0001699039false2020Q2--12-31P3Y0M0DP3Y00016990392020-01-012020-06-30xbrli:shares0001699039us-gaap:CommonClassAMember2020-07-220001699039us-gaap:CommonClassBMember2020-07-22iso4217:USD00016990392020-06-3000016990392019-12-31iso4217:USDxbrli:shares0001699039us-gaap:CommonClassAMember2020-06-300001699039us-gaap:CommonClassAMember2019-12-310001699039us-gaap:CommonClassBMember2020-06-300001699039us-gaap:CommonClassBMember2019-12-310001699039rngr:HighSpecificationRigsMember2020-04-012020-06-300001699039rngr:HighSpecificationRigsMember2019-04-012019-06-300001699039rngr:HighSpecificationRigsMember2020-01-012020-06-300001699039rngr:HighSpecificationRigsMember2019-01-012019-06-300001699039rngr:CompletionAndOtherServicesMember2020-04-012020-06-300001699039rngr:CompletionAndOtherServicesMember2019-04-012019-06-300001699039rngr:CompletionAndOtherServicesMember2020-01-012020-06-300001699039rngr:CompletionAndOtherServicesMember2019-01-012019-06-300001699039rngr:ProcessingSolutionsMember2020-04-012020-06-300001699039rngr:ProcessingSolutionsMember2019-04-012019-06-300001699039rngr:ProcessingSolutionsMember2020-01-012020-06-300001699039rngr:ProcessingSolutionsMember2019-01-012019-06-3000016990392020-04-012020-06-3000016990392019-04-012019-06-3000016990392019-01-012019-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-03-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-03-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-12-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2018-12-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-04-012020-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-04-012019-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-01-012020-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-01-012019-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2020-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassAMember2019-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-03-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-03-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-12-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2018-12-310001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2020-06-300001699039us-gaap:CommonStockMemberus-gaap:CommonClassBMember2019-06-300001699039us-gaap:TreasuryStockMember2020-03-310001699039us-gaap:TreasuryStockMember2019-03-310001699039us-gaap:TreasuryStockMember2019-12-310001699039us-gaap:TreasuryStockMember2018-12-310001699039us-gaap:TreasuryStockMember2020-01-012020-06-300001699039us-gaap:TreasuryStockMember2020-06-300001699039us-gaap:TreasuryStockMember2019-06-300001699039us-gaap:RetainedEarningsMember2020-03-310001699039us-gaap:RetainedEarningsMember2019-03-310001699039us-gaap:RetainedEarningsMember2019-12-310001699039us-gaap:RetainedEarningsMember2018-12-310001699039us-gaap:RetainedEarningsMember2020-04-012020-06-300001699039us-gaap:RetainedEarningsMember2019-04-012019-06-300001699039us-gaap:RetainedEarningsMember2020-01-012020-06-300001699039us-gaap:RetainedEarningsMember2019-01-012019-06-300001699039us-gaap:RetainedEarningsMember2020-06-300001699039us-gaap:RetainedEarningsMember2019-06-300001699039us-gaap:AdditionalPaidInCapitalMember2020-03-310001699039us-gaap:AdditionalPaidInCapitalMember2019-03-310001699039us-gaap:AdditionalPaidInCapitalMember2019-12-310001699039us-gaap:AdditionalPaidInCapitalMember2018-12-310001699039us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-300001699039us-gaap:AdditionalPaidInCapitalMember2019-04-012019-06-300001699039us-gaap:AdditionalPaidInCapitalMember2020-01-012020-06-300001699039us-gaap:AdditionalPaidInCapitalMember2019-01-012019-06-300001699039us-gaap:AdditionalPaidInCapitalMember2020-06-300001699039us-gaap:AdditionalPaidInCapitalMember2019-06-300001699039us-gaap:ParentMember2020-03-310001699039us-gaap:ParentMember2019-03-310001699039us-gaap:ParentMember2019-12-310001699039us-gaap:ParentMember2018-12-310001699039us-gaap:ParentMember2020-04-012020-06-300001699039us-gaap:ParentMember2019-04-012019-06-300001699039us-gaap:ParentMember2020-01-012020-06-300001699039us-gaap:ParentMember2019-01-012019-06-300001699039us-gaap:ParentMember2020-06-300001699039us-gaap:ParentMember2019-06-300001699039us-gaap:NoncontrollingInterestMember2020-03-310001699039us-gaap:NoncontrollingInterestMember2019-03-310001699039us-gaap:NoncontrollingInterestMember2019-12-310001699039us-gaap:NoncontrollingInterestMember2018-12-310001699039us-gaap:NoncontrollingInterestMember2020-04-012020-06-300001699039us-gaap:NoncontrollingInterestMember2019-04-012019-06-300001699039us-gaap:NoncontrollingInterestMember2020-01-012020-06-300001699039us-gaap:NoncontrollingInterestMember2019-01-012019-06-300001699039us-gaap:NoncontrollingInterestMember2020-06-300001699039us-gaap:NoncontrollingInterestMember2019-06-3000016990392020-03-3100016990392019-03-3100016990392018-12-3100016990392019-06-30rngr:segment00016990392020-03-120001699039rngr:WorkoverRigsMember2020-01-012020-06-300001699039rngr:WorkoverRigsMember2020-06-300001699039rngr:WorkoverRigsMember2019-12-310001699039us-gaap:MachineryAndEquipmentMembersrt:MinimumMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:MachineryAndEquipmentMember2020-01-012020-06-300001699039us-gaap:MachineryAndEquipmentMember2020-06-300001699039us-gaap:MachineryAndEquipmentMember2019-12-310001699039us-gaap:OtherMachineryAndEquipmentMembersrt:MinimumMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:OtherMachineryAndEquipmentMember2020-01-012020-06-300001699039us-gaap:OtherMachineryAndEquipmentMember2020-06-300001699039us-gaap:OtherMachineryAndEquipmentMember2019-12-310001699039srt:MinimumMemberus-gaap:RefiningEquipmentMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:RefiningEquipmentMember2020-01-012020-06-300001699039us-gaap:RefiningEquipmentMember2020-06-300001699039us-gaap:RefiningEquipmentMember2019-12-310001699039us-gaap:VehiclesMembersrt:MinimumMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:VehiclesMember2020-01-012020-06-300001699039us-gaap:VehiclesMember2020-06-300001699039us-gaap:VehiclesMember2019-12-310001699039us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMembersrt:MinimumMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2020-01-012020-06-300001699039us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2020-06-300001699039us-gaap:OtherCapitalizedPropertyPlantAndEquipmentMember2019-12-310001699039us-gaap:CustomerRelationshipsMembersrt:MinimumMember2020-01-012020-06-300001699039srt:MaximumMemberus-gaap:CustomerRelationshipsMember2020-01-012020-06-300001699039us-gaap:CustomerRelationshipsMember2020-06-300001699039us-gaap:CustomerRelationshipsMember2019-12-310001699039srt:MinimumMember2020-06-300001699039srt:MaximumMember2020-06-30xbrli:pure0001699039us-gaap:NotesPayableToBanksMember2020-06-300001699039us-gaap:NotesPayableToBanksMember2019-12-310001699039us-gaap:RevolvingCreditFacilityMember2020-06-300001699039us-gaap:RevolvingCreditFacilityMember2019-12-310001699039rngr:OtherLongTermDebtMember2020-06-300001699039rngr:OtherLongTermDebtMember2019-12-310001699039rngr:SellersNotesMember2017-08-160001699039rngr:SellerSNoteDueAugust2018Member2017-08-160001699039rngr:SellerSNoteDueFebruary2019Member2017-08-160001699039us-gaap:NotesPayableToBanksMember2018-01-012018-12-310001699039us-gaap:NotesPayableToBanksMember2020-01-012020-06-300001699039rngr:SeniorRevolvingCreditFacility2017Member2017-08-160001699039srt:MaximumMemberrngr:SeniorRevolvingCreditFacility2017Member2020-06-300001699039rngr:SeniorRevolvingCreditFacility2017Member2020-06-300001699039rngr:SeniorRevolvingCreditFacility2017Membersrt:MinimumMemberrngr:LIBORRateLoansMember2017-08-162017-08-160001699039srt:MaximumMemberrngr:SeniorRevolvingCreditFacility2017Memberrngr:LIBORRateLoansMember2017-08-162017-08-160001699039rngr:SeniorRevolvingCreditFacility2017Memberrngr:BaseRateLoansMembersrt:MinimumMember2017-08-162017-08-160001699039srt:MaximumMemberrngr:SeniorRevolvingCreditFacility2017Memberrngr:BaseRateLoansMember2017-08-162017-08-160001699039rngr:SeniorRevolvingCreditFacility2017Memberrngr:LIBORRateLoansMember2020-01-012020-06-300001699039rngr:SeniorRevolvingCreditFacility2017Memberrngr:BaseRateLoansMember2020-01-012020-06-300001699039us-gaap:LetterOfCreditMember2020-06-300001699039us-gaap:SubsequentEventMemberrngr:SeniorRevolvingCreditFacility2017Member2020-07-012020-07-270001699039us-gaap:SubsequentEventMemberrngr:SeniorRevolvingCreditFacility2017Member2020-07-220001699039srt:MinimumMemberrngr:MasterFinancingAndSecurityAgreementMember2018-06-220001699039srt:MaximumMemberrngr:MasterFinancingAndSecurityAgreementMember2018-06-220001699039rngr:MasterFinancingAndSecurityAgreementMember2018-06-220001699039rngr:MasterFinancingAndSecurityAgreementMember2018-06-232018-12-310001699039rngr:MasterFinancingAndSecurityAgreementMember2020-06-300001699039us-gaap:LondonInterbankOfferedRateLIBORMemberrngr:MasterFinancingAndSecurityAgreementMember2018-06-220001699039us