 ( 2.1 )

Share issuance to related party for termination of TRA 3.8 —

Other costs, net 1.7 2.6

Changes in operating assets and liabilities

Changes in operating assets and liabilities, net effects of business combinations

Accounts receivable ( 49.0 ) 15.6

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Accrued expenses 19.6 ( 9.1 )

Operating lease, right-of-use obligations ( 0.6 ) —

Other current liabilities ( 0.1 ) ( 0.6 )

Other long-term liabilities 0.7 1.1

Net cash provided by operating activities 25.5 51.9

Net cash (used in) provided by operating activities ( 39.4 ) 25.5

Cash Flows from Investing Activities

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Proceeds from disposal of property and equipment 9.1 1.8

Purchase of businesses, net of cash received ( 39.9 ) —

Net cash used in investing activities ( 36.4 ) ( 5.4 )

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Principal payments on Credit Facility ( 158.0 ) ( 47.1 )

Borrowings under Eclipse M&E Term Loan 12.5 —

Borrowings under Eclipse Term Loan B 15.0 —

Principal payments under Eclipse Term Loan B ( 2.6 ) —

Deferred financing costs on Eclipse ( 2.5 ) —

Principal payments on Secured Promissory Note ( 1.0 ) —

Principal payments on Encina Master Financing Agreement ( 17.7 ) ( 10.0 )

Principal payments on ESCO Note Payable ( 3.6 ) —

Payments on Installment Purchases ( 0.6 ) —

Proceeds from financing of sale-leasebacks 15.6 —

Principal payments on financing lease obligations ( 5.4 ) ( 4.7 )

Repurchase of Class A Common Stock ( 3.1 ) ( 0.7 )

Shares withheld on equity transactions ( 1.2 ) ( 0.3 )

Net cash used in financing activities ( 24.2 ) ( 24.2 )

Increase (decrease) in Cash and Cash equivalents ( 4.1 ) 4.3

Proceeds from series A Preferred Stock issuance 42.0 —

Principal payments on ESCO Note Payable — ( 3.6 )

Repurchase of Class A Common Stock — ( 3.1 )

Net cash (used in) provided by financing activities 73.6 ( 24.2 )

Decrease in Cash and Cash equivalents ( 2.2 ) ( 4.1 )

Cash and Cash Equivalents, Beginning of Year 2.8 6.9

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Capital expenditures $ ( 1.5 ) $ 0.1

Additions to fixed assets through financing leases $ ( 1.0 ) $ 2.4

Additions to fixed assets through installment purchases and financing leases $ ( 1.6 ) $ ( 1.0 )

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

Secured Promissory Note $ ( 11.4 ) $ —

Early termination of financing leases $ — $ 1.3

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

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

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

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Ranger Energy Services, Inc.

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

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

We provide an extensive range of well site services to leading U.S.

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Provides high-spec well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.

• Completion and Other Services .

Provides wireline completion services necessary to bring a well on production and other ancillary services often utilized in conjunction with our high-spec rig services to enhance the production of a well.

• Processing Solutions .

Provides proprietary, modular equipment for the processing of natural gas.

• Wireline Services .

Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production, and pump down lines of business.

• Processing Solutions and Ancillary Services .

Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments.

These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.

We operate in most of the active oil and natural gas basins in the United States, including the Permian Basin, Denver-Julesburg Basin, Bakken Shale, Eagle Ford Shale, Haynesville Shale, Gulf Coast, South Central Oklahoma Oil Province and Sooner Trend Anadarko Basin Canadian and Kingfisher Counties plays.

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

Recent Events

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

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

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

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

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

The extent of the COVID-19 outbreak on the Company’s operational and financial performance will 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 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 consolidated financial statements is uncertain.

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

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

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

Collectively, these events created an unprecedented global oil and natural gas supply and demand imbalance, reduced global oil and natural gas storage capacity, caused oil prices to decline significantly and resulted in continued volatility in oil, natural gas and NGLs prices through the year ended December 31, 2020.

With the combined effects of the increased production levels

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

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

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

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

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:

limitations on the ability of the Company’s customers to conduct business, which would result in a decrease in demand for services and lower utilization of the Company’s assets;

limitations on the ability of suppliers to provide materials or equipment, limitations on the ability of the Company’s employees to perform their work due to illness caused by the pandemic or local, state or federal orders requiring employees to remain at home;

reduction of capital expenditures and discretionary spend;

and limitations on the ability of customers to pay us on a timely basis.

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

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

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

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

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

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The accompanying audited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) and pursuant to the rules and regulations of the U.S.

The accompanying audited consolidated financial statements of the Company have been prepared in accordance with US GAAP and pursuant to the rules and regulations of the U.S.

Securities and Exchange Commission (“SEC”).

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Investments in which the Company exercises control are consolidated and the noncontrolling interests of such investments, which are not attributable directly or indirectly to the Company, are presented as a separate component of net income or loss and equity in the accompanying consolidated financial statements.

The Company has ownership interests in Ranger LLC, which is consolidated within the Company’s consolidated financial statements but is not wholly owned by the Company.

The Company had ownership interests in Ranger LLC, which was consolidated within the Company’s consolidated financial statements, but was not wholly owned by the Company.

Upon the conversion of the Class B Common Stock, all noncontrolling interests were eliminated.

Changes in the Company’s ownership interest in Ranger LLC, while it retains its controlling interest, are accounted for as equity transactions.

