What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-04-29 compared with 2021-11-05 · 169 added, 353 removed, 163 unchanged (76% of the section changed)

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(“Ranger, Inc.”) and its consolidated subsidiaries.

How We Evaluate Our Operations

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:

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Provides high-specification (“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.

For additional financial information about our segments, please see “Item 1.

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Recent Events and Outlook

Patriot Well Solutions (“Patriot”) Acquisition

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

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

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

PerfX Wireline Services (“PerfX”) Acquisition

On July 8, 2021, the Company completed the acquisition of PerfX, a provider of wireline services that operate in Williston, North Dakota and Midland, Texas.

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

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

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

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

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

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

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

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

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

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

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

Basic Energy Acquisition

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

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

The Company paid $36.65 million in cash to Basic.

Coronavirus (“COVID-19”)

The outbreak of COVID-19 in the first quarter of 2020 and its continued spread across the globe has resulted, and is likely to continue to result, in significant economic disruption and has, and will likely continue to, adversely affect the operations of the Company’s business, as the significantly reduced global and national economic activity has resulted in reduced demand for oil and natural gas.

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

Various containment measures, which included the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe decline 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 risks associated with the COVID-19 pandemic have impacted our workforce and the way we meet our business objectives.

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

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

however the full extent to which the COVID-19 outbreak may affect the Company’s financial conditions, results of operations or liquidity subsequent to the date hereof.

COVID-19 and numerous public and political responses thereto have contributed to equity market volatility and potentially the risk of a global recession.

While commodity prices, as well as our stock price, have improved with the rollout of COVID-19 vaccines, we expect this global equity market volatility to continue at least until the outbreak of COVID-19, including new variants, stabilizes, if not longer.

Additionally, increased activity during 2021 can be attributed to stay-at-home orders and other restrictions being lifted in certain geographical areas, however any future containment measures could curtail such growth.

The response to the COVID-19 outbreak (such as stay-at-home orders, closures of restaurants and banning of group gatherings) and slowing of the global economy has contributed to increased unemployment rates.

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

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

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

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

limitations on the ability of our suppliers to provide materials or equipment, limitations on the ability of our 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;

limitations on the ability of our customers to conduct business;

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

If prolonged, whether as a result of new strains or variants of COVID-19 or otherwise, such factors may also negatively affect the carrying values of our property and equipment and intangible assets.

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

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

Significant progress has been made to combat COVID-19 and its multiple variants, however, it remains a global challenge and continues to have an impact on our financial results.

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

While commodity prices, as well as our stock price and operational activity, have improved during the quarter ended March 31, 2022, we expect this global market volatility to continue at least until the outbreak of COVID-19, including any new variants, stabilizes, if not longer.

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

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

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

How We Evaluate Our Operations

Management uses a variety of metrics to analyze our operating results and profitability, which include operating revenues, cost of conducting our operations, operating income (loss) and adjusted EBITDA, among others.

Within our High Specification Rig segment, management uses additional metrics to analyze our activity levels and profitability, including, rig hours and rig utilization.

We qualified for limited aid under the CARES Act and have deferred payroll tax payments of $1.1 million as of March 31, 2022 under the CARES Act, which will become due on December 31, 2022.

In February 2022, Russia invaded neighboring Ukraine.

The conflict has caused turmoil in global markets, resulting in higher oil prices, and injected even more uncertainty into a worldwide economy recovering from the effects of COVID-19.

Given the evolving conflict, there are many unknown factors and events that could materially impact our operations.

These events have and continue to impact commodity prices, which could have a material effect on our earnings, cash flows, and financial condition.

In the short-term, commodity price fluctuations are highly uncertain.

Actual price outcomes will be dependent on the degree to which existing sanctions imposed on Russia, any potential future sanctions, and independent corporate actions affect Russia’s oil production or the sale of Russia’s oil in the global market.

In addition, the degree to which other oil producers respond to current oil prices, as well as the effects macroeconomic developments might have on global oil demand, will be important for oil price formation in the coming months.

