Ranger Energy Second Quarter 2026 - Conference Call

for the quarter of $26.4 million. Year-to-date, free cash flow is neutral given the build and working capital early in the year and spend on the Echo Fleet. We do expect further working capital releases in the back half of 2026 to support further debt paydown and strategic opportunities. We used our free cash flow generated this quarter to fund more than $4.5 million dollars of share repurchases during the second quarter and bought back 282,900 shares at attractive prices. As of June 30th, total liquidity remained healthy at 61.3 million dollars, comprised of 57.1 million dollars available revolver capacity and 4.2 million dollars of cash on hand. Now I'll turn the call back over to Stuart for closing remarks.

We thank everyone for joining us today. This quarter was gratifying for the whole team here at Ranger. Surpassing $25 million of adjusted EBITDA was a benchmark run rate for us post-acquisition, and we handily beat it. Additionally, our wireline group and some of our ancillary service lines, including quail tubing, P&A, and torrent, posted incredibly strong results. Ranger's second quarter underscores yet again, our operational resilience and ability to grow our business and create ever more differentiation while producing good cash flows and allocating capital wisely. We look forward to updating you again in November. And with that, operator, let's open up the line for questions.

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today comes from Don Crist with Johnson Rice. Please go ahead.

Morning guys, hopefully y'all doing well this morning. Thanks With the work over rig segment, I mean, we're hearing a lot more antidotes around the industry that the E&Ps think that oil prices are going to be higher for longer and they're starting to look towards 27 for increased activity, et cetera. Just wanted to see your kind of macro thoughts on that and, you know, how the business is developing now with more 24-hour work and weekend work than we've seen in months and quarters past? Just anything along those lines.

Yeah, thanks for the question, Don. I think we kind of share that view that as you move into 27, just as the forward curve is strengthened and strengthened in the back part, that we'll see an increase. I'm not sure it's translated at the moment into kind of meaningful changes from our customers. It'll be interesting to see how things develop when they pour budgets. I'd say what we're seeing right now is kind of an increase in smaller programs, right? So kind of us filling up white space, which is helping just with utilization. But I don't think we've seen enough kind of change yet to meaningfully add capacity into the market. But I think we're watching pretty closely as we move into budgeting season.

Okay. And then on the ECHO rig program, I know you were spooling up with your vendor to to try to hit a goal of certain amount of rigs per month, just any updates on where you are with that process. And, you know, with the 18 rigs on order, obviously two of them are doing field testing right now, but are you on a run rate of, you know, one or two per month coming out that we should see for the back half of the year and through 27?

Yeah, I think that's right. That's right, Don. So we have two in the field that are working right now. Those are the first two that went out, and the two we referenced in the script are two from the contract that we announced earlier in the year. So when those two go into the field, you know, at the end of Q3, that would be four in the field, and I think that's right. We would expect we announced 15 earlier this year. We would think those would all be deployed by the end of next year, so that kind of gets you to 17. So, yeah, that's about right. I mean, kind of think one-ish a month is a pretty good run rate. So we're kind of on track with that, you know, right now. And then obviously we had the additional contract for three more. So there are now a total of 2,300 contract.

Okay. And those should be incremental to your rig count, not displace current rigs, right?

It's one of the things that we're working through right now to see. I think we are getting increasingly confident that a lot of these will be additive. But we do expect to see some kind of modest shuffling, and that's kind of one of the things the teams are working on right now is to reallocate those rigs.

Okay. I will turn it back to the operator and get back in queue. Thanks for the answers.

All right. Appreciate it, Don. The next question is from Derek Podhazer with Piper Sandler. Please go ahead.

Hey, good morning, guys. Maybe sticking on Echo and just trying to think through the prepayments and how they affect the margin. I know margins came off a little bit in high specs. Got a couple things weighing on those. But maybe could you help educate us just as far as the margins attached with Echoes as you get these things out, how we should think about that? Accretive, dilutive, I know there's some funky things with the prepayments now. It impacts the cash flow into the P&L. So maybe just help around that, how we should think about these margins as you continue to ramp up Echo.

Yeah, no, it's a good question, Derek. And we'll have a little bit of additional clarity coming out in the updated investor presentation coming out today. The best guidance we can give you for now is it's largely going to be unnoticeable. we will end up adjusting back out the amortization of the upfront payments. So it will, in essence, lift revenue, but it will not lift EBITDA being as it's a non-cash item over the longer term. That said, as the premium day rates come into play, to the extent there are those on contracts, those would potentially have margin uplift effect because they're being billed and their cash items being collected real time. What we sort of committed to the community writ large was that as that started to play out and it became noticeable and started to quantify 50 bps of margin, et cetera, et cetera, we will give you quarter-to-quarter updates on that. But for right now, it's largely a muted, no-impact effect.

Got it. Okay. That's super helpful. Thanks, Melissa. And then you had a line in the press release talking about potentially stepping out with new service lines through advantageous acquisitions, that position you will for the future. Stuart, maybe just if you could talk to that, what you're seeing, if it's some of the stuff you got from AWS, some of the stuff you're growing organically like Torrent, or other items that you're targeting as you think about how the shape of the recovery in the future of your business. So maybe just some thoughts around what you're seeing in M&A and just talk to that line you had in the press release.

