Q4 2020 Ranger Energy Services Inc Earnings Call
Good morning, and welcome to the Ranger Energy fourth quarter 2020 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After todays presentation, there will be and opportunity to ask a question to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two please note. This event is being recorded.
I would now like to turn the conference over to Darin Anderson CEO. Please go ahead.
Thank you operator.
And welcome Greg Resources fourth quarter 2015 earnings Conference call joining me today, as always and brand loss and our CFO, who will offer you.
Momentum.
And you start here.
The fourth quarter marked the peripheral sign from our industry rebounding from the activity low point.
Yes.
With WCS prices stabilize.
And we all range during the quarter.
Operator began to increase activity.
And ladies and a 22% growth and USA and rig count.
60, boosting growth and Frac spread count.
Both metrics and starting from a historic low.
Not surprisingly ranger expand our significant increase in activity within our production related re operation.
The cash from operations and can be quickly mobilized degree and production back on line.
And we expected to see this part of our growth.
Non offerings at the forefront of operator demand.
If you recall from our Q3 reported.
The upward trajectory of our real estate and started in late Q3 and early Q4.
The strength, we are experiencing at the time update with regards to the 25 and 30% from the fourth quarter.
With actual radar.
For Q4.
Activity continues to ramp.
And as we have projected.
This growth boosted our consolidated revenue and $41 5 million.
A 20% sequential increase.
While we are very pleased with our top line performance, we did experience a onetime operating costs and your interest Russian and resulted in an adjusted EBITDA of $3 two net.
This figure represents.
And keep water and Rob.
And our positive EBITDA since going public.
And we are very proud of and the fact that during this difficult year 'twenty and 'twenty.
Right and delivered positive EBITDA and earnings.
And the hallmark of the year.
Before I dive into the detail of our quarterly results.
And just provide a general recap our fleet Labor force.
And update on the strategy, we've been working on.
Our balance sheet.
And one of the most difficult year.
Industry Ranger and made considerable progress improving our already strong balance sheet.
And the year, we generated 26 net operating cash flow and decrease our long term debt.
Yes.
Yes.
Maintenance capex for the year net.
$1 $1 million, which highlights one of the benefits from our outstanding assets and.
And we remain disciplined with gross cash.
Afternoon.
And the first quarter net.
Net.
Mr.
And whether this efficiency gain as well.
And our back office.
We continue to identify opportunities to create value.
And the processes.
And.
And we made significant headway and capturing real time data.
And when.
And what began as and the brick instantaneous visibility completions were up record quarter.
To drive efficiencies to our customer.
As a also a much wider range of operational and performance metrics and have been used and capturing market share with top tier clients.
And regarding from back office.
24 from G&A, excluding equity comp ran and 19, 7% of revenue down 20% year over year.
We believe we operate one of the lowest cost structures.
Good day.
As a result, this places ranger and a competitive advantage and assuming acquisition opportunities.
Both companies and ourselves the opportunity to apply Ranger back office process to a broader organization.
Ladies and.
And creation.
Net our top tier clients.
Working reconstitute plan day.
And we continue to demonstrate that with initiatives from cross wavelength.
Institute perspective.
Looking at the top 12, E&P company and the U S measured by the ex <unk> capital.
Right and provide services to 10 and 12.
And given that we've added a new integrated customer early 'twenty, one and our total is now 11.
And in terms of revenue contribution from Ranger.
Net of the top tier class contributed 43% of our 2018 revenue.
74% index.
The revenue contribution matches, our great presentation Ranger strong partnership.
Interest.
And the financial health of our organization and is allowing us to meet their strength.
Services and asset quality demand as well as to meet the growing working capital requirements that need desktop is well funded with activity.
Net.
Hopefully this gives you both and again.
Financial accomplishments and Ranger.
Does flow March 2021.
Also the strong position, we find ourselves in.
And we moved into a series of Martin.
And in 2021.
And when Brandon.