Financial Metrics

How We Generate Revenues

We currently generate revenues through the provision of a variety of oilfield services.

These services are performed under a variety of contract structures, including a long term take-or-pay contract and various master service agreements, as supplemented by statements of work, pricing agreements and specific quotes.

A portion of our master services agreements include provisions that establish pricing arrangements for a period of up to one year in length.

However, the majority of those agreements provide for pricing adjustments based on market conditions.

The majority of our services are priced based on prevailing market conditions and changing input costs at the time the services are provided, giving consideration to the specific requirements of the customer.

We analyze our revenues by comparing actual revenues to our internal projections for a given period and to prior periods to assess our performance.

We believe that revenues are a meaningful indicator of the demand and pricing for our services.

Within our High Specification Rig segment, we analyze rig hours as an important indicator of our activity levels and profitability.

Rig hours represent the aggregate number of hours that our well service rigs actively worked during the periods presented.

We typically bill customers for our well services on an hourly basis during the period that a well service rig is actively working, making rig hours a useful metric for evaluating our profitability.

Rig Utilization

Within our High Specification Rig segment, we analyze rig utilization as a further important indicator of our activity levels and profitability.

We measure rig utilization by reference to average monthly hours per rig, which is calculated by dividing (a) the approximate, aggregate operating well service rig hours for the periods presented by (b) the aggregate number of high-spec rigs in our fleet during such period, as aggregated on a monthly basis utilizing a mid-month convention whereby a high-spec rig added to our fleet during a month, meaning that we have taken delivery of such high-spec rig and it is ready for service, assumed to be in our fleet for one half of such month.

We believe that rig utilization as measured by average monthly hours per high-spec rig is a meaningful indicator of the operational efficiency of our core revenue-producing assets, market demand for our well services and our ability to profitably capitalize on such demand.

Our evaluation of our rig utilization as measured by average monthly hours per rig may not be comparable to that of our competitors.

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

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

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

Rig hours and stage counts, as it relates to our High Specification Rigs and Wireline Services segments, respectively, are important indicators of our activity levels and profitability.

The stage count metric has become increasingly important with the update in our external reporting segments.

Rig hours represent the aggregate number of hours that our well service rigs actively worked, whereas stage counts represent the number of completed stages during the periods presented.

Generally, during the period our services are being provided, our customers are billed on an hourly basis for our high-spec rig services or, as it relates to our wireline services, they are billed upon the earlier of the completion of the well or on a monthly basis.

The rates for such rig hours and completed wells at which the customer is billed is generally predetermined based upon a contractual agreement.

Costs of Conducting Our Business

The principal expenses involved in conducting our business are personnel, repairs and maintenance costs as well as other direct material costs, general and administrative, depreciation and amortization and interest expense.

We manage the level of our expenses, except depreciation and amortization and interest expense, based on several factors, including industry conditions and expected demand for our services.

In addition, a significant portion of the costs we incur in our business is variable based on the quantities of specific services provided and the requirements of such services.

Direct cost of services and general and administrative expenses include the following major cost categories:

(i) personnel costs;

and (ii) equipment costs, including repair and maintenance.

The principal costs associated with conducting our business are personnel, repairs and maintenance, general and administrative, and depreciation expense.

Cost of Services.

Our primary costs associated with our cost of services are related to personnel expenses, repairs and maintenance of our fixed assets and perforating and gun costs.

A significant portion of these expenses are variable, and therefore typically managed, based on industry conditions and demand for our services.

Further, there is generally a correlation between our revenues generated and personnel and repairs and maintenance costs, which are dependent upon the operational activity.

Personnel costs associated with our operational employees represent a significant cost of our business.

A substantial portion of our labor costs is attributable to our crews and is partly variable based on the requirements of specific customers and operations.

A key component of personnel costs relate to the ongoing training of our employees, which improves safety rates and reduces attrition.