-gaap:LondonInterbankOfferedRateLIBORMemberrngr:MasterFinancingAndSecurityAgreementMember2020-01-012020-06-300001699039srt:MinimumMemberrngr:MasterFinancingAndSecurityAgreementMember2018-06-222018-06-220001699039srt:MaximumMemberrngr:MasterFinancingAndSecurityAgreementMember2018-06-222018-06-220001699039us-gaap:RestrictedStockMember2020-01-012020-06-300001699039us-gaap:RestrictedStockMember2020-04-012020-06-300001699039us-gaap:RestrictedStockMember2019-01-012019-06-300001699039us-gaap:RestrictedStockMember2020-06-300001699039us-gaap:PerformanceSharesMember2020-01-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsMember2020-04-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsMember2020-01-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsRelativeMember2020-04-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsRelativeMember2020-01-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsAbsoluteMember2020-04-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsAbsoluteMember2020-01-012020-06-300001699039rngr:MarketBasedRestrictedStockUnitsMember2019-01-012019-06-300001699039rngr:MarketBasedRestrictedStockUnitsRelativeMember2019-01-012019-06-300001699039rngr:MarketBasedRestrictedStockUnitsAbsoluteMember2019-01-012019-06-300001699039rngr:MarketBasedRestrictedStockUnitsMember2020-06-300001699039us-gaap:CommonClassAMember2020-01-012020-06-300001699039rngr:A2019ShareRepurchasePlanMember2019-06-300001699039rngr:A2019ShareRepurchasePlanMemberus-gaap:CommonClassAMember2020-01-012020-06-300001699039us-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMemberrngr:EOGResourcesMember2020-04-012020-06-300001699039rngr:ConchoResourcesInc.Memberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2020-04-012020-06-300001699039us-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMemberrngr:EOGResourcesMember2020-01-012020-06-300001699039rngr:ConchoResourcesInc.Memberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-06-300001699039us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-06-300001699039us-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMemberrngr:EOGResourcesMember2019-04-012019-06-300001699039rngr:ConchoResourcesInc.Memberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2019-04-012019-06-300001699039us-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMemberrngr:EOGResourcesMember2019-01-012019-06-300001699039rngr:ConchoResourcesInc.Memberus-gaap:RevenueFromContractWithCustomerMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-06-300001699039us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-06-300001699039us-gaap:CommonClassAMember2020-04-012020-06-300001699039us-gaap:CommonClassAMember2019-04-012019-06-300001699039us-gaap:CommonClassAMember2019-01-012019-06-300001699039rngr:EquityBasedAwardsMember2020-01-012020-06-300001699039rngr:EquityBasedAwardsMember2020-04-012020-06-300001699039us-gaap:ConvertibleCommonStockMember2020-04-012020-06-300001699039us-gaap:ConvertibleCommonStockMember2020-01-012020-06-300001699039us-gaap:NotesPayableToBanksMember2018-12-310001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2020-04-012020-06-300001699039us-gaap:MaterialReconcilingItemsMember2020-04-012020-06-300001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2020-01-012020-06-300001699039us-gaap:MaterialReconcilingItemsMember2020-01-012020-06-300001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2020-06-300001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2020-06-300001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2020-06-300001699039us-gaap:MaterialReconcilingItemsMember2020-06-300001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2019-04-012019-06-300001699039us-gaap:MaterialReconcilingItemsMember2019-04-012019-06-300001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2019-01-012019-06-300001699039us-gaap:MaterialReconcilingItemsMember2019-01-012019-06-300001699039rngr:HighSpecificationRigsMemberus-gaap:OperatingSegmentsMember2019-12-310001699039rngr:CompletionAndOtherServicesMemberus-gaap:OperatingSegmentsMember2019-12-310001699039rngr:ProcessingSolutionsSegmentMemberus-gaap:OperatingSegmentsMember2019-12-310001699039us-gaap:MaterialReconcilingItemsMember2019-12-31
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-38183
RANGER ENERGY SERVICES, INC.
(Exact name of registrant as specified in its charter)
|
|
|
|
|
|
Delaware |
81-5449572 |
(State or other jurisdiction of
incorporation or organization) |
(I.R.S. Employer
Identification No.) |
800 Gessner Street, Suite 1000
Houston, Texas 77024
(Address of principal executive offices) (Zip Code)
(713) 935-8900
(Registrant’s telephone number, including area code)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities registered pursuant to Section 12(b) of the
Act: |
|
|
|
|
Title of each class |
|
Trading Symbol(s) |
|
Name of each exchange on which registered |
Class A Common Stock, $0.01 par value |
|
RNGR |
|
New York Stock Exchange |
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large accelerated filer ☐ |
|
Accelerated filer ☐ |
|
Non-accelerated Filer ☒
|
Smaller reporting company ☒
|
|
Emerging growth company ☒
|
|
|
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the
Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
☒
As of July 22, 2020, the registrant had 8,479,668 shares of
Class A Common Stock and 6,866,154 shares of Class B Common Stock
outstanding.
RANGER ENERGY SERVICES, INC.
TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
RANGER ENERGY SERVICES, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE
SHEETS
(in millions, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
6.0 |
|
|
$ |
6.9 |
|
Accounts receivable, net |
|
16.0 |
|
|
41.5 |
|
Contract assets |
|
1.1 |
|
|
1.2 |
|
Inventory |
|
2.0 |
|
|
3.8 |
|
Prepaid expenses |
|
1.8 |
|
|
5.3 |
|
Total current assets |
|
26.9 |
|
|
58.7 |
|
|
|
|
|
|
Property and equipment, net |
|
206.6 |
|
|
218.9 |
|
Intangible assets, net |
|
8.9 |
|
|
9.3 |
|
Operating leases, right-of-use assets |
|
5.3 |
|
|
6.5 |
|
Other assets |
|
0.4 |
|
|
0.1 |
|
Total assets |
|
$ |
248.1 |
|
|
$ |
293.5 |
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
Accounts payable |
|
$ |
5.1 |
|
|
$ |
13.8 |
|
Accrued expenses |
|
8.0 |
|
|
18.4 |
|
Finance lease obligations, current portion |
|
4.0 |
|
|
5.1 |
|
Long-term debt, current portion |
|
10.0 |
|
|
15.8 |
|
Other current liabilities |
|
1.2 |
|
|
2.0 |
|
Total current liabilities |
|
28.3 |
|
|
55.1 |
|
|
|
|
|
|
Operating leases, right-of-use obligations |
|
4.2 |
|
|
4.5 |
|
Finance lease obligations |
|
2.3 |
|
|
3.6 |
|
Long-term debt, net |
|
16.8 |
|
|
26.6 |
|
Other long-term liabilities |
|
1.3 |
|
|
0.7 |
|
Total liabilities |
|
52.9 |
|
|
90.5 |
|
|
|
|
|
|
Commitments and contingencies (Note 12) |
|
|
|
|
|
|
|
|
|
Stockholders' equity |
|
|
|
|
Preferred stock, $0.01 per share; 50,000,000 shares authorized; no
shares issued or outstanding as of June 30, 2020 and December 31,
2019
|
|
— |
|
|
— |
|
Class A Common Stock, $0.01 par value, 100,000,000 shares
authorized; 9,031,495 shares issued and 8,479,668 shares
outstanding as of June 30, 2020 and 8,839,788 shares issued and
8,725,851 shares outstanding as of December 31, 2019
|
|
0.1 |
|
|
0.1 |
|
Class B Common Stock, $0.01 par value, 100,000,000 shares
authorized; 6,866,154 shares issued and outstanding as of June 30,
2020 and December 31, 2019
|
|
0.1 |
|
|
0.1 |
|
Less: Class A Common Stock held in treasury, at cost (551,827
shares as of June 30, 2020 and 113,937 as of December 31,
2019)
|
|
(3.8) |
|
|
(0.7) |
|
Accumulated deficit |
|
(11.5) |
|
|
(8.1) |
|
Additional paid-in capital |
|
121.0 |
|
|
121.8 |
|
Total controlling stockholders' equity |
|
105.9 |
|
|
113.2 |
|
Noncontrolling interest |
|
89.3 |
|
|
89.8 |
|
Total stockholders' equity |
|
195.2 |
|
|
203.0 |
|
Total liabilities and stockholders' equity |
|
$ |
248.1 |
|
|
$ |
293.5 |
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
RANGER ENERGY SERVICES, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(in millions, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
|
June 30, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
|
|
|
|
|
|
|
|
High specification rigs |
|
$ |
11.4 |
|
|
$ |
33.1 |
|
|
$ |
46.3 |
|
|
$ |
64.8 |
|
Completion and other services |
|
17.7 |
|
|
46.3 |
|
|
61.0 |
|
|
97.9 |
|
Processing solutions |
|
1.6 |
|
|
4.9 |
|
|
4.4 |
|
|
9.9 |
|
Total revenues |
|
30.7 |
|
|
84.3 |
|
|
111.7 |
|
|
172.6 |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and
amortization): |
|
|
|
|
|
|
|
|
High specification rigs |
|
10.1 |
|
|
28.7 |
|
|
40.0 |
|
|
56.1 |
|
Completion and other services |
|
13.3 |
|
|
35.0 |
|
|
45.0 |
|
|
72.9 |
|
Processing solutions |
|
0.4 |
|
|
1.9 |
|
|
1.9 |
|
|
4.1 |
|
Total cost of services |
|
23.8 |
|
|
65.6 |
|
|
86.9 |
|
|
133.1 |
|
General and administrative |
|
5.5 |
|
|
6.3 |
|
|
10.5 |
|
|
13.5 |
|
Depreciation and amortization |