We have made certain reclassifications to our prior period operating revenue and cost of sales amounts due to the change in reportable segments whereby our Wireline Services, and Processing Solutions and Ancillary Services were bifurcated from our historical Completion and Other Services segment as a result of our fourth quarter operating segment changes.

In addition, there has been a reclassification of finance lease obligations, disclosed in the prior year, to other current and other long-term liabilities.

None of these reclassifications have an impact on our consolidated operations results, cash flows or financial position.

Use of Estimates

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• 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;

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Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions.

The allowance for doubtful accounts was $ 1.6 million for both of the years ended December 31, 2020 and 2019.

The allowance for doubtful accounts was $ 2.8 million and $ 1.6 million for the years ended December 31, 2021 and 2020, respectively.

Bad debt expense recorded for the years ended December 31, 2021 and 2020 was $ 1.5 million and $ 0.1 million, respectively.

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2020 $ 1.6 $ 0.1 $ ( 0.1 ) $ 1.6

Inventories are carried at the lower of cost or net realizable value and primary consists of supplies held for the Completion and Other Services segment.

Inventories are carried at the lower of cost or net realizable value and primarily consists of supplies held for the Wireline Services segment.

The Company accounts for inventory using the weighted average cost method.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease, discounted at our annual incremental borrowing rate (“IBR”).

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Variable lease payments are excluded from the ROU asset and lease liabilities and are recognized in the period in which the obligation for those payments is incurred.

For certain leases, where variable lease payments are incurred and relate primarily to common area maintenance, in substance fixed payments are included in the ROU asset and lease liability.

For certain leases, where variable lease payments are incurred and

relate primarily to common area maintenance, in substance fixed payments are included in the ROU asset and lease liability.

For those leases that do not provide an implicit rate, we use an IBR based on the estimated rate of interest for a fully collateralized, fully amortizing loan over a similar term of the lease payments at commencement date.

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

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

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

Property and Equipment, net

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If a long‑lived asset is tested for recoverability and the undiscounted estimated future cash flows expected to result from the use and eventual disposition of the asset is less than the carrying amount of the asset, the asset cost is adjusted to fair value and an impairment loss is recognized as the amount by which the carrying amount of a long‑lived asset exceeds its fair value.

During the first and second quarter of 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.

Intangible Assets

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The Company did not have any assets or liabilities that were measured at fair value on a recurring basis at December 31, 2021 and 2020.

See “Note 3 — Business Combinations,” for information regarding the estimated fair value of non-recurring items.

Revenue Recognition

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The Company elected the “right to invoice” practical expedient for recognizing revenue.

The Company invoices customers upon completion of the

specified services and collection generally occurs within the payment terms agreed with customers.

The Company invoices customers upon completion of the specified services and collection generally occurs within the payment terms agreed with customers.

Accordingly, there is no financing component to our arrangements with customers.

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Equity-Based Compensation

The Consolidated Financial Statements reflect various equity-based compensation awards granted by Ranger.

The Consolidated Financial Statements reflect various equity-based compensation awards granted by Ranger Inc.

These awards include restricted stock awards and performance stock units.

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An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable to public companies.

The Company will lose its EGC during the year ending December 31, 2022, as this will be the last fiscal year following the fifth anniversary of the first Form S-1, which was filed with the SEC in August 2017.

The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act.

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or (i) has annual revenues of less than $100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than $700 million.

Smaller reporting company status is determined on an annual basis.

Recent Accounting Pronouncements

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

Note 3 — Business Combinations

The Company completed three acquisitions during the year ended December 31, 2021 where all purchases were 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 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 Consolidated Balance Sheets.

The preliminary purchase price assessment and fair value estimations are subject to change for up to one year subsequent to the closing date of each respective acquisition.

The Company uses valuation techniques consistent with the market and income approach to measure the fair value of the assets acquired and liabilities assumed in each of the business combinations.

The Company’s market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets.

The Company’s income approach uses valuation techniques to convert future projected cash flows to a single discounted present value amount.

The estimates of fair value required the use of significant unobservable inputs, representative of a Level 3 fair value measurement, including assumptions related to the future performance of the assets.

The supplemental unaudited pro forma information presented below 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 operated the assets since January 1, 2020.

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

Patriot Well Solutions (“Patriot”) Acquisition

On May 14, 2021, the Company acquired all of the assets 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 within the Wireline Services reporting segment.

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

The Company finalized the purchase price allocation in the fourth quarter of 2021.

PerfX Wireline Services (“PerfX”) Acquisition

On July 8, 2021, the Company acquired all of the assets 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 within the Wireline Services reporting segment.

The aggregate consideration paid 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, however the Company may elect to cure the forfeiture event through a cash payment to XConnect.

If the Company elects not to 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 value assigned to the warrant by the Company is negligible.

The Company finalized the purchase price allocation in the fourth quarter of 2021.

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 0.1

Operating leases, right-of-use asset 1.1

Property and equipment 18.4

Total assets acquired 27.6

Accounts payable 5.4

Accrued expenses 1.0

Operating lease right-of-use obligation 1.1

Total liabilities assumed 7.5

Purchase price $ 20.1

The following unaudited pro-forma financial results considers that the PerfX Acquisition occurred as of January 1, 2020 (in millions):

Year Ended December 31,

Revenue $ 348.0 $ 290.5

Operating loss $ ( 41.6 ) $ ( 23.5 )

Net loss $ ( 3.1 ) $ ( 27.7 )

Basic earnings (loss) per share $ 0.70 $ ( 1.64 )

Diluted earnings (loss) per share $ 0.60 $ ( 1.64 )

The Company reported revenue and an operating loss during the year ended December 31, 2021 of approximately $ 55.5 million and $ 1.5 million, respectively.