We also incur costs to employ personnel to support our services and perform maintenance on our assets.

Costs for these employees are not directly tied to our level of business activity.

Operating Income (Loss)

We analyze our operating income (loss), which we define as revenues less cost of services, general and administrative expenses, depreciation and amortization, impairment and other operating expenses, to measure our financial performance.

We believe operating income (loss) is a meaningful metric because it provides insight on profitability and true operating performance based on the historical cost basis of our assets.

We also compare operating income (loss) to our internal projections for a given period and to prior periods.

A substantial portion of our labor costs is attributable to our field crews and is partly variable based on the requirements of specific customers.

A key component of personnel costs relates to the ongoing training of our employees, which improves safety rates and reduces attrition.

General & Administrative.

As described above general and administrative expenses are corporate in nature and are included within the Other segment.

These costs are not attributable to any of our lines of businesses nor reporting segments.

We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense.

We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.

Operating Income or Loss

We analyze our operating income or loss by segment, which we have defined as revenues less cost of services and depreciation expense.

We believe this is a key financial metric as it provides insight on profitability and operational performance based on the historical cost basis of our assets.

Adjusted EBITDA

We view Adjusted EBITDA, which is a financial measure not determined in accordance with generally accepted accounting principles in the United States (“U.S.

GAAP”), as an important indicator of performance.

We define Adjusted EBITDA as net income (loss) before net interest expense, income tax provision or benefit, depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets and other non-cash and certain items that we do not view as indicative of our ongoing performance.

See “Results of Operations—Note Regarding Non-GAAP Financial Measure” for more information and reconciliations of net income (loss) to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with U.S.

We view Adjusted EBITDA, which is a non‑GAAP financial measure, as an important indicator of performance.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax provision (benefit), depreciation and amortization, equity‑based compensation, acquisition‑related and severance costs, gain and loss on disposal of assets, legal fees and settlements, and other non‑cash and certain other items that we do not view as indicative of our ongoing performance.

See “—Results of Operations” and “—Note Regarding Non‑GAAP Financial Measure” for more information and reconciliations of net income (loss) to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with GAAP.

Results of Operations

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

Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021

The following is an analysis of our operating results.

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

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

Three Months Ended

September 30, Variance

March 31, Variance

2022 2021 $ %

High specification rigs $ 64.9 $ 21.7 $ 43.2 199 %

Completion and other services 50.8 18.9 31.9 169 %

Processing solutions 1.0 1.2 (0.2) (17) %

Wireline services 38.6 12.1 26.5 219 %

Processing solutions and ancillary services 20.1 4.5 15.6 347 %

Total revenues 123.6 38.3 85.3 223 %

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High specification rigs 50.8 19.0 31.8 167 %

Completion and other services 48.4 14.0 34.4 246 %

Processing solutions 0.5 0.3 0.2 67 %

Wireline services 40.4 11.3 29.1 258 %

Processing solutions and ancillary services 16.8 3.8 13.0 342 %

Total cost of services 108.0 34.1 73.9 217 %

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Depreciation and amortization 11.6 8.0 3.6 45 %

Gain on sale of assets — — — 100 %

Total operating expenses 128.8 45.6 83.2 182 %

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Net loss $ (5.7) $ (8.3) $ 2.6 (31) %

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

Revenues for the three months ended March 31, 2022 increased $85.3 million, or 223%, to $123.6 million from $38.3 million for the three months ended March 31, 2021.

The change in revenues by segment was as follows:

High Specification Rigs.

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

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

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

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

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

Completion and Other Services.

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

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

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

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

Processing Solutions.

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

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

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

Cost of services (excluding depreciation and amortization).

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

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

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

High Specification Rigs.

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

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

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

Completion and Other Services.

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

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

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

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

Processing Solutions.

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

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

General & Administrative.

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

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

Depreciation and Amortization.

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

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

Interest Expense, net.

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

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

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

The following is an analysis of our operating results.

