Good morning, and welcome to the Ranger Energy Second Quarter 2019 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Mr. Darron Anderson, Chief Executive Officer. Please go ahead, sir.

Thank you, operator. Good morning, everyone and welcome to Ranger Energy Services Second Quarter 2019 Earnings Conference Call. Joining me today is Brandon Blossman, our CFO, who will offer his comment in a moment.On our last call I, highlighted the Q1 headwinds of the pressed commodity prices in difficult weather. But at the same time, I pointed out how our strong portfolio of diversified services and geographical regions allowed us to overcome those headwinds producing our sixth quarter in a row of increasing revenue and EBITDA.As we move into Q2 our optimism is high and frankly continues to be at high or higher today. While our quality growth took a pause in Q2, I want to share with you the reasons for that pause and also explain the rationale behind my high level of optimism with our business.I would like to start off this morning by calling your attention to some of the more significant events of this quarter. First, outperforming Wireline business proactively made the decision to reposition its core set of assets. This decision was driven by degradation and KPIs for particular customer, which yielded an opportunity for high grading. We therefore chose a temporary interruption in our previous consistently high Wireline utilization to reduce business risk and further improve this already high-quality business.Next, improving metrics across all other areas of our business. Operationally, EBITDA was up across all service lines with another exception of Wireline. Our High-Spec Rigs, the remainder of our Completion and Other Services and our Processing Solutions all delivered improved results driven by mild increases in pricing and utilization. This performance has continued into Q3 and combined with Wireline returning to normalized performance levels, our confidence is high despite the backdrop of a challenged U.S land services market.And finally, we continue to be well-positioned…

Thanks, Darron, and good morning to everybody on the call. Good to be here. So let's go ahead and get started with the full walk through of numbers for the quarter. As Darron mentioned on a consolidated basis, overall revenue moved down sequentially 5% or $4 million from $88 million to $84 million. EBITDA moved down 8% from $14.2 million to $13 million flat while resulting adjusted EBITDA margins ticked down slightly from 16% to 15%.Now moving on to the details and starting with revenue by segment. At the segment level, the sequential revenue decline was driven by a decrease in Completion and Other Services, which was partially offset by growth in High Spec Rigs.Specifically in Completion and Other Services segment, revenue was down 10% or $5.3 million. The segment revenue decline was the result of the transition of two wireline trucks and two pump-down spreads that Darron talked about from a single customer to a less concentrated customer base, which resulted in little contribution from these transitioning assets during the quarter.As Darron noted these assets started back to work late Q2 and are currently fully deployed. Offsetting the drop in wireline revenue were sequential increases in nearly all of the individual business lines in the balance of the segment.In our High Spec Rigs segment, revenue was up 4% or $1.4 million driven by a 3% increase in period revenue hours along with a 2% increase in hourly rig rates. Specifically revenue hours went from 60,100 to 62,200 hours and hourly rig rates went from $522 per hour to $530 per hour.The increase in period hours was driven by an increase in 24-hour work but the 24-hour rig count moving from an average of nine rigs in Q1 to 13 rigs in Q2. The increase in period hours are Q1…

Thank you, Brandon. Looking forward, I believe both Brandon and my comments today have provided clarity on few one-time issues that made a significant impact on our quarter's performance. The high level of optimism that maintains our business looking forward is not only because this one-time issue is now behind us, but equally for the opportunities that lie ahead of us.As we've entered Q3, all of our metrics are pointing in the right direction. Our High-Spec Rigs segment continues to show modest gains in pricing against an oversupply of rig market. This indicates our current and new clients continue to reward us for the high-quality asset base and operation performance that we are providing to them.Additionally, this segment has potential for new contract awards and market share gains as we continue our efforts of high grading our customer base. Similar to our Permian Basin and multiyear contracts, we currently have several other contractual opportunities at various stages of development. Within our Completions and Other Services segment our Wireline business is back to full deployment on a dedicated basis with an even stronger Permian Basin client list.Our Other service lines within the segment continued a positive trend having delivered three quarters in a row of improved performance. Additional rig contract rewards will also benefit our Other Services segment as they give us the opportunity to pull-through some of our complementary service lines. Within the Processing Solution segment, I will characterize our business as stable with near-term upside from the new gas cooler deployment to a first-time global integrated customer.Looking at this business over the next few quarters, our team is strategically reviewing growth opportunity that could drive even greater demand for our existing asset base. And finally, as we continue to execute, and further deleverage one of the cleaner balance sheets amongst our peers, strategic opportunities will develop. I think we all agree that consolidation is needed amongst U.S. land services, but the reality of mini hurdles exist.We feel that, our continued capital discipline line-of-sight cash flow, high-quality assets, good operations, and efficient processes are key attributes that allow us to execute on strategic options when others cannot another reason for my high-level optimism going forward.This concludes our prepared remarks. And operator, we'll now open the call for questions.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from John Daniel from Simmons & Company. Please go ahead.