The transaction costs related to the PerfX Acquisition approximated $ 0.7 million and are included as part of general and administrative expense.

Basic Energy Services, Inc.

(“Basic”) Acquisition

On September 15, 2021, Ranger Energy Acquisition, LLC (“Ranger Acquisitions”) entered into an Asset Purchase Agreement for certain assets of Basic and certain of its subsidiaries (the “Basic Sellers”), which closed on October 1, 2021.

Ranger Acquisitions 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, North Dakota, Oklahoma, and Texas.

The Basic Sellers were considered distressed, as they were unable to maintain operations with cash on-hand, nor had other financing mechanisms available, therefore filed for bankruptcy and held a public auction of substantially all of their assets.

As consideration for the Basic Acquisition, the Company paid $ 37.6 million in cash to Basic Sellers.

Such cash was generated through the issuance of Series A Preferred Stock.

See “Note 10 — Equity” for further details related to the issuance of the Series A Preferred Stock.

The material financial results of Basic are included within the High Specification Rigs reporting segment.

All assets associated with the Basic Acquisition, were recorded at their fair value based on a preliminary purchase price allocation.

The purchase price allocation has not been finalized due to additional items to be settled that the Company expects to be immaterial to the financial statements.

The Company used the market approach to value as of the closing date, October 1, 2021, to apply fair values to the assets purchased based on the selling price of similar assets.

As a result of comparing the purchase price to the fair value of the assets acquired, a $ 37.2 million bargain purchase gain, net of tax, was recognized and is included in “Other expense (income)” in the consolidated statements of operations.

The bargain purchase gain is primarily attributable Basic’s distressed financial position and lack of financing options available to avoid liquidation.

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

Property and equipment $ 89.5

Total assets acquired 89.5

Finance lease obligations 3.9

Bargain purchase deferred tax liability 10.8

Total liabilities assumed 14.7

Net assets acquired 74.8

Bargain purchase 37.2

Purchase Price $ 37.6

The following unaudited pro-forma financial results considers that the Basic Acquisition occurred as of January 1, 2020 (in millions, except per share amounts):

Year Ended December 31,

Revenue $ 423.2 $ 357.2

Operating loss $ ( 41.2 ) $ ( 51.8 )

Net income (loss) $ ( 3.0 ) $ ( 18.0 )

Basic earnings (loss) per share $ 0.68 $ ( 1.15 )

Diluted earnings (loss) per share $ 0.59 $ ( 1.15 )

The Company reported revenue and an operating loss during the year ended December 31, 2021 that included approximately $ 38.0 million and $ 8.0 million, respectively.

The transaction costs related to the Basic Energy Acquisition approximated $ 7.1 million and are included as part of general and administrative expense.

Note 4 — Property and Equipment, Net

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High specification rigs machinery and equipment 5 - 10

Completions and other services machinery and equipment 5 - 10

Process solutions machinery and equipment 3 - 30

Wireline services machinery and equipment 5 - 10

Processing Solutions and ancillary services machinery and equipment 3 - 30

Vehicles 3 - 15

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Depreciation expense was $ 36.1 million and $ 34.2 million for the years ended December 31, 2021 and 2020, respectively.

The Company had assets under finance leases of $ 12.3 million and $ 4.0 million for the years ended December 31, 2021 and 2020.

Note 5 — Intangible Assets

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Long-term portion of finance lease obligations $ 2.9

On February 22, 2021, the Company entered into an agreement to sell and leaseback certain of our vehicles for cash consideration of $ 3.5 million.

Note 8 — Other Financing Liabilities

During the year ended December 31, 2021, the Company entered into an agreement to sell a parcel of land and a building attached thereto, and subsequently entered into a lease agreement to lease such property.

The Company received cash of $ 12.1 million from the sale of the land and building.

The lease contains a 15-year term and rent escalations of two percent per annum.

During the year ended December 31, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently entered into a lease agreement to lease such fixed assets.

The Company received cash of $ 3.5 million from the sale of the fixed assets.

The leased assets are to be paid over 18 to 60 months.

These sales did not qualify for sale accounting, therefore the leases were classified as other financing liabilities and no gain or loss was recorded.

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

As of the year ended December 31, 2021, aggregate future lease payments of the financing liabilities are as follows (in millions):

For the twelve months ending December 31, Total

Thereafter 9.7

Total future minimum lease payments $ 14.7

Note 9 — Debt

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

ESCO Notes Payable $ — $ 5.8

Wells Fargo Credit Facility 7.2 9.5

Eclipse Revolving Credit Facility $ 27.0 $ —

Eclipse M&E Loan 12.2 —

Eclipse Term Loan B 11.9 —

Secured Promissory Note 10.4 —

Installment Purchases 1.0 —

Encina Master Financing Agreement — 17.3

Credit Facility — 7.2

Total Debt 62.5 24.5

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Long term-debt, net $ 18.4 $ 14.5

ESCO Notes Payable

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

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

The notes bore interest at 5.0 % payable quarterly until their respective maturity dates.

