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, 2021

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.)

10350 Richmond, Suite 550

Houston, Texas 77042

(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 28, 2021, the registrant had 11,030,560 shares of Class A Common Stock and 6,866,154 shares of Class B Common Stock outstanding.

RANGER ENERGY SERVICES, INC.

TABLE OF CONTENTS

	Page
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
Unaudited Interim Condensed Consolidated Balance Sheets	3
Unaudited Interim Condensed Consolidated Statements of Operations	4
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity	5
Unaudited Interim Condensed Consolidated Statements of Cash Flows	6
Notes to Unaudited Interim Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3. Quantitative and Qualitative Disclosures About Market Risks	34
Item 4. Controls and Procedures	34
PART II – OTHER INFORMATION
Item 1. Legal Proceedings	35
Item 1A. Risk Factors	35
Item 2. Unregistered Sales of Securities and Use of Proceeds	35
Item 6. Exhibits	36
SIGNATURES	37

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, 2021		December 31, 2020
Assets
Cash and cash equivalents	$	3.4	$	2.8
Accounts receivable, net	35.5		25.9
Contract assets	3.0		1.1
Inventory	2.7		2.3
Prepaid expenses	6.1		3.6
Total current assets	50.7		35.7
Property and equipment, net	182.6		189.4
Goodwill	1.8		—
Intangible assets, net	8.1		8.5
Operating leases, right-of-use assets	6.3		5.8
Other assets	1.0		1.2
Total assets	$	250.5	$	240.6
Liabilities and Stockholders' Equity
Accounts payable	$	13.5	$	10.5
Accrued expenses	9.9		9.3
Other financing liability, current portion	2.6		—
Long-term debt, current portion	10.4		10.0
Other current liabilities	3.9		3.2
Total current liabilities	40.3		33.0
Operating leases, right-of-use obligations	5.0		5.2
Other financing liability	13.4		—
Long-term debt, net	12.5		14.5
Other long-term liabilities	3.1		3.1
Total liabilities	74.3		55.8
Commitments and contingencies (Note 14)
Stockholders' equity
Preferred stock, $0.01 per share; 50,000,000 shares authorized; no shares issued or outstanding as of June 30, 2021 and December 31, 2020	—		—
Class A Common Stock, $0.01 par value, 100,000,000 shares authorized; 10,682,388 shares issued and 10,130,560 shares outstanding as of June 30, 2021; 9,093,743 shares issued and 8,541,915 shares outstanding as of December 31, 2020	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, 2021 and December 31, 2020	0.1		0.1
Less: Class A Common Stock held in treasury at cost; 551,828 treasury shares as of June 30, 2021 and December 31, 2020	(3.8)		(3.8)
Accumulated deficit	(28.6)		(18.4)
Additional paid-in capital	139.5		123.9
Total controlling stockholders' equity	107.3		101.9
Noncontrolling interest	68.9		82.9
Total stockholders' equity	176.2		184.8
Total liabilities and stockholders' equity	$	250.5	$	240.6

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

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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,
	2021		2020		2021		2020
Revenues
High specification rigs	$	29.0	$	11.4	$	50.7	$	46.3
Completion and other services	19.8		17.7		35.3		61.0
Processing solutions	1.2		1.6		2.3		4.4
Total revenues	50.0		30.7		88.3		111.7
Operating expenses
Cost of services (exclusive of depreciation and amortization):
High specification rigs	24.0		10.1		43.0		40.0
Completion and other services	19.2		13.3		33.8		45.0
Processing solutions	0.9		0.4		1.4		1.9
Total cost of services	44.1		23.8		78.2		86.9
General and administrative	6.2		5.5		9.7		10.5
Depreciation and amortization	8.2		9.5		16.2		18.4
Total operating expenses	58.5		38.8		104.1		115.8
Operating loss	(8.5)		(8.1)		(15.8)		(4.1)
Other expenses
Interest expense, net	0.7		0.8		1.3		1.9
Total other expenses	0.7		0.8		1.3		1.9
Loss before income tax expense	(9.2)		(8.9)		(17.1)		(6.0)
Tax (benefit) expense	(0.1)		—		0.3		0.1
Net loss	(9.1)		(8.9)		(17.4)		(6.1)
Less: Net loss attributable to noncontrolling interests	(3.5)		(4.0)		(7.2)		(2.7)
Net loss attributable to Ranger Energy Services, Inc.	$	(5.6)	$	(4.9)	$	(10.2)	$	(3.4)
Loss per common share
Basic	$	(0.59)	$	(0.58)	$	(1.13)	$	(0.40)
Diluted	$	(0.59)	$	(0.58)	$	(1.13)	$	(0.40)
Weighted average common shares outstanding
Basic	9,523,127		8,474,077		9,055,077		8,545,925
Diluted	9,523,127		8,474,077		9,055,077		8,545,925

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

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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,
	2021	2020	2021		2020		2021	2020	2021		2020
	Quantity		Amount				Quantity		Amount
Shares, Class A Common Stock
Balance, beginning of period	9,329,306	8,947,830	$	0.1	$	0.1	9,093,743	8,839,788	$	0.1	$	0.1
Issuance of shares under share-based compensation plans	123,672	117,502	—		—		456,748	270,135	—		—
Shares withheld for taxes on equity transactions	(26,590)	(33,837)	—		—		(124,103)	(78,428)	—		—
Share issuance for acquisition	1,256,000	—	—		—		1,256,000	—	—		—
Balance, end of period	10,682,388	9,031,495	$	0.1	$	0.1	10,682,388	9,031,495	$	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	(551,828)	(551,828)	$	(3.8)	$	(3.8)	(551,828)	(113,937)	$	(3.8)	$	(0.7)
Repurchase of Class A Common Stock	—	—	—		—		—	(437,891)	—		(3.1)
Balance, end of period	(551,828)	(551,828)	$	(3.8)	$	(3.8)	(551,828)	(551,828)	$	(3.8)	$	(3.8)
Accumulated deficit
Balance, beginning of period			$	(23.0)	$	(6.6)			$	(18.4)	$	(8.1)
Net loss attributable to controlling interest			(5.6)		(4.9)				(10.2)		(3.4)
Balance, end of period			$	(28.6)	$	(11.5)			$	(28.6)	$	(11.5)
Additional paid-in capital
Balance, beginning of period			$	125.0	$	120.2			$	123.9	121.8
Equity based compensation amortization			0.9		0.9				1.8		1.6
Shares withheld for taxes on equity transactions			(0.2)		(0.2)				(0.7)		(0.3)
Share issuance for acquisitions			7.7		—				7.7		—
Impact of transactions affecting noncontrolling interest			6.1		0.1				6.8		(2.1)
Balance, end of period			$	139.5	$	121.0			$	139.5	$	121.0
Total controlling interest shareholders’ equity
Balance, beginning of period			$	98.4	$	110.0			$	101.9	$	113.2
Net loss attributable to controlling interest			(5.6)		(4.9)				(10.2)		(3.4)
Equity based compensation amortization			0.9		0.9				1.8		1.6
Shares withheld for taxes on equity transactions			(0.2)		(0.2)				(0.7)		(0.3)
Share issuance for acquisition			7.7		—				7.7		—
Impact of transactions affecting noncontrolling interest			6.1		0.1				6.8		(2.1)
Repurchase of Class A Common Stock			—		—				—		(3.1)
Balance, end of period			$	107.3	$	105.9			$	107.3	$	105.9
Noncontrolling interest
Balance, beginning of period			$	78.5	$	93.4			$	82.9	$	89.8
Net loss attributable to noncontrolling interest			(3.5)		(4.0)				(7.2)		(2.7)
Equity based compensation amortization			—		—				—		0.1
Impact of transactions affecting noncontrolling interest			(6.1)		(0.1)				(6.8)		2.1
Balance, end of period			$	68.9	$	89.3			$	68.9	$	89.3
Total Stockholders' Equity
Balance, beginning of period			$	176.9	$	203.4			$	184.8	$	203.0
Net loss			(9.1)		(8.9)				(17.4)		(6.1)
Equity based compensation amortization			0.9		0.9				1.8		1.7
Shares withheld for taxes on equity transactions			(0.2)		(0.2)				(0.7)		(0.3)
Share issuance from acquisition			7.7		—				7.7		—
Repurchase of Class A Common Stock			—		—				—		(3.1)
Balance, end of period			$	176.2	$	195.2			$	176.2	$	195.2

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

5

RANGER ENERGY SERVICES, INC.

