Ranger Energy Services, Inc. Announces Q4 2017 Results

HOUSTON–(BUSINESS WIRE)–Ranger Energy Services, Inc. (NYSE: RNGR) (“Ranger” or the “Company”)
announced today its results for its fiscal quarter ended December 31,
2017.

The highlights for Q4 2017 were:

• The Company began to raise high-spec rig hourly rates in response to
  higher demand and labor costs.
• The Company launched its completion wireline business in the Permian
  Basin. Four trucks were put into service during the quarter and
  another two have been delivered thus far in 2018.
• In January 2018, the Company purchased 15 well testing spreads to
  launch a new complementary service line. Well testing fits into the
  Company’s focus on delivering a solutions-based approach to best meet
  its customers’ completion needs.
• The Company made significant progress integrating assets acquired in
  the acquisition of ESCO Leasing, LLC, an affiliate of Energy Service
  Company of Bowie, Inc. (the “ESCO Acquisition”) via re-aligning the
  management structure and systems.

Financial highlights for Q4 2017 were:

• Revenues of $50.1 million for Q4 2017, a sequential increase of 22%
  from $41.1 million in Q3 2017.
• Net loss of $5.6 million for Q4 decreased from a net loss of $9.5
  million in Q3 2017 largely due to the reduction of non-cash interest
  expense from related party debt in Q4 as compared to Q3.
• Adjusted EBITDA1 increased to $3.8 million for Q4, from
  $3.0 million in Q3, principally due to revenue growth partially offset
  by startup costs for the wireline business, year-end adjustments
  related to insurance and the year-end seasonal slowdown.
• Rig hours for Q4 increased 18% to approximately 69,800 for Q4 from
  59,000 in Q3. The rig hours for rigs not part of the ESCO Acquisition
  were approximately 52,900 in Q4 versus 49,200 in Q3.
• Rig utilization as measured by average monthly hours per rig decreased
  to 179 hours in Q4 from 199 hours in Q3 due to the seasonal slowdown
  and having a full quarter of activity from the rigs acquired in the
  ESCO Acquisition.
• The average hourly rates for high-spec rigs increased to approximately
  $454 in Q4 from $444 in Q3.

Darron Anderson, Ranger’s CEO, commented:

“We experienced another dynamic quarter despite normal, year-end
customer budget constraints and seasonal weather impact. Since the
beginning of the year, we are seeing demand strengthening broadly across
all basins. We remain focused on our strategy to be the premier,
solutions-focused, high-spec rig provider of choice for horizontal
completions and producing wells. During the quarter, we took delivery of
six new high-spec rigs and launched our completions-focused wireline
business in the Permian Basin. Subsequent to the quarter we purchased 15
well testing spreads to support our horizontal drill-out solution and
further our expansion into the completions space. The ESCO integration
is progressing well and we are seeing continued rig hour growth from
that portion of our fleet thus far in 2018. With demand improving, we
continue to increase pricing and remain optimistic as the market is
still significantly below 2014 levels.”

Financial Results

Revenues

During the quarter, revenues increased to $50.1 million from $41.1
million in Q3. The increase was primarily attributable to the increased
number of rig hours in the Well Services segment, representing the first
full quarter following the ESCO Acquisition, and the startup of our new
Permian Basin wireline business. The results by segment were as follows:

• Well Services revenue increased 22% to $47.7 million in Q4 from $39.0
  million in Q3. Rig utilization, as measured by average monthly hours
  per rig, decreased to 179 from 199. Total rig hours increased to
  approximately 69,800 hours in Q4 from 59,000. For the quarter, the
  average number of rigs in our fleet increased to 130 rigs from 99 in
  Q3. The Company ended the fourth quarter with 135 rigs in its fleet of
  which 130 were ready for service and 105 were active. During the
  quarter, the Company had six new rigs delivered of which one was ready
  for service by the end of the quarter. Additional increases to revenue
  were principally due to our Permian Basin wireline business.
• Processing Solutions revenue increased slightly to $2.4 million from
  $2.1 million in Q3 mainly due to increased mobilization revenue.

Operating Loss and Net Loss

During the quarter, the operating loss increased to $5.2 million from
$4.8 million in Q3. The $0.4 million increase was mainly due to higher
depreciation and amortization expenses which were driven by the
additional capital expenditures and represents a full quarter of results
for the assets acquired in the ESCO Acquisition.

During the quarter, net loss decreased by $3.9 million to $5.6 million
from $9.5 million in Q3. The decrease was principally due to lower
interest expense from related party debt which was converted to equity
in connection with the Company’s initial public offering (the “IPO”),
partly offset by depreciation and amortization expense.

