What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-13 compared with 2022-03-30 · 262 added, 274 removed, 662 unchanged (45% of the section changed)

13 unchanged sentences

Note 3 — Business Combinations

Note 4—Assets Held for Sale

Note 5—Property and Equipment

6 unchanged sentences

Note 13—Income Taxes

Note 1 3 —Earnings (Loss) per Share

Note 14—Earnings per Share

Note 1 5 —Commitments and Contingencies

4 unchanged sentences

Ranger Energy Services, Inc.

Houston, Texas

Opinion on the Consolidated Financial Statements

2 unchanged sentences

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, 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.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 13, 2023 expressed an adverse opinion thereon.

Basis for Opinion

1 unchanged sentence

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.

We are a public accounting firm registered with the 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.

1 unchanged sentence

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.

2 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Identification of a Section 382 Ownership Change

As discussed within Note 13 to the consolidated financial statements, Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), generally imposes, upon the occurrence of an ownership change, an annual limitation on certain net operating losses that can be utilized.

We identified management’s assessment of the existence of a Section 382 ownership change as a critical audit matter because of the judgments required in interpreting the available information in making the determination as whether a Section 382

ownership change has occurred.

Testing management’s assessment required an increased extent of effort, including the need to involve our tax specialists.

The primary procedures we performed to address this critical audit matter included:

• Testing the completeness and accuracy of the underlying data used in making the determination as to the existence of a change in ownership.

• Utilizing professionals with specialized income tax knowledge and skills to assist in evaluating the accuracy of the conclusions reached by management related to a potential change in ownership.

/s/ BDO USA, LLP

10 unchanged sentences

Prepaid expenses 9.2 8.3

Assets held for sale 3.2 —

Total current assets 140.1 105.2

20 unchanged sentences

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

no Series A shares issued and outstanding as of December 31, 2022;

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

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

2 unchanged sentences

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

no shares issued or outstanding as of December 31, 2022 and 2021.

Class A Common Stock held in treasury at cost;

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

551,828 treasury shares as of December 31, 2022 and 2021

( 3.8 ) ( 3.8 )

Accumulated deficit ( 8.0 ) ( 18.4 )

Retained earnings (accumulated deficit) 7.1 ( 8.0 )

Additional paid-in capital 262.6 260.2

Total controlling stockholders' equity 248.7 101.9

Noncontrolling interest — 82.9

Total stockholders' equity 266.2 248.7

8 unchanged sentences

Processing solutions and ancillary services 118.3 35.1

Total revenues 293.1 187.8

Total revenue 608.5 293.1

Operating expenses

6 unchanged sentences

Depreciation and amortization 44.4 36.8

Impairment of fixed assets 1.3 —

Gain on sale of assets ( 0.7 ) ( 1.1 )

Total operating expenses 588.8 333.6

Operating loss ( 40.5 ) ( 17.2 )

Operating income (loss) 19.7 ( 40.5 )

Other income and expenses

Interest expense, net 7.3 5.0

(Gain) loss on debt retirement 0.2 ( 2.1 )

Gain on bargain purchase, net of tax ( 3.6 ) ( 37.2 )

Total other income and expenses 3.7 ( 32.2 )

Loss before income tax expense ( 8.3 ) ( 18.5 )

Income tax benefit ( 6.2 ) —

Net loss ( 2.1 ) ( 18.5 )

Income (loss) before income tax expense (benefit) 16.0 ( 8.3 )

Income tax expense (benefit) 0.9 ( 6.2 )

Net income (loss) 15.1 ( 2.1 )

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

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

$ 8.6 $ ( 10.3 )

Income (loss) per common share

Net income attributable to Ranger Energy Services, Inc.

