Ranger Energy Services, Inc. 10-K

Item 8. Financial Statements and Supplementary Data RANGER ENERGY SERVICES, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ( BDO USA, LLP; Houston, Texas; PCAOB ID # 243 ) 48 CONSOLIDATED BALANCE SHEETS 49 CONSOLIDATED STATEMENTS OF OPERATIONS 50 CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY 51 CONSOLIDATED STATEMENTS OF CASH FLOWS 52 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Note 1—Organization and Business Operations 53 Note 2—Summary of Significant Accounting Policies 53 Note 3 — Business Combinations 57 Note 4 —Property and Equipment 60 Note 5 —Intangible Assets 60 Note 6 —Accrued Expenses 61 Note 7 —Leases 61 Note 8 — Other Finance Leases 62 Note 9 —Debt 63 Note 10 —Equity 65 Note 1 1 —Risk Concentrations 67 Note 1 2 —Income Taxes 68 Note 1 3 —Earnings (Loss) per Share 70 Note 1 4 — Commitments and Contingencies 70 Note 1 5 —Related Party Transactions 70 Note 1 6 —Segment Reporting 72 47 Report of Independent Registered Public Accounting Firm To the Board of Directors and the Stockholders of Ranger Energy Services, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Ranger Energy Services, Inc. (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 These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. 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 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. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, LLP We have served as the Company’s auditor since 2016. Houston, Texas March 30, 2022 48 RANGER ENERGY SERVICES, INC. CONSOLIDATED BALANCE SHEETS (in millions, except share and per share amounts) December 31, 2021 2020 Assets Cash and cash equivalents $ 0.6 $ 2.8 Accounts receivable, net 80.8 25.9 Contract assets 13.0 1.1 Inventory 2.5 2.3 Prepaid expenses 8.3 3.6 Total current assets 105.2 35.7 Property and equipment, net 270.6 189.4 Intangible assets, net 7.8 8.5 Operating leases, right-of-use assets 6.8 5.8 Other assets 2.7 1.2 Total assets $ 393.1 $ 240.6 Liabilities and Stockholders' Equity Accounts payable $ 20.7 $ 10.5 Accrued expenses 30.3 9.3 Other financing liability, current portion 2.2 — Long-term debt, current portion 44.1 10.0 Other current liabilities 5.4 3.2 Total current liabilities 102.7 33.0 Operating leases, right-of-use obligations 5.8 5.2 Other financing liability 12.5 — Long-term debt, net 18.4 14.5 Other long-term liabilities 5.0 3.1 Total liabilities 144.4 55.8 Commitments and contingencies (Note 14) Stockholders' equity Preferred stock, $ 0.01 per share; 50,000,000 shares authorized; 6,000,001 Series A shares issued and outstanding as of December 31, 2021; no shares issued and outstanding as of December 31, 2020 0.1 — Class A Common Stock, $ 0.01 par value, 100,000,000 shares authorized; 18,981,172 shares issued and 18,429,344 shares outstanding as of December 31, 2021; 9,093,743 shares issued and 8,541,915 shares outstanding as of December 31, 2020 0.2 0.1 Class B Common Stock, $ 0.01 par value, 100,000,000 shares authorized; no shares and 6,866,154 shares issued and outstanding as of December 31, 2021 and 2020, respectively — 0.1 Less: Class A Common Stock held in treasury at cost; 551,828 treasury shares as of both December 31, 2021 and 2020 ( 3.8 ) ( 3.8 ) Accumulated deficit ( 8.0 ) ( 18.4 ) Additional paid-in capital 260.2 123.9 Total controlling stockholders' equity 248.7 101.9 Noncontrolling interest — 82.9 Total stockholders' equity 248.7 184.8 Total liabilities and stockholders' equity $ 393.1 $ 240.6 The accompanying notes are an integral part of these consolidated financial statements. 49 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except share and per share amounts) Years Ended December 31, 2021 2020 Revenues High specification rigs $ 140.1 $ 82.5 Wireline services 117.9 79.0 Processing solutions and ancillary services 35.1 26.3 Total revenues 293.1 187.8 Operating expenses Cost of services (exclusive of depreciation and amortization): High specification rigs 118.8 71.5 Wireline services 115.6 57.0 Processing solutions and ancillary services 28.9 19.4 Total cost of services 263.3 147.9 General and administrative 33.5 22.1 Depreciation and amortization 36.8 35.0 Total operating expenses 333.6 205.0 Operating loss ( 40.5 ) ( 17.2 ) Other income and expenses Interest expense, net 4.8 3.4 (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 ) Less: Net loss attributable to non-controlling interests ( 10.7 ) ( 8.2 ) Net income (loss) attributable to Ranger Energy Services, Inc. $ 8.6 $ ( 10.3 ) Income (loss) per common share Basic $ 0.73 $ ( 1.21 ) Diluted $ 0.63 $ ( 1.21 ) Weighted average common shares outstanding Basic 11,860,312 8,532,923 Diluted 13,552,166 8,532,923 The accompanying notes are an integral part of these consolidated financial statements. 