Thank you. Hey, Darron and Brandon great, I really appreciate the granularity this quarter. Not many companies do that. So it's appreciated.

Thank you.

Brandon, my first question is on the -- that $7 million AR number that you referenced, is that potentially the same customers, that you took the wireline units away from? And if so, is there a risk on that receivable?

So, the answer is yes. It is potentially one of the same customers. The risk on the receivable, certainly there is a risk there. I don't want to sugarcoat it…

…Right.

But the good news is that they have been paying down their balance fairly regularly. And we expect them to continue to do so.

…Okay.

So the number looks bad but it is lower than it has been. And we continue to expect that they can go lower throughout the quarter.

Fair enough. Appreciate that. And then -- well I got two more. Just on the CapEx. On the last call you had sort of referenced slowing the growth CapEx cadence. Can you speak to what growth CapEx might be in the second half, and then, just early thoughts on, 2020 growth CapEx?

Yeah. So, again we're getting it all done quickly here. There's a couple items. One, the preprogram 2018, full year CapEx program, we still have a $1 million left on that. And that is all…

…Okay.

… in Processing Solutions. So that is the -- what we have approved in totality is $1 million. Maintenance CapEx should continue at that million or sub-million dollar per quarter cadence.And then, I'll let Darron speak to any incremental CapEx that may come up that is not currently approved.

Yeah. Any incremental CapEx really doesn't have to be tied to contract awards. Most likely tied to potential longer-term drill on contract awards where we may need 10K BOPs or something of that nature. So, as far as permit program there's nothing else additional from a growth CapEx except for again new contract awards John.

Okay. I got two quick ones here. And then, I'll turn it over. Again, I know you guys don't like giving specific financial guidance next call. But, I mean, just hearing the commentary or everything you walk through it does feel like Q3 -- your expectation is a bit better than Q2. Is that a fair assessment?

Yeah John, that's very fair assessment. I mean our exit run rate coming out of Q2, the last month was much stronger than the previous two months within a quarter. So, in Q3 was a high level of optimism come again to -- Q3 we call it optimism. I think as we continue to sit here with the one month behind us that hasn't changed.

Okay. And then the last one, just a chance for you to kind of sit up on the poll button pretty sure. But with respect to consolidation obviously everyone has talked about it, everyone knows it's needed. But it just doesn't ever seem to happen.Do you think there's any hope for the well service sector, if we don't see consequential consolidation, notwithstanding, your business is doing okay on a relative basis?

Well, you'll hate if that happens. Go ahead, I'm sorry?

And do you think it actually happens, I guess?

Well, for years we've been saying, it's got to happen and it has not happened. If ever going to happen now's the time that it does need to happen. But as I've said John, they are horrible.And when you look -- I know we've had these conversations before, on the type of wells that have been working on a day, it's a different type of asset base that's needed. So, yes while consolidation is needed. Yes there's lot of assets out there that can be attained. It's what the future viability of those assets.So, I can't predict the future. And I'm not going to start trying now….

…Yeah.

We have put ourselves in this position and we didn't get here by accident. This was by strategy of execution, specific targeted growth, conservative balance sheet, line of sight for free cash flow. And we took care of those things right after alternatives presented themselves we want to participate in those opportunities.

Okay. Again I appreciate your time. And thank you for the granularity in this quarter.

Thank you.

Thanks, John.

Our next question comes from Daniel Burke from Johnson Rice. Please go ahead, sir.

Yeah, good morning, guys.

Good morning, Daniel.

Maybe just to -- a pen one to John's question, Darron you mentioned June was much stronger than the prior two months. I was just curious is that simply because of the return of the Wireline units to active service? Or did you really observe a stronger June across your broader service portfolio?

No. I think it was the combination of both. Definitely the return coming back on was a contributor. But the rest of our business as well too as I mentioned, even within our others services captured in that Completion and Other Services those service line we've had three quarters in a row of improving performance there.Rigs continue to hang in there well for the month of June too. So across the portfolio, we saw upticks but also definitely a contribution from the assets that were laid down earlier in the quarter on the Wireline side.

Okay. All right. That's helpful. And then maybe just one other one and I'll ask it on your smallest segment, but it has attracted a decent amount of growth capital this year. I mean, what is the opportunity set for Processing Solutions? How large a capital allocation could that business be in line for in a 2020 environment? Just trying to scale what level of growth could be possible there the next couple of years?