|
9.5 |
|
|
8.4 |
|
|
18.4 |
|
|
16.8 |
|
Total operating expenses |
|
38.8 |
|
|
80.3 |
|
|
115.8 |
|
|
163.4 |
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
(8.1) |
|
|
4.0 |
|
|
(4.1) |
|
|
9.2 |
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
|
Interest expense, net |
|
0.8 |
|
|
1.9 |
|
|
1.9 |
|
|
3.2 |
|
Total other expenses |
|
0.8 |
|
|
1.9 |
|
|
1.9 |
|
|
3.2 |
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax expense |
|
(8.9) |
|
|
2.1 |
|
|
(6.0) |
|
|
6.0 |
|
Tax expense |
|
— |
|
|
0.3 |
|
|
0.1 |
|
|
0.6 |
|
Net income (loss) |
|
(8.9) |
|
|
1.8 |
|
|
(6.1) |
|
|
5.4 |
|
Less: Net income (loss) attributable to noncontrolling
interests |
|
(4.0) |
|
|
0.8 |
|
|
(2.7) |
|
|
2.4 |
|
Net income (loss) attributable to Ranger Energy Services,
Inc. |
|
$ |
(4.9) |
|
|
$ |
1.0 |
|
|
$ |
(3.4) |
|
|
$ |
3.0 |
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.58) |
|
|
$ |
0.12 |
|
|
$ |
(0.40) |
|
|
$ |
0.35 |
|
Diluted |
|
$ |
(0.58) |
|
|
$ |
0.10 |
|
|
$ |
(0.40) |
|
|
$ |
0.29 |
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
8,474,077 |
|
|
8,514,495 |
|
|
8,545,925 |
|
|
8,481,788 |
|
Diluted |
|
8,474,077 |
|
|
15,412,431 |
|
|
8,545,925 |
|
|
15,361,162 |
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
RANGER ENERGY SERVICES, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
STOCKHOLDERS’ EQUITY
(in millions, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2020 |
2019 |
2020 |
2019 |
|
2020 |
2019 |
2020 |
2019 |
|
Quantity |
|
Amount |
|
|
Quantity |
|
Amount |
|
Shares, Class A Common Stock |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
8,947,830 |
|
8,454,273 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
8,839,788 |
|
8,448,527 |
|
$ |
0.1 |
|
$ |
0.1 |
|
Issuance of shares under share-based compensation plans |
117,502 |
|
93,621 |
|
— |
|
— |
|
|
270,135 |
|
101,621 |
|
— |
|
— |
|
Shares withheld for taxes on equity transactions |
(33,837) |
|
(37,765) |
|
— |
|
— |
|
|
(78,428) |
|
(40,019) |
|
— |
|
— |
|
Issuance of Class A Common Stock to related party |
— |
|
206,897 |
|
— |
|
— |
|
|
— |
|
206,897 |
|
— |
|
— |
|
Balance, end of period |
9,031,495 |
|
8,717,026 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
9,031,495 |
|
8,717,026 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
Shares, Class B Common Stock |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
6,866,154 |
|
6,866,154 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
6,866,154 |
|
6,866,154 |
|
$ |
0.1 |
|
$ |
0.1 |
|
Balance, end of period |
6,866,154 |
|
6,866,154 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
6,866,154 |
|
6,866,154 |
|
$ |
0.1 |
|
$ |
0.1 |
|
|
|
|
|
|
|
|
|
|
|
Treasury Stock |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
(551,827) |
|
— |
|
$ |
(3.8) |
|
$ |
— |
|
|
(113,937) |
|
— |
|
$ |
(0.7) |
|
$ |
— |
|
Repurchase of Class A Common Stock |
— |
|
— |
|
— |
|
— |
|
|
(437,890) |
|
— |
|
(3.1) |
|
— |
|
Balance, end of period |
(551,827) |
|
— |
|
$ |
(3.8) |
|
$ |
— |
|
|
(551,827) |
|
— |
|
$ |
(3.8) |
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
$ |
(6.6) |
|
$ |
(7.9) |
|
|
|
|
$ |
(8.1) |
|
$ |
(9.9) |
|
Net income (loss) attributable to controlling interest |
|
|
(4.9) |
|
1.0 |
|
|
|
|
(3.4) |
|
3.0 |
|
Balance, end of period |
|
|
$ |
(11.5) |
|
$ |
(6.9) |
|
|
|
|
$ |
(11.5) |
|
$ |
(6.9) |
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
$ |
120.2 |
|
$ |
112.2 |
|
|
|
|
$ |
121.8 |
|
$ |
111.6 |
|
Equity based compensation amortization |
|
|
0.9 |
|
0.8 |
|
|
|
|
1.6 |
|
1.4 |
|
Shares withheld for taxes on equity transactions |
|
|
(0.2) |
|
(0.4) |
|
|
|
|
(0.3) |
|
(0.4) |
|
Issuance of Class A Common Stock to related party |
|
|
— |
|
3.0 |
|
|
|
|
— |
|
3.0 |
|
Benefit from reversal of valuation allowance |
|
|
— |
|
0.6 |
|
|
|
|
— |
|
0.6 |
|
Impact of transactions affecting noncontrolling
interest |
|
|
0.1 |
|
3.7 |
|
|
|
|
(2.1) |
|
3.7 |
|
Balance, end of period |
|
|
$ |
121.0 |
|
$ |
119.9 |
|
|
|
|
$ |
121.0 |
|
$ |
119.9 |
|
|
|
|
|
|
|
|
|
|
|
Total controlling interest shareholders’ equity |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
$ |
110.0 |
|
$ |
104.5 |
|
|
|
|
$ |
113.2 |
|
$ |
101.9 |
|
Net income (loss) attributable to controlling interest |
|
|
(4.9) |
|
1.0 |
|
|
|
|
(3.4) |
|
3.0 |
|
Equity based compensation amortization |
|
|
0.9 |
|
0.8 |
|
|
|
|
1.6 |
|
1.4 |
|
Shares withheld for taxes on equity transactions |
|
|
(0.2) |
|
(0.4) |
|
|
|
|
(0.3) |
|
(0.4) |
|
Issuance of Class A Common Stock to related party |
|
|
— |
|
3.0 |
|
|
|
|
— |
|
3.0 |
|
Benefit from reversal of valuation allowance |
|
|
— |
|
0.6 |
|
|
|
|
— |
|
0.6 |
|
Repurchase of Class A Common Stock |
|
|
— |
|
— |
|
|
|
|
(3.1) |
|
— |
|
Impact of transactions affecting noncontrolling
interest |
|
|
0.1 |
|
3.7 |
|
|
|
|
(2.1) |
|
3.7 |
|
Balance, end of period |
|
|
$ |
105.9 |
|
$ |
113.2 |
|
|
|
|
$ |
105.9 |
|
$ |
113.2 |
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
$ |
93.4 |
|
$ |
91.7 |
|
|
|
|
$ |
89.8 |
|
$ |
90.1 |
|
Net income (loss) attributable to noncontrolling
interest |
|
|
(4.0) |
|
0.8 |
|
|
|
|
(2.7) |
|
2.4 |
|
Equity based compensation amortization |
|
|
— |
|
0.1 |
|
|
|
|
0.1 |
|
0.1 |
|
Impact of transactions affecting noncontrolling
interest |
|
|
(0.1) |
|
(3.7) |
|
|
|
|
2.1 |
|
(3.7) |
|
Balance, end of period |
|
|
$ |
89.3 |
|
$ |
88.9 |
|
|
|
|
$ |
89.3 |
|
$ |
88.9 |
|
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Equity |
|
|
|
|
|
|
|
|
|
Balance, beginning of period |
|
|
$ |
203.4 |
|
$ |
196.2 |
|
|
|
|
$ |
203.0 |
|
$ |
192.0 |
|
Net income (loss) |
|
|
(8.9) |
|
1.8 |
|
|
|
|
(6.1) |
|
5.4 |
|
Equity based compensation amortization |
|
|
0.9 |
|
0.9 |
|
|
|
|
1.7 |
|
1.5 |
|
Shares withheld for taxes on equity transactions |
|
|
(0.2) |
|
(0.4) |
|
|
|
|
(0.3) |
|
(0.4) |
|
Issuance of Class A Common Stock to related party |
|
|
— |
|
3.0 |
|
|
|
|
— |
|
3.0 |
|
Benefit from reversal of valuation allowance |
|
|
— |
|
0.6 |
|
|
|
|
— |
|
0.6 |
|
Repurchase of Class A Common Stock |
|
|
— |
|
— |
|
|
|
|
(3.1) |
|
— |
|
Balance, end of period |
|
|
$ |
195.2 |
|
$ |
202.1 |
|
|
|
|
$ |
195.2 |
|
$ |
202.1 |
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
RANGER ENERGY SERVICES, INC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|
|
|
2020 |
|
2019 |
Cash Flows from Operating Activities |
|
|
|
|
Net income (loss) |
|
$ |
(6.1) |
|
|
$ |
5.4 |
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
Depreciation and amortization |
|
18.4 |
|
|
16.8 |
|
Equity based compensation |
|
1.7 |
|
|
1.5 |
|
Gain on debt retirement |
|
(2.1) |
|
|
— |
|
Other costs, net |
|
1.8 |
|
|
— |
|
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
|
25.4 |
|
|
(8.6) |
|
Contract assets |
|
0.1 |
|
|
(2.9) |
|
Inventory |
|
1.4 |
|
|
(2.8) |
|
Prepaid expenses |
|
3.5 |
|
|
1.4 |
|
Other assets |
|
(0.2) |
|
|
0.9 |
|
Accounts payable |
|
(8.7) |
|
|
(0.6) |
|
Accrued expenses |
|
(10.4) |
|
|
2.0 |
|
Operating lease, right-of-use obligations |
|
(1.1) |
|
|
— |
|
Other long-term liabilities |
|
0.5 |
|
|
1.1 |
|
Net cash provided by operating activities |
|
24.2 |
|
|
14.2 |
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
Purchase of property and equipment |
|
(5.8) |
|
|
(16.0) |
|
Proceeds from disposal of property and equipment |
|
0.3 |
|
|
0.5 |
|
Net cash used in investing activities |
|
(5.5) |
|
|
(15.5) |
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
Borrowings under Credit Facility |
|
32.6 |
|
|
25.1 |
|
Principal payments on Credit Facility |
|
(37.6) |
|
|
(17.3) |
|
Principal payments on Encina Master Financing Agreement |
|
(5.0) |
|
|
(4.8) |
|
Principal payments on ESCO Note Payable |
|
(3.6) |
|
|
— |
|
Principal payments on financing lease obligations |
|
(2.6) |
|
|
(2.2) |
|
Repurchase of Class A Common Stock |
|
(3.1) |
|
|
— |
|
Shares withheld on equity transactions |
|
(0.3) |
|
|
(0.4) |
|
Net cash (used in) provided by financing activities |
|
(19.6) |
|
|
0.4 |
|
|
|
|
|
|
Decrease in Cash and Cash equivalents |
|
(0.9) |
|
|
(0.9) |
|
Cash and Cash Equivalents, Beginning of Period |
|
6.9 |
|
|
2.6 |
|
Cash and Cash Equivalents, End of Period |
|
$ |
6.0 |
|
|
$ |
1.7 |
|
|
|
|
|
|
Supplemental Cash Flow Information |
|
|
|
|
Interest paid |
|
$ |
1.7 |
|
|
$ |
2.3 |
|
Supplemental Disclosure of Non-cash Investing and Financing
Activities |
|
|
|
|
Capital expenditures |
|
$ |
0.1 |
|
|
$ |
(2.3) |
|
Additions to fixed assets through financing leases |
|
$ |
(1.0) |
|
|
$ |
(0.8) |
|
Early termination of financing leases |
|
$ |
0.7 |
|
|
$ |
— |
|
Initial operating lease right-of-use asset additions |
|
$ |
— |
|
|
$ |
(8.3) |
|
Issuance of Class A Common Stock to related party |
|
$ |
— |
|
|
$ |
3.0 |
|
The accompanying notes are an integral part of these unaudited
interim condensed consolidated financial statements.
