Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger”) announced its results for the first quarter ended March 31, 2024.
First Quarter 2024 Highlights
- Revenue of $136.9 million, a 13% decrease from $157.5 million in first quarter 2023 driven by declines in wireline completions and ancillary services
- High specification rig revenue of $79.7 million, a 3% increase from $77.5 million in first quarter 2023 with additional growth anticipated in future quarters
- Net loss of $0.8 million, or negative $0.03 per fully diluted share, a decrease from net income of $6.2 million, or $0.25 per share in first quarter of 2023
- Adjusted EBITDA(1) of $10.9 million, a 46% decrease from $20.1 million in first quarter 2023
- Free Cash Flow(2) of $5.5 million or $0.24 per share
- Share repurchases of 846,900 shares during the first quarter of 2024 for a total value of $8.5 million
Management Comments
Stuart Bodden, Ranger’s Chief Executive Officer, commented, “This quarter’s results presented Ranger with a unique set of challenges that adversely impacted multiple service lines. As mentioned in our year-end investor call, 2024 got off to a slow start. As the quarter progressed, typical weather disruptions and other events beyond our control, combined with a declining completions market that created excess capacity and increased competition, impacted our quarterly performance more than originally expected.”
“To expand, the most significant factor impacting performance this quarter was pressure from the completions market pullback over the winter, from a peak of 281 frac spreads at the end of November to a trough of 234 frac spreads mid-January, representing a 17% decline over the winter months when activity is already at depressed levels. This dynamic was felt on several fronts, most significantly in our Wireline Completions and Coil Tubing service lines. In total, we estimate an impact of over $4 million during the quarter as a consequence of the completions market pullback, representing the largest adverse contributor to quarterly results.”
“We have previously mentioned the challenging dynamics of the Wireline Completions business in the Permian Basin. These dynamics began to spread to our North region this quarter where the normal seasonal lull in the wireline business was exacerbated by aggressive pricing concessions made by some of our competitors. We do not believe these pricing levels are sustainable and will likely result in meaningful losses for these competitors. Ranger has made a conscious choice to avoid chasing market share in lieu of profitable returns and remains focused on expanding our production business, which is an important strategic effort for us this year.”
“Our Ancillary Services segment was also negatively affected by depressed levels of activity in our Coil Tubing service line due to competitive pressures associated with the previously mentioned completions declines over the winter months. However, we have begun to see a recovery in this service line beginning in April that we expect to continue to build in May and reach normalized levels of activity by June.”
Mr. Bodden continued, “In our High Specification Rigs segment, although revenues were essentially flat quarter over quarter, Ranger experienced weather-related impacts and an unexpected downtime event due to a safety-related incident on a non-Ranger rig that was outside of our control. We estimate that approximately 75 rig days were affected by this event, during which the company carried the full rig cost burden, pressuring segment margins for the quarter.
“Despite the first quarter headwinds, we were still able to generate positive free cash flow during the quarter. Importantly, we believe Ranger’s fundamental value proposition remains fully intact. We continue to be encouraged by our near-term opportunities and have had several bright spots among our service lines that are worth highlighting.
- In our P&A business, customers are contracting incremental rigs to complete necessary decommissioning work and we believe Ranger is well positioned to capitalize on this trend;
- In our in-field gas processing solution service, Torrent has been receiving an increased number of inbound sales inquiries given the need for in-field power generation and to take advantage of increasing liquids prices, and we believe there is an opportunity for this business to provide greater contribution in the future; and
- In our Wireline Services segment, we completed our first geothermal project with a new customer. These projects are technically challenging, and the Ranger team was able to rise to the occasion and provide the quality service our customers expect. We are optimistic there is a new opportunity for Ranger with this type of work in the future.”
Mr. Bodden concluded, “Although the year has not started in the way we planned, we view our first quarter as a perfect storm that we have weathered and emerged from as a stronger organization, with important lessons learned and efficiencies catalyzed by these challenges. Most of the challenges we faced during the first quarter were non-recurring and are now in our rear-view mirror. In March we posted strong margins with an improving revenue profile as customer activity levels picked up and our High Specification Rigs business returned to peak levels. Our view for the full year remains positive and we are confident the worst is behind us now; we will remain steadfast on ensuring we generate strong cash flows which will lead to increasing shareholder returns."