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

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

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

During the year ended December 31, 2020, the Company settled the indemnification claims, 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.

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

Credit Facility

On August 16, 2017, Ranger, LLC entered into a $ 50.0 million senior 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 Company’s eligible accounts receivable serves as collateral for the borrowings under the Credit Facility.

On August 16, 2017, Ranger, LLC 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 LIBOR loans ranges from 1.5 % to 2.0 % and the applicable margin for Base Rate loans ranges from 0.5 % to 1.0 %, in each case, depending on Ranger, LLC’s average excess availability under the Credit Facility.

The applicable margin for the LIBOR loan was 2.2 % and the Base Rate loan interest rate was 4.3 % as of December 31, 2020.

The weighted average interest rate for the borrowings under the Credit Facility was 2.3 % for the year ended December 31, 2021.

Under the Credit Facility, the total loan capacity was $ 20.7 million, which was based on a borrowing base certificate in effect as of December 31, 2020.

The Company had outstanding borrowings of $ 7.5 million under the Credit Facility, leaving a residual $ 13.2 million available for borrowing as of December 31, 2020.

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

There were capitalized fees of $ 0.7 million associated with the Credit Facility, which are included on the Consolidated Balance Sheets as a discount to the long term debt.

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

Unamortized debt issuance costs as of December 31, 2020 was $ 0.3 million.

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

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

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

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

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

During the first quarter of 2020, the Company borrowed against the Credit Facility causing dominion to revert to the Administrative Agent, however after the 30 consecutive day period, as defined above,

dominion reverted back to the Company in the second quarter of 2020.

The borrowings under the Credit Facility, and related issuance costs, were included in Long-term debt, net in the Consolidated Balance Sheets as of December 31, 2020, as the Company was not subject to dominion and the scheduled maturity date is August 16, 2022.

During the year ended December 31, 2021, the Company recognized a loss on the retirement of debt of $ 0.2 million, as the Credit Facility was extinguished in connection with the Eclipse Loan and Security Agreement, which is described further below.

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

On June 22, 2018, the Company entered into a 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 Financing Agreement is secured by a lien on certain high specification rig assets.

As of December 31, 2020, the aggregate principal balance outstanding under the Financing Agreement was $ 17.7 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 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 bear interest at a rate per annum equal to the sum of 8.0 % plus the London Interbank Offered Rate (“LIBOR”), subject to a floor of 1.5 %.

As of December 31, 2020, LIBOR was 1.5 %.

Under the terms of the Financing Agreement, the Company is required to maintain a leverage ratio of 2.50 to 1.00.

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

The Company capitalized fees of $ 0.9 million associated with the Financing Agreement, which are included on the Consolidated Balance Sheets as a discount to the Long-term Debt, net.

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

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

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, which is described further below.

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 Consolidated Balance Sheets within Other Assets.

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

The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of December 31, 2021.

On January 7, 2022, the Company entered into an Amended and Restated Loan and Security Agreement with Eclipse Business Capital and Eclipse Business Capital SPV, LLC.

which extended the Maximum Revolving Facility Amount (as defined in the Amended Loan Agreement) to $ 65 million, among other things.

Revolving Credit Facility

The Revolving Credit Facility was drawn, in part, on September 27, 2021, to repay the 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.

The borrowings of the Revolving Credit Facility, therefore, are classified as current maturities of long-term debt on the Consolidated Balance Sheet.

Under the Revolving Credit Facility, the maximum borrowing capacity was $ 45.0 million, which was based on a borrowing base certificate in effect as of December 31, 2021.

The Company had outstanding borrowings of $ 27.0 million under the Revolving Credit Facility, leaving a residual $ 18.0 million available for borrowings as of December 31, 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 5.1 % for the year ended December 31, 2021.

The Company capitalized fees of $ 1.8 million associated with the Revolving Credit Facility, which are included in Other Assets in the Consolidated Balance Sheets.

Such fees will be amortized through maturity.

Unamortized debt issuance costs as of December 31, 2021 were $ 1.7 million.

On January 7, 2022, the Company entered into the First Amendment to the Loan and Security Agreement, increasing the maximum revolving credit facility availability to $ 65.0 million.

M&E Term Loan Facility

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $ 12.5 million as of December 31, 2021, 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 8.1 % for the year ended December 31, 2021.

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

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

Any principal amounts repaid may not be reborrowed.

The Company capitalized fees on $ 0.3 million associated with this M&E Term Loan Facility, which are included in the Consolidated Balance Sheets as a discount to the Long-term Debt, net.

Such fees will be amortized through maturity.

Unamortized debt issuance costs as of December 31, 2021 were $ 0.3 million.

On October 1, 2021, 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 Basic assets.

On October 1, 2021, Term Loan B was drawn in full to repay borrowings under the Revolving Credit Facility and as of December 31, 2021 the principal balance outstanding was $ 12.4 million.

Any principal amounts paid are from the proceeds from the sale of Basic assets, and may not be reborrowed.

The Company capitalized fees of $ 0.6 million associated with Term Loan B, which are included in the Consolidated Balance Sheets as a discount to the Current Maturities of Long-term Debt, net.

Such fees will be amortized through maturity.

Unamortized debt issuance costs as of December 31, 2021 were $ 0.4 million.

The Company paid approximately $ 1.5 million on Term Loan B subsequent to December 31, 2021, where such cash was generated from the sale of Basic assets under the Term Loan B.