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

	Six Months Ended June 30,
	2021		2020
Cash Flows from Operating Activities
Net loss	$	(17.4)	$	(6.1)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	16.2		18.4
Equity based compensation	1.8		1.7
Gain on debt retirement	—		(2.1)
Other costs, net	1.1		1.8
Changes in operating assets and liabilities, net effects of business combinations
Accounts receivable	(6.8)		25.4
Contract assets	(1.9)		0.1
Inventory	0.4		1.4
Prepaid expenses	(1.0)		3.5
Other assets	0.8		(0.2)
Accounts payable	2.4		(8.7)
Accrued expenses	0.7		(10.4)
Operating lease, right-of-use obligations	(0.5)		(1.1)
Other long-term liabilities	0.1		0.5
Net cash (used in) provided by operating activities	(4.1)		24.2
Cash Flows from Investing Activities
Purchase of property and equipment	(1.8)		(5.8)
Proceeds from disposal of property and equipment	0.4		0.3
Purchase of business, net of cash received	(3.5)		—
Net cash used in investing activities	(4.9)		(5.5)
Cash Flows from Financing Activities
Borrowings under Credit Facility	20.6		32.6
Principal payments on Credit Facility	(18.4)		(37.6)
Principal payments on Encina Master Financing Agreement	(5.0)		(5.0)
Payments on Installment Purchases	(0.3)		—
Proceeds from financing of sale-leasebacks	15.6		—
Principal payments on financing lease obligations	(2.2)		(2.6)
Shares withheld on equity transactions	(0.7)		(0.3)
Principal payments on ESCO Note Payable	—		(3.6)
Repurchase of Class A Common Stock	—		(3.1)
Net cash provided by (used in) financing activities	9.6		(19.6)
Increase (decrease) in Cash and Cash equivalents	0.6		(0.9)
Cash and Cash Equivalents, Beginning of Period	2.8		6.9
Cash and Cash Equivalents, End of Period	$	3.4	$	6.0
Supplemental Cash Flow Information
Interest paid	$	0.9	$	1.7
Supplemental Disclosure of Non-cash Investing and Financing Activities
Capital expenditures	$	(1.1)	$	0.1
Additions to fixed assets through financing leases	$	(0.7)	$	(1.0)
Issuance of Class A Common Stock for acquisition	$	(7.7)	$	—
Early termination of financing leases	$	—	$	0.7

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

6

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

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

•Processing Solutions. Provides 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, and its sole material assets 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 include the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe drop in general economic activity and a resulting decrease in energy demand. In addition, the global economy has experienced a significant disruption to global supply chains. The extent of the COVID-19 outbreak on the Company’s operational and financial performance will continue to depend on certain developments, including the duration and spread of the outbreak and its continued impact on customer activity and third-party providers. The direct impact to the Company’s operations began to take effect at the close of the first quarter ended March 31, 2020, and continued through the issuance of these 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.

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, the Organization of the Petroleum Exporting Countries (“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 natural gas liquids (“NGLs”) prices through the second quarter of 2021. With the

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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.

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 of 2020, the Company initiated cost reductions throughout the organization, including a reduction in the workforce and salary reductions. However, during the second quarter of 2021 certain employee salaries were reinstated. 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 condensed consolidated financial statements. During the first half of 2021, increased activity can be attributed to stay-at-home orders and other restrictions being lifted in certain geographical areas, however any future containment measure, as a result of the emergence of new strains or variants of COVID-19 or otherwise, could curtail such growth. We will continue to actively monitor the situation and may take further actions that alter business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of the Company’s employees, customers and stakeholders.

Note 2 — Summary of Significant Accounting Policies

Basis of Presentation

The consolidated balance sheet as of December 31, 2020 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 (“U.S. 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, 2020 and 2019, included in the Annual Report filed on Form 10-K for the year ended December 31, 2020 (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, 2021.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. 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;

8

•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 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 Securities Exchange Act of 1934, as Amended. 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 — Business Combinations

Patriot Well Solutions (“Patriot”) Acquisition

On May 14, 2021, the Company and certain of its subsidiaries completed the acquisition of Patriot (the “Patriot Acquisition”), a provider of wireline evaluation and intervention services that operate in the Permian, Denver-Julesburg and Powder River Basins and Bakken Shale. The purchase was accounted for using the acquisition method of accounting under FASBs Accounting Standards Codification 805, Business Combinations (“ASC 805”). The results of operations for the acquisition are included in the accompanying condensed consolidated statements of operations from the date of acquisition.

As consideration for the Patriot Acquisition, pursuant to the Membership Interest Purchase Agreement, the Company paid an aggregate of $11.0 million, which included 1.3 million shares of Class A Common Stock and cash payments of $3.3 million, net of cash acquired. The financial results of Patriot are included in the Completion and Other Services reporting segment. The pro forma results of operations for the Patriot Acquisition is not presented because the pro forma effects, individually and in the aggregate, are not material to the Company’s consolidated results of operations.

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Note 4 — Property and Equipment, Net

Property and equipment, net include the following (in millions):

	Estimated Useful Life (years)	June 30, 2021		December 31, 2020
High specification rigs	20	$	127.0	$	127.2
High specification rigs machinery and equipment	5 - 10	41.8		39.7
Completion and other services machinery and equipment	5 - 10	59.3		56.5
Processing solutions machinery and equipment	3 - 30	46.7		45.9
Vehicles	3 - 15	23.5		20.4
Other property and equipment	5 - 25	11.0		10.9
Property and equipment		309.3		300.6
Less: accumulated depreciation		(128.4)		(113.0)
Construction in progress		1.7		1.8
Property and equipment, net		$	182.6	$	189.4

Depreciation expense was $8.0 million and $9.3 million for the three months ended June 30, 2021 and 2020, respectively, and $15.8 million and $18.0 million for the six months ended June 30, 2021 and 2020, 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 the macroeconomic environment 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 Company’s policy of testing long-lived assets for impairments.

Note 5 — Goodwill and Intangible Assets

During the three and six months ended June 30, 2021, the Company recognized $1.8 million of goodwill in connection with the Patriot Acquisition.

Definite lived intangible assets are comprised of the following (in millions):

	Estimated Useful Life (years)	June 30, 2021		December 31, 2020
Customer relationships	10-18	$	11.4	$	11.4
Less: accumulated amortization		(3.3)		(2.9)
Intangible assets, net		$	8.1	$	8.5

Amortization expense was $0.2 million for both of the three months ended June 30, 2021 and 2020, and $0.4 million for both of the six months ended June 30, 2021 and 2020. Amortization expense for the future periods is expected to be as follows (in millions):

For the twelve months ending June 30,	Amount
2022	$	0.7
2023	0.7
2024	0.7
2025	0.7
2026	0.7
Thereafter	4.6
Total	$	8.1

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Note 6 — Accrued Expenses

Accrued expenses include the following (in millions):

	June 30, 2021		December 31, 2020
Accrued payables	$	3.9	$	2.7
Accrued compensation	4.8		4.5
Accrued taxes	1.0		1.0
Accrued insurance	0.2		1.1
Accrued expenses	$	9.9	$	9.3

Note 7 — 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, 2021 and 2020, are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021			2020
Short-term lease costs	$	0.5	$	0.6	$	0.8		$	1.4
Operating lease cost	$	0.5	$	0.7	$	0.8		$	1.4
Operating cash outflows from operating leases	$	0.4	$	0.7	$	0.7		$	1.4
Weighted average remaining lease term					5.1 years			6.0 years
Weighted average discount rate					8.6		%	9.3		%

Aggregate future minimum lease payments under operating leases are as follows (in millions):

For the twelve months ending June 30,	Total
2022	$	2.0
2023	1.4
2024	1.2
2025	1.2
2026	1.2
Thereafter	1.2
Total future minimum lease payments	8.2
Less: amount representing interest	(1.7)
Present value of future minimum lease payments	6.5
Less: current portion of operating lease obligations	(1.5)
Long-term portion of finance lease obligations	$	5.0

Finance Leases

The Company leases certain assets, primarily automobiles, under finance leases with terms that are generally three to five years. The assets and liabilities under finance leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets. The assets are amortized over the shorter of the estimated useful lives or over the lease term. The finance leases are included in Property and equipment, net, Other current liabilities and Other long-term liabilities in the Condensed Consolidated Balance Sheets.

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Lease costs and other information related to finance leases for the three and six months ended June 30, 2021 and 2020, are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021			2020
Amortization of finance leases	$	0.8	$	1.4	$	1.6		$	2.8
Interest on lease liabilities	$	0.1	$	0.1	$	0.2		$	0.3
Financing cash outflows from finance leases	$	1.4	$	1.4	$	2.2		$	2.6
Weighted average remaining lease term					1.5 years			1.5 years
Weighted average discount rate					3.5		%	4.0		%

Aggregate future minimum lease payments under finance leases are as follows (in millions):

For the twelve months ending June 30,	Total
2022	$	2.5
2023	1.1
2024	0.4
2025	0.1
Total future minimum lease payments	4.1
Less: amount representing interest	(0.2)
Present value of future minimum lease payments	3.9
Less: current portion of finance lease obligations	(2.4)
Long-term portion of finance lease obligations	$	1.5

Note 8 — Other Financing Liabilities

During the three and six months ended June 30, 2021, the Company entered into an agreement to sell a parcel of land and a building attached thereto, and subsequently leased back the property. The Company received cash of $12.1 million from the sale and the lease has a 15 year term with an annual rent escalation of two percent per annum. During the six months ended June 30, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently leased back such assets and received cash of $3.5 million to be paid over 18 to 60 months.

The sale of the fixed assets during the three and six months ended June 30, 2021, did not qualify for sale accounting, therefore these leases were classified as finance leases and no gain or loss was recorded. The net book value of the assets remained in property and equipment, net and are depreciating over their original useful lives.