50 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (in millions, except shares) Years Ended December 31, 2021 2020 2021 2020 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 Balance, beginning of period 9,093,743 8,839,788 $ 0.1 $ 0.1 Issuance of shares under share-based compensation plans 636,403 340,110 — — Shares withheld for taxes on equity transactions ( 147,313 ) ( 86,155 ) — — 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 Shares, Class B Common Stock 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 Treasury Stock Balance, beginning of period ( 551,828 ) ( 113,937 ) $ ( 3.8 ) $ ( 0.7 ) Repurchase of Class A Common Stock — ( 437,891 ) — ( 3.1 ) Balance, end of period ( 551,828 ) ( 551,828 ) $ ( 3.8 ) $ ( 3.8 ) Accumulated deficit Balance, beginning of period $ ( 18.4 ) $ ( 8.1 ) 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 ) Additional paid-in capital 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 — Impact of transactions affecting non-controlling interest 72.2 ( 1.2 ) Balance, end of period $ 260.2 $ 123.9 Total controlling interest stockholders’ equity Balance, beginning of period $ 101.9 $ 113.2 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 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 ) Repurchase of Class A Common Stock — ( 3.1 ) Balance, end of period $ 248.7 $ 101.9 Non-controlling interest Balance, beginning of period $ 82.9 $ 89.8 Net loss attributable to non-controlling interest ( 10.7 ) ( 8.2 ) Equity based compensation — 0.1 Impact of transactions affecting non-controlling interest ( 72.2 ) 1.2 Balance, end of period $ — $ 82.9 Total Stockholders’ Equity Balance, beginning of period $ 184.8 $ 203.0 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 — 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 ) Balance, end of period $ 248.7 $ 184.8 The accompanying notes are an integral part of these consolidated financial statements. 51 RANGER ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) Years Ended December 31, 2021 2020 Cash Flows from 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) 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, net effects of business combinations Accounts receivable ( 49.0 ) 15.6 Contract assets ( 11.9 ) 0.1 Inventory 2.7 0.4 Prepaid expenses ( 4.0 ) 1.7 Other assets ( 1.7 ) ( 1.1 ) Accounts payable 4.1 ( 3.3 ) Accrued expenses 19.6 ( 9.1 ) Other current liabilities ( 0.1 ) ( 0.6 ) Other long-term liabilities 0.7 1.1 Net cash (used in) provided by operating activities ( 39.4 ) 25.5 Cash Flows from Investing Activities Purchase of property and equipment ( 5.6 ) ( 7.2 ) 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 ) Cash Flows from Financing Activities Borrowings under Credit Facility 177.5 44.6 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 ) Payments on Installment Purchases ( 0.6 ) — Proceeds from financing of sale-leasebacks 15.6 — Principal payments on financing lease obligations ( 5.4 ) ( 4.7 ) Shares withheld on equity transactions ( 1.2 ) ( 0.3 ) 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 Cash and Cash Equivalents, End of Year $ 0.6 $ 2.8 Supplemental Cash Flow Information Interest paid $ 1.6 $ 2.9 Supplemental Disclosure of Non-cash Investing and Financing Activities Capital expenditures $ ( 1.5 ) $ 0.1 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 The accompanying notes are an integral part of these consolidated financial statements. 52 RANGER ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 — Organization and Business Operations Business Ranger Energy Services, Inc. (“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. exploration and production (“E&P”) companies that are fundamental to establishing and enhancing the flow of oil and natural gas throughout the productive life of a well. Our service offerings consist of well completion support, workover, well maintenance, wireline, fluid management, other complementary services, as well as installation, commissioning and operating of modular equipment, which are conducted in three reportable segments, as follows: • High Specification Rigs . 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. 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. Organization Ranger Inc. was incorporated as a Delaware corporation in February 2017. Ranger Inc. is a holding company, the sole material assets of which consist of membership interests in RNGR Energy Services, LLC a Delaware limited liability company (“Ranger LLC”). Ranger LLC owns all of the outstanding equity interests in Ranger Energy Services, LLC (“Ranger Services”) and Torrent Energy Services, LLC (“Torrent Services”), the subsidiaries through which it operates its assets. 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. 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 US GAAP and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all material adjustments, which are of a normal and recurring nature, necessary for the fair presentation of the financial results for all periods presented have been reflected. All intercompany balances and transactions have been eliminated. 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 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. 