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 December 31, 2021, the aggregate principal balance outstanding was $ 10.4 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.

The Company made a cash payment of $ 1.5 million payment in February 2022 on the Secured Promissory Note, where such cash was generated from the sale of liened assets.

Other Installment Purchases

During the year ended December 31, 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 December 31, 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.

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.

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 year ended December 31, 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 Consolidated Statement of Operations.

Scheduled Debt Maturities

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Equity Based Compensation

Series A Preferred Stock

During the year ended December 31, 2021, the Company consummated the private placement under the Securities Purchase Agreement, dated September 10, 2021, with certain accredited investors of 6.0 million newly issued shares of Series A Convertible Preferred Stock, par value $ 0.01 per share, in exchange for cash consideration in an aggregate amount of $ 42 million.

The holders of Series A Preferred Stock will vote as a separate class only on matters adversely affecting the Series A Preferred Stock.

The Series A Preferred Stock will not have any right to vote together with the common stock on any matters.

In the event of any liquidation, the holders of our Series A Preferred Stock will be entitled to receive out of the assets available for distribution, an amount equal to the greater of the original issue price of $ 7.00 per share of Series A Preferred Stock, and the product of the amount per share that would have been payable upon such liquidation to the holders of shares of common stock, multiplied by the number of shares of Class A Common Stock into which each share of Series A Preferred Stock is then convertible.

The Preferred Stock will automatically convert into shares of the Company’s Class A Common Stock upon effectiveness of a registration statement.

Class A Common Stock

Equity Based Compensation

The Company has a Long-Term Incentive Plan (“LTIP”) for executives, employees, consultants and non-employee directors, under which awards can be granted in the form of stock options, stock appreciation rights, restricted stock awards (“RSAs”), restricted stock units, performance awards, dividend equivalents, other stock-based awards, cash awards and substitute awards.

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Achievement with respect to the absolute TSR criteria is based on a measurement of the Company’s stock price growth during the measurement period.

The PSUs that were granted during the years ended December 31, 2020 and 2019 will cliff vest, subject to the achievement of applicable performance criteria and certification by the board of directors, on April 23, 2023 and March 21, 2022, respectively.

The PSUs that were granted during the years ended December 31, 2021 and 2020 will cliff vest, subject to the achievement of applicable performance criteria and certification by the board of directors, on March 15, 2024 and April 23, 2023, respectively.

As of December 31, 2021, there was an aggregate of $ 1.1 million of unrecognized compensation cost related to PSUs.

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Granted 123,106 $ 9.24 2.2 years 123,106 $ 7.45 2.2 years

Forfeited ( 111,382 ) ( 146,863 )

Vested 54,696 19,213

Unvested as of December 31, 2021 215,493 1.8 years 144,529 1.8 years

Issuance of shares in Connection with Acquisitions

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.

As consideration for the PerfX Acquisition, aggregate consideration paid was $ 20.1 million, which included 1,000,000 shares of Class A Common Stock.

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.

See “Note 3 — Business Combinations” for further details related to the acquisitions of Patriot and PerfX.

Issuance of shares to a Related Party

During the year ended December 31, 2021, the Company entered into a definitive agreement with affiliates of CSL Capital Management (“CSL”) and Bayou Holdings (“Bayou”) to terminate the Tax Receivable Agreement (the “TRA Termination Agreement”).

In consideration of the TRA Termination Agreement, the Company issued an aggregate of 376,185 shares of Class A Common Stock of the Company to affiliates of CSL Capital Management and Bayou Holdings.

Purchases of Equity Securities

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In June 2019, the Board of Directors approved a share repurchase program, authorizing the Company to purchase up to 10 % of the outstanding Class A Common Stock held by non-affiliates, not to exceed 580,000 shares or $ 5.0 million in aggregate value.

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

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

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

During the years ended December 31, 2020 and 2019, the Company repurchased 93,063 shares and 113,937 shares, respectively, of Class A Common Stock for an aggregate $ 0.7 million for both periods, in the open market.

During the year ended December 31, 2020, the Company repurchased 93,063 shares of Class A Common Stock for an aggregate $ 0.7 million in the open market.

The following table summarizes the activity of treasury stock for the years ended December 31, 2021 and 2020:

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Balance at December 31, 2021 ( 551,828 ) $ ( 3.8 )

Share Issuance to Related Party

In connection with the Offering, the Company entered into a master reorganization agreement in 2017, under which the parties thereto effected a series of restructuring transactions.

Under the master reorganization agreement, an aggregate of $ 3.0 million liability was settled by the Company and CSL Energy Holdings I, LLC during the year ended December 31, 2019.

At the Company’s discretion the liability was settled with the issuance of 206,898 Class A Common Stock.

Class B Common Stock

During the year ended December 31, 2021, in connection with the TRA Termination Agreement, Ranger LLC redeemed CSL’s and Bayou’s outstanding units in Ranger LLC and the corresponding shares of its Class B Common Stock for an equivalent number of shares of Class A Common Stock.

Following this redemption, no shares of Class B Common Stock were issued or outstanding.

Note 11 — Risk Concentrations

Customer Concentrations

For the year ended December 31, 2020, two customers, EOG Resources (“EOG”) and Concho Resources, Inc.

(“Concho”), accounted for approximately 21 % and 17 %, respectively, of the Company’s consolidated revenues.