As of June 30, 2021, aggregate future lease payments of the financing liabilities are as follows (in millions):

For the twelve months ending June 30,	Total
2022	$	2.6
2023	1.4
2024	0.7
2025	0.7
2026	0.7
Thereafter	9.9
Total future minimum lease payments	$	16.0

Note 9 — Debt

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

	June 30, 2021		December 31, 2020
Credit Facility	$	9.5	$	7.2
Encina Master Financing Agreement	12.4		17.3
Installment Purchases	1.0		—
Promissory Note	—		—
Total Debt	22.9		24.5
Current portion of long-term debt	(10.4)		(10.0)
Long term-debt, net	$	12.5	$	14.5

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Credit Facility

On August 16, 2017, Ranger Services, entered into a $50.0 million senior secured revolving credit facility (the “Credit Facility”) by and among certain of Ranger’s subsidiaries, as borrowers, each of the lenders party thereto and Wells Fargo Bank, N.A., as administrative agent (the “Administrative Agent”). The Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the Company’s eligible accounts receivable less certain reserves. The Company’s eligible accounts receivable serves as collateral for the borrowings under the Credit Facility and is scheduled to mature in August 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 margins for the LIBOR loan was 2.1% and the Base Rate loan was 4.3% as of June 30, 2021. The weighted average interest rate for the borrowings under the Credit Facility was 2.6% for the six months ended June 30, 2021. The applicable margin for the LIBOR and Base Rate loans will decrease to 1.75% and 0.75% effective July 1, 2021 due to an increase in the average availability.

Under the Credit Facility, the total loan capacity was $22.5 million, which was based on a borrowing base certificate in effect as of June 30, 2021. The Company had outstanding borrowings of $9.7 million under the Credit Facility, leaving a residual $12.8 million available for borrowings as of June 30, 2021. The Company was in compliance with the Credit Facility covenants as of June 30, 2021. 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 continue to be amortized through maturity and are included in Interest Expense, net on the Condensed Consolidated Statement of Operations. Unamortized debt issuance costs as of June 30, 2021 was $0.2 million.

Encina Master Financing and Security Agreement

On June 22, 2018, the Company entered into a Master Financing and Security Agreement (the “Financing Agreement”) with Encina Equipment Finance SPV, LLC (the “Lender”). The 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, 2021, the aggregate principal balance outstanding under the Financing Agreement was $12.7 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, 2021. 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, 2021.

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 continue to 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, 2021 was $0.3 million.

Other Installment Purchases

During the three and six months ended June 30, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral. As of June 30, 2021, the aggregate principal balance outstanding under the Installment Agreements was $1.0 million and is payable ratably over 36 months from the time of each purchase. The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.

ESCO Notes Payable

In connection with the IPO and the ESCO Leasing, LLC (“ESCO”) acquisition, both of which occurred on August 16, 2017, the Company issued $7.0 million of Seller’s Notes as partial consideration for the ESCO acquisition. These notes included a note for $5.8 million, which was settled in March 2020. During the 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.

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Debt Obligations and Scheduled Maturities

As of June 30, 2021, aggregate future principal payments of total debt are as follows (in millions):

For the twelve months ending June 30,	Total
2022	$	10.4
2023	12.7
2024	0.3
Total	$	23.4

Note 10 — 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” or “RSAs”) and performance-based restricted stock units (“performance stock units” or “PSUs”) under the 2017 Plan.

Restricted Stock Awards

The Company has granted RSAs, which generally vest in three equal annual installments beginning on the first anniversary date of the grant. During the three and six months ended June 30, 2021, the Company granted 500,073 restricted shares with an aggregate value of $3.0 million. During the three and six months ended June 30, 2020, the Company granted 465,304 restricted shares with an aggregate fair value of $2.0 million. As of June 30, 2021, there was an aggregate $4.7 million of unrecognized expense related to restricted shares issued which are expected to be recognized over a weighted average period of 1.9 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 an approximated three-year performance period.

During the three and six months ended June 30, 2021, the Company granted 145,270 target shares of market based performance stock units at a relative and absolute grant date fair value of approximately $9.24 and $7.45 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on March 15, 2024. 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 $6.33 per share and $3.62 per share, respectively, which are expected to vest (if at all) following the completion of the applicable performance period on April 3, 2023. As of June 30, 2021, there was an aggregate $1.8 million of unrecognized compensation cost related to performance stock units which are 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 344,828 shares of the Company’s Class A Common Stock for an aggregate $2.4 million in a privately negotiated transaction with ESCO. See Note 14 — Commitments and Contingencies for further details.

In June 2019, the Board of Directors approved a share repurchase program, authorizing the Company to purchase up to 10% of the outstanding Class A Common Stock held by non-affiliates, not to exceed 580,000 shares or $5.0 million in aggregate value. Share repurchases may have taken place from time to time on the open market or through privately negotiated transactions. The duration of the share repurchase program was 12 months and therefore ended in June 2020. During the 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.

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Note 11 — Risk Concentrations

Customer Concentrations 

For the three months ended June 30, 2021, two customers, EOG Resources and ConocoPhillips, accounted for 20% and 14%, respectively, of the Company’s consolidated revenues. For the six months ended June 30, 2021, the same two customers accounted for 22% and 12%, respectively, of the Company’s consolidated revenues. As of June 30, 2021, approximately 28% of the net accounts receivable balance was due from these customers.

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.

Note 12 — 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, 2021 and 2020 was (1.7)% and 0.0%, 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 initial public offering and subsequent reorganization, the Company recorded a deferred tax asset. However, a full valuation allowance (“VA”) has been recorded to reduce the Company’s net deferred tax assets to an amount that is more likely than not to be realized. The VA 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, 2021 and 2020 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, 2021, 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 2019, 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, 2021, 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, 2021, there were no material tax impacts to the condensed consolidated financial statements as it relates to COVID-19 measures. However, the Company has deferred payroll tax payments of $1.9 million as of June 30, 2021, where 50% of the deferral is due by December 31, 2021. The Company will continue to monitor additional guidance issued by the U.S. Treasury Department, the Internal Revenue Service and others.

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Note 13 — Loss per Share

Loss per share is based on the amount of net 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 loss per share were as follows (in millions, except share and per share data):

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Loss (numerator):
Basic:
Net loss attributable to Ranger Energy Services, Inc.	$	(5.6)	$	(4.9)	$	(10.2)	$	(3.4)
Net loss attributable to Class A Common Stock	$	(5.6)	$	(4.9)	$	(10.2)	$	(3.4)
Diluted:
Net loss attributable to Ranger Energy Services, Inc.	$	(5.6)	$	(4.9)	$	(10.2)	$	(3.4)
Net loss attributable to Class A Common Stock	$	(5.6)	$	(4.9)	$	(10.2)	$	(3.4)
Weighted average shares (denominator):
Weighted average number of shares - basic	9,523,127		8,474,077		9,055,077		8,545,925
Weighted average number of shares - diluted	9,523,127		8,474,077		9,055,077		8,545,925
Basic loss per share	$	(0.59)	$	(0.58)	$	(1.13)	$	(0.40)
Diluted loss per share	$	(0.59)	$	(0.58)	$	(1.13)	$	(0.40)

During the three and six months ended June 30, 2021 and 2020, the Company excluded approximately 1.3 million and 0.9 million of equity-based awards, respectively. For all periods presented in the table above, the Company excluded 6.9 million shares of Common Stock issuable upon conversion of the Company’s Class B Common Stock in calculating diluted loss per share. These items were excluded from the calculation of the loss per share, as the effect was anti-dilutive.

Note 14 — Commitments and Contingencies

Legal Matters

From time to time, the Company is involved in various legal matters arising in the normal course of business. The Company does not believe that the ultimate resolution of these 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 the 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 9 — Debt” and “Note 10 — Equity” for further details of the debt and equity settlements.

Note 15 — Segment Reporting

The Company’s operations are 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-spec 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.

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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, 2021 and December 31, 2020 and for the three and six months ended June 30, 2021 and 2020 is as follows (in millions):

	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	Three Months Ended June 30, 2021
Revenues	$	29.0	$	19.8	$	1.2	$	—	$	50.0
Cost of services	24.0		19.2		0.9		—		44.1
Depreciation and amortization	4.7		2.5		0.7		0.3		8.2
Operating income (loss)	0.3		(1.9)		(0.4)		(6.5)		(8.5)
Interest expense, net	—		—		—		0.7		0.7
Net income (loss)	0.3		(1.9)		(0.4)		(7.1)		(9.1)
Capital expenditures	$	1.4	$	0.9	$	—	$	—	$	2.3
	Six Months Ended June 30, 2021
Revenues	$	50.7	$	35.3	$	2.3	$	—	$	88.3
Cost of services	43.0		33.8		1.4		—		78.2
Depreciation and amortization	9.5		4.7		1.3		0.7		16.2
Operating income (loss)	(1.8)		(3.2)		(0.4)		(10.4)		(15.8)
Interest expense, net	—		—		—		1.3		1.3
Net income (loss)	(1.8)		(3.2)		(0.4)		(12.0)		(17.4)
Capital expenditures	$	2.4	$	1.1	$	—	$	—	$	3.5
	As of June 30, 2021
Property and equipment, net	$	108.6	$	32.8	$	36.3	$	4.9	$	182.6
Total assets	$	158.4	$	47.8	$	37.1	$	7.2	$	250.5

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	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 December 31, 2020
Property and equipment, net	$	115.8	$	30.8	$	37.7	$	5.1	$	189.4
Total assets	$	154.3	$	41.1	$	38.4	$	6.8	$	240.6

Note 16 — Subsequent Events

PerfX Wireline Services, LLC (“PerfX”) Acquisition

On July 8, 2021 (the “Acquisition Date”), the Company and certain of its subsidiaries, entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with PerfX Wireline Services, LLC, a Nevada limited liability company (the “PerfX Acquisition”). As consideration for the assets acquired pursuant to the Asset Purchase Agreement, the Company issued 1,000,000 shares of Class A Common Stock, in addition to a Secured Promissory Note of $11.4 million, which bears an interest rate of 8.5% per annum and holds certain assets as collateral through the scheduled maturity date of January 31, 2024. The PerfX Acquisition will be accounted for using the acquisition method of accounting in accordance with ASC 805. The results of operations for the acquisition will be included in the accompanying condensed consolidated statements of operations from the Acquisition Date. The initial accounting for the PerfX Acquisition has not yet been completed, however management expects to finalize during the year ending December 31, 2021.