Adjusted EBITDA

Adjusted EBITDA increased to $3.8 million in Q4 from $3.0 million in Q3.
The increase was mainly due to increased revenues offset by start-up
costs for our new wireline activities, adjustments related to insurance
and the seasonal slowdown.

Liquidity and Balance Sheet

Operating Activities: Net cash used in operating activities was
$17.3 million for the year ended December 31, 2017.

Investing Activities: Net cash used in investing activities was
$68.9 million for the year ended December 31, 2017. This includes $47.7
million used for the ESCO Acquisition. Not included in these numbers
were assets worth $24.5 million for non-cash additions and $10.7 million
in assets purchased via capital lease financing during the year ended
December 31, 2017.

Financing Activities: Net cash provided by financing activities
was $89.9 million for the year ended December 31, 2017, comprised of
$80.8 million of net proceeds from the IPO, $21.0 million in borrowings
from related parties that were converted to equity as described below
and $4.0 million of contributions from the Company’s previous parent,
partially offset by repayment of long-term debt of $12.0 million.

Not included in the numbers above are the following non-cash
transactions. In connection with the IPO, the Company settled its
related party debt of $21.0 million with the issuance of shares of its
Class A and Class B common stock and a $3.0 million long-term liability
payable to a related party that can be settled with Class A common
stock. In connection with the ESCO Acquisition, the Company issued $5.0
million in shares of its Class A common stock and entered into notes
payable to the seller with a principal amount of $7.0 million.

In addition, the Company entered into a $50 million revolving credit
facility in conjunction with the IPO. The current borrowing capacity,
based on eligible accounts receivable, is approximately $22 million as
of December 31, 2017.

Presentation

This press release presents historical results, (i) for the period prior
to August 16, 2017, of Ranger Energy Services, LLC, and Torrent Energy
Services, LLC, the predecessor of Ranger Energy Services, Inc. for
financial reporting purposes and (ii) for the period subsequent to
August 16, 2017, of Ranger Energy Services, Inc. and its consolidated
subsidiaries. These historical results do not purport to reflect what
the results of operations of Ranger would have been had the IPO and
related transactions occurred prior to such periods. For example,
certain of these historical results do not reflect the attribution of
net income to non-controlling interests or the provision for corporate
income taxes on the income attributable to Ranger that Ranger expects to
recognize in future periods.

Conference Call

The Company will host a conference call to discuss its fourth quarter
2017 results on March 7, 2018 at 9:00 a.m. Central Time (10:00 a.m.
Eastern Time). To join the conference call from within the United
States, participants may dial 1-866-807-9684. To join the conference
call from outside of the United States, participants may dial
1-412-317-5415. When instructed, please ask the operator to join the
Ranger Energy Services, Inc. call. Participants are encouraged to log in
to the webcast or dial in to the conference call approximately ten
minutes prior to the start time. To listen via live webcast, please
visit the Investor Relations section of the Company’s website, http://www.rangerenergy.com.

An audio replay of the conference call will be available shortly after
the conclusion of the call and will remain available for approximately
seven days. It can be accessed by dialing 1-877-344-7529 within the
United States or 1-412-317-0088 outside of the United States. The
conference call replay access code is 10113927. The replay will also be
available in the Investor Resources section of the Company’s website
shortly after the conclusion of the call and will remain available for
approximately seven days.

About Ranger Energy Services, Inc.

Ranger Energy Services, Inc. is an independent provider of well service
rigs and associated services in the United States, with a focus on
unconventional horizontal well completion and production operations.

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These forward-looking statements represent Ranger’s expectations
or beliefs concerning future events, and it is possible that the results
described in this press release will not be achieved. These
forward-looking statements are subject to risks, uncertainties and other
factors, many of which are outside of Ranger’s control that could cause
actual results to differ materially from the results discussed in the
forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is
made, and, except as required by law, Ranger does not undertake any
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise. New factors
emerge from time to time, and it is not possible for Ranger to predict
all such factors. When considering these forward-looking statements, you
should keep in mind the risk factors and other cautionary statements in
our filings from time to time with the SEC. The risk factors and other
factors noted in Ranger’s filings with the SEC could cause its actual
results to differ materially from those contained in any forward-looking
statement.

Adjusted EBITDA is not a financial measure determined in accordance with
GAAP. We define Adjusted EBITDA as net loss before interest expense,
net, tax expense (benefit), depreciation and amortization, equity-based
compensation, acquisition-related and severance costs, impairment of
goodwill, costs incurred for IPO-related services 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 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 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 GAAP.

The following table is a reconciliation of net income (loss) to Adjusted
EBITDA for the three months ended December 31, 2017 and September 30,
2017, in millions:

Contacts

Ranger Energy Services, Inc.
Robert S. Shaw Jr., 713-935-8900
Chief
Financial Officer
[email protected]