Momentarily.
Sure a couple of new development.
This is Greg.
Now for more detail from the quarter, starting with price risks.
Okay. Thank you.
Increase and high spec rig revenue.
Thanks, Robert for overall revenue growth.
And I would say brief segment very strong demand drove inc. Wait groups that increase and re.
And as mentioned in my opening comments.
Rig activity growth began in Q3.
That momentum will continue to improve off of Q4.
And comparing our Q3 interest activity levels versus our Q4 exit.
76%.
We are very pleased to experienced increased demand for our ranger right across every region we serve.
This significant demand for our rate resulted and the nature reinstate the R&D employees and.
Additionally, our redeployment and highly concentrated from a top tier client.
And as quality standard and longevity.
Program, Jeff and five.
Covid level of net debt.
And training and maintenance expenditure.
Total of $1 $3 million from quarter.
Although this was a onetime expenses associated with the make ready and 18 day, we did not added back to our reported EBITDA figure.
Would've resulted in adjusted EBITDA for profit.
And Dan we chose to Macy's Inc.
Reported methodology.
Because our top line growth with both from the quarter other revenue sources, where mass.
We've been fortunate to have minimal Covid, 19, led and eruption and our rate.
The joint and several day.
And Keith Harvey due to COVID-19.
Additionally, we experienced a two week disruption.
And uplift 20, Ferrari and customer consolidations budget.
Moving on to our completion and others are.
Yes.
Within this segment a ramp in activity, but not yet from that.
Yes.
While we experienced revenue increases with our smaller other service offerings and that growth was offset by a 7% decline and the wireline revenue.
Normally.
The EBIT decline.
And given the year and the depot.
But during the fourth quarter, we're fortunate and have only one customer.
With me and budget early.
Unfortunately, it occurred from <unk>.
<unk>, resulting in a lot from dedicated fleet.
Okay.
This leak paths and return.
And good day estimate of January.
Additionally, the fourth quarter, we began discussions with many of our customers.
Yes.
And final Frac operations.
Operations required new bar line, yet on multi well pads and phosphate operations are conducted with.
With one particular customer operations and scheduled to begin in early December was significantly delayed due to COVID-19.
Among the buyers.
<unk> Bruce.
While this resulted in a temporary disruption where Facebook and the fact that we and our customers to health and safety of our employees.
And finally, our processing solutions segment.
As expected and given remained flat from quarter.
Additionally, do you believe that the lack of drilling and completion activity.
And the increase in commodity prices and growing activity levels, we expect to see the demands and needs to improve as we move further.
Further in 2021.
Equally as important weaken and segment and having the opportunity to make a strong contribution to the ACF and for our customers and to begin strength.
And my closing comments and I will now turn the call over to brands and more detail on the numbers.
Thank you Darren and good morning to everybody on the call. Let's go ahead and do our normal walk through of the fourth quarter and details.
So we reiterate the consolidated numbers.
Relative to last quarter Q4, as revenues were up 20%.
$19 million moving from $35 million to $42 million adjusted.
Adjusted EBITDA was down 27% or $1 2 million moving to.
And from $4 4 million.
$3 2 million.
And as Aaron mentioned, just a bit ago net $3 $2 million EBITDA. It does include $1 3 million and expenses associated with high spec rig reactivation.
Overall, adjusted EBITDA margin moved from 13 eight percentage for the quarter.
And now on to the segment details starting with revenue.
Great revenue was up a solid 50% or $7 billion moving from $14 billion to $22 billion.
And the combined effect of an increase and Jared rig hours, along with increased and.
Great race, specifically revenue hours increased 43% or $12900 moving from 3200 43100 hours largely on the addition of an average of 12 rigs in the quarter, bringing the Q4 <unk>.
And as rates out to 42 basis.
Composite and hourly rig rates also increased and they were up 5% quarter over quarter or $23 and now moving from $480 now.
$503 per hour.
