Ranger Energy Services(US:RNGR)2025-03-04 21:22Operations and Services - The company operates in multiple active oil and natural gas basins in the U.S., including the Permian Basin and Bakken Shale, providing services through three reportable segments: High Specification Rigs, Wireline Services, and Processing Solutions[20] - As of December 31, 2024, the company has a fleet of 406 well service rigs, with 180 active and marketable rigs, 168 available for reactivation, and 35 classified as assets held for sale[33] - The High Specification Rigs segment includes 329 rigs with a mast height greater than 102 feet or operating horsepower greater than 450, indicating a focus on advanced well servicing capabilities[34] - The Wireline Services segment operates 72 wireline trucks and 29 high-pressure pump trucks, essential for well completion and intervention operations[36] - The company maintains a fleet of approximately 1,100 light-duty trucks and vehicles to support operational activities across all segments as of December 31, 2024[39] - The company’s processing solutions include 30 mechanical refrigeration units and 60 gas coolers, enhancing its capabilities in gas processing operations[38] Market Dynamics - The company’s operations are influenced by the cyclical nature of the oil and gas industry, with demand for services closely tied to E&P companies' capital expenditures, which fluctuate with oil and natural gas prices[42] - Seasonal weather conditions can adversely affect operations, particularly in regions like the Denver-Julesburg Basin and Bakken Shale, leading to reduced service capacity during winter months[43] - The competitive landscape includes both large and small oilfield service providers, with significant competition in various geographic regions across the U.S.[40] Customer Base - In the year ended December 31, 2024, four customers accounted for approximately 22%, 13%, 13%, and 11% of the company's consolidated revenue, while in 2023, two customers accounted for approximately 10% each[46] - The top five revenue-generating customers represented approximately 65% of consolidated revenue in 2024, up from 43% in 2023[46] - The company served approximately 215 distinct customers during 2024, indicating a diverse customer portfolio[46] Workforce and Supply Chain - As of December 31, 2024, the company employed approximately 1,950 full-time employees and utilized independent contractors as needed[48] - The company is not dependent on any single source of supply for materials, ensuring flexibility and continuity in operations[47] Regulatory and Environmental Risks - The company faces potential increased costs and liabilities due to stringent environmental regulations, which could adversely affect its financial condition and operations[52] - Compliance with air pollution control and permitting requirements may lead to increased capital expenditures and operational delays[64] - The company is subject to various environmental laws that could impose substantial liabilities for pollution resulting from its operations[57] - The threat of climate change and related regulatory risks may adversely affect the demand for the company's products and services[66] - The company may face litigation risks related to climate change, which could impact its operations and financial performance[67] - The adoption of stricter regulations on GHG emissions could increase compliance costs and reduce demand for oil and natural gas services[69] - Hydraulic fracturing is regulated by state commissions, with federal oversight from the EPA, which has issued rules affecting wastewater discharge and the use of diesel fuel[71] - Increased regulatory oversight at state and local levels may lead to higher operational costs or suspension of operations for customers, adversely impacting demand for services[72] - Historical environmental compliance costs have not materially affected the company's financial condition, but future costs could be significant due to stricter regulations[74] Financial Risks - The company is exposed to interest rate risk associated with its Wells Fargo Revolving Credit Facility, with a potential interest expense change of less than $0.1 million per year for a 1.0% rate change[271] - As of December 31, 2024, the top three trade receivable balances represented 31%, 20%, and 8% of consolidated accounts receivable, indicating concentration risk[272] - The company does not currently hedge its indirect exposure to commodity price risk, which could affect demand for services if oil and natural gas prices decline significantly[273]