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 (our “Annual Report”). We assume no obligation to update any of these forward-looking statements. Except as otherwise indicated or required by the context, all references in this Quarterly Report to the “Company,” “Ranger,” “we,” “us,” or “our” relate to Ranger Energy Services, Inc. (“Ranger, Inc.”) and its consolidated subsidiaries.

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

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

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

For additional financial information about our segments, please see “Item 1. Financial Information — Note 13 — Segment Reporting.”

Recent Events and Outlook

Patriot Well Solutions (“Patriot”) Acquisition

During the three and six months ended June 30, 2021, the Company and certain of its subsidiaries completed the acquisition of Patriot (the “Patriot Acquisition”), a provider of wireline evaluation and intervention services that operate in the Permian, Denver-Julesburg and Powder River Basins and Bakken Shale. The results of operations for the acquisition are included in the accompanying condensed consolidated statements of operations from the date of acquisition.

PerfX Wireline Services, LLC (“PerfX”) Acquisition

On July 8, 2021, the Company and certain of its subsidiaries executed an Asset Purchase Agreement with PerfX Wireline Services, LLC to acquire certain assets (the “PerfX Acquisition”). As consideration for the assets acquired pursuant to the Asset Purchase Agreement, the Company issued 1,000,000 shares of Class A Common Stock, in addition to a Secured Promissory Note of $11.4 million (the “Secured Promissory Note”), which bears an interest rate of 8.5% per annum. The Secured Promissory Note holds certain assets as collateral through the scheduled maturity date of January 31, 2024.

Coronavirus (“COVID-19”)

The outbreak of the novel coronavirus (“COVID-19”) in the first quarter of 2020 and its continued spread across the globe has resulted, and is likely to continue to result, in significant economic disruption and has, and will likely continue to, adversely affect the operations of the Company’s business, as the significantly reduced global and national economic activity has resulted in reduced demand for oil and natural gas. Federal, state and local governments mobilized to implement containment mechanisms and minimize impacts to their populations and economies. Various containment measures, which included the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe decline in general economic activity and a resulting decrease in energy demand. In addition, the global economy has experienced a significant disruption to global supply chains. The risks associated with the COVID-19 pandemic have impacted our workforce and the way we meet our business objectives. The extent of the COVID-19 outbreak on the Company’s operational and financial performance will significantly depend on certain developments, including the duration and spread of the outbreak and its continued impact on customer activity and third-party providers. The direct impact to the Company’s operations began to take affect at the close of the first quarter ended March 31, 2020 and has continued through the second quarter ended June 30, 2021; however the full extent to which the COVID-19 outbreak may affect the Company’s financial conditions, results of operations or liquidity subsequent to the date hereof.

COVID-19 and numerous public and political responses thereto have contributed to equity market volatility and potentially the risk of a global recession. While commodity prices, as well as our stock price, have improved with the rollout of COVID-19 vaccines, we expect this global equity market volatility to continue at least until the outbreak of COVID-19, including new variants, stabilizes, if not longer. Additionally, increased activity during 2021 can be attributed to stay-at-home orders and other restrictions being lifted in certain geographical areas, however any future containment measures could curtail such growth. The response to the COVID-19 outbreak (such as stay-at-home orders, closures of restaurants and banning of group gatherings) and slowing of the global economy has contributed to increased unemployment rates.

The severe drop in economic activity, travel restrictions and other restrictions due to COVID-19 have had a significant negative impact on the demand for oil and gas. In addition to the impact of the COVID-19 outbreak, in March 2020, OPEC, Russia and certain other oil producing states, commonly referred to as “OPEC Plus,” failed to agree on a plan to cut production of oil and natural gas. Subsequently, Saudi Arabia announced plans to increase production to record levels and reduce the prices

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at which they sell oil and, in turn, Russia responded with threats to also increase production. Collectively, these events created an unprecedented global oil and natural gas supply and demand imbalance, reduced global oil and natural gas storage capacity, caused oil and natural gas prices to decline significantly and resulted in continued volatility in oil, natural gas and NGLs prices through the year ended December 31, 2020. Since then, OPEC Plus has agreed to varying production levels in attempts to align production levels with demand as economies begin to reopen around the world, most recently agreeing to increase production by 400,000 barrels a day beginning in August 2021. There can be no assurance that the future actions, or inaction, of OPEC Plus or other major oil producers will not have material effects on commodity prices.

Factors deriving from the COVID-19 response, as well as the oil oversupply, that have and may continue to negatively impact sales, liquidity and gross margins in the future include, but are not limited to: limitations on the ability of our suppliers to provide materials or equipment, limitations on the ability of our employees to perform their work due to illness caused by the pandemic or local, state or federal orders requiring employees to remain at home; reduction of capital expenditures and discretionary spend; limitations on the ability of our customers to conduct business; and limitations on the ability of our customers to pay us on a timely basis. If prolonged, whether as a result of new strains or variants of COVID-19 or otherwise, such factors may also negatively affect the carrying values of our property and equipment and intangible assets. We will continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees, customers and stakeholders.

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

How We Evaluate Our Operations

Management uses a variety of metrics to analyze our operating results and profitability, which include operating revenues, cost of conducting our operations, operating income (loss) and adjusted EBITDA, among others. Within our High Specification Rig segment, management uses additional metrics to analyze our activity levels and profitability, including, rig hours and rig utilization.

How We Generate Revenues

We currently generate revenues through the provision of a variety of oilfield services. These services are performed under a variety of contract structures, including a long term take-or-pay contract and various master service agreements, as supplemented by statements of work, pricing agreements and specific quotes. A portion of our master services agreements include provisions that establish pricing arrangements for a period of up to one year in length. However, the majority of those agreements provide for pricing adjustments based on market conditions. The majority of our services are priced based on prevailing market conditions and changing input costs at the time the services are provided, giving consideration to the specific requirements of the customer.

We analyze our revenues by comparing actual revenues to our internal projections for a given period and to prior periods to assess our performance. We believe that revenues are a meaningful indicator of the demand and pricing for our services.

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,

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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.

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.

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 financial measure not determined in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”), as an important indicator of performance. We define Adjusted EBITDA as net income (loss) before net interest expense, income tax provision or benefit, depreciation and amortization, equity-based compensation, acquisition-related and severance costs, gain or loss on disposal of assets and other non-cash and certain items that we do not view as indicative of our ongoing performance. See “Results of Operations—Note Regarding Non-GAAP Financial Measure” for more information and reconciliations of net income (loss) to Adjusted EBITDA, the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

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Results of Operations

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

The following is an analysis of our operating results. See “—How We Evaluate Our Operations” for definitions of rig hours, rig utilization and other analogous information. The significant declines in operational activity, across all segments, as well as corporate-related expenses are related to the deterioration of crude oil pricing and significantly reduced demand for our services since March 2020, primarily due to the effects of COVID-19, as described in “—Recent Events and Outlook.”

	Three Months Ended
	June 30,				Variance
	2021		2020		$		%
Revenues
High specification rigs	$	29.0	$	11.4	$	17.6	154	%
Completion and other services	19.8		17.7		2.1		12	%
Processing solutions	1.2		1.6		(0.4)		(25)	%
Total revenues	50.0		30.7		19.3		63	%
Operating expenses
Cost of services (exclusive of depreciation and amortization):
High specification rigs	24.0		10.1		13.9		138	%
Completion and other services	19.2		13.3		5.9		44	%
Processing solutions	0.9		0.4		0.5		125	%
Total cost of services	44.1		23.8		20.3		85	%
General and administrative	6.2		5.5		0.7		13	%
Depreciation and amortization	8.2		9.5		(1.3)		(14)	%
Total operating expenses	58.5		38.8		19.7		51	%
Operating loss	(8.5)		(8.1)		(0.4)		5	%
Other expenses
Interest expense, net	0.7		0.8		(0.1)		(13)	%
Total other expenses	0.7		0.8		(0.1)		(13)	%
Loss before income tax expense	(9.2)		(8.9)		(0.3)		3	%
Tax (benefit) expense	(0.1)		—		(0.1)		(100)	%
Net loss	$	(9.1)	$	(8.9)	$	(0.2)	2	%

Revenues. Revenues for the three months ended June 30, 2021 increased $19.3 million, or 63%, to $50.0 million from $30.7 million for the three months ended June 30, 2020. The change in revenues by segment was as follows:

High Specification Rigs. High Specification Rig revenues for the three months ended June 30, 2021 increased $17.6 million, or 154%, to $29.0 million from $11.4 million for the three months ended June 30, 2020. The increase in rig services revenue included a 104% increase in total rig hours to 50,100 for the three months ended June 30, 2021 from 24,600 for the three months ended June 30, 2020. The increased rig hours attributed to a 109% increase in rig utilization. The average revenue per rig hour increased 27% to $587 from $463 for the three months ended June 30, 2020.