53 Use of Estimates The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Management uses historical and other pertinent information to determine these estimates. Actual results could differ from such estimates. Areas where critical accounting estimates are made by management include: • 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; • Revenue recognition; • Income taxes; and • Equity-based compensation. Significant Accounting Policies Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less are considered cash equivalents. The Company maintains its cash accounts in financial institutions that are insured by the Federal Deposit Insurance Corporation. From time to time cash balances may exceed the insured amounts, however, the Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks. Accounts Receivable, net Accounts receivable, net are stated at the amount management expects to collect from outstanding balances. Before extending credit, the Company reviews a customer’s credit history and generally does not require collateral from its customers. The allowance for doubtful accounts is established as losses are estimated and are recorded through a provision for bad debts. Losses are charged against the allowance when management believes the uncollectibility of a receivable is confirmed. Subsequent recoveries, if any, are credited to the allowance. The allowance for doubtful accounts is evaluated on a regular basis by management and based on past experience and other factors, which, in management’s judgment, deserve current recognition in estimating possible bad debts. 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 $ 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. Balance at Beginning of Year Charged to Operations Written Off Balance at End of Year Allowance for Doubtful Accounts Receivable 2021 $ 1.6 $ 1.5 $ ( 0.3 ) $ 2.8 2020 $ 1.6 $ 0.1 $ ( 0.1 ) $ 1.6 Inventories 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. Leases 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”). ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. 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 54 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. ROU assets also include any lease payments made and exclude lease incentives. Lease terms do not include options to extend or terminate the lease, as management does not consider them reasonably certain to exercise at this time. Leases with terms of 12 months or less are considered short-term leases and therefore payments are recorded as an expense on a straight line basis over the lease term. Any lease and non-components are combined. Operating Leases The Company enters into operating leases, primarily for real estate, with terms that vary from less than 12 months to seven years , where certain of the leases contain escalation clauses. The operating leases are included in Operating lease right-of-use assets, Other current liabilities and Operating lease right-of-use obligations in the Consolidated Balance Sheets. Lease costs associated with our yards and field offices are included in Cost of Services and our executive offices are included in General and Administrative expenses in the Consolidated Statements of Operations. Finance Leases The Company enters into lease arrangements for certain equipment, which are considered finance leases and generally have a term of three to five years . The assets and liabilities under finance leases are recorded at the lower of present value of the minimum lease payments or the fair value of the assets. 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, Other current liabilities and Other long-term liabilities in our Consolidated Balance Sheets. Property and Equipment, net Property and equipment is stated at cost or estimated fair market value at the acquisition date less accumulated depreciation. Depreciation is charged to expense on the straight‑line basis over the estimated useful life of each asset. Expenditures for major renewals and betterments are capitalized while expenditures for maintenance and repairs are charged to expenses as incurred. Depreciation does not begin until property and equipment is placed in service. Once placed in service, depreciation on property and equipment continues while being repaired, refurbished or between periods of deployment. Long‑Lived Asset Impairment The Company evaluates the recoverability of the carrying value of long‑lived assets, including property and equipment and intangible assets, whenever events or circumstances indicate the carrying amount may not be recoverable. 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. Intangible Assets Identified intangible assets with determinable lives consist of customer relationships. Customer relationships are straight-line amortized over their estimated useful lives. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. In valuing certain assets and liabilities, the inputs used to measure fair value may fall into different levels of the fair value hierarchy, which are summarized, as follows: Level 1—Quoted prices in active markets for identical assets and liabilities. Level 2—Other significant observable inputs. Level 3—Significant unobservable inputs. The Company’s financial instruments consist of cash and cash equivalents, trade receivables and trade payables, where the carrying amount approximates fair value due to the short‑term nature of each instrument. The fair value of long‑term debt approximates its carrying value based on the borrowing rates currently available to the Company for bank loans with similar terms and maturities. 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. 