Earnings per common share

Basic $ 0.66 $ 0.73

11 unchanged sentences

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 $ —

Balance, beginning of year 6,000,001 — $ 0.1 $ —

Conversion of Series A Preferred Stock ( 6,000,001 ) 6,000,001 ( 0.1 ) 0.1

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

Shares, Class A Common Stock

Balance, beginning of period 9,093,743 8,839,788 $ 0.1 $ 0.1

Balance, beginning of year 18,981,172 9,093,743 $ 0.2 $ 0.1

Issuance of shares under share-based compensation plans 484,459 636,403 — —

Shares withheld for taxes on equity transactions ( 119,340 ) ( 147,313 ) — —

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

Issuance of shares in connection with acquisitions 100,000 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

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

Balance, end of year 25,446,292 18,981,172 $ 0.3 $ 0.2

Shares, Class B Common Stock

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

Balance, beginning of year — 6,866,154 $ — $ 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

Balance, end of year — — $ — $ —

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 )

Balance, beginning of year ( 551,828 ) ( 551,828 ) $ ( 3.8 ) $ ( 3.8 )

Balance, end of year ( 551,828 ) ( 551,828 ) $ ( 3.8 ) $ ( 3.8 )

Retained earnings (accumulated deficit)

Balance, beginning of year $ ( 8.0 ) $ ( 18.4 )

Income attributable to controlling interest 15.1 8.6

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 )

Balance, end of year $ 7.1 $ ( 8.0 )

Additional paid-in capital

Balance, beginning of period $ 123.9 $ 121.8

Balance, beginning of year $ 260.2 $ 123.9

Issuance of Series A Preferred Stock — 41.9

4 unchanged sentences

Impact of transactions affecting non-controlling interest — 72.2

Balance, end of period $ 260.2 $ 123.9

Balance, end of year $ 262.6 $ 260.2

Total controlling interest stockholders’ equity

Balance, beginning of period $ 101.9 $ 113.2

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

Balance, beginning of year $ 248.7 $ 101.9

Net income attributable to controlling interest 15.1 8.6

Issuance of Series A Preferred Stock — 42.0

4 unchanged sentences

Benefit from release of valuation allowance — 1.5

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

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

Impact of transactions affecting non-controlling interest — 72.2

Repurchase of Class A Common Stock — ( 3.1 )

Balance, end of period $ 248.7 $ 101.9

Balance, end of year $ 266.2 $ 248.7

Non-controlling interest

Balance, beginning of period $ 82.9 $ 89.8

Balance, beginning of year $ — $ 82.9

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

Equity based compensation — 0.1

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

Balance, end of period $ — $ 82.9

Balance, end of year $ — $ —

Total Stockholders’ Equity

Balance, beginning of period $ 184.8 $ 203.0

Net loss ( 2.1 ) ( 18.5 )

Balance, beginning of year $ 248.7 $ 184.8

Net income (loss) 15.1 ( 2.1 )

Issuance of Series A Preferred Stock — 42.0

3 unchanged sentences

Issuance of Class A Common Stock to related party — 3.8

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

Tax step-up related to non-controlling interest exchange for TRA Termination — 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

Balance, end of year $ 266.2 $ 248.7

The accompanying notes are an integral part of these Consolidated Financial Statements.

4 unchanged sentences

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 ) —

Net income (loss) $ 15.1 $ ( 2.1 )

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

Depreciation and amortization 44.4 36.8

Equity based compensation 3.8 3.2

(Gain) loss on debt retirement 0.2 ( 2.1 )

Impairment of fixed assets 1.3 —

Gain on bargain purchase, net of tax ( 3.6 ) ( 37.2 )

Deferred income tax expense (benefit) 0.4 ( 6.2 )

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

Other expense, net 0.4 1.9

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

Accounts receivable ( 10.7 ) ( 49.0 )

1 unchanged sentence

Inventory ( 3.4 ) 2.7

Prepaid expenses ( 4.0 ) 1.7

Prepaid expenses and other current assets ( 0.8 ) ( 4.0 )

Other assets ( 1.9 ) ( 1.7 )

3 unchanged sentences

Other long-term liabilities 3.7 0.7

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

Net cash provided by (used in) operating activities 44.5 ( 39.4 )

Cash Flows from Investing Activities

2 unchanged sentences

Purchase of businesses, net of cash received 0.8 ( 39.9 )

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

Net cash provided by (used in) investing activities 11.3 ( 36.4 )