We like that business. It's been a good performer for us. You see the margins that the business throws off. It's predictable. A stable business for us. So all great attributes. Yes, we think growth CapEx across 2018 and into 2019, as we wind down the spread and said this last $1 million is really geared towards that. That's pretty much it for that segment for 2019. As we roll in 2020, I think there are going to be opportunities there. But again, we are going to stay conservatively I think across the entire portfolio even entering to 2020. We have utilization that can still be built in on the rig side and some of our other services. So while 2020, we will turn back on the growth CapEx it will be on a conservative basis.

Got it. I'll live it there guys. Thank you for the time.

Thanks, Daniel.

Our next question comes from Thomas Curran from B. Riley FBR. Please go ahead, sir.

Good morning, guys.

Good morning.

Hi, Tom.

Darron, now that Mallard has returned to full utilization with all 13 units working, how many different customers are those 13 working for at this point?

Oh gosh, I would say there's not any customer with more than three units working for them today. So you're probably talking five to six customers. I can count real quick here, but I'd say five to six customers.

And when I think of some of the companies that emerged and have remained -- emerged as early fans and have remained active users of yours, Pioneer, Concho these are among the most blue-chip established high-quality operators out there. Are the two that you upgraded with, are they both incremental? Are they both new customers?

What we upgrade to was two of our existing customer base of similar blue-chip soft customers that you just described.

Okay. So you did have additional units go to existing blue-chip operators?

We gained market share with our existing blue-chip customer base, yes, sir.

Great. Turning to the ongoing M&A effort you have underway. I'd be curious to know when it comes to the pipeline of PE sponsored prospects or family-owned private companies, how have valuation expectations evolved since the spring? And specifically have you seen any encouraging signs of a continued openness to accepting equity as part of consideration?

So good question. Your description of our M&A processes I wouldn't exactly describe those M&A processes right now. But what I would say is that yes, when you think about the PE, when you think about the private, I think valuation expectations are becoming more into reality. I think that the U.S. land service market has been a tough market for a lot of people out there and it continues to be a difficult market. And I think as a result of that, you have parties who are looking at options. I think that Ranger we're a viable option.I think we've proven to the market that we not execute that we're going to be disciplined. All the attributes that we have for authorization and still the level of imbalance that we've gotten over the last few months continue to increase. So while I won't say that we're actively trying to execute something I would say that our phone rings more a lot on the curve and we want to get ourselves in this position from the authorization of a balance sheet standpoint and we're here. So we have opportunities ahead of us and strategically we'll figure out what the right thing is to do. Whether that's from selling being acquired all the options there are many that's going to present come to us.

Okay. Good to hear. And then on -- Brandon, on the well service rig side would you update us for 2Q? What percentage of revenues came from completion-related work?

Let's see if we can -- completion versus production. I have to give that for you off-line Tom, I don't have that in front of me. If you have another question we can probably get it in the next 25 seconds.

All right. Sure.

I give it to you off-line it's your choice.

Well, just curious I joined late Brandon so while you are you looking did you give all-in CapEx guidance for 2Q or for the second half growth plus maintenance all-in or range?

So we did have --I'm going to call it an incremental $1.5 million in Q2 that we had not previously approved and planned so I'm a little gun shy because that CapEx is associated with new contracts and new rig deployments. So it's very opportunistic.So on a go-forward basis what we do have approved is an -- not an incremental sorry, absolutely not incremental a residual $1 million for our processing services segment and that is essentially yet outside of approximately $1 million worth of maintenance CapEx per quarter.So approved CapEx looks like $3 million point forward through to the end of 2019. The only caveat is that we continue to have a lot of success I would say on the contracted 24-hour and high margin 12- daylight-hour rig side and those incremental contracted rigs may come with small growth CapEx high stakes and less than $1 million per quarter.

Okay. And that residual $1 million you would expect to incur all of that in 3Q?

Yes. Yes.

Okay.

25. Yes, Sorry, Tom.

Did you find it?

Yes. Hang on just one second.

Sure.

Tom, it looks like it does a even 25-75 split for rig revenue on completion versus production for the quarter.

Terrific. Thanks for taking my questions, guys.

Thanks.

Thank you.

[Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Darron Anderson for any closing remarks.

I just want to thank everyone for their participation and continued support. We had a nice queue of people in the call today so the interest was quite high and hopefully we delivered the information you wanted to hear. So thank you to all of you and thank you to the outstanding Ranger employees and we look forward to talking to you next quarter. Thank you, operator.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. And enjoy the rest of your day.