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

Nine Months Ended

September 30, Variance

2021 2020 $ %

High specification rigs $ 80.6 $ 60.8 $ 19.8 33 %

Completion and other services 86.1 79.9 6.2 8 %

Processing solutions 3.3 5.6 (2.3) (41) %

Total revenues 170.0 146.3 23.7 16 %

Operating expenses

High Specification Rig revenues for the three months ended March 31, 2022 increased $43.2 million, or 199%, to $64.9 million from $21.7 million for the three months ended March 31, 2021.

The increase in rig services revenue included a 161% increase in total rig hours to 112,500 for the three months ended March 31, 2022 from 43,200 for the three months ended March 31, 2021.

The average revenue per rig hour increased 17% to $577 for the three months ended March 31, 2022 from $493 for the three months ended March 31, 2021.

Of the total segment revenue increase, $32.7 million is attributable to the assets acquired in the Basic Acquisition.

The increase in revenue, rig hours and average revenue per rig hour is also related to increased crude oil pricing and industry activity.

Wireline Services.

Wireline Services revenues for the three months ended March 31, 2022 increased $26.5 million, or 219%, to $38.6 million from $12.1 million for the three months ended March 31, 2021.

The increased wireline services revenue was primarily attributable to completion services which included a 163% increase in completed stage count to 7,400 for the three months ended March 31, 2022 from 2,800 for the three months ended March 31, 2021 related to completion services.

The increase in wireline services revenue included a 133% increase in average active wireline units to fourteen units for the three months ended March 31, 2022 from six units for the three months ended March 31, 2021.

Of the segment revenue, $7.3 million and $24.5 million are attributable to the assets acquired in the Patriot and PerfX Acquisitions, respectively.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services revenues for the three months ended March 31, 2022 increased $15.6 million, or 347%, to $20.1 million from $4.5 million for the three months ended March 31, 2021.

Of the total segment revenue increase, $9.5 million is attributable to the Basic Acquisition.

The increase in processing

solutions and ancillary services is primarily attributable to a $5.5 million increase in both of our equipment rentals and plugging and abandonment services to $6.0 million and $5.7 million, respectively.

Cost of services (exclusive of depreciation and amortization).

High specification rigs 68.1 52.3 15.8 30 %

Completion and other services 82.2 59.0 23.2 39 %

Processing solutions 1.9 2.2 (0.3) (14) %

Total cost of services 152.2 113.5 38.7 34 %

General and administrative 16.8 15.1 1.7 11 %

Depreciation and amortization 24.9 26.8 (1.9) (7) %

Total operating expenses 193.9 155.4 38.5 25 %

Operating loss (23.9) (9.1) (14.8) 163 %

Other expenses

Interest expense, net 2.5 2.7 (0.2) (7) %

Total other expenses 2.5 2.7 (0.2) (7) %

Loss before income tax expense (26.4) (11.8) (14.6) 124 %

Tax (benefit) expense 0.1 — 0.1 100 %

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

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

The change in revenues by segment was as follows:

High Specification Rigs.

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

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

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

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

Completion and Other Services.

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

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

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

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

Processing Solutions.

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

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

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

Cost of services (excluding depreciation and amortization).

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

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

Cost of services (exclusive of depreciation and amortization) for the three months ended March 31, 2022 increased $73.9 million, or 217%, to $108.0 million from $34.1 million for the three months ended March 31, 2021.

As a percentage of revenue, cost of services was 87% and 89% for the three months ended March 31, 2022 and 2021, respectively.

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

High Specification Rigs.

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

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

High Specification Rig cost of services for the three months ended March 31, 2022 increased $31.8 million, or 167% to $50.8 million from $19.0 million for the three months ended March 31, 2021.

The increase was primarily attributable to an increase in variable expenses, notably employee costs and fuel costs, which amounted to $18.3 million and $2.9 million, respectively.

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

Completion and Other Services.

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

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

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

Processing Solutions.