As of December 31, 2020, approximately 11 % and 10 %, respectively, of the consolidated accounts receivable balance was due from these customers.

For the year ended December 31, 2019, two customers, EOG and Concho, accounted for approximately 17 % and 14 %, respectively, of the Company’s consolidated revenues.

During the year ended December 31, 2021, two customers, EOG Resources, Inc.

(“EOG”) and ConocoPhillips, accounted for approximately 15 % and 10 %, respectively, of the Company’s consolidated revenues.

As of December 31, 2021, approximately 15 % of the consolidated accounts receivable balance was due from these customers.

For the year ended December 31, 2020, two customers, EOG and Concho Resources, accounted for approximately 21 % and 17 %, respectively, of the Company’s consolidated revenues.

As of December 31, 2020, approximately 11 % and 10 % respectively, of the consolidated accounts receivable balance was due from these customers.

Note 12 — Income Taxes

Ranger, LLC is treated as a partnership for U.S.

federal income tax purposes and is subject to Texas Margin Tax, however not subject to federal or state income taxation.

As a member in Ranger, LLC, the Company is subject to U.S.

taxation on its allocable share of U.S.

taxable income and the non-controlling interest members will pay taxes with respect to their allocable share of U.S.

taxable income.

Ranger LLC is treated as an entity disregarded as separate from its owner for U.S.

federal income tax purposes and is subject to Texas Margin Tax, but is not subject to U.S.

federal or state income taxation.

As the sole member of Ranger LLC, the Company is subject to U.S.

federal income taxation on all of Ranger LLC’s taxable income.

The Company is a corporation and is subject to U.S.

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Nontaxable (loss) income allocated to non-controlling interest 2.2 1.7

Bargain purchase gain ( 8.2 ) —

Valuation allowance 0.5 2.1

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Net operating loss carryforward $ 17.5 $ 16.4

Stock based compensation 2.0

Valuation allowance ( 1.9 ) ( 5.3 )

Other 1.0 $ —

Net deferred income tax asset $ 18.6 $ 11.1

Deferred income tax liabilities

Investment in partnership $ ( 11.1 ) $ ( 12.9 )

Property and equipment ( 21.5 ) ( 0.5 )

Other ( 0.3 ) —

Investment in partnership — $ ( 11.1 )

Deferred income tax liability ( 21.8 ) ( 11.6 )

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Note 13 — Earnings (loss) per Share

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

Diluted earnings (loss) per share is computed giving effect to all potentially dilutive shares.

The following table presents the Company’s calculation of basic and diluted earnings or loss per share for the years ended December 31, 2020 and 2019 (in millions, except share and per share data):

Loss per share is based on the amount of loss allocated to the shareholders and the weighted average number of shares outstanding during the period for each class of common stock.

Diluted loss per share is computed giving effect to all potentially dilutive shares.

The following table presents the Company’s calculation of basic and diluted loss per share for the years ended December 31, 2021 and 2020 (in millions, except share and per share data):

Years Ended December 31,

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Weighted average number of shares - basic 11,860,312 8,532,923

Equity compensation awards 191,854 —

Conversion of Series A Preferred Stock 1,500,000 —

Weighted average number of shares - diluted 13,552,166 8,532,923

Basic earnings (loss) per share $ ( 1.21 ) $ 0.21

Diluted earnings (loss) per share $ ( 1.21 ) $ 0.21

During the years ended December 31, 2020 and 2019, the Company excluded 6.9 million shares of Class A Common Stock issuable upon conversion of the Company’s Class B Common Stock for both periods and 1.3 million and 1.2 million, respectively, equity-based awards in calculating diluted earnings or loss per share, as the effect was anti-dilutive.

Basic loss per share $ 0.73 $ ( 1.21 )

Diluted loss per share $ 0.63 $ ( 1.21 )

During the year ended year ended December 31, 2021, the Company excluded 0.2 million shares of equity-based awards.

During the year ended December 31, 2020, the Company excluded 6.9 million shares of Class A Common Stock issuable upon conversion of the Company’s Class B Common Stock and 1.3 million equity-based awards.

These items were excluded in calculating diluted loss per share, as the effect was anti-dilutive.

Note 14 — Commitments and Contingencies

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In the event the size of Ranger’s Board of Directors is increased or decreased at any time to other than eight directors, CSL’s nomination rights will be proportionately increased or decreased, respectively, rounded up to the nearest whole number.

Redemption Rights

Under the Ranger LLC Agreement, holders of Ranger Units other than the Company (the “Ranger Unit Holders”) will, subject to certain limitations, have the right, pursuant to the Redemption Right (as defined in the Ranger LLC Agreement), to cause Ranger LLC to acquire all or a portion of their Ranger Units (along with a corresponding number of shares of Ranger’s Class B Common Stock) for, at Ranger LLC's election, (i) shares of the Company’s Class A Common Stock at a redemption ratio of one share of Class A Common Stock for each Ranger Unit redeemed, subject to conversion rate adjustments for stock splits, stock dividends, reclassification and other similar transactions, or (ii) cash in an amount equal to the Cash Election Value (defined below) of such Class A Common Stock.

Ranger LLC will determine whether to issue shares of Class A Common Stock or cash in an amount equal to the Cash Election Value based on facts in existence at the time of the decision, which the Company expects would include the trading prices for the Class A Common Stock at the time relative to the cash purchase price for the Ranger Units, the availability of other sources of liquidity (such as an issuance of preferred stock) to acquire the Ranger Units and alternative uses for such cash.