55 Revenue Recognition In determining the appropriate amount of revenue to be recognized as the Company fulfills the obligations under its contracts with customers, the following steps must be performed at contract inception: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when, or as the Company satisfies each performance obligation. The services of each segment are based on mutually agreed upon pricing with the customer prior to the services being performed and, given the nature of the services, do not include any warranty or right of return. Pricing for services are offered at hourly or daily rates, where the rates are, in part, determined by when services are performed and the nature of the specific job, with consideration for the extent of equipment, labor and consumables needed. Accordingly, the agreed upon pricing is considered to be variable consideration. Pricing for equipment rentals is based on fixed monthly service fees. We satisfy our performance obligation over time as the services are performed. The Company believes the output method is a reasonable measure of progress for the satisfaction of our performance obligations, which are satisfied over time, as it provides a faithful depiction of (i) our performance toward complete satisfaction of the performance obligation under the contract and (ii) the value transferred to the customer of the services performed under the contract. 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. Accordingly, there is no financing component to our arrangements with customers. All revenue transactions are presented on a net of sales tax in the Consolidated Statement of Operations. Contract Balances Contract assets representing the Company’s rights to consideration for work completed but not billed amounted to $ 13.0 million and $ 1.1 million as of December 31, 2021 and 2020, respectively. Substantially all of the contract assets as of December 31, 2021 and 2020 were invoiced during the subsequent periods. The Company does not have any contract liabilities included in the Consolidated Balance Sheets as of December 31, 2021 and 2020. Income Taxes The Company provides for income tax expense based on the liability method of accounting for income taxes. Deferred tax assets and liabilities are recorded based upon differences between the tax basis of assets and liabilities and their carrying values for financial reporting purposes and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The establishment of a valuation allowance requires significant judgment and is impacted by various estimates. Both positive and negative evidence, as well as the objectivity and verifiability of that evidence, is considered in determining the appropriateness of recording a valuation allowance on deferred tax assets. Under US GAAP, the valuation allowance is recorded to reduce the Company’s deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income. Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities and associated valuation allowances during the period. The impact of an uncertain tax position taken or expected to be taken on an income tax return is recognized in the financial statements at the largest amount that is more likely than not to be sustained upon examination by the relevant taxing authority. The income tax provision reflects the full benefit of all positions that have been taken in the Company's income tax returns, except to the extent that such positions are uncertain and fall below the recognition requirements. In the event that the Company determines that a tax position meets the uncertainty criteria, an additional liability or benefit will result. The amount of unrecognized tax benefit requires management to make significant assumptions about the expected outcomes of certain tax positions included in filed or yet to be filed tax returns. As of December 31, 2021 and 2020, the Company did not have any uncertain tax positions. The Company is subject to income taxes in the United States and in numerous state tax jurisdictions. The Company’s tax filings for 2020, 2019 and 2018 are subject to audit by the federal and state taxing authorities in most jurisdictions where we conduct business. None of the Company’s federal or state tax returns are currently under examination. These audits may result in assessments of additional taxes that are resolved with the authorities or through the courts. 56 The Company records income tax related interest and penalties, if applicable, as a component of tax expense. However, there were no such amounts recognized in the consolidated statements of operations in 2021 and 2020. Equity-Based Compensation The Consolidated Financial Statements reflect various equity-based compensation awards granted by Ranger Inc. These awards include restricted stock awards and performance stock units. The Company recognizes compensation expense related to equity-based awards based on the estimated fair value of the awards on the date of grant. The fair value of the equity-based awards on the grant date is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. The fair value of the restricted stock awards are estimated using the market price of the Company’s shares on the grant date. The fair value of the performance stock units are estimated using an option pricing model that includes certain assumptions, such as volatility, dividend yield and the risk free interest rate. Changes in these assumptions could change the fair value of our unit based awards and associated compensation expense in our Consolidated Statements of Operations. Forfeitures of all equity-based compensation are recognized as they occur. Emerging Growth Company and Smaller Reporting Company Status The Company is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company will remain an emerging growth company until the earlier of (1) the last day of its fiscal year (a) following the fifth anniversary of the completion of the Offering, (b) in which its total annual gross revenue is at least $1.07 billion, or (c) in which the Company is deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of its most recently completed second fiscal quarter, or (2) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. 