Cash Flows from Financing Activities

2 unchanged sentences

Borrowings under Eclipse M&E Term Loan — 12.5

Principal payments on Eclipse M&E Term Loan ( 2.1 ) —

Borrowings under Eclipse Term Loan B — 15.0

6 unchanged sentences

Principal payments on financing lease obligations ( 4.5 ) ( 5.4 )

Principal payments on other financing liabilities ( 2.3 ) —

Shares withheld on equity transactions ( 1.2 ) ( 1.2 )

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 )

Net cash provided by (used in) financing activities ( 52.7 ) 73.6

Increase (decrease) in Cash and Cash equivalents 3.1 ( 2.2 )

Cash and Cash Equivalents, Beginning of Year 0.6 2.8

7 unchanged sentences

Secured Promissory Note $ — $ ( 11.4 )

Early termination of financing leases $ — $ 1.3

The accompanying notes are an integral part of these Consolidated Financial Statements.

17 unchanged sentences

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 owns all of the outstanding equity interests in Ranger Energy Services, LLC (“Ranger Services”), Torrent Energy Services, LLC (“Torrent Services”), and Ranger Acquisitions, 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.

5 unchanged sentences

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.

Investments in which the Company exercises control are consolidated and the noncontrolling interests of such investments, which were 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’s ownership interests in Ranger LLC, which was consolidated within the Company’s Consolidated Financial Statements, was not wholly owned by the Company through October 1, 2021.

Pursuant to the TRA Termination Agreement (as defined herein) all noncontrolling interests in Ranger LLC ceased to exist.

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.

We have made certain reclassifications to our prior period operating expense amounts for year-over-year comparability purposes.

Other immaterial reclassifications have been made for comparability purposes.

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

Use of Estimates

30 unchanged sentences

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

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

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

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

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

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

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.

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.

1 unchanged sentence

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 Company enters into operating leases, primarily for real estate, with terms that vary from less than 12 months to nine 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.

11 unchanged sentences

Once placed in service, depreciation on property and equipment continues while being repaired, refurbished or between periods of deployment.

During the year ended December 31, 2022, the Company evaluated the useful lives and made adjustments, as needed, however such adjustments were not material to depreciation expense.

Long‑Lived Asset Impairment

10 unchanged sentences

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.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivables and accounts payables and debt.

The fair value of cash and cash equivalents, accounts receivables and accounts payables, which are determined to be Level 1 measurements, approximate fair value due to the short‑term nature of these instruments.

The carrying value reported for debt approximates fair value because the underlying instruments are at interest rates which approximate current market rates and is considered Level 3 in the fair value hierarchy The Company did not have any assets or liabilities that were measured at fair value on a recurring basis at December 31, 2022 and 2021.

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

13 unchanged sentences

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

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

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

The Company will periodically incur costs to fulfill contracts with customers and will defer such costs over the earlier of 12 months or the estimated number of months in which they are expected to be consumed.

The deferred costs are included within Prepaid assets on the Consolidated Balance Sheets as of December 31, 2022 and 2021.

During the years ended December 31, 2022 and 2021, the Company recognized expense of $ 0.7 million and $ 2.7 million, respectively.

All revenue transactions are presented on a net of sales tax in the Consolidated Statements of Operations.

Contract Balances

9 unchanged sentences

The ultimate realization of the deferred tax assets depends on the generation of sufficient taxable income.

The Company currently believes that it is reasonably possible to achieve a three-year cumulative level of profitability within the next 12 months, and as early as the first half of 2023.

Deferred tax expense or benefit is the result of changes in deferred tax assets and liabilities and associated valuation allowances during the period.

2 unchanged sentences

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.

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, 2022 and 2021, the Company did not have any uncertain tax positions.

2 unchanged sentences

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.

In the event our tax filings are audited, we may be subject to assessments of additional taxes that are resolved with the authorities or through the courts.

The Company records income tax-related interest and penalties, if applicable, as a component of tax expense.

9 unchanged sentences

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

2 unchanged sentences

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.

ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2022.

The Company adopted this standard on January 1, 2023.

This adoption did not have a material impact on the Company’s 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.

ASU 2020-04 became effective as of March 12, 2020 and can be applied through December 31, 2022, recently amended by ASU 2022-06 which has delayed the application date through December 31, 2024.