Alternatively, upon the exercise of the Redemption Right, the Company (instead of Ranger LLC) will have the right, pursuant to the Call Right (as defined in the Ranger LLC Agreement), to, for administrative convenience, acquire each tendered Ranger Unit directly from such Ranger Unit Holder for, at the Company’s election, (x) one share of Class A Common Stock or (y) cash in an amount equal to the value of a share of Class A Common Stock, based on a volume-weighted average price.

In addition, upon a change of control of the Company, the Company has the right to require each Ranger Unit Holder (other than the Company) to exercise its Redemption Right with respect to some or all of such unitholder’s Ranger Units.

As the Ranger Unit Holders redeem their Ranger Units, the Company’s membership interest in Ranger LLC will be correspondingly increased, the number of shares of Class A Common Stock outstanding will be increased, and the number of shares of Class B Common Stock outstanding will be reduced.

The Company’s acquisition (or deemed acquisition for U.S.

federal income tax purposes) of Ranger Units pursuant to an exercise of the Redemption Right or the Call Right is expected to result in adjustments to the tax basis of the tangible and intangible assets of Ranger LLC, and such adjustments will be allocated to the Company.

These adjustments would not have been available to the Company absent the acquisition or deemed acquisition of Ranger Units and are expected to reduce the amount of cash tax that the Company would otherwise be required to pay in the future.

“Cash Election Value” means, with respect to the shares of Class A Common Stock to be delivered to the redeeming Ranger Unit Holder by us pursuant to our Call Right, the amount that would be received if the number of shares of Class A Common Stock to which the redeeming Ranger Unit Holder would otherwise be entitled were sold at a per share price equal to the trailing 10 -day volume weighted average price of a share of Class A Common Stock on such redemption, net of actual or deemed offering expenses.

The Company incurred $ 0.7 million and $ 0.9 million in expenses to CSL and other board members for the years ended December 31, 2020 and 2019, respectively, primarily related to office rent, where such lease terminated during the fourth quarter of 2020.

As of December 31, 2020 amounts due to or from CSL and other board members was negligible.

In connection with the IPO, the Company entered into a master reorganization agreement in 2017, under which the parties thereto effected a series of restructuring transactions.

Under the master reorganization agreement, an aggregate of $ 3.0 million liability was settled by the Company and CSL Energy Holdings I, LLC during the year ended December 31, 2019.

At the Company’s discretion the liability was settled with the issuance of 206,898 Class A Common Stock.

Tax Receivable Agreement

On August 16, 2017, in connection with the Offering, the Company entered into a Tax Receivable Agreement (the “TRA”) with certain of the existing Ranger Unit holders and their permitted transferees (each such person, a “TRA Holder” and together, the “TRA Holders”).

The TRA generally provides for the payment by the Company of 85 % of the net cash savings, if any, in U.S.

federal, state and local income tax and franchise tax that the Company actually realizes (computed

using simplifying assumptions to address the impact of state and local taxes) or is deemed to realize in certain circumstances in periods after the Offering as a result of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holder’s Ranger Units in connection with the Offering or pursuant to the exercise of the Redemption Right or the Call Right (each as defined in the Amended and Restated Limited Liability Company Agreement of Ranger LLC) and (ii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRA.

The Company will retain the benefit of the remaining 15 % of these cash savings.

The term of the TRA commenced on August 16, 2017 and will continue until all tax benefits that are subject to the TRA (or the TRA is terminated due to other circumstances, including the Company’s breach of a material obligation thereunder or certain mergers, assets sales, other forms of business combination or other changes of control) have been utilized or expired, unless the Company exercises its right to terminate the TRA.

The payments under the TRA will not be conditioned upon a TRA Holder having a continued ownership interest in either Ranger LLC or the Company.

If the Company elects to terminate the TRA early or the TRA is terminated due to other circumstances (including the Company’s breach of a material obligation thereunder or certain mergers, asset sales other forms of business combinations or other changes of control), its obligations under the TRA would accelerate and it would be required to make an immediate payment equal to the present value of the anticipated future tax payments to be made by the Company under the TRA (determined by applying a discount rate of one-year LIBOR plus 150 basis points and based upon certain assumptions and deemed events set forth in the TRA).

In addition, payments due under the TRA will be similarly accelerated following certain mergers or other changes of control.

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

During the year ended December 31, 2021, the Company entered into a definitive agreement with affiliates of CSL and Bayou to terminate the TRA.

In consideration of the TRA Termination Agreement, the Company issued an aggregate of 376,185 shares of Class A Common Stock of the Company to affiliates of CSL Capital Management and Bayou Holdings.

Following this redemption, no shares of Class B Common Stock were issued or outstanding.

Registration Rights Agreement

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The Company is required to use all commercially reasonable efforts to maintain the effectiveness of any such registration statement until all shares covered by such registration statement have been sold.

Subject to certain exceptions, the Company is not obligated to effect such a registration within ninety 90 days after the closing of any underwritten offering of shares of Class A Common Stock requested by the Holders pursuant to the Registration Rights Agreements.

Subject to certain exceptions, the Company is not obligated to effect such a registration within 90 days after the closing of any underwritten offering of shares of Class A Common Stock requested by the Holders pursuant to the Registration Rights Agreements.