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. Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that (i) has a market value of common stock held by non-affiliates of less than $250 million; 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. Recent Accounting Pronouncements Recently issued accounting standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses , which replaces the incurred loss impairment methodology to reflect expected credit losses. The amendment requires the measurement of all expected credit losses for financial assets held at the reporting date to be performed based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted. The Company is evaluating the effect of this accounting standard on its consolidated financial statements. In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for accounting contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued due to the reference rate reform. ASU 2020-04 became effective as of March 12, 2020 and can be applied through December 31, 2022. The Company has not made any contract modifications as of the date of this report to transition to a different reference rate, however it will consider this guidance as future modifications are made. With the exception of the 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. 57 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. 58 The following table presents the fair value of assets acquired and liabilities assumed in accordance with ASC 805 (in millions): Cash $ 1.0 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, 2021 2020 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. 59 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, 2021 2020 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 Property and equipment include the following (in millions): Estimated Useful Life December 31, (Years) 2021 2020 High specification rigs 20 $ 145.4 $ 127.2 High specification rigs machinery and equipment 5 - 10 47.8 39.7 Wireline services machinery and equipment 5 - 10 53.1 33.5 Processing Solutions and ancillary services machinery and equipment 3 - 30 78.0 69.0 Vehicles 3 - 15 52.7 20.4 Other property and equipment 5 - 25 31.2 10.8 Property and equipment 408.2 300.6 Less: accumulated depreciation ( 140.5 ) ( 113.0 ) Construction in progress 2.9 1.8 Property and equipment, net $ 270.6 $ 189.4 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 Definite lived intangible assets are comprised of the following (in millions): Estimated Useful Life December 31, (Years) 2021 2020 Customer relationships 10 - 18 $ 11.4 $ 11.4 Less: accumulated amortization ( 3.6 ) ( 2.9 ) Intangible assets, net $ 7.8 $ 8.5 60 Amortization expense was $ 0.7 million and $ 0.8 million for the years ended December 31, 2021 and 2020, respectively. Amortization expense for the future periods is expected to be as follows (in millions): For the years ending December 31, Amount 2022 $ 0.7 2023 0.7 2024 0.7 2025 0.7 2026 0.7 Thereafter 4.3 Total $ 7.8 Note 6 — Accrued Expenses Accrued expenses are comprised of the following (in millions): December 31, 2021 2020 Accrued payables $ 12.5 $ 2.7 Accrued compensation 12.7 4.5 Accrued taxes 2.1 1.0 Accrued insurance 3.0 1.1 Accrued expenses $ 30.3 $ 9.3 Note 7 — Leases Operating Leases Lease costs and other information related to operating leases are as follows (in millions): Years Ended December 31, 2021 2020 Short-term lease costs $ 4.5 $ 1.9 Operating lease cost $ 1.4 $ 2.6 Operating cash outflows from operating leases $ 1.5 $ 2.6 Weighted average remaining lease term 5.1 years 6.1 years Weighted average discount rate 8.9 % 8.5 % As of December 31, 2021, aggregate future minimum lease payments under operating leases was (in millions): For the years ending December 31, Total 2022 $ 2.0 2023 1.4 2024 1.4 2025 1.4 2026 1.3 Thereafter 1.2 Total future minimum lease payments 8.7 Less: amount representing interest ( 1.5 ) Present value of future minimum lease payments 7.2 Less: current portion of operating lease obligations ( 1.4 ) Long-term portion of finance lease obligations $ 5.8 61 Finance Leases Lease costs and other information related to finance leases are as follows (in millions): Years Ended December 31, 2021 2020 Amortization of finance leases $ 2.7 $ 4.7 Interest on lease liabilities $ 0.6 $ 0.4 Financing cash outflows from finance leases $ 5.4 $ 4.7 Weighted average remaining lease term 1.4 years 1.2 years Weighted average discount rate 2.1 % 3.9 % As of December 31, 2021, aggregate future minimum lease payments under finance leases was (in