On September 23, 2022, the Company entered into the Fourth Amendment to the Loan and Security Agreement (the Eclipse Loan and Security Agreement, as amended through and including the Fourth Amendment, the “Amended Loan Agreement”) with EBC and Eclipse Business Capital SPV, LLC where the Secured Overnight Financing Rate (“SOFR”) replaced LIBOR as the reference rate for interest on borrowings, effective October 1, 2022.

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.

3 unchanged sentences

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 utilized valuation techniques consistent with the market 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.

The supplemental unaudited pro forma information presented below is 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, 2021.

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.

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

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

Following the acquisition of Patriot, the Company significantly expanded its scale and scope of the existing wireline business.

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 pro forma results of operations for the year ended December 31, 2021 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.

1 unchanged sentence

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.

Following the acquisition of PerfX, the Company significantly expanded its scale and scope of the existing wireline business.

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

The aggregate consideration paid was $ 20.1 million, which included 1.0 million 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 were issued by the Company on July 8, 2022, 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.

3 unchanged sentences

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 %.

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, if one should occur, 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 value assigned to the warrant by the Company is negligible as of December 31, 2022.

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

11 unchanged sentences

Purchase price $ 20.1

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

The following unaudited pro forma financial results considers that the PerfX Acquisition occurred as of January 1, 2021 (in millions, exception per share amounts):

Year Ended December 31, 2021

2 unchanged sentences

Net loss $ ( 3.1 )

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

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

Basic earnings per share $ 0.70

Diluted earnings per share $ 0.60

The supplemental pro forma information presented above is being provided for information purposes only and may not necessarily reflect what the results of operations would have been had the Company owned and operation the PerfX assets since January 1, 2021.

The financial results of PerfX are included in the Wireline Services reporting segment.

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.

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

On September 15, 2021, 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.

All assets associated with the Basic Acquisition, were recorded at their fair value.

The Company used the market approach 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, the Company realized a $ 40.8 million bargain purchase gain, net of tax.

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

While the Company uses its best estimates and assumptions as part of the purchase price allocation process to accurately value assets acquired and liabilities assumed as of the closing date, the estimates and assumptions are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the closing date, the Company recorded adjustments to the assets acquired and liabilities assumed, with the corresponding offset to the bargain purchase.

Subsequent to the measurement period, any adjustment to assets acquired or liabilities assumed is included in the operating results in the period in which the adjustment is identified.

As of the date of this report, the Company has finalized the purchase price allocation in the fourth quarter of 2022.

During the year ended December 31, 2022, adjustments were made within the permitted measurement period that resulted in an increase to the bargain purchased recognized of $ 3.6 million, net of tax, due to updated information regarding facts and circumstances which existed as of the date of the business combination.

The measurement period adjustments primarily impacted the bargain purchase gain and property and equipment.

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

11 unchanged sentences

Operating loss $ ( 41.2 )

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 )

Net loss $ ( 3.0 )

Basic earnings per share $ 0.68

Diluted earnings per share $ 0.59

The financial results of Basic are included in the High Specification Rigs and Processing Solutions and Ancillary Services reporting segments.

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.

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

Note 4 — Assets Held for Sale

Assets held for sale include the net book value of assets the Company plans to sell within the next 12 months and are primarily related to excess assets acquired from the Basic Acquisition.

Long-lived assets that meet the held for sale criteria are held for sale and reported at the lower of their carrying value or fair value less estimated costs to sell.

The Company intends to sell the excess assets to fund the repayments under the Eclipse Loan and Security Agreement.

Refer to “Note 10 — Debt” for further details.

As of December 31, 2022, the Company classified land and buildings within our High Specification Rigs and Processing Solutions and Ancillary Services segments, which are being actively marketed, as held for sale.

During the year ended December 31, 2022, the Company recorded an impairment of $ 1.3 million to assets held for sale as the carrying value exceeded the fair value less estimated costs to sell.

Assets held for sale at December 31, 2022 consisted of the following (in millions):

December 31, 2022

Land and buildings $ 2.2

Other property and equipment 1.0

Assets held for sale $ 3.2

As of March 1, 2023, the Company sold $ 0.9 million and $ 1.0 million land and buildings and other property and equipment, respectively, that were classified as held for sale as of December 31, 2022.