RANGER ENERGY SERVICES, INC.
NOTES TO UNAUDITED INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
Business
Ranger Energy Services, Inc. (“Ranger, Inc.,” “Ranger,” or the
“Company”) is a provider of onshore high specification
(“high-spec”) well service rigs and complementary services in the
United States. The Company also provides an extensive range of well
site services to leading U.S. exploration and production
(“E&P”) companies that are fundamental to establishing and
maintaining the flow of oil and natural gas throughout the
productive life of a well.
The Company offers services that consist of well completion
support, workover, well maintenance, wireline, fluid management,
other complementary services, as well as installation,
commissioning and operating of modular equipment, which are
conducted in three reportable segments, as follows:
•High
Specification Rigs.
Provider of high-spec well service rigs and complementary equipment
and services to facilitate operations throughout the lifecycle of a
well.
•Completion
and Other Services.
Provider of wireline completion services necessary to bring a well
on production and other ancillary services often utilized in
conjunction with the high-spec rig services to enhance the
production of a well.
•Processing
Solutions.
Provider of proprietary, modular equipment for the processing of
natural gas.
The Company’s operations take place in most of the active oil and
natural gas basins in the United States, including the Permian
Basin, Denver-Julesburg Basin, Bakken Shale, Eagle Ford Shale,
Haynesville Shale, Gulf Coast, South Central Oklahoma Oil Province
and Sooner Trend Anadarko Basin Canadian and Kingfisher Counties
plays.
Organization
Ranger, Inc. was incorporated as a Delaware corporation in
February 2017. Ranger, Inc. is a holding company, the sole
material assets of which consist of membership interests in RNGR
Energy Services, LLC, a Delaware limited liability company (“Ranger
LLC”). Ranger LLC owns all of the outstanding equity interests in
Ranger Energy Services, LLC (“Ranger Services”) and Torrent Energy
Services, LLC (“Torrent Services”), the subsidiaries through which
it operates its assets. Ranger LLC is the sole managing member of
Ranger Services and Torrent Services, and is responsible for
all operational, management and administrative decisions relating
to Ranger Services and Torrent Services’ business and consolidates
the financial results of Ranger Services and Torrent Services
and their subsidiaries.
Recent Events
The outbreak of the novel coronavirus (“COVID-19”) has spread
across the globe and has been declared a public health emergency by
the World Health Organization and a National Emergency by the
President of the United States. The COVID-19 pandemic has resulted,
and is likely to continue to result, in significant economic
disruption and has, and is likely to continue to, adversely affect
the operations of the Company’s business, as the significantly
reduced global and national economic activity has resulted in
reduced demand for oil and natural gas. Federal, state and local
governments mobilized to implement containment mechanisms to
minimize impacts to their populations and economies. Various
containment measures, which includes the quarantining of cities,
regions and countries, while aiding in the prevention of further
outbreak, have resulted in a severe drop in general economic
activity and a resulting decrease in energy demand. In addition,
the global economy has experienced a significant disruption to
global supply chains. The extent of the COVID-19 outbreak on the
Company’s operational and financial performance will continue to
depend on certain developments, including the duration and spread
of the outbreak and its continued impact on customer activity and
third-party providers. The direct impact to the Company’s
operations began to take effect at the close of the first quarter
ended March 31, 2020, and continued through the issuance of these
condensed consolidated financial statements. The full extent to
which the COVID-19 outbreak may affect the Company’s financial
conditions, results of operations or liquidity subsequent to the
issuance of these condensed consolidated financial statements is
uncertain. At the time of this filing, cases of COVID-19 in the
U.S. were increasing rapidly, particularly in Texas, where we
conduct significant operations.
The severe drop in economic activity, travel restrictions and other
restrictions due to COVID-19 have had a significant negative impact
on the demand for oil and gas. In addition to the impact of the
COVID-19 outbreak, in March 2020, OPEC, Russia and certain other
oil producing states, commonly referred to as “OPEC Plus,” failed
to agree on a plan to cut production of oil and natural gas.
Subsequently, Saudi Arabia announced plans to increase production
to record levels and reduce the prices at which they sell oil and,
in turn, Russia responded with threats to also increase production.
Collectively, these events created an unprecedented global oil and
natural gas supply and demand imbalance, reduced global oil and
natural gas storage capacity, caused oil prices to decline
significantly and resulted in continued volatility in oil, natural
gas and NGLs prices into the second
quarter of 2020. On April 12, 2020, OPEC Plus agreed to cut oil
production by 9.7 million barrels per day in May and June 2020;
however, on July 15, 2020, OPEC Plus agreed to increase production
by 1.6 million barrels per day starting in August 2020. With
the combined effects of the increased production levels earlier in
2020, the recent increase in production and the reduction in demand
caused by COVID-19, the global oil and natural gas supply and
demand imbalance persists and continues to have a significant
adverse effect on the oil and gas industry.
Due to the significantly reduced demand for oil and natural gas as
a result of the COVID-19 pandemic and the current oversupply of oil
and natural gas in the market, available storage and capacity for
the Company’s customers’ production may be limited or completely
unavailable in the future, which may further negatively impact the
price of oil.
The Company cannot predict whether, or when, the global supply and
demand imbalance will be resolved or whether, or when, oil and
natural gas production and economic activities will return to
normalized levels. In the absence of additional reductions to
global production, oil, natural gas and NGLs prices could remain at
current levels, or decline further, for an extended period of
time.
Factors deriving from the COVID-19 response, as well as the oil
oversupply, that have or may negatively impact sales, liquidity and
gross margins in the future include, but are not limited to:
limitations on the ability of the Company’s customers to conduct
business, which would result in a decrease in demand for services
and lower utilization of the Company’s assets; limitations on the
ability of suppliers to provide materials or equipment, limitations
on the ability of the Company’s employees to perform their work due
to illness caused by the pandemic or local, state or federal orders
requiring employees to remain at home; reduction of capital
expenditures and discretionary spend; and limitations on the
ability of customers to pay us on a timely basis. If prolonged,
such factors may also negatively affect the carrying values of the
Company’s property and equipment and intangible assets. At the
close of the first quarter, the Company initiated cost reductions
throughout the organization, including a reduction in the workforce
and salary reductions. Additionally, various other operational,
travel and organizational expense reductions will continue to
manage costs to preserve liquidity through the downturn. We believe
these actions will provide sufficient liquidity to finance our
operations for twelve months post issuance of these consolidated
financial statements. We will continue to actively monitor the
situation and may take further actions that alter business
operations as may be required by federal, state or local
authorities, or that we determine are in the best interests of the
Company’s employees, customers and stakeholders.