millions): For the years ending December 31, 2021 2022 $ 6.0 2023 2.5 2024 0.5 Total future minimum lease payments 9.0 Less: amount representing interest ( 0.5 ) Present value of future minimum lease payments 8.5 Less: current portion of finance lease obligations ( 5.6 ) Long-term portion of finance lease obligations $ 2.9 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 2022 $ 2.2 2023 0.8 2024 0.6 2025 0.7 2026 0.7 Thereafter 9.7 Total future minimum lease payments $ 14.7 62 Note 9 — Debt The aggregate carrying amounts, net of issuance costs, of the Company’s debt consists of the following (in millions): December 31, 2021 2020 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 Current portion of long-term debt ( 44.1 ) ( 10.0 ) Long term-debt, net $ 18.4 $ 14.5 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 weighted average interest rate for the borrowings under the Credit Facility was 2.3 % for the year ended December 31, 2021. 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 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 %. 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. 63 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. Term Loan B 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. 64 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 As of December 31, 2021, aggregate principal repayments of total debt for the next five years are as follows (in millions): For the years ending December 31, Total 2022 $ 44.1 2023 5.3 2024 8.1 2025 5.7 Total $ 63.2 Note 10 — Equity 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. 65 Class A Common Stock Equity Based Compensation Overview 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. Subject to adjustment in accordance with the terms of the LTIP, 2,850,000 shares of Class A Common Stock have been reserved for issuance pursuant to awards under the LTIP. Class A Common Stock withheld to satisfy exercise prices or tax withholding obligations will be available for delivery pursuant to other awards. The LTIP will be administered by the Board or an alternative committee appointed by the Board. RSAs The Company has granted RSAs, which generally vest in three equal annual installments beginning on the first anniversary date of the grant. The aggregate fair value of RSAs granted during the years ended December 31, 2021 and 2020 was $ 4.2 million and $ 2.5 million, respectively. As of December 31, 2021, there was an aggregate of $ 3.3 million of unrecognized expense related to RSAs issued, which are expected to be recognized over a weighted average period of 1.6 years. The following table summarizes the unvested activity for RSAs during the years ended December 31, 2021 and 2020: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Unvested at January 1, 2020 761,588 Granted 649,039 $ 3.84 1.8 years Forfeited ( 59,790 ) Vested ( 340,110 ) Unvested at December 31, 2020 1,010,727 $ 5.30 1.5 years Granted 645,288 $ 6.58 2.0 years Forfeited ( 253,060 ) Vested ( 562,494 ) Unvested at December 31, 2021 840,461 $ 6.08 1.6 years Performance Stock Units (“PSUs”) The Company has granted performance awards to certain key employees, in the form of PSUs, which are earned based on the achievement of certain market factors and performance targets at the discretion of the board of directors. The PSUs are subject to a three year measurement period during which the number of Class A Common Stock to be issued in settlement of the PSUs remains uncertain until the end of the measurement period and will generally cliff vest based on the level of achievement with respect to the applicable performance criteria. Subsequent to such measurement period, the vesting of PSUs is subject to certification by the board of directors. As defined in the respective PSU agreements, the performance criteria applicable to these awards is relative and absolute total shareholder return (“TSR”). Achievement with respect to the relative TSR criteria is determined by the Company’s TSR compared to the TSR of the defined peer group during the measurement period. 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, 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. 66 The following table summarizes the unvested activity for PSUs during the years ended December 31, 2021 and 2020: Relative Absolute Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Vesting Period Unvested as of January 1, 2020 88,442 88,442 Granted 60,631 $ 6.33 60,631 $ 3.62 Unvested as of December 31, 2020 149,073 149,073 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 During the year ended December 31, 2020, the Company repurchased 344,828 shares of the Company’s Class A Common Stock for an aggregate $ 2.4 million in a privately negotiated transaction with ESCO. See “Note 14 — Commitments and Contingencies” for further details. 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 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 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: Treasury Stock Quantity Amount Balance at January 1, 2020 ( 113,937 ) $ ( 0.7 ) Repurchase of Class A Common Stock ( 437,891 ) ( 3.1 ) Balance at December 31, 2020 ( 551,828 ) ( 3.8 ) Repurchase of Class A Common Stock — — Balance at December 31, 2021 ( 551,828 ) $ ( 3.8 ) 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. 