And increased 24 hour work supported a higher rig rates.
And 6% of our activity.
And for operations as compared to 20% from the third quarter.
And at completion and other services segment revenue saw a slight decrease of $300000 moving to 18 million $18 6 million and Q4.
Slight decrease was fully attributable to our mallard wireline business.
As Darin details on early and shutdown non budgeted cost.
And and Covid related delay along with ongoing pricing pressure.
And in Ireland.
Wireline business revenues were down 7% sequentially.
Driven by a 6% decrease from composites pricing per stage, along with the stage count.
And the lower period over period.
And finally, and and processing solutions segment revenues held flat at one point.
For the quarter.
Now moving on to segment level, EBITDA and margins overall segment level adjusted EBITDA. This being the four corporate G&A decreased from 13% or $1 1 million.
Moving down from $8 3 million to seven 2 million and the fourth quarter and and.
And increased at the highest spec rigs.
Segment.
And primarily was offset primarily by EBITDA declines and completion and other services.
On the margin front consolidated segment margins again.
And before corporate G&A were down from 24% to 17%.
G&A expense as adjusted was just up from flat at $4 million.
Versus $3 $9 million, and Q3, which marks our third quarter as this new materially lower G&A base.
And now to the segment level for high spec rates adjusted EBITDA was up 21% or a half a million dollars moving from $2 4 billion.
And $2 9 million.
Gross margins will be and the opposite direction down from 17% 13%.
I'll note here that adjusting out the $1 3 billion and <unk>.
And the expenses seen in this segment would have resulted in an EBITDA increase of 75% sequentially, along with a margin increase to 19%.
Yes.
And the completion and other services segment, adjusted EBITDA was down 28% or $1 $4 billion from.
$5 billion to three 6 million.
Margins here were down from 27% 19%.
As noted earlier the primary driver of this margin and such.
Ongoing rate pressure at our Mallard wireline business.
And as rate pressure and it's been with us for several quarters now.
And the pass and been able to at least partially offset this top line price pressure reduction and frac sand cost and labor efficiency gains. This quarter. However, we were not able to further squeeze cost and and rate pressure and at the top line and slated.
And two a one for one impacts on margins.
And finally and processing solutions, adjusted EBITDA increased 2% from $900000.
700.
Segment margins moved down from 72%.
And <unk>.
And finally on the net income line for Q4, we reported a net loss of $6 7 million.
A $1 million detriment to Q2, Q threes loss of $5 $7 million. This change was in line with the sequential.
<unk>.
Now moving to the balance sheets.
Net debt did show a modest increase and this quarter and moving up slightly from Q3's, $2 4 million to a year and balance of $226 million.
This modest increase was driven by a $4 million working capital draw on the increased revenues, which was partially offset by this quarter's EBITDA.
Our term debt.
And this was reduced and another two $5 million during the quarter, bringing the year and valves to less than $18 million.
And total.
And of course, the entire year, we reduced our outstanding long term debt by $16 million.
Our nearly 50% moving year over year from.
Our balance of $33 million two as I said year end balance of just under $18 million.
Capex Q4 saw another quarter of near to business Capex spend.
As we noted earlier, we did see some significant spending.
And highest spec rigs on reactivation. However, we continue to adhere to our relatively high capitalization thresholds, resulting in little if any of that about and capitalize.
In total we saw less and $600000 and Capex reported for Q4 across all business lines and 200000 that 600000 without maintenance capex with the remaining 400000.
And largely driven by incremental real time monitoring and data capture and systems, along with some expenses associated with the stand up of a new human resource information.
So liquidity.
We ended the quarter was $16 million from liquidity consisting of one point.
Alright, and consisting of $13 $2 million and capacity on our revolver and $2 8 million and cash that's up 2 million from Q3 and $14 million and liquidity as.
As with last quarter, and increasing liquidity was largely driven by and increased the borrowing base as our accounts receivable balances continue to ramp.
Yes.