Completion and Other Services. Completion and Other Services revenues for the three months ended June 30, 2021 increased $2.1 million, or 12%, to $19.8 million from $17.7 million for the three months ended June 30, 2020. The increase was attributable to our wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021. The consolidated wireline activity accounted for approximately $0.3 million of the segment revenue increase, which includes $2.3 million of revenue from Patriot. The increase in wireline services revenue included a 24% increase in average active wireline units to six units for the three months ended June 30, 2021 from five units for the three months ended June 30, 2020. All other service lines also had comparable revenue increases.

Processing Solutions. Processing Solutions revenues for the three months ended June 30, 2021 decreased $0.4 million, or 25%, to $1.2 million from $1.6 million for the three months ended June 30, 2020. The decrease was primarily attributable to a decline in rental revenue related to our Mechanical Refrigeration Units (“MRU”), which was attributable to a decline in MRU utilization. Our average MRU utilization for the three months ended June 30, 2021 and 2020, was 9% and 12%, respectively.

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Cost of services (excluding depreciation and amortization). Cost of services for the three months ended June 30, 2021 increased $20.3 million, or 85%, to $44.1 million from $23.8 million for the three months ended June 30, 2020. As a percentage of revenue, cost of services was 88% and 78% for the three months ended June 30, 2021 and 2020, respectively. The change in cost of services by segment was as follows:

High Specification Rigs. High Specification Rig cost of services for the three months ended June 30, 2021 increased $13.9 million, or 138% to $24.0 million from $10.1 million for the three months ended June 30, 2020. The increase was primarily attributable to an increase in variable expenses, notably employee costs and repair and maintenance costs. Additionally, the increase corresponds with the increase in rig hours and revenues.

Completion and Other Services. Completion and Other Services cost of services for the three months ended June 30, 2021 increased $5.9 million, or 44%, to $19.2 million from $13.3 million for the three months ended June 30, 2020. The increase was primarily attributable to an increase in the wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021. The consolidated wireline activity accounted for approximately $3.4 million of the segment cost of sales increase, which includes $2.8 million of costs related to Patriot. The increase was primarily attributable to an increase in variable expenses related to employee costs and direct material costs across all service lines.

Processing Solutions. Processing Solutions cost of services for the three months ended June 30, 2021 increased $0.5 million, or 125%, to $0.9 million from $0.4 million for the three months ended June 30, 2020. The increase was primarily attributable to increased employee costs and costs associated with ancillary equipment.

General & Administrative. General and administrative expenses for the three months ended June 30, 2021 increased $0.7 million, or 13%, to $6.2 million from $5.5 million. The increase during the three months ended June 30, 2021 is attributable to increased professional fees related to the acquisition of Patriot.

Depreciation and Amortization. Depreciation and amortization for the three months ended June 30, 2021 decreased $1.3 million, or 14%, to $8.2 million from $9.5 million for the three months ended June 30, 2020. The decrease is attributable to depreciation expense for fixed assets that were retired and disposed of during the trailing 12 months.

Interest Expense, net. Interest expense, net for the three months ended June 30, 2021 decreased $0.1 million, or 13%, to $0.7 million from $0.8 million for the three months ended June 30, 2020. The slight decrease to net interest expense was attributable to the reduction of the principal balance on our Encina Master Financing Agreement.

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Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

The following is an analysis of our operating results. See “—How We Evaluate Our Operations” for definitions of rig hours, rig utilization and other analogous information. The significant declines in operational activity, across all segments, as well as corporate-related expenses are related to the deterioration of crude oil pricing and significantly reduced demand for our services since March 2020, primarily due to the effects of COVID-19, as described in “—Recent Events and Outlook.”

	Six Months Ended
	June 30,				Variance
	2021		2020		$		%
Revenues
High specification rigs	$	50.7	$	46.3	$	4.4	10	%
Completion and other services	35.3		61.0		(25.7)		(42)	%
Processing solutions	2.3		4.4		(2.1)		(48)	%
Total revenues	88.3		111.7		(23.4)		(21)	%
Operating expenses
Cost of services (exclusive of depreciation and amortization):
High specification rigs	43.0		40.0		3.0		8	%
Completion and other services	33.8		45.0		(11.2)		(25)	%
Processing solutions	1.4		1.9		(0.5)		(26)	%
Total cost of services	78.2		86.9		(8.7)		(10)	%
General and administrative	9.7		10.5		(0.8)		(8)	%
Depreciation and amortization	16.2		18.4		(2.2)		(12)	%
Total operating expenses	104.1		115.8		(11.7)		(10)	%
Operating loss	(15.8)		(4.1)		(11.7)		285	%
Other expenses
Interest expense, net	1.3		1.9		(0.6)		(32)	%
Total other expenses	1.3		1.9		(0.6)		(32)	%
Loss before income tax expense	(17.1)		(6.0)		(11.1)		185	%
Tax (benefit) expense	0.3		0.1		0.2		200	%
Net loss	$	(17.4)	$	(6.1)	$	(11.3)	185	%

Revenues. Revenues for the six months ended June 30, 2021 decreased $23.4 million, or 21%, to $88.3 million from $111.7 million for the six months ended June 30, 2020. The change in revenues by segment was as follows:

High Specification Rigs. High Specification Rig revenues for the six months ended June 30, 2021 increased $4.4 million, or 10%, to $50.7 million from $46.3 million for the six months ended June 30, 2020. The increase in rig services revenue included a 7% increase in total rig hours to 93,300 for the six months ended June 30, 2021 from 87,000 for the six months ended June 30, 2020. The increased rig hours attributed to a 10% increase in rig utilization. The average revenue per rig hour increased 2% to $543 from $531 for the six months ended June 30, 2020.

Completion and Other Services. Completion and Other Services revenues for the six months ended June 30, 2021 decreased $25.7 million, or 42%, to $35.3 million from $61.0 million for the six months ended June 30, 2020. The decrease was primarily attributable to our wireline business, which includes activity from the acquisition of Patriot during the three months ended June 30, 2021. The wireline activity accounted for approximately $22.9 million of the segment revenue decrease, however includes $2.3 million of revenue from Patriot. The decrease in wireline services revenue included a 24% decrease in average active wireline units to six units for the six months ended June 30, 2021 from eight units for the six months ended June 30, 2020. All other service lines also had comparable revenue reductions.

Processing Solutions. Processing Solutions revenues for the six months ended June 30, 2021 decreased $2.1 million, or 48%, to $2.3 million from $4.4 million for the six months ended June 30, 2020. The decrease was primarily attributable to a decline in rental revenue related to our MRUs, which was attributable to a decline in MRU utilization. Our average MRU utilization for the six months ended June 30, 2021 and 2020, was 9% and 15%, respectively. The MRU utilization decrease was due to certain of our customer contracts that terminated during 2020, as scheduled, without renewal.

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Cost of services (excluding depreciation and amortization). Cost of services for the six months ended June 30, 2021 decreased $8.7 million, or 10%, to $78.2 million from $86.9 million for the six months ended June 30, 2020. As a percentage of revenue, cost of services was 89% and 78% for the six months ended June 30, 2021 and 2020, respectively. The change in cost of services by segment was as follows:

High Specification Rigs. High Specification Rig cost of services for the six months ended June 30, 2021 increased $3.0 million, or 8% to $43.0 million from $40.0 million for the six months ended June 30, 2020. The increase was primarily attributable to an increase in variable expenses, notably employee costs and repair and maintenance costs. Additionally, the increase corresponds with the increase in rig hours and revenues.

Completion and Other Services. Completion and Other Services cost of services for the six months ended June 30, 2021 decreased $11.2 million, or 25%, to $33.8 million from $45.0 million for the six months ended June 30, 2020. The decrease was primarily attributable to a reduction in the wireline business, which includes activity from the acquisition of Patriot during the six months ended June 30, 2021. The consolidated wireline activity accounted for approximately $10.8 million of the segment cost of sales decrease, which includes $2.8 million of costs related to Patriot. The decrease was primarily attributable to a reduction in variable expenses related to employee costs and direct material costs across all service lines.

Processing Solutions. Processing Solutions cost of services for the six months ended June 30, 2021 decreased $0.5 million, or 26%, to $1.4 million from $1.9 million for the six months ended June 30, 2020. The decrease was primarily attributable to a reduction in employee costs and costs associated with ancillary equipment rentals, corresponding with a decrease in revenue.

General & Administrative. General and administrative expenses for the six months ended June 30, 2021 decreased $0.8 million, or 8%, to $9.7 million from $10.5 million. During the six months ended June 30, 2020, general and administrative expenses included a gain on debt retirement of $2.1 million related to the settlement of the ESCO Seller’s Notes.