Note 5 — Property and Equipment, Net

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High specification rigs 15 $ 131.0 $ 145.4

High specification rigs machinery and equipment 5 - 10

Wireline services machinery and equipment 5 - 10

Processing Solutions and ancillary services machinery and equipment 3 - 30

Machinery and equipment 3 - 30

Vehicles 3 - 15

5 unchanged sentences

Depreciation expense was $ 43.7 million and $ 36.1 million for the years ended December 31, 2022 and 2021, 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.

The Company had assets under finance leases of $ 11.7 million and $ 12.3 million for the years ended December 31, 2022 and 2021, respectively.

For the year ended December 31, 2022, the Company modified the estimated useful life of high specification rigs from 20 years to 15 years and determined the impact on depreciation was immaterial.

A change in useful life is treated as a change in accounting estimate and is applied prospectively.

During the year ended December 31,

2022, the Company reclassified $ 9.0 million of property and equipment to Assets held for sale and disposed of $ 19.2 million of assets mostly acquired from the Basic Acquisition with a recognized Gain on sale of assets of $ 0.7 million.

Note 6 — Intangible Assets

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Intangible assets, net $ 7.1 $ 7.8

Amortization expense was $ 0.7 million and $ 0.8 million for the years ended December 31, 2021 and 2020, respectively.

Amortization expense was $ 0.7 million for each of the years ended December 31, 2022 and 2021.

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

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Operating Leases

The Company has operating leases, primarily for real estate and equipment, with terms that vary from one to nine years , included in operating lease costs in the table below.

The operating leases are included in Operating leases, right-of-use assets, Other current liabilities and Operating leases, right-of-use obligations in the Consolidated Balance Sheets.

Lease costs associated with yard and field offices are included in cost of services and executive offices are included in general and administrative costs in the Consolidated Statements of Operations.

Lease costs and other information related to operating leases are as follows (in millions):

5 unchanged sentences

Weighted average discount rate 8.1 % 8.9 %

As of December 31, 2021, aggregate future minimum lease payments under operating leases was (in millions):

As of December 31, 2022, aggregate future minimum lease payments under operating leases are as follows (in millions):

For the years ending December 31, Total

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current portion of operating lease obligations ( 2.3 )

Long-term portion of finance lease obligations $ 5.8

Long-term portion of operating lease obligations $ 9.6

Finance Leases

The Company leases certain assets, primarily automobiles, under finance leases with terms that are generally three to five years .

The assets and liabilities under finance leases are recorded at the lower of the 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 the Consolidated Balance Sheets.

Lease costs and other information related to finance leases are as follows (in millions):

5 unchanged sentences

Weighted average discount rate 3.7 % 2.1 %

As of December 31, 2021, aggregate future minimum lease payments under finance leases was (in millions):

As of December 31, 2022, aggregate future minimum lease payments under finance leases are as follows (in millions):

For the years ending December 31, 2022

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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.

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

As of the year ended December 31, 2022, aggregate future lease payments of the financing liabilities are as follows (in millions):

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Eclipse Revolving Credit Facility $ 1.4 $ 27.0

Eclipse M&E Loan 12.2 —

Eclipse Term Loan B 11.9 —

Eclipse M&E Term Loan, net 10.4 12.2

Secured Promissory Note 6.1 10.4

Installment Purchases 0.5 1.0

Encina Master Financing Agreement — 17.3

Credit Facility — 7.2

Eclipse Term Loan B — 11.9

Total Debt 18.4 62.5

1 unchanged sentence

Long term-debt, net $ 11.6 $ 18.4

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

1 unchanged sentence

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.

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

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

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.

On January 7, 2022, the Company entered into the First Amendment to Loan and Security Agreement with EBC and Eclipse Business Capital SPV, LLC, which increased the Maximum Revolving Credit Facility Amount (as defined in the Amended Loan Agreement (as defined below)) to $ 65 million, among other things.