And finally before I turn it back over to Darren a couple of housekeeping items on the balance sheet.
Given the meaningful spread between our trading multiple and interest rates. We have long noted and it does not take and does that make sense to keep any unnecessary fixed asset.
And our balance sheet, specifically this means that we did not have any strategic interest and maintain material real estate holdings, and secondly, we will lease rather than buy and light duty vehicles and the lease terms are favorable.
This brings us to a couple of near term action items first we mentioned and in the past and we've had an increase and unsolicited interest in.
And sale leaseback transactions on a couple of our field locations and.
And as a result, we have recently launched a formal sale leaseback process on the largest of our facilities and milling facility.
To date this process is and Thats a significant strong interest and we look forward to continuing that process.
In conclusion.
Secondly, we have now fully right sized.
Sure.
Our light duty vehicle fleet to match, our near term outlook and expectations and.
And now having right sized that fleet, we are restructuring the leases to match. The current fleet size these items taken.
Taken together, we executed our exposure to return more than $15 million of cash flow balance sheets.
With an implied interest rate as well down into this.
And.
Now I'll turn it back over to Darren.
Thank you Brian.
Looking forward I am.
Must reiterate through growing confidence and we have and the market and our business.
We feel that our portfolio and services.
And well positioned to participate and the needs of GNP dynamic fishing.
Fishing capital spin while.
And while maintaining production levels.
Operated from prioritizes as well and these activities combined with disciplined drilling and completion growth.
We expect to see material demand growth for our high spec rigs across 2021.
This growth will lead to further price improvement.
I will point out and our Q4 pricing is within 10% of our Q1 pre downturn price.
Therefore, our current price and discussions with our clients have been mutually beneficial.
We will continue to have positive discussion.
<unk> prices improve.
I also want to point out for this segment as well as for our completion and other surplus segment.
Significant weather events and February will have an impact on our Q1 results.
Argued and probably slightly choppy.
And customer consolidation impact mentioned earlier spilled over into early January.
But.
First week of February our daily rig revenue with reaching the highest realized post downturn.
Unfortunately, shortly thereafter, we began to experience significant disruption, whether it bid and North Dakota.
Which moves across each of our operating regions and.
Ultimately.
South Texas and.
And Thats taken a 19 day for our combined rate locations.
Peak level this period and early February.
Further compounding impact maintenance.
And you're seeing in ramp mode, therefore, carrying higher cost.
Growth is event.
While our optimism regarding our rig business.
And all the highest its ever been in company history.
The materiality of whether its business and it will.
It will be delayed until Q2.
Within our completion and other services.
Our wireless service activity and have increased as we entered 2021.
Today, we are operating in seven years compared to $5 seven average in Q4.
Ex completion activity continues to grow.
And for wireline activity will increase.
But as Brendan pointed out pricing, but wireline and <unk> to decline across 2020.
And operator issues did and the late fall whether 21 programs.
We experienced competitive bid at breakeven and compliance.
Below operating profit.
And this type of pricing is not sustainable and we.
Expenses statement that will strength all of these organizations at the working capital need growth and access to government line decline.
We believe this will lead to a much needed foundation and the crop.
This sector.
And the segment was also impacted by significant weather events and February.
Approximately seven day from law Permian wireline operation not only due to the significant coal, but also the trailing effect of gas shortages.
And plan and desperately.
And delivery and completion activity.
Our other services within this segment will continue to see modest growth post 2021 at the majority of the are concentrated and DJ basin.
Reactivity patches Laura respond.
And I'll start.
And a stronger ramp.
And finally, our processing solutions segment.
Increased drilling and completion activity will naturally drive demand from processes and solutions assets.
And the ESG.
Industry create the potential for additional asset demand.
After the call for the reduction or potential elimination of gas line and increases our assets will play a part and this market.
And the catch up layer GAAP.
And without processing, losing assets and others and associated equipment.