67 Note 11 — Risk Concentrations Customer Concentrations 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 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. federal income tax. The effective U.S. federal income tax rate applicable to the Company for the years ended December 31, 2021 and 2020 was 21%. Total income tax expense for the year ended December 31, 2021 and 2020 differed from amounts computed by applying the U.S. federal statutory tax rate of 21% primarily due to non-deductible expenses, other state taxes, in addition to the adjustment for non-controlling interest that is not subject to federal tax. A release of the valuation allowance would result in the recognition of an increase in deferred tax assets and an income tax benefit in the period in which the release occurs, although the exact timing and amount of the release is subject to change based on numerous factors, including projections of future taxable income, which continues to be assessed based on available information each reporting period. Years Ended December 31, 2021 2020 Current provision (benefit) Federal $ — $ — State — ( 0.2 ) Total current provision (benefit) — ( 0.2 ) Deferred provision (benefit) Federal ( 6.4 ) 0.2 State 0.2 — Total deferred expense (benefit) ( 6.2 ) 0.2 Income tax expense (benefit) $ ( 6.2 ) $ — A reconciliation of the expected income tax expense on income (loss) before income taxes using the statutory federal income tax rate of 21% for 2021 and 2020 to income tax expense follows (in millions): December 31, 2021 2020 Income (loss) before income taxes $ ( 8.3 ) $ ( 18.5 ) Statutory rate 21 % 21 % Income tax expense (benefit) computed at statutory rate $ ( 1.7 ) $ ( 3.9 ) Reconciling items State income taxes, net of federal tax benefit 0.2 ( 0.1 ) Nontaxable (loss) income allocated to non-controlling interest 2.2 1.7 Bargain purchase gain ( 8.2 ) — Valuation allowance 0.5 2.1 Non-deductible expenses and other 0.8 0.2 Income tax expense (benefit) $ ( 6.2 ) $ — 68 As a result of the Offering and subsequent reorganization, the Company recorded a deferred tax asset, however a full valuation allowance has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized and is based upon the uncertainty of the realization of certain federal and state deferred tax assets related to net operating loss carryforwards and other tax attributes. The tax effects of the cumulative temporary differences resulting in the net deferred income tax liability, which are shown in Other Long-Term Liabilities on the consolidated balance sheet, are as follows (in millions): December 31, 2021 2020 Deferred income tax assets 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 Property and equipment ( 21.5 ) ( 0.5 ) Other ( 0.3 ) — Investment in partnership — $ ( 11.1 ) Deferred income tax liability ( 21.8 ) ( 11.6 ) Net deferred income tax liability $ ( 3.2 ) $ ( 0.5 ) As of December 31, 2021, the Company has net operating loss carryforwards of approximately $ 78.8 million, consisting of $ 9.8 million of section 382 limited losses expiring beginning in 2034, an estimated $ 20.6 million of non-section 382 limited losses expiring beginning in 2037 and $ 48.4 million of non-section 382 limited losses which carryforward indefinitely. The Coronavirus, Aid, Relief and Economic Security Act (the “CARES Act”), which was enacted on March 27, 2020 in the U.S., includes measures to assist companies, including temporary changes to income and non-income-based tax laws. As of December 31, 2021, the Company had deferred payroll tax payments of $ 1.1 million, however there were no other material tax impacts to the consolidated financial statements as it related to COVID-19 measures. 69 Note 13 — Earnings (loss) per Share 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, 2021 2020 Income (loss) (numerator): Basic: Net income (loss) attributable to Ranger Energy Services, Inc. $ 8.6 $ ( 10.3 ) Net income (loss) attributable to Class A Common Stock $ 8.6 $ ( 10.3 ) Diluted: Net income (loss) attributable to Ranger Energy Services, Inc. $ 8.6 $ ( 10.3 ) Net income (loss) attributable to Class A Common Stock $ 8.6 $ ( 10.3 ) Weighted average shares (denominator): 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 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 Legal Matters From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not believe that the ultimate resolution of these matters will have a material adverse effect on its consolidated financial position or results of operations. During the year ended December 31, 2018, the Company provided notice to ESCO Leasing, LLC that the Company is seeking 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. During the year ended December 31, 2020, the Company paid an aggregate of $ 6.2 million to ESCO, of which $ 3.8 million was paid to settle the Seller’s Note, and any unpaid interest, and $ 2.4 million was paid to repurchase shares of the Company’s Class A Common Stock. See “Note 9 — Debt” and “Note 10 — Equity” for further details of the debt and equity settlements. Note 15 — Related Party Transactions Stockholders’ Agreement In connection with the Offering, Ranger entered into a stockholders’ agreement (the “Stockholders’ Agreement”) with the Legacy Owners and the Bridge Loan Lenders (defined