On March 12, 2020, the Company received a non-binding offer from
CSL Capital Management, L.P. (“CSL”) and Bayou Holdings, proposing
to acquire all of the outstanding shares of common stock of the
Company not owned by CSL, Bayou Holdings and T. Rowe Price
Associates, Inc. in a cash merger transaction for $6.00 per share
(the “Take Private Proposal”). On May 11, 2020, CSL announced their
decision to not pursue the possible acquisition of shares
outstanding of Ranger at this time and abandoned the Take Private
Proposal.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The consolidated balance sheet as of December 31, 2019 has been
derived from audited financial statements and the unaudited
condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the
United States (“US GAAP”) for interim financial information and the
Securities and Exchange Commission’s (the “SEC”) instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain
notes and other information have been condensed or omitted. The
unaudited condensed consolidated financial statements reflect all
normal and recurring adjustments that are, in the opinion of
management, necessary for the fair presentation of the results of
operations for the interim periods. These interim financial
statements should be read in conjunction with the consolidated
financial statements and related notes for the years ended
December 31, 2019 and 2018, included in the Annual Report filed on
Form 10-K for the year ended December 31, 2019 (the “Annual
Report”). Interim results for the periods presented may not be
indicative of results that will be realized for future
periods.
Significant Accounting Policies
The Company’s significant accounting policies are disclosed in Note
2 — Summary of Significant Accounting Policies of the Annual
Report. There have been no changes in such policies or the
application of such policies during the six months ended June 30,
2020.
Use of Estimates
The preparation of condensed consolidated financial statements in
conformity with US GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of revenue and expenses during the reporting
period. Management uses historical and other pertinent information
to determine these estimates. Actual results could differ from such
estimates. Areas where critical accounting estimates are made by
management include:
•Depreciation
and amortization of property and equipment and intangible
assets;
•Impairment
of property and equipment and intangible assets;
•Revenue
recognition;
•Income
taxes; and
•Equity-based
compensation.
Emerging Growth Company Status 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 its initial public offering
(“IPO”), (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 the Company’s
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 generally 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 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 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. Smaller reporting company
status is determined on an annual basis.
New Accounting Pronouncements
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”)
issued ASU 2016-13,
Financial Instruments - Credit Losses,
which replaces the incurred loss impairment methodology to reflect
expected credit losses. The amendment requires the measurement of
all expected credit losses for financial assets held at the
reporting date to be performed based on historical experience,
current conditions and reasonable and supportable forecasts. ASU
2016-13 is effective for annual and interim periods beginning after
December 15, 2022, with early adoption permitted. The Company is
evaluating the effect of this accounting standard on its
consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04,
Reference Rate Reform - Facilitation of the Effects of Reference
Rate Reform on Financial Reporting,
which provides optional expedients and exceptions for accounting
contracts, hedging relationships and other transactions affected by
reference rate reform if certain criteria are met. The amendments
apply only to contracts, hedging relationships and other
transactions that reference the London Interbank Offering Rate
(“LIBOR”) or another reference rate expected to be discontinued due
to the reference rate reform. ASU 2020-04 became effective as of
March 12, 2020 and can be applied through December 31, 2022. The
Company has not made any contract modifications as of the date of
this report to transition to a different reference rate, however it
will consider this guidance as future modifications are
made.
With the exception of the standards above, there have been no new
accounting pronouncements not yet effective that have significance,
or potential significance, to the Company’s condensed consolidated
financial statements.
Note 3 — Property and Equipment, Net
Property and equipment, net include the following (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Life
(years) |
|
June 30, 2020 |
|
December 31, 2019 |
High specification rigs |
|
20
|
|
$ |
128.2 |
|
|
$ |
127.2 |
|
High specification rigs machinery and equipment |
|
5 - 10
|
|
40.7 |
|
|
38.3 |
|
Completion and other services machinery and equipment |
|
5 - 10
|
|
56.5 |
|
|
55.8 |
|
Processing solutions machinery and equipment |
|
3 - 30
|
|
45.9 |
|
|
40.8 |
|
Vehicles |
|
3 - 15
|
|
23.0 |
|
|
25.9 |
|
Other property and equipment |
|
5 - 25
|
|
10.6 |
|
|
10.1 |
|
Property and equipment |
|
|
|
304.9 |
|
|
298.1 |
|
Less: accumulated depreciation |
|
|
|
(100.3) |
|
|
(85.5) |
|
Construction in progress |
|
|
|
2.0 |
|
|
6.3 |
|
Property and equipment, net |
|
|
|
$ |
206.6 |
|
|
$ |
218.9 |
|
Depreciation expense was $9.3 million and $8.2 million for the
three months ended June 30, 2020 and 2019, respectively, and $18.0
million and $16.5 million for the six months ended June 30, 2020
and 2019, respectively.
During the three and six months ended June 30, 2020, the Company
noted a sustained decline in stock price due to the reduced demand
and oversupply of oil and natural gas, which was an indication that
the fair value of the Company’s long-lived assets could have fallen
below their carrying values. As a result, an impairment analysis
was performed and it was determined that no impairment existed.
Please see “Note 1 — Organization and Business Operations—Recent
Events” for additional information regarding reduced demand and
oversupply of oil and “Part I, Item 8. Financial Statements and
Supplementary Data — Note 2 — Summary of Significant Accounting
Policies — Significant Accounting Policies — Long-Lived Asset
Impairment” of the Annual Report for the policy of testing
long-lived assets for impairment.
Note 4 — Intangible Assets
Definite lived intangible assets are comprised of the following (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Life
(years) |
|
June 30, 2020 |
|
December 31, 2019 |
Customer relationships |
|
10-18
|
|
$ |
11.4 |
|
|
$ |
11.4 |
|
Less: accumulated amortization |
|
|
|
(2.5) |
|
|
(2.1) |
|
Intangible assets, net |
|
|
|
$ |
8.9 |
|
|
$ |
9.3 |
|
Amortization expense was $0.2 million and $0.2 million for the
three months ended June 30, 2020 and 2019, respectively and $0.4
million and $0.3 million for the six months ended June 30, 2020 and
2019, respectively. Amortization expense for the future periods is
expected to be as follows (in millions):
|
|
|
|
|
|
|
|
|
For the twelve months ending June 30, |
|
Amount |
2021 |
|
$ |
0.7 |
|
2022 |
|
0.7 |
|
2023 |
|
0.7 |
|
2024 |
|
0.7 |
|
2025 |
|
0.8 |
|
Thereafter |
|
5.3 |
|
Total |
|
$ |
8.9 |
|
Note 5 — Accrued Expenses
Accrued expenses include the following (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
Accrued payables |
|
$ |
1.9 |
|
|
$ |
8.3 |
|
Accrued compensation |
|
4.3 |
|
|
6.3 |
|
Accrued taxes |
|
1.6 |
|
|
1.8 |
|
Accrued insurance |
|
0.2 |
|
|
2.0 |
|
Accrued expenses |
|
$ |
8.0 |
|
|
$ |
18.4 |
|
Note 6 — Leases
Operating Leases
The Company has operating leases, primarily for real estate and
equipment, with terms that vary from 12 months to seven 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 Condensed 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 Condensed Consolidated Statements of
Operations. Lease costs and other information related to operating
leases for the three and six months ended June 30, 2020 and 2019,
are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Short-term lease costs |
|
$ |
0.6 |
|
|
$ |
1.1 |
|
|
$ |
1.4 |
|
|
$ |
3.3 |
|
Operating lease cost |
|
$ |
0.7 |
|
|
$ |
0.6 |
|
|
$ |
1.4 |
|
|
$ |
1.3 |
|
Operating cash outflows from operating leases |
|
$ |
0.7 |
|
|
$ |
0.6 |
|
|
$ |
1.4 |
|
|
$ |
1.4 |
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term |
|
|
|
|
|
6.0 years |
|
5.7 years |
Weighted average discount rate |
|
|
|
|
|
9.3 |
% |
|
9.4 |
% |
Aggregate future minimum lease payments under operating leases are
as follows (in millions):
|
|
|
|
|
|
|
|
|
For the twelve months ending June 30, |
|
Total |
2021 |
|
$ |
1.7 |
|
2022 |
|
1.0 |
|
2023 |
|
0.8 |
|
2024 |
|
0.8 |
|
2025 |
|
0.8 |
|
Thereafter |
|
2.0 |
|
Total future minimum lease payments |
|
7.1 |
|
Less: amount representing interest |
|
(1.7) |
|
Present value of future minimum lease payments |
|
5.4 |
|
Less: current portion of operating lease obligations |
|
(1.2) |
|
Long-term portion of operating lease obligations |
|
$ |
4.2 |
|
Finance Leases
The Company leases certain assets, primarily automobiles, under
finance leases with terms that are generally
three to four 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, Finance lease obligations, current portion and
Finance lease obligations in the Condensed Consolidated Balance
Sheets.