We will not only support our clients and our own ESG effort, but it may lead to alternative revenue sources other operational and cost reduction.
And we're all well aware.
Environment and discussions are evolving.
We think our processing solutions segment has great potential to be and part of these discussions and future changes.
Typically ranger and the strong position.
We've proven drop in 'twenty and 'twenty positive result.
And how to manage and difficult market.
While Q4, and one experienced ramp up and whether that these items are isolated and kansas or by our balance sheet.
And many of our competitors will struggle with.
We are continuing to grow our market share with the top U S volume.
Our customers will receive excellent safety services and the most efficient operation.
And a relatively clean balance sheet continues to position us as it.
And industry consolidation.
Operator that concludes our prepared remarks, and we will now open up the call for questions.
We will now begin the question and answer session and ask a question Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
I withdraw your question. Please press Star then two.
Good day will come from Jason Bandel with Evercore ISI.
Hi, good morning.
Good morning, Jason.
First question, let's start on the rig side of the business, obviously and impressive increase and hours off the bottom here.
Can you give a little more color around your expectations for the cadence of rig deployments.
And you guys talked about deploying 12, it sounds like in Q4, there and obviously you have to make credit expenses and what that can mean in terms of ours given the other puts and takes with the weather impact when you talked about for Q1.
Yeah, well thanks for the question Jason Great.
Great demand definitely is continuing to grow.
Across Q1.
And we are experienced a continuous ramp.
And I mentioned and my comment.
The weather event Westbury disruptor.
Right.
And the Bakken and North Dakota down from the base envelope, all up across all of Texas, West, Texas and South.
South, Texas and literally and.
And so our moves out and we watched our revenue and <unk>.
And you cross each low basis with each location each missing about one week revenue, so and I said and.
Good day, and a 90 day by day to get back from roofing and <unk>.
Early February so it will match the performance for Q1 up and to your question the ramp continues.
But we're going to see.
Call it another 10% increase and activity.
And when you think about excluding the weather impact from a additional raised across Q1 and net with what we have no and part of this from our customers I think and the improvement in commodity price that we will continue to grow but at the.
And $60 all level set and buyers so that day.
Getting more demand and.
And as a commodity price driven issue, but at the same time, it's a market share driven issue.
Great.
It does and a unique position relative to our competitor day and when you think about working.
Working capital demands as activity increases when you think about the operator consolidation and.
Fifth gated process and that Theyre getting larger demand. They have it is putting a strain and competitors and we don't have the balance sheet is very difficult to compete so we're picking up market share and commodity prices and definitely helping us out as well.
And then given the operating basically youre dealing with here and your percentage of revenue has increased with the larger operators and you look on the drilling side that group has been.
And more conservative and adding activity and I'm trying to spend money.
And the Brooks and services side, what are they telling you in terms of expectations for 2021.
And do you see additional demand for more integrated contracts.
So for 'twenty, one and again, a large part of our demand are coming from the large and integrated.
Integrated oil companies.
And it really boiling down to the capital discipline by the ANP and BNP.
Trying to drive cash out of their business.
But that's all from imbalanced with having to maintain and build up the production.
We all know that EBIT and real.
Horizontal <unk>.
Commissioner wells and the decline rate and so what I would call it causing operators to really focus more on getting wells back online and offline.
We're doing maintenance activity due to try and get up to now.
And then balance of course that with GE capital has been so I think and a normal commodity price environment, you would see a strong and commodity price improvement you would be more of a strength runs and the drill bit.
And I see more of a balance between the drill bit and maintenance activity.
The environment and Herceptin.
Got it and that makes sense from them.
And we get one more in here on the completion side of the business and wireline you talked about how and in the past and what the kind of offset falling prices with other either.
And some cost or crack on.
It seemed like even though your revenue fell below your cost of services and increased in Q4.
What kind of steps can you take here and the near term I think I saw one of the Frac on providers talk about a possible increase and the near future.