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

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

Of the segment cost of services, $25.0 million is attributable to the Basic Acquisition.

Wireline Services.

Wireline Services cost of services for the three months ended March 31, 2022 increased $29.1 million, or 258%, to $40.4 million from $11.3 million for the three months ended March 31, 2021.

The increase was primarily attributable to increased employee costs due to the acquisitions of PerfX and Patriot, and, to a lesser extent, maintenance costs.

Of the total segment cost of services, $26.6 million and $6.4 million is attributable to the assets acquired in the PerfX and Patriot Acquisitions, respectively, whereas the increased maintenance costs amounted to $1.6 million.

Processing Solutions and Ancillary Services.

Processing Solutions and Ancillary Services cost of services for the three months ended March 31, 2022 increased $13.0 million, or 342%, to $16.8 million from $3.8 million for the three months ended March 31, 2021.

The increase was primarily attributable to increased employee costs with the upturn in operational activity, which amounted to $6.2 million.

Of the segment cost of services increase, $9.8 million is attributable to the Basic Acquisition.

General & Administrative.

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

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

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

General and administrative expenses for the three months ended March 31, 2022 increased $5.7 million, or 163%, to $9.2 million from $3.5 million.

The increase in general and administrative expenses is primarily due to corporate employee costs and increased professional fees during three months ended March 31, 2022.

Depreciation and Amortization.

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

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

Depreciation and amortization for the three months ended March 31, 2022 increased $3.6 million, or 45%, to $11.6 million from $8.0 million for the three months ended March 31, 2021.

The increase was attributable to assets acquired through the business combinations during the last half of the year ended December 31, 2021.

This was partially offset by depreciation expense related to fixed assets disposed of during the three months ended March 31, 2021.

Interest Expense, net.

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

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

Interest expense, net for the three months ended March 31, 2022 increased $1.5 million, or 250%, to $2.1 million from $0.6 million for the three months ended March 31, 2021.

The increase to net interest expense was attributable to the increased principal balance on our Revolving Credit Facility (as defined below), higher interest rates on each tranche of the Loan and Security Agreement that closed on September 27, 2021, and interest paid on the Secured Promissory Note issued in connection with the PerfX Acquisition.

Note Regarding Non-GAAP Financial Measure

Adjusted EBITDA is not a financial measure determined in accordance with U.S.

We define Adjusted EBITDA as net income (loss) before interest expense, net, income tax provision (benefit), depreciation and amortization, equity-based compensation, acquisition-related, severance and reorganization costs, impairment of goodwill, gain or loss on disposal of assets and certain other items that we do not view as indicative of our ongoing performance.

We define Adjusted EBITDA as net income or loss before net interest expense, income tax provision (benefit), depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets, legal fees and settlements, and other non-cash and certain other items that we do not view as indicative of our ongoing performance.

We believe Adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure.

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

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

Three Months Ended March 31, 2022 compared to Three Months Ended March 31, 2021

The following is an analysis of our Adjusted EBITDA.

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

Three Months Ended September 30, 2021

High Specification Rigs Completion and Other Services Processing Solutions Other Total

(in millions)

Net income (loss) $ 0.7 $ (1.2) $ (0.1) $ (8.5) $ (9.1)

Interest expense, net — — — 1.2 1.2

Income Tax expense — — — (0.2) (0.2)

Depreciation and amortization 4.1 3.6 0.6 0.4 8.7

Equity based compensation — — — 0.3 0.3

Loss on retirement of debt — — — 0.2 0.2

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

Severance and reorganization costs — — — 0.5 0.5

Acquisition related costs — — — 0.8 0.8

Legal fees and settlements — — — 0.9 0.9

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

Three Months Ended September 30, 2020

High Specification Rigs Completion and Other Services Processing Solutions Other Total

(in millions)

Net income (loss) $ (2.4) $ 2.2 $ 0.2 $ (5.7) $ (5.7)