Yeah, thanks for the question, Derek. And Insular in general, we were really pretty pleased with how the quarter went and the outlook. You know, as you kind of reference, COIL, P&A, Torrents, our infield gas processing, all had really strong quarters. Some of the service lines we picked up in AWS, we picked up a mixing plant business, we picked up a trucking business, we picked up a tubing inspection business. I would say some of those were a little bit mixed. Some were quite strong, some were less strong. And I think that's kind of where we're focused is getting those more consistent. And there's a couple in there that we really like the margin profile. And I think we just want to be confident that we see sustained demand before we kind of meaningfully lean into it. But hopefully that kind of gives you a sense of kind of what we're thinking. And then I think there might've been a question in there about the M&A, kind of what we're looking at going forward. You know, I don't think it would surprise you to say that we're looking at a number of things, but generally they're by and large in line with things that we're currently, you know, service lines we currently have.

Okay, got it. And maybe just a little bit more on Torrent. I know it's kind of an interesting business you have as far as, you know, potential attachment to some power generations out there. It sounds like it had a really good quarter, maybe some of the drivers with that and how you're thinking about that business longer term.

Yeah, we were, again, pretty excited about how it came out. I think how we've been thinking about it, and you're exactly right. So infield gas processing, we are cleaning up gas streams and knocking out the liquids of gas streams that can't get into permanent processing facilities. So you can kind of imagine about, you know, the types of fields where that occurs. We're definitely seeing an uptick in demand. I think how we're thinking about it is we want to see, again, I think, how do we think about the longer term outlook and just sort of getting to sustainable utilization? We're not quite there yet. So, again, I think we're trying to be thoughtful about it and, you know, see where we can meaningfully invest it. But at the moment, I think we're most focused on getting out our existing equipment.

Okay, great. Appreciate all the comments, guys.

Yeah, thanks, Derek.

Again, if you have a question, please press star, then one. The next question is from John Daniel with Daniel Energy Partners. Please go ahead.

Hey, good morning, Stuart and Melissa. Thanks for including me. Congrats on the ECHO contract. My question is, when you look at the companies like the Chevrons of the world, they're running dozens upon dozens of work over rigs across the country. Do you envision a scenario or a point in time where they might make a complete shift to ECHO-type technology?

Yeah, I'll start and Melissa can chime in. I'll give you maybe just some kind of the flavor of the conversations that we have with them. I think they're still trying to determine that, to be honest, John. I think we've heard some where some of the larger players have indicated they might want a certain base load to be electric rigs, right? So if they kind of think about, hey, under almost any kind of long-term commodity price scenario, they're going to run X rigs, and they want X to be electric or hybrid rigs, and then they'll kind of flex with conventional rigs on top of that. We've heard some people want to make a kind of more aggressive shift than that, but I think everybody's really just trying to figure it out right now. But I would kind of reiterate that we're pretty encouraged by the demand and the conversations we're having right now. I misspoke slightly earlier. We're at 20 under contract right now. And I don't think we'd be surprised to see more come under contract in the next, you know, kind of 9 to 12 months.

I would only add to Stuart's comments that I think a lot of the dependency is really on how these rigs start. Because, you know, I mean, we've only had two and the only other electric workover rig out there, I think there's five. They've only really got two years of run time. And they don't have the same sort of economic value proposition that IFRAC had. So I think a lot of the dependency will be sort of over time. How meaningfully do safety statistics move and, frankly, efficiency statistics? So to the extent the efficiencies that we believe will ultimately mature within the electric workover rig, as they come to pass, the likelihood is adoption kind of continues to increase.

Okay. And I'm not looking for names with this question, but I would suspect the incremental orders you get in the near term would be more with existing customers. But assuming that's true, when would you anticipate some of the independent operators really kicking the tires?

I'd say we have a couple independents that are kicking tires, but I would say it's very, you know, it's kind of early, early days. Yeah. I think how I would answer the question is kind of going back to Melissa's comments is I think when there is a established track record of safety improvement, efficiency gains, that I think it will be easier for for some of the smaller players to then point to it right now. All of the early signs are really encouraging. But at least I think my informal conversations is they want a kind of a longer track record of the smaller players.

Very helpful. Final one, if I may, is just your latest thoughts on the U.S. coal tubing market. I'll turn it back over, what you're seeing.

Yeah, so coal tubing for us was a really strong quarter. We are focused in the Rockies. And, again, I think we were pretty encouraged by what we saw there. You know, it's not a surprise that as drilling rig count is starting to tick up and frack count is slowly ticking up that COIL would follow. But, again, we're pretty happy with the quarter we saw.

Thank you very much.

All right.

Thank you so much.

This concludes our question and answer session. I would like to turn the conference back over to Stuart Bowden for any closing remarks.

Again, thank you, everyone, for joining us today. We appreciate it, and we look forward to speaking to you in November. Take care, everyone.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.