Can you reduce your cost there can you consider looking at different provider or would you move to more of a hybrid gun solution just some thoughts around that please.
Yes.
And currently.
And as a integrated solution right now.
And we liked the ablation and because it.
For Middle head count and back office support loans.
And so we are committed to that.
And that we do view as Brendan mentioned and the frozen basis, we have been able to offset.
Our price reduction with.
Labor efficiency as.
And as well as through our supply chain and getting cost down there now and it was a very very tough year. We work both of those parts of the goods and you get to a point, where there's just no more space to meet the backlog right and so right now we're looking at.
Our supply chain and we're going to make the best decisions for the organization that gives a good level of inc. At the right cost so.
We're committed to the types of systems that we use but we are looking at alternatives.
And our supply chain.
Great. Thanks for the time I'll turn it back.
Our next question comes from Daniel Burke with Johnson Rice.
Yeah, Good morning, guys.
Good day.
Let's see I don't want to get hung up on a transitory weather impact story line in Q1, but did you guys have visibility to say, if it's Q1 revenue will be sequentially higher or not for Q4.
Yes, so we're still in the process of collecting all that data and figuring out what is going to happen for the full quarter.
Say that right now, we're probably looking at flat, including all of the revenue impact, but the wildcard here will be the March graph and so we're seeing early signs us low yourself as a SaaS Inc.
And expected ramp here as we look forward to the next two or three weeks now and what it does all come to fruition or not.
It's a question but.
And also the weather disruptions.
Pretty aggressive in terms of.
Requests coming in to get back up and this deal with incremental assets. So I think baseline we're talking flat.
Risks and positive risk and the upside on March.
Great.
Okay.
That's helpful. I appreciate I appreciate that clarity and and recognize its still the core.
And obviously isn't closed alright, just to retread on each day to.
Our larger segments.
Darren and I think I think I heard you referenced I mean.
Another 10% increase and in activity.
And in your answer just a moment or two ago I wasn't quite sure what the context wasn't maybe I misheard that again, just try and away.
Net.
Wait what.
Rig service activity could look like exiting Q1.
Yes, and that was my comment on repurchase activity, when we think about our average mark and rig or.
Q4.
And where I believe we will exit Q1 will.
It will be about a 10% increase and again that's taken out the disruptive event net cash so I'd break that patient flat revenue, you would think but thats not baked regionally.
But again, Mike and just on the App because numbers four rigs working.
Moving into the quarter or exiting the quarter.
Okay got it that helps and then.
A final one on the completion services side.
And again I understand you'll you'll take a hard look at the supply chain, but and and it's plausible that that pricing pressures that that pricing has bottomed and and with certain activity scenarios. Maybe maybe later this year theres, some some pricing upside, but I mean, it's the completion services segment and the and the first half of 'twenty one now.
Now at 20% business as it was in Q4 or can it can it return to the mid 20 percents that you all had really held very well as and that's frankly other competitors experienced some pressures over the preceding two years.
Well I think the margins that were reflected here and this quarter automobile and Martin and then compared to what we would've.
Scott and <unk>.
And <unk>.
First quarter operating.
And unfortunately.
I think when the operators to their credit and Dennis day went out and the 'twenty 'twenty, one bed commodity price and wasn't at this point.
And on the wireless market and to go for annual contract and so the price into locked in but that being said we have reopened those discussions and are pursuing price increases. So we're doing the right thing that will not happen overnight. So when you think about a Q1 price and it's pretty much baked for Q1 and anything we.
And on price improvement will not occur until Q2 download and look at the back half of the year to start and get back to more of a ranger Mallard historical wireline margin profile, you see and the patents.
Okay.
Alright, guys Thats helpful. I appreciate the I appreciate the color. Thank you.
Okay.
Thank you for your questions.
Our next question comes from Tom Curran with B Riley Securities.
Good morning.
Hey, good morning.
Darrin with the M&A prospects where were you.