On September 23, 2022, the Company entered into the Fourth Amended Loan and Security Agreement with the EBC Lenders, which, among other things, designated the change in reference rate from LIBOR to SOFR and designated a Letter of Credit in the amount of $ 1.6 million to be utilized for working capital and general corporate purposes, as needed.

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 Revolving Credit Facility was drawn, in part, on September 27, 2021, to repay the indebtedness under the existing EBC 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.

1 unchanged sentence

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 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 $ 60.3 million, which was based on a borrowing base certificate in effect as of December 31, 2022.

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 Company had outstanding borrowings of $ 1.4 million under the Revolving Credit Facility and a $ 1.6 million Letter of Credit, leaving a residual $ 57.3 million available for borrowings as of December 31, 2022.

Borrowings under the Revolving Credit Facility bear interest at a rate per annum ranging from 4.5 % to 5.0 % in excess of SOFR and 3.5 % to 4.0 % in excess of the Base Rate, dependent on the fixed cost coverage ratio, through January 1, 2023.

The weighted average applicable margin for the loan was 6.6 % for the year ended December 31, 2022.

2 unchanged sentences

Unamortized debt issuance costs as of December 31, 2022 were $ 1.3 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.

Under the M&E Term Loan Facility, the Company had outstanding borrowings of $ 10.4 million as of December 31, 2022, where the monthly installments of $ 0.2 million 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 SOFR and 7 % in excess of the Base Rate.

The weighted average interest rate for the loan was 9.9 % for the year ended December 31, 2022.

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 M&E Term Loan Facility is secured by a lien on certain high-spec rig assets and is scheduled to mature in September 2025.

Principal amounts repaid are not available to be reborrowed.

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

Such fees will be amortized through maturity.

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

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

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

Term Loan B is scheduled to mature in September 2022.

The Financing Agreement is secured by a lien on certain Basic assets.

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

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

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

Such fees will be amortized through maturity.

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

Unamortized debt issuance costs as of December 31, 2022 were $ 0.2 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.

On October 1, 2021, Term Loan B was finalized in connection with the closing of the Basic Acquisition and was drawn in full to repay borrowings under the Revolving Credit Facility.

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

The weighted average interest rate for Term Loan B was 13.0 % through the maturity date of August 16, 2022.

The Company capitalized fees of $ 0.6 million associated with Term Loan B, which were included in the Consolidated Balance Sheets as a discount to the long-term debt, current portion.

Such fees were amortized through maturity and are included in Interest expense, net on the Consolidated Statement of Operations.

On August 16, 2022, the remaining balance of the loan was $ 0.3 million, which was paid utilizing funds from the Revolving Credit Facility.

At the time, the Company had capitalized fees associated with Term Loan B of $ 0.1 million, which was charged to interest expense on the Consolidated Statement of Operations.

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.

In connection with the PerfX Acquisition, on July 8, 2021, Bravo Wireline, LLC, a wholly owned subsidiary of Ranger Services, 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, 2022, the aggregate principal balance outstanding was $ 6.1 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.

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

Other Installment Purchases

1 unchanged sentence

As of December 31, 2022, the aggregate principal balance outstanding under the Installment Agreements was $ 0.5 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

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

Debt Obligations and Scheduled Maturities

As of December 31, 2022, aggregate principal repayments of total debt for the next five years are as follows (in millions):

1 unchanged sentence

Note 11 — 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.

On September 10, 2021, the Company consummated the private placement under the Securities Purchase Agreement, 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 $ 42.0 million.

The transaction closed on October 1, 2021, and during the year ended December 31, 2022, the Preferred Stock automatically converted into shares of the Company’s Class A Common Stock, on April 18, 2022, upon effectiveness of a registration statement filed on Form S-1 by the Company on March 31, 2022 (File No.

001-699-039).

Class A Common Stock

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

The PSUs that were granted during the years ended December 31, 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.

The PSUs that were granted during the years ended December 31, 2022 and 2021 will cliff vest, subject to the achievement of applicable performance criteria and certification by the Board of Directors, on April 23, 2023, March 15, 2024, and December 31, 2024, respectively.

As of December 31, 2022, there was an aggregate of $ 1.2 million of unrecognized compensation cost related to PSUs.

