Good day, and welcome to the Ranger Energy Third Quarter 2020 Conference Call. [Operator Instructions] Please note this event is being recorded. And I would now like to turn the conference over to Darron Anderson, Chief Executive Officer. Please go ahead.

Thank you, operator. Good morning, and welcome to Ranger Energy Services' Third Quarter 2020 Earnings Conference Call. Joining me today, as always, is Brandon Blossman, our CFO, who will offer his comments in a moment. Q3 has been a successful quarter for Ranger with improving results across each month, trend that has continued into early Q4. While the recent volatility has tested our organization, our team has risen to the occasion and passed with flying colors. We have exited this downturn incrementally more efficient and focused, which is easing the path to a ramp back up and allowing us to divert our full attention to addressing our customers' growing service needs. Over the past 2 quarters, the focus of our attention has solely not been on cost and cash management, but beyond to include ongoing increases to organizational efficiency, new customer development and the enhancement of real-time operations monitoring and data capturing for improved performance. The actions taken and decisions made through the downturn, combined with our solid financial footing, are now starting to pay dividends through additional market share gains. While our year-to-date headcount and revenues are each still down approximately 50%, we have seen a very substantial increase in activity off of the Q2 trough. Our current revenue run rate is up 55% and headcount up 40% from the bottom. It is still too early to point to a broad market recovery, but within our segment and select basins, we are experiencing positive trends of improvement. These improvements include month-over-month increases in High Specification Rig hours and rates and expected increase in active Wireline units, along with additional contract opportunities from customers scheduled to add frac crews in late Q4 or early 2021 and a significantly growing backlog of bid opportunities within our Processing Solutions group. Now for…

All right. Thank you, Darron, and good morning to everybody on the phone. Let's do a quick walk-through of all the third quarter details and make sure that we don't miss any of the numbers. So first, on a consolidated basis, a reminder of the numbers relative to last quarter, Q3 revenues were up 13% or $4 million, moving from $31 million to $35 million. Consolidated adjusted EBITDA was up 36% or $1.2 million, moving up from $3.2 million to $4.4 million, while adjusted EBITDA margins moved from 10.4% to 12.7%. And now going down to the segment level and starting with revenue. High Spec Rig revenue was up 26% or $3 million, moving up from $11 million to $14 million, the combined effect of an increase in period rig hours and composite rig rates, as Darron mentioned. Here, rig hours increased 23% or 5,600 hours, moving from 24,600 to 30,200 hours in the quarter. Composite hourly rig rates increased 4% or $17 an hour, moving up from $463 an hour to $480 an hour. In the Completion and Other Services segment, revenue was up 6% or $1 million, moving up from $18 million to $19 million, with our Wireline business posting the majority of those -- well, all of those increases, and those increases were partially offset by declines in other non-Wireline services. Specifically, Wireline revenues were up 15% sequentially, the mix of a 34% increase in period stage count, which was partially offset by a 13% decrease in composite pricing. The drop-off in other non-Wireline services, as Darron mentioned, was largely driven by continued weakness in the DJ Basin market. And finally, at our Processing Solutions segment, revenues here were down 22% or $400,000, moving from $1.6 million to $1.2 million, driven by a net reduction of 1…

Thank you, Brandon. I'll wrap up with a few brief comments now. While we still have a long road ahead of us, we are optimistic on the future and pleased to have started the fourth quarter with great momentum. For the balance of the year, we expect to see a continued growth in [rig] activity, primarily driven by the increasing maintenance demand of the overall market. Our completion-related services should remain stable for the year with the potential for modest activity increases very early in 1Q '21 based on current customer inbound and active contracting processes. And as I mentioned in my earlier comments, our Processing Solutions group has participated in a considerable number of bidding programs which could have a meaningful and positive impact to the start of 2021. In regards to our strategic initiatives, our efficient operating model continues to prove successful as demonstrated through our consistent margin performance across 2020. We will continue to drive efficiencies from our back office to our customers' wellheads. The continued implementation of data monitoring and capturing systems will take place across select 24-hour rig activities, along with pilot programs beginning within select completion service offerings. Our focus on top tier clients is yielding a growing high-quality revenue stream with additional contract opportunities ahead of us. Whilst smaller scale, we've recently been awarded a 4-well refrac pilot program with a new multinational operator. The real opportunity here was the award of their 2021 refrac program conditioned upon the commercial success of the pilot program. Additionally, we've expanded our relationship with an existing IOC customer into a new basin where we've historically not provided them rig services. The current plan is to ramp from our existing 1 working rig to 5 rigs by the end of the first quarter. And finally, we have consistently discussed our interest and consolidation each quarter and that continues to be a focus. The current acquisition and merchant environment remain opportunity rich. However, we continue to take a disciplined approach that focuses on delivering clear value to our shareholders and minimal risk to our strong balance sheet. While we do not have a transaction to announce this quarter, we continue to work diligently on this front and expect to have something to share in the future. Operator, this concludes our prepared remarks, and we will now open the call for questions.