Depreciation and Amortization. Depreciation and amortization for the six months ended June 30, 2021 decreased $2.2 million, or 12%, to $16.2 million from $18.4 million for the six months ended June 30, 2020. The decrease is attributable to depreciation expense for fixed assets that were retired and disposed of during the trailing 12 months.

Interest Expense, net. Interest expense, net for the six months ended June 30, 2021 decreased $0.6 million, or 32%, to $1.3 million from $1.9 million for the six months ended June 30, 2020. The decrease to net interest expense was attributable to the reduction of the principal balance on our Encina Master Financing Agreement.

Note Regarding Non-GAAP Financial Measure

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

We believe Adjusted EBITDA is a useful performance measure because it allows for an effective evaluation of our operating performance when compared to our peers, without regard to our financing methods or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDA because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net loss determined in accordance with U.S. GAAP. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an indication that our results will be unaffected by the items excluded from Adjusted EBITDA. Our computations of Adjusted EBITDA may not be identical to other similarly titled measures of other companies. The following table presents reconciliations of net income (loss) to Adjusted EBITDA, our most directly comparable financial measure calculated and presented in accordance with U.S. GAAP.

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

The following is an analysis of our Adjusted EBITDA. See “Item 1. Financial Information—Note 13—Segment Reporting” and “—Results of Operations” for further details.

	Three Months Ended June 30, 2021
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	0.3	$	(1.9)	$	(0.4)	$	(7.1)	$	(9.1)
Interest expense, net	—		—		—		0.7		0.7
Income Tax expense	—		—		—		(0.1)		(0.1)
Depreciation and amortization	4.7		2.5		0.7		0.3		8.2
Equity based compensation	—		—		—		0.9		0.9
Gain on disposal of property and equipment	—		—		—		0.5		0.5
Severance and reorganization costs	—		—		—		0.3		0.3
Acquisition related costs	—		—		—		0.6		0.6
Adjusted EBITDA	$	5.0	$	0.6	$	0.3	$	(3.9)	$	2.0

	Three Months Ended June 30, 2020
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	(3.9)	$	1.8	$	(0.1)	$	(6.7)	$	(8.9)
Interest expense, net	—		—		—		0.8		0.8
Income Tax expense	—		—		—		—		—
Depreciation and amortization	5.2		2.6		1.3		0.4		9.5
Equity based compensation	—		—		—		0.9		0.9
Gain on disposal of property and equipment	—		—		—		(0.1)		(0.1)
Severance and reorganization costs	0.4		0.2		—		0.4		1.0
Acquisition related costs	—		—		—		—		—
Adjusted EBITDA	$	1.7	$	4.6	$	1.2	$	(4.3)	$	3.2

	Variance ($)
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	4.2	$	(3.7)	$	(0.3)	$	(0.4)	$	(0.2)
Interest expense, net	—		—		—		(0.1)		(0.1)
Income Tax expense	—		—		—		(0.1)		(0.1)
Depreciation and amortization	(0.5)		(0.1)		(0.6)		(0.1)		(1.3)
Equity based compensation	—		—		—		—		—
Gain on disposal of property and equipment	—		—		—		0.6		0.6
Severance and reorganization costs	(0.4)		(0.2)		—		(0.1)		(0.7)
Acquisition related costs	—		—		—		0.6		0.6
Adjusted EBITDA	$	3.3	$	(4.0)	$	(0.9)	$	0.4	$	(1.2)

Adjusted EBITDA for the three months ended June 30, 2021 decreased $1.2 million to $2.0 million from $3.2 million for the three months ended June 30, 2020. The change by segment was as follows:

High Specification Rigs. High Specification Rigs Adjusted EBITDA for the three months ended June 30, 2021 increased $3.3 million to $5.0 million from $1.7 million for the three months ended June 30, 2020, primarily due to increased revenues of $17.6 million, partially offset by a corresponding increase in cost of services of $13.9 million.

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Completion and Other Services. Completion and Other Services Adjusted EBITDA for the three months ended June 30, 2021 decreased $4.0 million to $0.6 million from $4.6 million for the three months ended June 30, 2020, primarily due to increased revenues of $2.1 million, offset by an increase in cost of services of $5.9 million.

Processing Solutions. Processing Solutions Adjusted EBITDA for the three months ended June 30, 2021 decreased $0.9 million to $0.3 million from $1.2 million for the three months ended June 30, 2020, due to decreased revenues of $0.4 million, and increased cost of services of $0.5 million.

Other. Other Adjusted EBITDA for the three months ended June 30, 2021 decreased $0.4 million to a loss of $3.9 million from a loss of $4.3 million for the three months ended June 30, 2020. The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Completion and Other Services or Processing Solutions.

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Six Months Ended June 30, 2021 compared to Six Months Ended June 30, 2020

	Six Months Ended June 30, 2021
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	(1.8)	$	(3.2)	$	(0.4)	$	(12.0)	$	(17.4)
Interest expense, net	—		—		—		1.3		1.3
Income Tax expense	—		—		—		0.3		0.3
Depreciation and amortization	9.5		4.7		1.3		0.7		16.2
Equity based compensation	—		—		—		1.8		1.8
Gain on retirement of debt	—		—		—		—		—
Gain on disposal of property and equipment	—		—		—		0.1		0.1
Severance and reorganization costs	$	—	$	—	$	—	$	(1.1)	$	(1.1)
Acquisition related costs	—		—		—		0.6		0.6
Adjusted EBITDA	$	7.7	$	1.5	$	0.9	$	(8.3)	$	1.8

	Six Months Ended June 30, 2020
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	(4.2)	$	10.7	$	0.6	$	(13.2)	$	(6.1)
Interest expense, net	—		—		—		1.9		1.9
Income Tax expense	—		—		—		0.1		0.1
Depreciation and amortization	10.5		5.3		1.9		0.7		18.4
Equity based compensation	—		—		—		1.7		1.7
Gain on retirement of debt	—		—		—		(2.1)		(2.1)
Gain on disposal of property and equipment	—		—		—		(0.3)		(0.3)
Severance and reorganization costs	0.4		0.2		—		0.4		1.0
Acquisition related costs	—		—		—		—		—
Adjusted EBITDA	$	6.7	$	16.2	$	2.5	$	(10.8)	$	14.6

	Variance ($)
	High Specification Rigs		Completion and Other Services		Processing Solutions		Other		Total
	(in millions)
Net income (loss)	$	2.4	$	(13.9)	$	(1.0)	$	1.2	$	(11.3)
Interest expense, net	—		—		—		(0.6)		(0.6)
Income Tax expense	—		—		—		0.2		0.2
Depreciation and amortization	(1.0)		(0.6)		(0.6)		—		(2.2)
Equity based compensation	—		—		—		0.1		0.1
Gain on retirement of debt	—		—		—		2.1		2.1
Gain on disposal of property and equipment	—		—		—		0.4		0.4
Severance and reorganization costs	(0.4)		(0.2)		—		(1.5)		(2.1)
Acquisition related costs	—		—		—		0.6		0.6
Adjusted EBITDA	$	1.0	$	(14.7)	$	(1.6)	$	2.5	$	(12.8)

Adjusted EBITDA for the six months ended June 30, 2021 decreased $12.8 million to $1.8 million from $14.6 million for the six months ended June 30, 2020. The change by segment was as follows:

High Specification Rigs. High Specification Rigs Adjusted EBITDA for the six months ended June 30, 2021 increased $1.0 million to $7.7 million from $6.7 million for the six months ended June 30, 2020, primarily due to increased revenues of $4.4 million, partially offset by a corresponding increase in cost of services of $3.0 million.

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Completion and Other Services. Completion and Other Services Adjusted EBITDA for the six months ended June 30, 2021 decreased $14.7 million to $1.5 million from $16.2 million for the six months ended June 30, 2020, primarily due to decreased revenues of $25.7 million, partially offset by a decrease in cost of services of $11.2 million.

Processing Solutions. Processing Solutions Adjusted EBITDA for the six months ended June 30, 2021 decreased $1.6 million to $0.9 million from $2.5 million for the six months ended June 30, 2020, primarily due to decreased revenues of $2.1 million, partially offset by a decrease in cost of services of $0.5 million.

Other. Other Adjusted EBITDA for the six months ended June 30, 2021 decreased $2.5 million to a loss of $8.3 million from a loss of $10.8 million for the six months ended June 30, 2020. The balances included in Other reflect other general and administrative costs, which are not directly attributable to High Specification Rigs, Completion and Other Services or Processing Solutions.

Liquidity and Capital Resources

Overview

We require capital to fund ongoing operations, including maintenance expenditures on our existing fleet and equipment, organic growth initiatives, investments and acquisitions. Our primary sources of liquidity are cash generated from operations and borrowings under our Credit Facility. As of June 30, 2021, we had total liquidity of $16.2 million, consisting of $3.4 million of cash on hand and availability under our Revolving Credit Facility of $12.8 million.

As of June 30, 2021, our borrowing base under the Credit Facility was $22.5 million compared to $10.8 million and $20.7 million as of June 30, 2020 and December 31, 2020, respectively, as a result of slightly increased operational activity and accounts receivable balances. We strive to maintain financial flexibility and proactively monitor potential capital sources to meet our investment and target liquidity requirements and to permit us to manage the cyclicality associated with our business. We currently expect to have sufficient funds to meet the Company’s liquidity requirements and comply with our covenants of our debt agreements for at least the next 12 months from the date of issuance of these financial statements. For further details, see “— Our Debt Agreements.”