The Company is also not obligated to effect any registration where such registration has been requested by the holders of Registrable Securities (as defined in the Registration Rights Agreement) which represent less than $ 25 million, based on the five-day volume weighted average trading price of the Class A Common Stock on the New York Stock Exchange.

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The obligations to register shares under the Registration Rights Agreement will terminate as to any Holder when the Registrable Securities held by such Holder are no longer subject to any restrictions on trading under the provisions of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”), including any volume or manner of sale restrictions.

Registrable Securities means all shares of Class A Common Stock owned at any particular point in time by a Holder other than shares (i) sold pursuant to an effective registration statement under the Securities Act, (ii) sold in a transaction pursuant to Rule 144 under the Securities Act, (iii) that have ceased to be outstanding or (iv) that are eligible for resale without restriction and without the need for current public information pursuant to any section of Rule 144 under the Securities Act.

Registrable Securities means all shares of Class A Common Stock owned at any particular point in time by a Holder other

than shares (i) sold pursuant to an effective registration statement under the Securities Act, (ii) sold in a transaction pursuant to Rule 144 under the Securities Act, (iii) that have ceased to be outstanding or (iv) that are eligible for resale without restriction and without the need for current public information pursuant to any section of Rule 144 under the Securities Act.

The Company incurred $ 0.1 million and $ 0.7 million in expenses to CSL and other board members for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021 amounts due to or from CSL and other board members was negligible.

Note 16 — Segment Reporting

The Company’s operations are located in the United States and organized into three reporting segments:

High Specification Rigs, Completion and Other Services and Processing Solutions.

High Specification Rigs, Wireline Services, and Processing Solutions and Ancillary Services.

The reportable segments comprise the structure used by the Chief Operating Decision Maker (“CODM”) to make key operating decisions and assess performance during the years presented in the accompanying consolidated financial statements.

The reportable segments have been categorized based on services provided in each line of business.

The CODM evaluates the segments’ operating performance based on multiple measures including Adjusted EBITDA, rig hours and rig utilization.

The tables below present the operating income (loss) measurement, as the Company believes this is most consistent with the principals used in measuring the financial statements.

The following is a description of the segments:

As a result of three business combinations, coupled with executive management changes, the Company re-evaluated the reportable segments accordingly.

During the fourth quarter of 2021, the Company bifurcated the legacy Completion and Other Services segment into Wireline Services, with the remaining business added to the Processing Solutions and Ancillary Services.

The following is a description of the reporting segments as updated during the fourth quarter of 2021:

• High Specification Rigs .

The Company’s High Specification 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 Exploration & Production (“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 specification rigs are designed to support growing U.S.

horizontal well demands.

In addition to the core well service rig operations, the Company offers a suite of complementary services, including fluid management and well service-related equipment rentals.

Completion and Other Services.

The Completion and Other Services segment provides wireline completion services necessary to bring a well on production and other ancillary services consisting primarily of the Company’s wireline and snubbing lines of business along with other, non-rig well services to enhance the production of a well.

Processing Solutions .

The Company provides a range of proprietary, modular equipment for the processing of rich natural gas streams at the wellhead or central gathering points in basins where drilling and completion activity has outpaced the development of permanent processing infrastructure.

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.

Provides high-spec well service rigs and complementary equipment and services to facilitate operations throughout the lifecycle of a well.

• Wireline Services .

Provides services necessary to bring and maintain a well on production and consists of our wireline completion, wireline production, and pump down lines of business.

• Processing Solutions and Ancillary Services .

Provides other services often utilized in conjunction with our High Specification Rigs and Wireline Services segments.

These services include equipment rentals, plug and abandonment, logistics hauling, processing solutions, as well as snubbing and coil tubing.

The Company incurs costs, indicated as Other, that are not allocable to any of the operating segments and includes mostly corporate general and administrative expenses as we all as depreciation of office furniture and fixtures and other corporate assets.

Segment information for the years ended December 31, 2021 and 2020 is as follows (in millions):

Year Ended December 31, 2021

High Specification Rigs Completion and Other Services Processing Solutions Other Total

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

Revenues $ 140.1 $ 117.9 $ 35.1 $ — $ 293.1

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Depreciation and amortization 21.5 8.1 5.9 1.3 36.8

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

Operating income (loss) ( 0.2 ) ( 5.8 ) 0.3 ( 34.8 ) ( 40.5 )

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Income tax expense — — — ( 6.2 ) ( 6.2 )

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

Gain on bargain purchase, net of tax ( 37.2 ) — — — ( 37.2 )

Net income (loss) $ 37.0 $ ( 5.8 ) $ 0.3 $ ( 33.6 ) $ ( 2.1 )

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Year Ended December 31, 2020

High Specification Rigs Completion and Other Services Processing Solutions Other Total

High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total

Revenues $ 82.5 $ 79.0 $ 26.3 $ — $ 187.8

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Depreciation and amortization 20.2 5.6 7.8 1.4 35.0

Gain on debt retirement — — — — —

Operating income (loss) ( 9.2 ) 16.4 ( 0.9 ) ( 23.5 ) ( 17.2 )

1 unchanged sentence

Income tax expense — — — — —

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

Gain on bargain purchase, net of tax — — — — —

Net income (loss) $ ( 9.2 ) $ 16.4 $ ( 0.9 ) $ ( 24.8 ) $ ( 18.5 )

6 unchanged sentences

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-K

Item 8. Financial Statements and Supplementary Data