Advanced the farthest, but couldn't reach a deal would have been some of the insurmountable obstacles I'm asking me about issues other than the sheer span of the bid ask spread.
And do you currently have prospects, where the gating item or items are unrelated.
To evaluation and seem resolver Bull.
Yes, I think.
No.
When we look at the acquisition opportunities that we've been looking at and historically have looked at.
No its been very issues, while we have and consummated start from right.
I think when you look at our active Youll at call. It 90 day.
And that will be stepped up.
One is raising quite a bit.
We are in active dialogue there are some things that are being delayed relative to where live and organizations that may be <unk> and.
And is there a risk that we see by operating and the transaction while loans has been forgiven that we make is based vision to hold off and.
And the playbook transaction and afterwards, so I would say no my guiding principle are awesome.
And Activations day.
We're running a very good observation, yes, we'd have some disruption and Q4.
Based on what we are we have a strong balance sheet. We've proven that we know how to operate efficiently and all day are attracting some good candidates for potential merger and acquisition and we will continue to work with those profit.
Okay and then.
Thank you for the update you gave on the customer high grading success.
<unk> had over the last few years with penetrating and growing your share of total revenue derived from those top probably E&P operators zeroing in on the majors, what do the major specifically represent as a percentage of your active rigs or rig fleet revenue.
Gosh I don't have those exact figures and.
And Brian.
And Im looking at brand and my head of rigs right now and no labor.
Well you did comment that 74% of our revenue comes from that.
Top 12 list.
As you might guess the majority vast majority of that is majors.
Very large independence and debt.
<unk>.
Yes.
That opportunity for us.
Colin.
It's not the vast majority, but its certainly well north of 50% and.
Closer to $75.
Yeah.
Great and and and Brandon that would specifically be for that.
The high high spec rig division.
Thats correct, sorry, yes, right and.
And then Oh.
And I'll close with one for you Brandon and I'm, sorry, if I missed it but what.
What is your your debt reduction target for 2021 with the.
And whether it's a specific level of range, just where would you like to exit this year at.
And I'd like to add to it.
And then or.
Alright.
Alright.
And so thats, our target and that it did.
As mentioned a few items that will add cash to our balance sheet and on a net net base.
And obviously.
And one for one addition, if we get those two items executed and.
And I'd like to say, we're very optimistic about both of those.
And it is very realistic to think of a net debt zero.
But.
That's that's a that's an aspiration not a promise.
And.
Understood.
Thanks for taking my questions.
Thanks, Tom.
And again, if you have a question you can press star and then one and join our Q.
Our next question comes from John Pitzer with Dialectic capital.
Yes, good morning, John Good morning.
Just one thing for everybody's benefit if you guys can do this called modern and.
Room with the speaker phone and we can all hear you a little bit better it's a little fuzzy.
Fuzzy.
I.
<unk> this quarter is as tricky with the weather.
But I'm just kind of.
And I'm curious if you can give us some idea of how you see the year playing out.
At this time of year, where you will give annual guidance or one might.
And know what your what your thoughts are on the matter.
Yes.
From a historical standpoint, we have made and practice building full year guidance I think when I talk about the optimism that we have and the market and our business that is absolutely true and Q.
Q1.
It will be tough due to the weather.
As Brendan mentioned, what we're seeing right now.
And as a ramp has continued post the weather event.
It is very strong and it continues to get stronger.
All the rigs out of our business we.
And we will be looking at considerable improvement.
And the.
Back half of the year compared to what we've run the last before and that will take considerable improvement.
On the completion side of our business is probably our wireline business.
We have to get some level of pricing back and talk about the pricing and the cost side, there, but we will see improvement, but that will be needed from other things that we have to get accomplished there and that.
The real upside that we can have for 2021 could be without profit and publishes as I talked about and our comments with what was able to ESG efforts will continue to GAAP exercise.
Net debt has definitely leveled off given the drop off and drilling and completion activity.