Cash Flows

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

	Six Months Ended June 30,				Change
	2021		2020		$		%
	(in millions)
Net cash (used in) provided by operating activities	$	(4.1)	$	24.2	$	(28.3)	(117)	%
Net cash used in investing activities	(4.9)		(5.5)		0.6		11	%
Net cash provided by (used in) financing activities	9.6		(19.6)		29.2		(149)	%
Net change in cash	$	0.6	$	(0.9)	$	1.5	(167)	%

Operating Activities

Net cash used in operating activities increased $28.3 million to cash used of $4.1 million for six months ended June 30, 2021 compared to cash provided of $24.2 million for the six months ended June 30, 2020. The change in cash flows from operating activities is primarily attributable to a decrease in gross margins and operating income for the six months ended June 30, 2021 compared to the six months ended June 30, 2020. The use of working capital cash decreased $15.6 million to a use of $6.3 million for the six months ended June 30, 2021, compared to cash generated of $9.0 million for the six months ended June 30, 2020.

Investing Activities

Net cash used in investing activities decreased $0.6 million from a use of cash of $5.5 million for the six months ended June 30, 2020. The change in cash flows from investing activities is attributable to a significant reduction in capital expenditures during the trailing twelve months due to the economic events that took place in the industry.

Financing Activities

Net cash provided by financing activities increased $29.2 million from a use of cash of $19.6 million for the six months ended June 30, 2020. During the six months ended June 30, 2021, we entered into sale-leaseback transactions related to certain of our fixed assets, coupled with additional net borrowings under the Credit Facility.

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Supplemental Disclosures

During the six months ended June 30, 2021, the Company acquired Patriot by issuing $7.7 million of Class A Common Stock. Additionally, we entered into installment agreements, thereby increasing our current and long-term obligations by $1.1 million and added fixed assets of $0.7 million, all of which were non-cash additions

Working Capital

Our working capital, which we define as total current assets less total current liabilities, was $10.4 million as of June 30, 2021 compared to $2.7 million as of December 31, 2020. The working capital has increased due to increased activity, as well as the working capital attributable to Patriot.

Our Debt Agreements

Credit Facility

In August 2017, we entered into a $50.0 million Credit Facility by and among certain of Ranger’s subsidiaries, as borrowers, each of the lenders’ party thereto and Wells Fargo Bank, N.A., as administrative agent. The Credit Facility is subject to a borrowing base that is calculated based upon a percentage of the value of our eligible accounts receivable less certain reserves. The Credit Facility is scheduled to mature in August 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 our average excess availability under the Credit Facility. The applicable margins for each of the loans are re-determined as of the first day of each calendar quarter. The applicable margins for the LIBOR and Base Rate loans were 2.1% and 4.3%, respectively, as of June 30, 2021. The weighted average interest rate for the borrowings under the Credit Facility was 2.6% during the six months ended June 30, 2021. The applicable margin for the LIBOR and Base Rate loans will decrease to 1.75% and 0.75% effective July 1, 2021 due to an increase in the average availability.

Under the Credit Facility, the total loan capacity is $22.5 million, which was based on a borrowing base certificate in effect as of June 30, 2021. The Company had outstanding borrowings of $9.7 million under the Credit Facility, leaving a residual $12.8 million available for borrowings as of June 30, 2021. The Company was in compliance with the Credit Facility covenants as of June 30, 2021.

Covenants and Other Restrictions

In addition, the Credit Facility restricts our ability to make distributions on, or redeem or repurchase, our equity interests, except for certain distributions, including distributions of cash so long as, both at the time of the distribution and after giving effect to the distribution, no default exists under the Credit Facility and either (a) excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 22.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $10.0 million or (b) if our fixed charge coverage ratio is at least 1.0x on a pro forma basis, excess availability at all times during the preceding 90 consecutive days, on a pro forma basis and after giving effect to such distribution, is not less than the greater of (1) 17.5% of the lesser of (A) the maximum revolver amount and (B) the then-effective borrowing base and (2) $7.0 million. If the foregoing threshold under clause (b) is met, we may not make such distributions (but may make certain other distributions, including under clause (a) above) prior to the earlier of the date that is (a) 12 months from closing or (b) the date that our fixed charge coverage ratio is at least 1.0x for two consecutive quarters. Our Credit Facility generally permits us to make distributions required under the Tax Receivable Agreement (“TRA”), but a “Change of Control” under the TRA constitutes an event of default under our Credit Facility, and our Credit Facility does not permit us to make payments under the TRA upon acceleration of our obligations thereunder unless no event of default exists or would result therefrom and we have been in compliance with the fixed charge coverage ratio for the most recent 12-month period on a pro forma basis. Our Credit Facility also requires us to maintain a fixed charge coverage ratio of at least 1.0x if our liquidity is less than $10.0 million, until our liquidity is at least $10.0 million for 30 consecutive days. We are not subject to a fixed charge coverage ratio if we have no drawings under the Credit Facility and have at least $20.0 million of qualified cash.

The Credit Facility contains events of default customary for facilities of this nature, including, but not limited, to:

•events of default resulting from our failure or the failure of any guarantors to comply with covenants and financial ratios;

•the occurrence of a change of control;

•the institution of insolvency or similar proceedings against us or any guarantor; and

•the occurrence of a default under any other material indebtedness we or any guarantor may have.

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Upon the occurrence and during the continuation of an event of default, subject to the terms and conditions of the Credit Facility, the lenders are able to declare any outstanding principal of our Credit Facility debt, together with accrued and unpaid interest, to be immediately due and payable and exercise other remedies.

Encina Master Financing and Security Agreement

In June 2018, we entered into a Master Financing and Security Agreement (“Financing Agreement”) with Encina Equipment Finance SPV, LLC (the “Lender”). The amount available to be provided by the Lender to us 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 to acquire certain capital equipment. Subsequent to the first financing, we borrowed an additional $17.8 million, net of expenses and in two tranches, under the Financing Agreement. As of June 30, 2021, the aggregate principal balance outstanding under the Financing Agreement was $12.7 million. The total borrowings under the Financing Agreement were borrowed in three tranches, where the amounts outstanding are payable ratably over 48 months from the time of each borrowing. The three tranches mature in July 2022, November 2022 and January 2023. The Financing Agreement is secured by a lien on certain of our high specification rig assets.

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, 2021. In no event will LIBOR fall below 1.5%. The Financing Agreement requires that the Company maintain leverage ratios of 2.5 to 1.0. The Company was in compliance with the covenants under the Financing Agreement as of June 30, 2021.

Other Installment Purchases

During the six months ended June 30, 2021, the Company entered into various Installment and Security Agreements (collectively, the “Installment Agreements”) in connection with the purchase of certain ancillary equipment, where such assets are being held as collateral. As of June 30, 2021, the aggregate principal balance outstanding under the Installment Agreements was $1.0 million and is payable ratably over 36 months from the time of each purchase. The monthly installment payments contain an imputed interest rate that are consistent with the Company’s incremental borrowing rate and is not significant to the Company.

Sale-Leaseback Transactions

During the three and six months ended June 30, 2021, the Company entered into an agreement to sell a parcel of land and a building attached thereto, and subsequently leased back the property. The Company received cash of $12.1 million from the sale and the lease has a 15 year term with an annual rent escalation of 2% per annum. During the six months ended June 30, 2021, the Company entered into an agreement to sell certain of other fixed assets and subsequently leased back such assets and received cash of $3.5 million to be paid over 18 to 60 months.

TRA

With respect to obligations we expect to incur under our TRA (except in cases where we elect to terminate the TRA early, the TRA is terminated early due to certain mergers, asset sales, other forms of business combination or other changes of control or we have available cash but fail to make payments when due), generally we may elect to defer payments due under the TRA if we do not have available cash to satisfy our payment obligations under the TRA or if our contractual obligations limit our ability to make these payments. Any such deferred payments under the TRA generally will accrue interest. In certain cases, payments under the TRA may be accelerated and/or significantly exceed the actual benefits, if any, we realize in respect of the tax attributes subject to the TRA. We intend to account for any amounts payable under the TRA in accordance with ASC 450, Contingencies. Further, we intend to account for the effect of increases in tax basis and payments for such increases under the TRA arising from future redemptions as follows:

•when future sales or redemptions occur, we will record a deferred tax asset for the gross amount of the income tax effect along with an offset of 85% of this as a liability payable under the TRA; the remaining difference between the deferred tax asset and tax receivable agreement liability will be recorded as additional paid-in-capital; and

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

Critical Accounting Policies and Estimates

Our significant accounting policies are discussed in our Annual Report and have not materially changed since December 31, 2020.

Off-Balance Sheet Arrangements

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We currently have no material off-balance sheet arrangements.

Emerging Growth Company Status and Smaller Reporting Company Status

We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. We will remain an emerging growth company until the earlier of (1) the last day of our fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter, or (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting and other burdens that are otherwise applicable generally to public companies. We have irrevocably opted out of the extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies.