below). Among other things, the Stockholders’ Agreement provides CSL and Bayou Wells Holdings Company, LLC (“Bayou Holdings”) with the right to designate nominees to Ranger’s board of directors (each, as applicable, a “CSL Director” or “Bayou Director”) as follows: • for so long as CSL beneficially owns at least 50 % of Ranger’s common stock, at least three members of the Board of Directors shall be CSL Directors and at least two members of the Board of Directors shall be Bayou Directors (which may include Richard Agee, Brett Agee or any other person that may be designated by Bayou Holdings in accordance with the terms of the stockholders’ agreement); 70 • for so long as CSL beneficially owns less than 50 % but at least 30 % of Ranger’s common stock, at least three members of the Board of Directors shall be CSL Directors; • for so long as CSL beneficially owns less than 30 % but at least 20 % of Ranger’s common stock, at least two members of the Board of Directors shall be CSL Directors; • for so long as CSL beneficially owns less than 20 % but at least 10 % of Ranger’s common stock, at least one member of the Board of Directors shall be a CSL Director; and • once CSL beneficially owns less than 10 % of Ranger’s common stock, CSL will not have any Board designation rights. 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. 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. 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. Registration Rights Agreement On August 16, 2017, in connection with the closing of the Offering, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with certain stockholders (the “Holders”). Pursuant to, and subject to the limitations set forth in, the Registration Rights Agreement, at any time after the 180 -day lock-up period, the Holders have the right to require the Company by written notice to prepare and file a registration statement registering the offer and sale of a number of their shares of Class A Common Stock. Reasonably in advance of the filing of any such registration statement, the Company is required to provide notice of the request to all other Holders who may participate in the registration. 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 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. In addition, pursuant to the Registration Rights Agreement, the Holders have the right to require the Company, subject to certain limitations set forth therein, to effect a distribution of any or all of their shares of Class A Common Stock by means of an underwritten offering. Further, subject to certain exceptions, if at any time the Company proposes to register an offering of its equity securities or conduct an underwritten offering, whether or not for its account, then the Company must notify the Holders of such proposal at least three business days before the anticipated filing date or commencement of the underwritten offering, as applicable, to allow them to include a specified number of their shares in that registration statement or underwritten offering, as applicable. These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration or offering and the Company’s right to delay or withdraw a registration statement under certain circumstances. The Company will generally pay all registration expenses in connection with its obligations under the Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective. 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 71 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. Payments 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, 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 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. 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 . 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. • Other. 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. 72 Segment information for the years ended December 31, 2021 and 2020 is as follows (in millions): Year Ended December 31, 2021 High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total Revenues $ 140.1 $ 117.9 $ 35.1 $ — $ 293.1 Cost of services 118.8 115.6 28.9 — 263.3 General and administrative — — — 33.5 33.5 Depreciation and amortization 21.5 8.1 5.9 1.3 36.8 Operating income (loss) ( 0.2 ) ( 5.8 ) 0.3 ( 34.8 ) ( 40.5 ) Interest expense, net — — — 4.8 4.8 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 ) Capital expenditures $ 5.9 $ 2.0 $ 0.8 $ — $ 8.7 As of December 31, 2021 Property and equipment, net $ 140.4 $ 41.5 $ 63.3 $ 25.4 $ 270.6 Total assets $ 203.9 $ 60.3 $ 91.9 $ 37.0 $ 393.1 Year Ended December 31, 2020 High Specification Rigs Wireline Services Processing Solutions and Ancillary Services Other Total Revenues $ 82.5 $ 79.0 $ 26.3 $ — $ 187.8 Cost of services 71.5 57.0 19.4 — 147.9 General and administrative — — — 22.1 22.1 Depreciation and amortization 20.2 5.6 7.8 1.4 35.0 Operating income (loss) ( 9.2 ) 16.4 ( 0.9 ) ( 23.5 ) ( 17.2 ) Interest expense, net — — — 3.4 3.4 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 ) Capital expenditures $ 5.0 $ 1.8 $ 0.7 $ 0.3 $ 7.8 As of December 31, 2020 Property and equipment, net $ 115.8 $ 20.9 $ 47.6 $ 5.1 $ 189.4 Total assets $ 154.3 $ 24.6 $ 54.9 $ 6.8 $ 240.6 73 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures Not applicable.