And that it can be comes back into the drop in demand for our profit and solution asset, but we think the gas capture because dry and equal or potentially even greater demand for those assets.
And if you add all that together, we're very very optimistic John.
And for 2021, again Q1 debuted it but I really think you'll start to see the payoff in Q2 and beyond and.
And you want to apologize for the.
Conditions on the call today. This is the first time, we are taking a call from our new office the day.
And of our new office and that we reduced our annual rent cost significantly and dropped our square footage down from the cost savings for all of our investor, but unfortunate for the first time and we're taking the call from this new room, and so we will correct that and the future.
And Thats, a great excuse I'm happy to listen more carefully if you're saving money. So.
I figured out and dropped.
And I like it so when do you think.
If you had to guess.
And when do you think you'd get back to peak revenue and do you see a path to exceeding your prior peak revenue at some point and the visible future.
On the rig side.
And definitely see a path to exceeding peak revenue.
And probably sooner than later and that is the opt.
Mis and Ma.
On the wireline side, the pricing and the market has come down.
Clearly over the last year.
Year, and a half and so region those peak levels will be.
Difficult.
And the short term and will be priced and help to get.
And those type of loans.
And with the saying that what I'm, saying that.
Items.
Great and.
And.
So once again I know, Tom asked about acquisitions, and what kind of hurdles were.
Do you still think the Windows open to get some done do you think it's the first half of the year is it just too difficult to tell and I know you've been focused on it for the better part of six months.
And maybe nine months at this point.
I Dunno, how do you handicap it.
And you are right every time, we had the call and we have noticed about acquisitions and we felt like broken records, though.
Yes, we've been working on for quite a while.
But I can honestly say that.
We feel like that we're kind of close and they are seeing.
On the right and.
Net net are near term and so.
And we hope to get one or two these low with banks and half.
Revenue.
Alright.
Just trying to understand what you said, but it sounded like you are.
You still hope youre going to get one done at that set a fair summary, yes.
Fair enough and you get there.
And my last question is really <unk>.
On everything you've said.
And today and even to my questions.
You should be generating some some real free cash flow over the course of this year on a run rate basis and on a.
Cumulative basis over the course of the year, your debt's going to be zero or approaching zero.
So you know I.
And I feel like it's it's exactly one year ago today I think I asked the same question what's your plan.
And that free cash are you going to return it to shareholders or are you going to do some share buybacks you know what.
What are your thoughts.
Okay.
Brad and John.
The thoughts are as they have been and we will evaluate that and in terms of that juncture in.
Historically accurate of conversations and the boardroom about strategy thought processes and what's due specifically no decisions have been made at this point and then I'll add Darren at this point.
And your question earlier M&A is off horizon for us. So we will need to incorporate that into our thought process sort of depending on what transactions we get done.
As of March and and we're talking about small amounts of money here some of those transactions could require a little bit of cash and across the finish line and get the synergies taken out of that transaction and get a little bit of cash without talking about a lot and Conversely, the other transactions will bring incremental cash to the balance sheet.
So that changes the calculus on that cash.
Capital disposition question.
At the margin so and the short answer is all options are on the table.
<unk> to be.
And as discussed at our capital allocation and we'll see what the right answer is when the time comes from Asia.
Yes.
Super.
Thanks, a lot.
And and good luck out there great job last year. It was really a standout performance and look forward to see what you guys do in 'twenty one.
Thank you John and thanks for question.
Yes.
This concludes our question and answer session I would like to turn the call back over to Darron Anderson for any closing remarks.
Thank you operator, and I think my.
And my final closing remarks from Pat just wanted to thank our team.
2020, what was a very difficult year for the industry very difficult year for Ranger, but our teams and absolutely outstanding job stepping up and the challenges with job growth also and thanks, everyone with volume for your interest and Ranger and again, we apologize and the sound quality and we will take care of that next quarter. This <unk>.
Our call. Thank you.
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