Lease costs and other information related to finance leases for the
three and six months ended June 30, 2020 and 2019, are as follows
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Amortization of finance leases |
|
$ |
1.4 |
|
|
$ |
1.2 |
|
|
$ |
2.8 |
|
|
$ |
2.5 |
|
Interest on lease liabilities |
|
$ |
0.1 |
|
|
$ |
0.2 |
|
|
$ |
0.3 |
|
|
$ |
0.4 |
|
Financing cash outflows from finance leases |
|
$ |
1.4 |
|
|
$ |
1.2 |
|
|
$ |
2.6 |
|
|
$ |
2.2 |
|
|
|
|
|
|
|
|
|
|
Weighted average remaining lease term |
|
|
|
|
|
1.5 years |
|
1.8 years |
Weighted average discount rate |
|
|
|
|
|
4.0 |
% |
|
4.5 |
% |
Aggregate future minimum lease payments under finance leases are as
follows (in millions):
|
|
|
|
|
|
|
|
|
For the twelve months ending June 30, |
|
Total |
2021 |
|
$ |
4.3 |
|
2022 |
|
1.6 |
|
2023 |
|
0.6 |
|
2024 |
|
0.1 |
|
Total future minimum lease payments |
|
6.6 |
|
Less: amount representing interest |
|
(0.3) |
|
Present value of future minimum lease payments |
|
6.3 |
|
Less: current portion of finance lease obligations |
|
(4.0) |
|
Long-term portion of finance lease obligations |
|
$ |
2.3 |
|
Note 7 — Debt
The aggregate carrying amounts, net of issuance costs, of the
Company’s debt consists of the following (in
millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020 |
|
December 31, 2019 |
ESCO Notes Payable |
|
$ |
— |
|
|
$ |
5.8 |
|
Credit Facility |
|
4.6 |
|
|
9.5 |
|
Encina Master Financing Agreement |
|
22.2 |
|
|
27.1 |
|
Total Debt |
|
26.8 |
|
|
42.4 |
|
Current portion of long-term debt |
|
(10.0) |
|
|
(15.8) |
|
Long term-debt, net |
|
$ |
16.8 |
|
|
$ |
26.6 |
|
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 $1.2 million,
which was paid in August 2018 and a note for $5.8 million, which
was settled during the six months ended June 30, 2020. Both of
these notes bore interest at 5.0%, payable quarterly until their
respective maturity dates.
During the year ended December 31, 2018, the Company provided
notice to ESCO that the Company sought to be indemnified for breach
of contract. The Company exercised its right to stop payments of
the remaining principal balance of $5.8 million on the Seller’s
Notes and any unpaid interest, pending resolution of certain
indemnification claims. Interest on the outstanding principal
balance was accrued through the maturity date of the Note Payable.
During the six months ended June 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. Please see Note 12 —
Commitments and Contingencies for further details.
Credit Facility
On August 16, 2017, Ranger Energy Services, LLC, (“Ranger,
LLC”) entered into a $50.0 million senior unsecured revolving
credit facility (the “Credit Facility”) by and among certain of
Ranger’s subsidiaries, as borrowers, each of the lenders party
thereto and Wells Fargo Bank, N.A., as administrative agent (the
“Administrative Agent”). The Credit Facility is subject to a
borrowing base that is calculated based upon a percentage of the
value of the Company’s eligible accounts receivable less certain
reserves. Such calculation is submitted, in the form of a borrowing
base certificate, to the Administrative Agent within ten business
days of the preceding month end. The Credit Facility includes cash
dominion provisions that permits the Administrative Agent to sweep
cash daily from the Company’s bank accounts into an account of the
Administrative Agent to repay the Company’s obligations under the
Credit Facility. Such dominion is triggered when excess
availability is less than the greater of $6.25 million and 12.5% of
the lesser of (x) the maximum revolver amount and (y) the borrowing
base as of such date of determination. When the Company is subject
to dominion, for 30 consecutive days it is required to either (a)
maintain excess availability in excess of the greater of $6.25
million and 12.5% of the lesser of (x) the maximum revolver amount
and (y) the borrowing base as of such date of determination and no
event of default has occurred and is continuing or (b) have no
revolver drawings and available cash of at least $20.0 million for
dominion to revert back to the Company. During the three months
ended March 31, 2020, the Company borrowed against the Credit
Facility causing dominion to revert to the Administrative Agent,
however after the 30 consecutive day period, as defined above,
dominion reverted back to the Company in April 2020. The borrowings
under the Credit Facility, and related issuance costs, were
included in long-term debt, net in the Condensed Consolidated
Balance Sheets as of June 30, 2020, as the Company was not subject
to dominion. The Credit Facility is scheduled to mature on August
16, 2022.
The applicable margin for the LIBOR loans ranges from 1.5% to 2.0%
and the applicable margin for Base Rate loans ranges from 0.5% to
1.0%, in each case, depending on Ranger LLC’s average excess
availability under the Credit Facility. The applicable margin for
the LIBOR loan was 1.75% and the applicable margin for Base Rate
loans was 0.75% as of June 30, 2020. The weighted average interest
rate for the borrowings under the Credit Facility was 3.1% for the
six months ended June 30, 2020.
Under the Credit Facility, the total loan capacity was
$15.8 million, which was based on a borrowing base certificate
in effect as of June 30, 2020. The Company had outstanding
borrowings of $5.0 million under the Credit Facility, leaving a
residual $10.8 million available for borrowings as of June 30,
2020. The Company made a cash payment of $5.0 million on
the Credit Facility in July 2020, such that there were no
borrowings under the Credit Facility as of July 22, 2020. The
Company was in compliance with the Credit Facility covenants as of
June 30, 2020. The Company capitalized fees of $0.7 million
associated with the Credit Facility, which are included in the
Condensed Consolidated Balance Sheets as a discount to the Credit
Facility. Such fees will be amortized through maturity and are
included in Interest Expense, net on the Condensed Consolidated
Statement of Operations. Unamortized debt issuance costs as of June
30, 2020 was $0.4 million.
Encina Master Financing and Security Agreement (“Financing
Agreement”)
On June 22, 2018, the Company entered into a Financing Agreement
with Encina Equipment Finance SPV, LLC (the “Lender”). The amount
available to be provided by the Lender to the Company under the
Financing Agreement was contemplated to be not less than $35.0
million, and not to exceed $40.0 million. The first financing was
required to be in an amount up to $22.0 million, which was used by
the Company to acquire certain capital equipment. Subsequent to the
first financing, the Company borrowed an additional $17.8 million,
net of expenses and in two tranches, under the Financing Agreement.
The Company utilized the additional net proceeds to acquire certain
capital equipment. The Financing Agreement is secured by a lien on
certain high-spec rig assets. As of June 30, 2020, the aggregate
principal balance outstanding under the Financing Agreement was
$22.7 million. The total borrowings under the Financing Agreement
were borrowed in three tranches, where the amounts outstanding are
payable ratably over 48 months from the time of each borrowing. The
three tranches mature in July 2022, November 2022 and January
2023.
Borrowings under the Financing Agreement bear interest at a rate
per annum equal to the sum of 8.0% plus LIBOR, which was 1.5% as of
June 30, 2020. Under the terms of the Financing Agreement, in no
event will LIBOR fall below 1.5% and it requires the Company to
maintain a leverage ratio of 2.5 to 1.0. The Company was in
compliance with the covenants under the Financing Agreement as of
June 30, 2020.
The Company capitalized fees of $0.9 million associated with the
Financing Agreement, which are included in the Condensed
Consolidated Balance Sheets as a discount to the long term debt.
Such fees will be amortized through maturity and are included in
Interest Expense, net in the Condensed Consolidated Statements of
Operations. Unamortized debt issuance costs as of June 30,
2020 was $0.5 million.
Debt Obligations and Scheduled Maturities
As of June 30, 2020, aggregate future principal payments of total
debt are as follows (in millions):
|
|
|
|
|
|
|
|
|
For the twelve months ending June 30, |
|
Total |
2021 |
|
$ |
10.0 |
|
2022 |
|
15.0 |
|
2023 |
|
2.7 |
|
Total |
|
$ |
27.7 |
|
Note 8 — Equity
Equity-Based Compensation
In 2017, the Company adopted the Ranger Energy Services, Inc. 2017
Long Term Incentive Plan (the “2017 Plan”). The Company has granted
shares of restricted stock (“restricted shares”) and
performance-based restricted stock units (“performance stock
units”) under the 2017 Plan.
Restricted Stock Awards
During the three and six months ended June 30, 2020, the Company
granted 465,304 restricted shares with an aggregate value of
$2.0 million. During the six months ended June 30, 2019, the
Company granted 495,750 restricted shares with an aggregate value
of $3.9 million. As of June 30, 2020, there was an aggregate $4.5
million of unrecognized expense related to restricted shares issued
which is expected to be recognized over a weighted average period
of 2.0 years.
Performance Stock Units
The performance criteria applicable to performance stock units that
have been granted by the Company are based on relative total
shareholder return, which measures the Company’s total shareholder
return as compared to the total shareholder return of a designated
peer group, and absolute total shareholder return. Generally, the
performance stock units are subject to a
three-year performance period.
During the three and six months ended June 30, 2020, the Company
granted 121,262 target shares of market based performance stock
units at a relative and absolute grant date fair value of
approximately $6.33 per share and $3.62 per share, respectively,
which are expected to vest on April 3, 2023. During the six
months ended June 30, 2019, the Company
granted 105,920 target shares of market based performance
stock units at a relative and absolute grant date fair value of
approximately $11.96 per share and $9.50 per share,
respectively, which are expected to vest on March 21,
2022.
As of June 30, 2020, there was an aggregate $1.3 million
of unrecognized compensation cost related to performance stock
units which is expected to be recognized over a weighted average
period of 1.9 years.
Share Repurchases
During the six months ended June 30, 2020, the Company repurchased
344,827 shares of the Company’s Class A Common Stock for an
aggregate $2.4 million in a privately negotiated transaction with
ESCO. Please see Note 12 — 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 may take 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 could have been
accelerated, suspended or discontinued at any time without notice.
During the six months ended June 30, 2020, the Company repurchased
93,063 shares of the Company’s Class A Common Stock for an
aggregate $0.7 million. Refer to “Part II, Item 2. Unregistered
Sales of Securities” for further information.