6 unchanged sentences

Vesting Period

Unvested as of January 1, 2020 88,442 88,442

Unvested at January 1, 2021 149,073 149,073

Granted 123,106 $ 9.24 123,106 $ 7.45

Unvested as of December 31, 2020 149,073 149,073

Forfeited ( 111,382 ) ( 146,863 )

Vested ( 54,696 ) ( 19,213 )

Unvested at December 31, 2021 106,101 106,103

Granted 50,448 $ 14.11 2.0 years 50,447 $ 12.69 2.0 years

1 unchanged sentence

Vested ( 19,068 ) ( 19,069 )

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

Unvested at December 31, 2022 101,704 1.4 years 101,705 1.4 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.

As consideration for the PerfX Acquisition, aggregate consideration paid was $ 20.1 million, which included 1.0 million shares of Class A Common Stock.

The Class A Common Stock issuance includes 100,000 shares that were issued by the Company on July 8, 2022, the 12-month anniversary of the acquisition date.

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

2 unchanged sentences

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

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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.

During the year ended December 31, 2022, one customer, accounted for approximately 10 % of the Company’s consolidated revenue.

As of December 31, 2022, approximately 9 % of the consolidated accounts receivable balance was due from this customer.

For the year ended December 31, 2021, two customers accounted for approximately 15 % and 10 % of the Company’s consolidated revenue.

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

Note 13 — 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 Company operates exclusively within the U.S.

and is subject to U.S.

federal and various state 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.

federal income tax rate applicable to the Company for the years ended December 31, 2022 and 2021 was 6 % and 75 %, respectively.

Total income tax expense for the year ended December 31, 2022 differed from amounts computed by applying the U.S.

federal statutory tax rate of 21% primarily due to the change in Valuation allowance of $ 1.5 million and Bargain purchase gain of $ 0.8 million and for the year ended December 31, 2021 primarily due to a non-taxable bargain purchase gain.

The Company has recorded a valuation allowance against the realizable value of the loss carryforwards.

Management continues to assess the need for a valuation allowance, the analysis of which 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.

A subsequent increase or decrease in the valuation allowance would results in a corresponding increase or decrease to the net deferred tax assets and an increase or decrease to income tax expense in the period in which change occurs.

Years Ended December 31,

Current provision (benefit)

Current expense (benefit)

Federal $ — $ —

State — ( 0.2 )

Total current provision (benefit) — ( 0.2 )

Deferred provision (benefit)

Total current expense (benefit) 0.5 —

Deferred expense (benefit)

Federal 0.2 ( 6.4 )

State 0.2 0.2

Total deferred expense (benefit) 0.4 ( 6.2 )

Income tax expense (benefit) $ 0.9 $ ( 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):

A reconciliation of the expected income tax expense (benefit) on income (loss) before income taxes using the statutory federal income tax rate of 21% for 2022 and 2021 to income tax expense (benefit) follows (in millions):

Income (loss) before income taxes $ 16.0 $ ( 8.3 )

3 unchanged sentences

State income taxes, net of federal tax benefit 0.7 0.2

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

Nontaxable income allocated to non-controlling interest — 2.2

Bargain purchase gain ( 0.8 ) ( 8.2 )

2 unchanged sentences

Income tax expense (benefit) $ 0.9 $ ( 6.2 )

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.

As of December 31, 2022, the Company has net operating loss carryforwards of approximately $ 69.5 million, consisting of $ 6.9 million of section 382 limited losses expiring beginning in 2034, an estimated $ 9.9 million of non-section 382 limited losses expiring beginning in 2037 and $ 52.7 million of non-section 382 limited losses which carryforward indefinitely.

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):

3 unchanged sentences

Valuation allowance ( 1.7 ) ( 1.9 )

Right-of-use liability 2.7 1.6

Other 1.8 ( 0.6 )

2 unchanged sentences

Property and equipment ( 21.8 ) ( 21.5 )

Right-of-use assets ( 2.5 ) ( 1.5 )

Other ( 0.3 ) 1.2

Investment in partnership — $ ( 11.1 )

Deferred income tax liability ( 24.6 ) ( 21.8 )

Net deferred income tax liability $ ( 4.6 ) $ ( 3.2 )

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 Company is subject to the following material taxing jurisdictions:

the United States and Texas.