Interest expense, net — — — 0.8 0.8

Income Tax expense — — — (0.1) (0.1)

Depreciation and amortization 4.6 2.7 0.7 0.4 8.4

Equity based compensation — — — 1.1 1.1

Loss on retirement of debt — — — — —

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

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

Acquisition related costs — — — — —

Legal fees and settlements — — — — —

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

High Specification Rigs Completion and Other Services Processing Solutions Other Total

(in millions)

Net income (loss) $ 3.1 $ (3.4) $ (0.3) $ (2.8) $ (3.4)

Interest expense, net — — — 0.4 0.4

Income Tax expense — — — (0.1) (0.1)

Depreciation and amortization (0.5) 0.9 (0.1) — 0.3

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

Loss on retirement of debt — — — 0.3 0.3

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

Severance and reorganization costs — — — 0.9 0.9

Acquisition related costs — — — 0.8 0.8

Legal fees and settlements — — — 0.9 0.9

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

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

The change by segment was as follows:

High Specification Rigs .

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

Completion and Other Services.

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

Processing Solutions .

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

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

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

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

Nine Months Ended September 30, 2021

High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended March 31, 2022

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

(in millions)

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Interest expense, net — — — 2.1 2.1

Income Tax expense — — — 0.1 0.1

Tax (benefit) expense — — — (1.6) (1.6)

Depreciation and amortization 6.4 2.7 2.0 0.5 11.6

Equity based compensation — — — 0.8 0.8

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

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

Gain on disposal of property and equipment — — — (1.0) (1.0)

Severance and reorganization costs — — — — —

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Adjusted EBITDA $ 14.1 $ (1.8) $ 3.3 $ (6.0) $ 9.6

Nine Months Ended September 30, 2020

High Specification Rigs Completion and Other Services Processing Solutions Other Total

Three Months Ended March 31, 2021

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

(in millions)

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Interest expense, net — — — 0.6 0.6

Income Tax expense — — — — —

Tax (benefit) expense — — — 0.4 0.4

Depreciation and amortization 4.8 1.2 1.6 0.4 8.0

Equity based compensation — — — 0.9 0.9

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

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

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

Severance and reorganization costs — — — (1.4) (1.4)

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Adjusted EBITDA $ 2.7 $ 0.8 $ 0.7 $ (4.4) $ (0.2)

High Specification Rigs Completion and Other Services Processing Solutions Other Total

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

(in millions)

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Interest expense, net — — — 1.5 1.5

Income Tax expense — — — 0.1 0.1

Tax (benefit) expense — — — (2.0) (2.0)

Depreciation and amortization 1.6 1.5 0.4 0.1 3.6

Equity based compensation — — — (0.1) (0.1)

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

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

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

Severance and reorganization costs — — — 1.4 1.4

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Adjusted EBITDA $ 11.4 $ (2.6) $ 2.6 $ (1.6) $ 9.8

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

Adjusted EBITDA for the three months ended March 31, 2022 increased $9.8 million to income of $9.6 million from a loss of $0.2 million for the three months ended March 31, 2021.

The change by segment was as follows:

High Specification Rigs .

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

Completion and Other Services.

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

Processing Solutions .

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

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

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

High Specification Rigs Adjusted EBITDA for the three months ended March 31, 2022 increased $11.4 million to $14.1 million from $2.7 million for the three months ended March 31, 2021, primarily due to increased revenues of $43.2 million, partially offset by a corresponding increase in cost of services of $31.8 million.

Wireline Services.

Wireline Services Adjusted EBITDA for the three months ended March 31, 2022 decreased $2.6 million to a loss of $1.8 million from income of $0.8 million for the three months ended March 31, 2021, primarily due to an increase in cost of services of $29.1 million, offset by increased revenues of $26.5 million.

Processing Solutions and Ancillary Services .