[Operator Instructions] And our first question today comes from Daniel Burke with Johnson Rice.

Let's see, Darron, appreciate all the quantification around how activity levels have continued to come up from the trough. October is typically seasonally a pretty good month of the year. Granted, this year is different from all other years. But I was wondering if you could just speak a little bit, and I get the activity -- or the indications of interest for incremental activity particularly headed into kind of '21. But can you talk about maybe the tempo of activity you'd expect within Q4 as Q4 advances? Do you see any tail-off this year?

Yes. I think it's going to be, in my opinion, probably a little bit of a different year because the activity level across the second and third quarters were so low, the room for decline is not really as material this year. What we've seen is the ramp-up that's been occurring, particularly in the September and October month. It's hard for us to imagine that operators will reduce that activity materially going into November and December, especially what we're seeing as far as inbound and contracting opportunities for work to start in January or even backing up in late December. So I think it'll be a unique year from what we've seen in the past that you won't get the typical strong seasonal declines. I think from our standpoint, our only concern is just the weather, how tough the weather will be. We've had some nice, nice improving performance contribution coming from our northern operations, which puts us a little more susceptible to the weather from the north. But outside of that, we think fourth quarter is going to be stronger than we would typically see and continue that momentum throughout the year.

Got it. And then, Darron, any way to explore further maybe the depth of interest you're seeing in Wireline units from Mallard to accompany this incremental demand for frac fleets that you're seeing in the Permian market? I mean is there a case where, as we get into 2021, you guys could be back to approaching full utilization?

Yes. I think approach of full utilization is still a tough bar. I think what we're seeing right now, operators that may be running 3 or 4 frac rigs that we have relationship with are looking to add, call it, 1 frac spread at year-end, 1 frac spread early 2021 with possibility to go up to 2. So it's those type of increases, which, again, going from 6 units to adding a few fleets in our business is a strong business there would have a nice benefit to us. But to say getting back to full utilization right now, we don't see that in the near-term horizon.

Okay. That's helpful. Let's see, I'll ask 1 or 2 more here. Don't frequently query on processing, but sounded like there was an interesting opportunity there. I think you used the word meaningful if you could convert some of these tenders. Could you return to a 2019 type of cash flow run rate in that business? Or again, is that stretching too far?

No. I think that one does have some greater upside to it. Again, and that's based off what we have in our queue, our bidding process again. We brought on a new management team. And again, this is a longer contracting process relative to our upstream wellhead-type services. So the queue they built has been kind of over the last 4 months with a lot of that to come to fruition, again, latter part of Q4 to early 2021. So it's a material backlog. And again, we're not guaranteed of the wins, but I know we'll be successful with some of those projects and could get back to kind of the 2019 performance level, in my opinion. Brandon, do you want to add to that?

No. I mean I think that there's clearly plenty of upside in that business today. The assets are all in good repair and all continue to be relatively new. So there's the path to going from where it was in '19 to -- or sorry, yes, the path to go to where it was in '19 is relatively easy, and it is just on the commercial side, and we think that there's plenty of opportunities out there based on the backlog and probably early conversations that are not in the backlog. But it's the commercialization effort and that is this whole hindrance to that business running back up to where it was.

[Operator Instructions] We'll conclude the question-and-answer session. I'd just like to turn the conference back over to you, Mr. Anderson, for any closing remarks.

No, great. Thank you. I just want to thank everyone for joining the call today. And I especially want to thank our great team for a job well done in the midst of a difficult market. Best wishes and safe health to everyone as we enter the holiday season and close out 2020. This concludes the call. Thank you.

And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines at this time.