As of December 31, 2022, the Company had no current tax years under audit.

The Company remains subject to examination for federal income taxes and state income taxes for tax years 2016 through 2021.

In August 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA 2022”) (Public Law Number 117-169) into law.

This legislation is not expected to have a material impact on our financial statements.

Other tax matters

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.

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.

As of December 31, 2022, the Company had deferred payroll tax payments of $ 0.9 million and is disclosed in Accounts payable on the Consolidated Balance Sheet;

however, there were no other material tax impacts to the Consolidated Financial Statements as it related to COVID-19 measures.

The deferred payroll tax payment was paid in January 2023.

Note 14 — Earnings per Share

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

Diluted earnings, or 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, 2022 and 2021 (in millions, except share and per share data):

Years Ended December 31,

Income (loss) (numerator):

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 )

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 )

Income (numerator):

Income attributable to Ranger Energy Services, Inc.

Net income attributable to Class A Common Stock $ 15.1 $ 8.6

Income attributable to Ranger Energy Services, Inc.

Net income attributable to Class A Common Stock $ 15.1 $ 8.6

Weighted average shares (denominator):

3 unchanged sentences

Weighted average number of shares - diluted 23,370,598 13,552,166

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.

Basic earnings per share $ 0.66 $ 0.73

Diluted earnings per share $ 0.65 $ 0.63

During the year ended December 31, 2021, the Company excluded 0.2 million of equity-based awards, as the effect was anti-dilutive.

Note 15 — Commitments and Contingencies

2 unchanged sentences

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 16 — Related Party Transactions

25 unchanged sentences

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

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

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

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

Payments and Purchases

The Company incurred $ 0.3 million and $ 0.1 million in expenses to CSL and other board members for the years ended December 31, 2022 and 2021, respectively.

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

For the year ended December 31, 2022, amounts collected from Board member Brett Agee was approximately $ 0.2 million for asset sales.

Note 17 — Segment Reporting

4 unchanged sentences

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.

During the fourth quarter of 2022, the Company determined fixed assets are routinely utilized across multiple segments and Management does not utilize the net property and equipment value as a metric to evaluate the profitability of the respective segments.

Therefore, the net property and equipment values have been removed from the segment data presented below.

Additionally, as a result of three business combinations, coupled with executive management changes, the Company reevaluated the reportable segments accordingly during the fourth quarter of 2021 and 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:

10 unchanged sentences

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

Revenues $ 140.1 $ 117.9 $ 35.1 $ — $ 293.1

Revenue $ 293.2 $ 197.0 $ 118.3 $ — $ 608.5

Cost of services 232.7 178.4 92.8 — 503.9

1 unchanged sentence

Depreciation and amortization 26.2 11.0 5.3 1.9 44.4

Impairment of fixed assets — — — 1.3 1.3

Gain on sale of assets — — — ( 0.7 ) ( 0.7 )

Operating income (loss) 34.3 7.6 20.2 ( 42.4 ) 19.7

Interest expense, net — — — 7.3 7.3

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

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

Income tax expense (benefit) — — — 0.9 0.9

Gain on bargain purchase, net of tax — — — ( 3.6 ) ( 3.6 )

1 unchanged sentence

Capital expenditures $ 8.2 $ 4.4 $ 6.5 $ — $ 19.1

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, 2021

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

Revenues $ 82.5 $ 79.0 $ 26.3 $ — $ 187.8

Revenue $ 140.1 $ 117.9 $ 35.1 $ — $ 293.1

Cost of services 118.8 115.6 28.9 — 263.3

1 unchanged sentence

Depreciation and amortization 21.5 8.1 5.9 1.3 36.8

Gain on sale of assets — — — ( 1.1 ) ( 1.1 )

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

Interest expense, net — — — 5.0 5.0

Income tax expense — — — — —

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

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

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

1 unchanged sentence

Capital expenditures $ 5.9 $ 2.0 $ 0.8 $ — $ 8.7

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

Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

1 unchanged sentence

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data