Processing Solutions and Ancillary Services Adjusted EBITDA for the three months ended March 31, 2022 increased $2.6 million to $3.3 million from $0.7 million for the three months ended March 31, 2021, due to increased revenues of $15.6 million, offset by a corresponding increase in cost of services of $13.0 million.

Other Adjusted EBITDA for the three months ended March 31, 2022 decreased $1.6 million to a loss of $6.0 million from a loss of $4.4 million for the three months ended March 31, 2021.

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

Liquidity and Capital Resources

We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions.

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

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

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

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

As of March 31, 2022, we had total liquidity of $10.2 million, consisting of $3.8 million of cash on hand and availability under our Revolving Credit Facility of $6.4 million.

As of March 31, 2022, our borrowing base under the Revolving Credit Facility was $51.2 million compared to $19.8 million and $45.0 million as of March 31, 2021 and December 31, 2021, respectively, as a result of increased operational activity and accounts receivable balances.

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

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

Nine Months Ended September 30, Change

Three Months Ended March 31, Change

2022 2021 $ %

(in millions)

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

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

Net cash used in operating activities $ (12.1) $ (1.9) $ (10.2) 537 %

Net cash provided by investing activities 5.0 — 5.0 100 %

Net cash provided by financing activities 10.3 0.6 9.7 1,617 %

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Operating Activities

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

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

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

Net cash used in operating activities increased $10.2 million to cash used of $12.1 million for three months ended March 31, 2022 compared to cash used of $1.9 million for the three months ended March 31, 2021.

The change in cash flows from operating activities is primarily attributable to a decrease in gross margins and operating income for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The use of working capital cash increased $6.3 million to $8.6 million for the three months ended March 31, 2022, compared to $2.3 million for the three months ended March 31, 2021.

Investing Activities

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

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

Net cash provided by investing activities increased $5.0 million from no cash provided, nor used in, investing activities for the three months ended March 31, 2021.

The change in cash flows from investing activities is attributable to the significant asset sales that took place during the three months ended March 31, 2022, partially offset by the fixed asset additions.

Financing Activities

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

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

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

Net cash provided by financing activities increased $9.7 million from cash provided of $0.6 million for the three months ended March 31, 2021 compared to cash provided of $10.3 million for the three months ended March 31, 2022.

The change in cash flows from financing activities is attributable to increased net borrowings of $16.8 million to fund working capital obligations.

Supplemental Disclosures

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

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

During the three months ended March 31, 2022, the Company added fixed assets of $0.8 million in finance leased assets, within our High-Spec Rigs and Wireline segments.

Working Capital

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

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

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

Our working capital, which we define as total current assets less total current liabilities, was $11.7 million as of March 31, 2022, compared to $2.5 million as of December 31, 2021.

The increased accounts receivable and contract assets, coupled with assets considered to be held for sale led to the working capital increase, however was partially offset by increased net borrowings under the EBC Revolving Credit Facility.

Our Debt Agreements

Credit Facility

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

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

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

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

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

Encina Master Financing and Security Agreement

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

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

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

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

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

Please see below for further details.

Eclipse Loan and Security Agreement

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

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

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

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

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”).

Debt under the Eclipse Loan and Security Agreement is secured by a lien on substantially all of the Company’s assets.

The Company was in compliance with the Eclipse Loan and Security Agreement covenants as of March 31, 2022.

On January 7, 2022, the Company entered into the First Amendment to Loan and Security Agreement (the Eclipse Loan and Security Agreement, as amended by the First Amendment, the “Amended Loan Agreement”) with EBC and Eclipse Business Capital SPV, LLC, which increased the Maximum Revolving Facility Amount (as defined in the Amended Loan Agreement) to $65.0 million, among other things.

Revolving Credit Facility

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

The Revolving Credit Facility was drawn in part on September 27, 2021, to repay the indebtedness under the existing Credit Facility, which was terminated in connection with such repayment, 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 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 serve as collateral for the borrowings under the Revolving Credit Facility, which is scheduled to mature in September 2025.