Note 9 — Risk Concentrations
Customer Concentrations
For the three months ended June 30, 2020, two customers, EOG
Resources and Concho Resources, Inc., accounted for 23% and 18%,
respectively, of the Company’s consolidated revenues. For the six
months ended June 30, 2020, the same two customers each accounted
for 19% of the Company’s consolidated revenues. As of June 30,
2020, approximately 18% of the accounts receivable balance was due
from these customers.
For the three months ended June 30, 2019, two customers, EOG
Resources and Concho Resources, Inc., accounted for 17% and 15%,
respectively, of the Company’s consolidated revenues. For the six
months ended June 30, 2019, two customers, EOG Resources and Concho
Resources, Inc., accounted for 17% and 14%, respectively, of the
Company’s consolidated revenues. As of June 30, 2019, approximately
19% of the accounts receivable balance was due from these
customers.
Note 10 — Income Taxes
The Company is a corporation and is subject to U.S. federal income
tax. The effective U.S. federal income tax rate applicable to
the Company for the six months ended June 30, 2020 and 2019 was
0.0% and 11.3%, respectively. The Company is subject to
the Texas Margin Tax that requires tax payments at a maximum
statutory effective rate of 0.75% on the taxable margin of each
taxable entity that does business in Texas.
As a result of the IPO 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.
Total income tax expense for the three and six months ended June
30, 2020 and 2019 differed from amounts computed by applying the
U.S. federal statutory tax rates to pre-tax income or loss
primarily due to changes in the valuation allowance related to
pre-tax book income or loss and the impact of permanent differences
between book and taxable income or loss attributable to
noncontrolling interest. The effective tax rate includes a rate
benefit attributable to the fact that Ranger LLC operates as a
limited liability company treated as a partnership for federal and
state income tax purposes and as such, is not subject to federal
and state income taxes, except for the State of Texas for which
Ranger LLC files with the Company. Accordingly, the portion of
earnings attributable to noncontrolling interest is subject to tax
when reported as a component of the noncontrolling interest’s
taxable income.
The Company is subject to the following material taxing
jurisdictions: the United States and Texas. As of June 30, 2020,
the Company has no current tax years under audit. The Company
remains subject to examination for federal income taxes and state
income taxes for tax years 2018, 2017 and 2016.
The Company has evaluated all tax positions for which the statute
of limitations remains open and believes that the material
positions taken would more likely than not be sustained upon
examination. Therefore, as of June 30, 2020, the Company had not
established any reserves for, nor recorded any unrecognized
benefits related to, uncertain tax positions.
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. For the three and six months ended
June 30, 2020, there were no material tax impacts to the condensed
consolidated financial statements as it relates to COVID-19
measures, although, the Company has deferred payroll tax payments
through December 31, 2020. The Company will continue to monitor
additional guidance issued by the U.S. Treasury Department, the
Internal Revenue Service and others.
Note 11 — Earnings (Loss) per Share
Earnings (loss) per share is based on the amount of net income
(loss) allocated to the shareholders and the weighted average
number of shares outstanding during the period for each class of
Common Stock. The numerator and denominator used to compute
earnings (loss) per share were as follows (in millions, except
share and per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
|
|
|
Income (loss) (numerator): |
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Ranger Energy Services,
Inc. |
|
$ |
(4.9) |
|
|
$ |
1.0 |
|
|
$ |
(3.4) |
|
|
$ |
3.0 |
|
|
|
|
|
Net income (loss) attributable to Class A Common Stock |
|
$ |
(4.9) |
|
|
$ |
1.0 |
|
|
$ |
(3.4) |
|
|
$ |
3.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Ranger Energy Services,
Inc. |
|
$ |
(4.9) |
|
|
$ |
1.0 |
|
|
$ |
(3.4) |
|
|
$ |
3.0 |
|
|
|
|
|
Effect of noncontrolling interest, net of tax |
|
— |
|
|
0.5 |
|
|
— |
|
|
1.4 |
|
|
|
|
|
Net income (loss) attributable to Class A Common Stock |
|
$ |
(4.9) |
|
|
$ |
1.5 |
|
|
$ |
(3.4) |
|
|
$ |
4.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares (denominator): |
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares - basic |
|
8,474,077 |
|
|
8,514,495 |
|
|
8,545,925 |
|
|
8,481,788 |
|
|
|
|
|
Effect of share-based awards |
|
— |
|
|
31,782 |
|
|
— |
|
|
13,220 |
|
|
|
|
|
Effect of noncontrolling interest, net of tax |
|
— |
|
|
6,866,154 |
|
|
— |
|
|
6,866,154 |
|
|
|
|
|
Weighted average number of shares - diluted |
|
8,474,077 |
|
|
15,412,431 |
|
|
8,545,925 |
|
|
15,361,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share |
|
$ |
(0.58) |
|
|
$ |
0.12 |
|
|
$ |
(0.40) |
|
|
$ |
0.35 |
|
|
|
|
|
Diluted income (loss) per share |
|
$ |
(0.58) |
|
|
$ |
0.10 |
|
|
$ |
(0.40) |
|
|
$ |
0.29 |
|
|
|
|
|
During the three and six months ended June 30, 2020, the Company
excluded 0.9 million of equity-based awards and 6.9 million
shares of Common Stock issuable upon conversion of the Company’s
Class B Common Stock in calculating diluted loss per share, as the
effect was anti-dilutive.
Note 12 — Commitments and Contingencies
Legal Matters
From time to time, the Company is involved in various legal matters
arising in the normal course of business. The Company does not
believe that the ultimate resolution of these currently pending
matters will have a material adverse effect on its condensed
consolidated financial position or results of
operations.
During the year ended December 31, 2018, the Company
provided notice to ESCO that the Company sought to be indemnified
for breach of contract. The Company exercised its right to stop
payments of the remaining principal balance of $5.8
million on the Seller's Notes and any unpaid interest, pending
resolution of certain indemnification claims. During the six months
ended June 30, 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. Please see
“Note 7 — Debt” and “Note 8 — Equity” for further details of the
debt and equity settlements.
Note 13 — Segment Reporting
The Company’s operations are all located in the United States and
organized into three reportable segments: High Specification Rigs,
Completion and Other Services and Processing Solutions. The
reportable segments comprise the structure used by the Chief
Operating Decision Maker (“CODM”) to make key operating decisions
and assess performance during the years presented in the
accompanying condensed consolidated financial statements. The CODM
evaluates the segments’ operating performance based on multiple
measures including Operating income, Adjusted EBITDA, rig hours and
rig utilization. The tables below present the operating income
measurement, as the Company believes this is most consistent with
the principals used in measuring the condensed consolidated
financial statements.
The following is a description of each operating
segment:
High Specification Rigs.
The Company’s High Specification Rigs facilitate operations
throughout the lifecycle of a well, including (i) completion,
(ii) workover, (iii) well maintenance and
(iv) decommissioning. The Company provides these advanced well
services to E&P companies, particularly to those operating in
unconventional oil and natural gas reservoirs and requiring
technically and operationally advanced services. The Company’s
high-spec rigs are designed to support growing U.S. horizontal well
demands. In addition to the core well service rig operations, the
Company offers a suite of complementary services.
Completion and Other Services.
The Completion and Other Services segment provides wireline
completion services necessary to bring a well on production and
other ancillary services often utilized in conjunction with the
high-spec rig services to enhance the production of a
well.
Processing Solutions.
The Company provides a range of proprietary, modular
equipment for the processing of rich natural gas streams at the
wellhead or central gathering points in basins where drilling and
completion activity has outpaced the development of permanent
processing infrastructure.
Other.
The Company incurs costs, indicated as Other, that are not
allocable to any of the operating segments or lines of business and
include corporate general and administrative expenses as well as
depreciation of office furniture and fixtures and other corporate
assets.
Segment information as of June 30, 2020 and December 31, 2019 and
for the three and six months ended June 30, 2020 and 2019 is as
follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High Specification Rigs |
|
Completion and Other Services |
|
Processing Solutions |
|
Other |
|
Total |
|
|
Three Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
11.4 |
|
|
$ |
17.7 |
|
|
$ |
1.6 |
|
|
$ |
— |
|
|
$ |
30.7 |
|
Cost of services |
|
10.1 |
|
|
13.3 |
|
|
0.4 |
|
|
— |
|
|
23.8 |
|
Depreciation and amortization |
|
5.2 |
|
|
2.6 |
|
|
1.3 |
|
|
0.4 |
|
|
9.5 |
|
Operating income (loss) |
|
(3.9) |
|
|
1.8 |
|
|
(0.1) |
|
|
(5.9) |
|
|
(8.1) |
|
Interest expense, net |
|
— |
|
|
— |
|
|
— |
|
|
0.8 |
|
|
0.8 |
|
Net income (loss) |
|
(3.9) |
|
|
1.8 |
|
|
(0.1) |
|
|
(6.7) |
|
|
(8.9) |
|
Capital expenditures |
|
$ |
(0.3) |
|
|
$ |
0.5 |
|
|
$ |
0.2 |
|
|
$ |
0.3 |
|
|
$ |
0.7 |
|
|
|
Six Months Ended June 30, 2020 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
46.3 |
|
|
$ |
61.0 |
|
|
$ |
4.4 |
|
|
$ |
— |
|
|
$ |
111.7 |
|
Cost of services |
|
40.0 |
|
|
45.0 |
|
|
1.9 |
|
|
— |
|
|
86.9 |
|
Depreciation and amortization |
|
10.5 |
|
|
5.3 |
|
|
1.9 |
|
|
0.7 |
|
|
18.4 |
|
Operating income (loss) |
|
(4.2) |
|
|
10.7 |
|
|
0.6 |
|
|
(11.2) |
|
|
(4.1) |
|
Interest expense, net |
|
— |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
1.9 |
|
Net income (loss) |
|
(4.2) |
|
|
10.7 |
|
|
0.6 |
|
|
(13.2) |
|
|
(6.1) |
|
Capital expenditures |
|
$ |
4.3 |
|
|
$ |
1.7 |
|
|
$ |
0.4 |
|
|
$ |
0.3 |
|
|
$ |
6.7 |
|
|
|
As of June 30, 2020 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
125.7 |
|
|
$ |
36.6 |
|
|
$ |
38.9 |
|
|
$ |
5.4 |
|
|
$ |
206.6 |
|
Total assets |
|
$ |
155.9 |
|
|
$ |
45.4 |
|
|
$ |
40.1 |
|
|
$ |
6.7 |
|
|
$ |
248.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
High Specification Rigs |
|
Completion and Other Services |
|
Processing Solutions |
|
Other |
|
Total |
|
|
Three Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
33.1 |
|
|
$ |
46.3 |
|
|
$ |
4.9 |
|
|
$ |
— |
|
|
$ |
84.3 |
|
Cost of services |
|
28.7 |
|
|
35.0 |
|
|
1.9 |
|
|
— |
|
|
65.6 |
|
Depreciation and amortization |
|
4.8 |
|
|
2.9 |
|
|
0.5 |
|
|
0.2 |
|
|
8.4 |
|
Operating income (loss) |
|
(0.4) |
|
|
8.4 |
|
|
2.5 |
|
|
(6.5) |
|
|
4.0 |
|
Interest expense, net |
|
— |
|
|
— |
|
|
— |
|
|
1.9 |
|
|
1.9 |
|
Net income (loss) |
|
(0.4) |
|
|
8.4 |
|
|
2.5 |
|
|
(8.7) |
|
|
1.8 |
|
Capital expenditures |
|
$ |
1.2 |
|
|
$ |
1.8 |
|
|
$ |
2.4 |
|
|
$ |
— |
|
|
$ |
5.4 |
|
|
|
Six Months Ended June 30, 2019 |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
64.8 |
|
|
$ |
97.9 |
|
|
$ |
9.9 |
|
|
$ |
— |
|
|
$ |
172.6 |
|
Cost of services |
|
56.1 |
|
|
72.9 |
|
|
4.1 |
|
|
— |
|
|
133.1 |
|
Depreciation and amortization |
|
9.6 |
|
|
5.7 |
|
|
1.0 |
|
|
0.5 |
|
|
16.8 |
|
Operating income (loss) |
|
(0.9) |
|
|
19.3 |
|
|
4.8 |
|
|
(14.0) |
|
|
9.2 |
|
Interest expense, net |
|
— |
|
|
— |
|
|
— |
|
|
3.2 |
|
|
3.2 |
|
Net income (loss) |
|
(0.9) |
|
|
19.3 |
|
|
4.8 |
|
|
(17.8) |
|
|
5.4 |
|
Capital expenditures |
|
$ |
4.0 |
|
|
$ |
3.6 |
|
|
$ |
6.5 |
|
|
$ |
0.5 |
|
|
$ |
14.6 |
|
|
|
As of December 31, 2019 |
|
|
|
|
|
|
|
|
Property and equipment, net |
|
$ |
132.2 |
|
|
$ |
40.8 |
|
|
$ |
40.5 |
|
|
$ |
5.4 |
|
|
$ |
218.9 |
|
Total assets |
|
$ |
186.1 |
|
|
$ |
57.4 |
|
|
$ |
42.6 |
|
|
$ |
7.4 |
|
|
$ |
293.5 |
|
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis should be read in conjunction
with the historical financial statements and related notes included
in Part I, Item 1. Financial Statements of this Quarterly Report on
Form 10-Q (the “Quarterly Report”). This discussion contains
“forward-looking statements” reflecting our current expectations,
estimates and assumptions concerning events and financial trends
that may affect our future operating results or financial position.
Actual results and the timing of events may differ materially from
those contained in these forward-looking statements due to a number
of factors. Factors that could cause or contribute to such
differences include, but are not limited to, market prices for oil
and natural gas, capital expenditures, economic and competitive
conditions, regulatory changes and other uncertainties, as well as
those factors discussed below and elsewhere in this report. Please
read Cautionary Note Regarding Forward-Looking Statements.
Also, please read the risk factors and other cautionary statements
described under Part II, Item 1A.-“Risk Factors” included elsewhere
in this Quarterly Report and in our Annual Report filed on Form
10-K for the year ended December 31, 2019. We assume no obligation
to update any of these forward-looking statements.
Overview
Our service offerings consist of well completion support, workover,
well maintenance, wireline, fluid management, other complementary
services, as well as installation, commissioning and operating of
modular equipment, which are conducted in three reportable
segments, as follows:
•High
Specification Rigs.
Provider of high-spec well service rigs and complementary equipment
and services to facilitate operations throughout the lifecycle of a
well.
•Completion
and Other Services.
Provider of 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.
Provider of proprietary, modular equipment for the processing of
natural gas.
For additional financial information about our segments, please see
“Item 1. Financial Information — Note 13 — Segment
Reporting.”
Recent Events and Outlook
The outbreak of the novel coronavirus (“COVID-19”) has spread
across the globe and has been declared a public health emergency by
the World Health Organization (“WHO”) and a National Emergency by
the President of the United States. The COVID-19 pandemic has
resulted, and is likely to continue to result, in significant
economic disruption and has, and 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 continued through the close of the second
quarter ended June 30, 2020; 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 issuance of
these financial statements is uncertain. At the time of this
filing, cases of COVID-19 in the U.S. were increasing rapidly,
particularly in Texas, where we conduct significant
operations.
COVID-19 and numerous public and political responses thereto have
contributed to equity market volatility and potentially the risk of
a global recession. We expect this global equity market volatility
experienced in the first and second quarters of 2020 to continue at
least until the outbreak of COVID-19 stabilizes, if not longer. 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 into the second quarter of 2020. On April 12, 2020, OPEC
Plus agreed to cut oil production by 9.7 million barrels per day in
May and June 2020; however, on July 15, 2020 OPEC Plus agreed to
increase production by 1.6 million barrels per day starting in
August 2020. With the combined effects of the increased production
levels earlier in 2020, the recent increase in production and the
reduction in demand caused by COVID-19, the global oil and natural
gas supply and demand imbalance persists and continues to have a
significant adverse effect on the oil and gas
industry.
Due to the significantly reduced demand for oil and natural gas as
a result of the COVID-19 pandemic and the current oversupply of oil
and natural gas in the market, available storage and capacity for
our customers’ production may be limited or completely unavailable
in the future, which may further negatively impact the price of
oil.
We cannot predict whether or when the global supply and demand
imbalance will be resolved or whether or when oil and natural gas
production and economic activities will return to normalized
levels. In the absence of additional reductions to global
production, oil, natural gas and NGLs prices could remain at
current levels, or decline further, for an extended period of
time.
Factors deriving from the COVID-19 response, as well as the oil
oversupply, that have or may negatively impact sales, liquidity and
gross margins in the future include, but are not limited to:
limitations on the ability of 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, such factors may also negatively affect the carrying
values of our property and equipment and intangible assets. As of
the date of this report, the Company has initiated cost reductions
throughout the organization, including a reduction in workforce of
approximately 60% and salary reductions across the Company’s
organizational structure, which has reduced payroll expense by
greater than 70% since the beginning of 2020. Additionally, we have
made various other operational, travel and organizational expense
reductions and will continue to manage costs to preserve liquidity
through this downturn. 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. Currently, we expect to have
sufficient liquidity to operate our business and remain in
compliance with the financial covenants under our Credit Facility
agreement.
The U.S. government has implemented a number of programs in the
wake of the impacts of COVID-19, including the Coronavirus Aid,
Relief, and Economic Security Act (the “CARES Act”), the largest
relief package in U.S. history, and the Main Street Lending Program
established by the Federal Reserve. Although we qualified for
limited aid under the CARES Act related to the deferment of certain
employer taxes, the Company is currently evaluating whether it can
meet the conditions of and benefit from the Main Street Lending
Program.
On March 12, 2020, the Company received a non-binding offer from
CSL Capital Management, L.P. and Bayou Holdings, proposing to
acquire all of the outstanding shares of common stock of the
Company not owned by CSL, Bayou Holdings and T. Rowe Price
Associates, Inc. in a cash merger transaction for $6.00 per share
(the “Take Private Proposal”). On May 11, 2020, CSL announced their
decision to not pursue the possible acquisition of shares
outstanding of Ranger at this time and abandon the Take Private
Proposal.
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.
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).
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. During the six
months ended June 30, 2020, the Company significantly reduced the
workforce due to the impacts of the COVID-19 and geopolitical
events that have recently taken place. Additionally, we implemented
salary reductions across our organizational structure. The combined
impact of the workforce reduction and salary reductions has
resulted in payroll expense decreasing by greater than 70% since
the beginning of 2020. We will continue to actively manage costs
and take further actions as necessary. See “—Recent Events and
Outlook” above.
How We Evaluate Our Operations
Management uses a variety of metrics to analyze our operating
results and profitability, which include operating revenues,
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.
Revenues
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.
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.
Adjusted EBITDA
We view Adjusted EBITDA, which is a non-GAAP financial measure, 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 GAAP.
Rig Hours
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.
Results of Operations
Three Months Ended June 30, 2020 compared to Three Months Ended
June 30, 2019
The following table presents the operating results for the three
months ended June 30, 2020 as compared to the three months ended
June 30, 2019.