The Company is also a “smaller reporting company” as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Smaller reporting company means an issuer that is not an investment company, an asset-back issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that has (i) market value of common stock held by non-affiliates of less than $250 million; or (ii) annual revenues of less than $100 million and either no common stock held by non-affiliates or a market value of common stock held by non-affiliates of less than $700 million. Smaller reporting company status is determined on an annual basis.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The information in this Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Exchange Act. All statements, other than statements of historical fact included in this Quarterly Report, regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Quarterly Report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements included in our Annual Report. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.

Forward-looking statements may include statements about:

•our business strategy;

•our operating cash flows, the availability of capital and our liquidity;

•our future revenue, income and operating performance;

•the volatility in global crude oil demand and crude oil prices for an uncertain period of time that may lead to a significant reduction of domestic crude oil and natural gas production;

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

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

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

•our ability to maintain acceptable pricing for our services;

•our future capital expenditures;

•our ability to finance equipment, working capital and capital expenditures;

•competition and government regulations, including new and proposed legislation by the Biden Administration aimed at reducing the impact of climate change;

•our ability to obtain permits and governmental approvals;

•pending legal or environmental matters;

•marketing of oil and natural gas;

•business or asset acquisitions;

•general economic conditions;

•credit markets;

•our ability to successfully develop our research and technology capabilities and implement technological developments and enhancements;

•uncertainty regarding our future operating results; and

•plans, objectives, expectations and intentions contained in this report that are not historical.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, the risks described under “Risk Factors” in our Annual Report previously filed. Should one or more of the risks or uncertainties described occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

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Item 3. Quantitative and Qualitative Disclosures about Market Risks

Recent Events

The outbreak of COVID-19 has spread across the globe and has been declared a public health emergency by the WHO and a National Emergency by the President of the United States. The extent of the impact of the COVID-19 outbreak on our 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 our operations began to take affect at the close of the first quarter ended March 31, 2020, and has continued through June 30, 2021, however the extent to which the COVID-19 outbreak may further affect our financial condition or results of operations is uncertain. For more information, please see “Item 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition — Recent Events and Outlook.”

Interest Rate Risk

We are exposed to interest rate risk, primarily associated with our Credit Facility and Financing Agreement. For a complete discussion of our interest rate risk, see our Annual Report. As of June 30, 2021, we had $9.7 million outstanding under our Credit Facility, with a weighted average interest rate of 2.6%. As of June 30, 2021, the aggregate principal balance outstanding was $12.7 million under the Financing Agreement, with an interest rate of 9.5%. A hypothetical 1.0% increase or decrease in the weighted average interest rate would increase or decrease interest expense by approximately $0.2 million per year. We do not engage in derivative transactions for speculative or trading purposes.

Credit Risk

The majority of our trade receivables have payment terms of 30 days or less. As of June 30, 2021, the top three trade receivable balances represented approximately 20%, 9%, and 8%, respectively, of consolidated net accounts receivable. Within our High Specification Rig segment, the top three trade receivable balances represented 33%, 7% and 7%, respectively, of total High Specification Rig net accounts receivable. Within our Completion and Other Services segment, the top three trade receivable balances represented 24%, 19%, and 10%, respectively, of total Completion and Other Services net accounts receivable. Within our Processing Solutions segment, the top three trade receivable balances represented approximately 37%, 36% and 22%, respectively, of total Processing Solutions net accounts receivable. We mitigate the associated credit risk by performing credit evaluations and monitoring the payment patterns of our customers.

Commodity Price Risk

The market for our services is indirectly exposed to fluctuations in the prices of oil and natural gas to the extent such fluctuations impact the activity levels of our E&P customers. See “— Recent Events” above for further details. Any prolonged substantial reduction in oil and natural gas prices would likely affect oil and natural gas production levels and therefore affect demand for our services. We do not currently intend to hedge our indirect exposure to commodity price risk.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we have evaluated, under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2021.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings

Our operations are subject to a variety of risks and disputes normally incident to our business. As a result, we may, at any given time, be a defendant in various legal proceedings and litigation arising in the ordinary course of business. However, we are not currently subject to any material litigation and in the opinion of management, the outcome of any existing matters will not have a material adverse effect on the Company’s consolidated financial position or consolidated results of operations. We maintain insurance policies with insurers in amounts and with coverage and deductibles that we, with the advice of our insurance advisers and brokers, believe are reasonable and prudent. We cannot, however, assure you that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal injury and property damage or that these levels of insurance will be available in the future at economical prices.

Item 1A. Risk Factors

Factors that could materially adversely affect our business, financial condition, operating results or liquidity and the trading price of our Class A Common Stock are described under “Risk Factors,” included in our Annual Report. This information should be considered carefully, together with other information in the Quarterly Report and the other reports and materials we file with the SEC.

We may experience difficulties in integrating acquired assets, including assets acquired in the Patriot Acquisition and the PerfX Acquisition, into our business and in realizing the expected benefits of an acquisition.

The success of an acquisition, if completed, will depend in part on our ability to realize anticipated business opportunities from combining acquired assets, including assets acquired in the Patriot Acquisition and the PerfX Acquisition, with our business in an efficient and effective manner. The integration process could take longer than anticipated and could result in the loss of key employees, the disruption of each company’s ongoing businesses, tax costs or inefficiencies or inconsistencies in standards, controls, information technology systems, procedures and policies, any of which could adversely affect our ability to maintain relationships with customers, employees or other third parties or our ability to achieve the anticipated benefits, and could harm our financial performance. If we are unable to successfully or timely integrate acquired assets with our business, we may incur unanticipated liabilities and be unable to realize the anticipated benefits, and our business, results of operations and financial condition could be materially and adversely affected.

Item 2. Unregistered Sales of Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table provides information with respect to Class A Common Stock purchases made by the Company during the three months ended June 30, 2021.

Period	Total Number of Shares Repurchased (1)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet be Purchased Under the Plans or Programs
April 1, 2021 - April 30, 2021	26,268	$	5.57	—	—
May 1, 2021 - May 31, 2021	322	7.90		—	—
June 1, 2021 - June 30, 2021	—	—		—	—
Total	26,590	$	6.74	—	—

_________________________

(1)    Total number of shares repurchased during the second quarter of 2021 consists of 26,590 shares withheld by us in satisfaction of withholding taxes due upon the vesting of restricted shares granted to our employees under the 2017 Plan.

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Item 6. Exhibits

    The following exhibits are filed as part of this Quarterly Report.

INDEX TO EXHIBITS
Exhibit Number	Description
2.1†	Asset Purchase Agreement, dated July 8, 2021 by and among PerfX Wireline Services, LLC, Bravo Wireline, LLC, Ranger Energy Services, Inc., Charlie Thomas, Shelby Sullivan, Jeff Thomas and Jimmie Hayes (incorporated by reference to Exhibit 2.1 to the Registrant’s Form 8-K (File No. 001-38183) filed with the Commission on July 14, 2021
3.1	Amended and Restated Certificate of Incorporation of Ranger Energy Services, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Form 8‑K (File No. 001-38183) filed with the Commission on August 22, 2017)
3.2	Amended and Restated Bylaws of Ranger Energy Services, Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Form 8-K (File No. 001‑38183) filed with the Commission on August 22, 2017)
4.1	Registration Rights Agreement (incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8‑K (File No. 001‑38183) filed with the Commission on August 22, 2017)
4.2	Stockholders’ Agreement (incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8‑K (File No. 001‑38183) filed with the Commission on August 22, 2017)
10.1	Secured Promissory Note, date July 8, 2021 by and among Bravo Wireline, LLC and Chief Investments, LLC (incorporated by reference to Exhibit 2.2 to the Registrant’s Form 8-K (File No. 001-38183) filed with the Commission on July 14, 2021)
10.2	Guaranty Agreement, dated as of July 8, 2021 by Ranger Energy Services, Inc. in favor of Chief Investments, LLC
10.3	Employment Agreement between Ranger Energy Services, LLC and William M. Austin (incorporated by reference to Exhibit 10.1 to the Registrant's Form 8-K (File No. 001-38183) filed with the Commission on July 23, 2021)
31.1*	Certification of Chief Executive Officer Pursuant to Rule 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a‑14(a)/15d‑14(a) of the Securities Exchange Act of 1934
32.1**	Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**	Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.CAL*	iXBRL Calculation Linkbase Document
101.DEF*	iXBRL Definition Linkbase Document
101.INS*	iXBRL Instance Document
101.LAB*	iXBRL Labels Linkbase Document
101.PRE*	iXBRL Presentation Linkbase Document
101.SCH*	iXBRL Schema Document
104*	Cover page interactive data file (formatted in iXBRL and contained in Exhibit 101)

*    Filed as an exhibit to this Quarterly Report on Form 10-Q.

**    Furnished as an exhibit to this Quarterly Report on Form 10-Q.

†    Schedules and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish a supplemental copy of any omitted schedule or similar attachment to the SEC upon request.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Ranger Energy Services, Inc.
/s/ J. Brandon Blossman	July 30, 2021
J. Brandon Blossman	Date
Chief Financial Officer
(Principal Financial Officer)
/s/ Mario H. Hernandez	July 30, 2021
Mario H. Hernandez	Date
Chief Accounting Officer
(Principal Accounting Officer)

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