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

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

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

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

The borrowings of the Revolving Credit Facility, therefore, will be classified as Long-term debt, current portion on the Condensed Consolidated Balance Sheet.

Under the Revolving Credit Facility, the total loan capacity was $51.2 million, which was based on a borrowing base certificate in effect as of March 31, 2022.

The Company had outstanding borrowings of $44.8 million under the Revolving Credit Facility, leaving a residual $6.4 million available for borrowings as of March 31, 2022.

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

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

The weighted average interest rate for the loan was 6.0% for the three months ended March 31, 2022.

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

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

Unamortized debt issuance costs as of March 31, 2022 were $1.6 million.

M&E Term Loan Facility

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

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $12.3 million where the monthly principal installments commenced on March 1, 2022.

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

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

The weighted average interest rate for the M&E Term Loan was 9.0% for the three months ended March 31, 2022.

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

Any principal amounts repaid may not be reborrowed.

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

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

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

Unamortized debt issuance costs as of March 31, 2022 were $0.3 million.

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

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Term Loan B is scheduled to mature in September 2022.

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

Any principal amounts repaid may not be reborrowed.

The weighted average interest rate for Term Loan B was 13.0% for the three months ended March 31, 2022.

On October 1, 2021, the Term Loan B was drawn in full to repay borrowings under the Revolving Credit Facility and as of March 31, 2022 the principal balance outstanding was $11.0 million.

Principal payments are generated 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 Condensed Consolidated Balance Sheets as a discount to the Long-term debt, current portion.

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

Unamortized debt issuance costs as of March 31, 2022 were $0.3 million.

The Company paid approximately $4.9 million on Term Loan B subsequent to March 31, 2022, 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 entered into a security agreement with Chief Investments, LLC, as administrative agent, for the financing of certain assets acquired.

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

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

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

As of March 31, 2022, the aggregate principal balance outstanding was $8.3 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 assets with an attached lien.

Other Installment Purchases

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

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

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 March 31, 2022, the aggregate principal balance outstanding under the Installment Agreements was $0.9 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 nine months ended September 30, 2020, the Company paid $3.8 million to settle the note and any unpaid interest, in full, and recognized a gain on the retirement of debt of $2.1 million, which is included in the Condensed Consolidated Statement of Operations within General and administrative expenses.

Tax Receivable Agreement (“TRA”)

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

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

In certain cases,

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

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

Further, we intend to account for the effect of increases in tax basis and payments for such increases under the TRA arising from future redemptions as follows:

• when future sales or redemptions occur, we will record a deferred tax asset for the gross amount of the income tax effect along with an offset of 85% of this as a liability payable under the TRA;

the remaining difference between the deferred tax asset and tax receivable agreement liability will be recorded as additional paid-in-capital;

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

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

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

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

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 TRA (the “Tax Receivable 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.

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.

Critical Accounting Policies and Estimates

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Emerging Growth Company Status and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012.

We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are 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 our most recently completed second fiscal quarter, or (2) the date on which we have 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 generally to public companies.

We have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (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 has (i) market value of common stock held by non-affiliates of less than $250 million;

or (ii) 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.

The Company is an “emerging growth company” as defined in 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 has irrevocably opted out of the extended transition period and, as a result, the Company will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

The Company will lose its EGC status on December 31, 2022, as this will represent the last day of the fiscal year following the fifth anniversary of our first Form S-1, which was filed 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.

Smaller reporting company status is determined on an annual basis.

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• global or national health concerns, including pandemics such as the outbreak of COVID-19;

• uncertainty regarding future actions of foreign oil producers, such as Saudi Arabia and Russia, and the risk that they take actions that will cause an over-supply of crude oil;

• political and economic conditions and events in foreign oil, natural gas and NGL producing countries, including embargoes, continued hostilities in the Middle East and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, Central America and China and acts of terrorism or sabotage;

• our ability to sustain and improve our utilization, revenues and margins;

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This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

Except as otherwise required by

applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis