Ranger Energy Services, Inc. (RNGR): Business Model Canvas [10-2024 Updated]

In the competitive landscape of the oil and gas industry, understanding the business model of Ranger Energy Services, Inc. (RNGR) is crucial for investors and industry stakeholders alike. This innovative company thrives on strategic partnerships and a robust operational framework, providing high-quality rig and wireline services. With a focus on customer relationships and a diverse range of revenue streams, Ranger Energy Services stands out as a key player in the energy sector. Dive deeper to explore the essential components of their business model canvas.

Ranger Energy Services, Inc. (RNGR) - Business Model: Key Partnerships

Collaborations with oil and gas exploration companies

Ranger Energy Services collaborates with various oil and gas exploration companies to provide high specification rigs and wireline services. In Q3 2024, the revenue from high specification rigs increased by $7.5 million, or 9%, reaching $86.7 million compared to $79.2 million in Q3 2023. This increase is attributed to improved pricing and a 6% rise in the average revenue per rig hour, which reached $741. The total rig hours also increased to 116,900 hours from 112,400 hours year-over-year.

Partnerships with equipment manufacturers

Ranger maintains strategic partnerships with equipment manufacturers to enhance its service offerings. For instance, the cost of services for high specification rigs rose to $67.2 million in Q3 2024, up from $63.5 million in Q3 2023. This increase in costs is primarily due to rising variable expenses including employee-related labor costs and maintenance. Equipment reliability and technological advancements from these partnerships enable Ranger to optimize operations and reduce downtime.

Alliances with logistics providers

Effective logistics are crucial in the oil and gas sector, and Ranger Energy Services has established alliances with logistics providers to streamline its operations. The revenue from processing solutions and ancillary services grew by $4.0 million, or 13%, to $36.0 million in Q3 2024. This growth was driven by increased revenues in rentals, plugging and abandonment, and logistics services. The company reported a notable increase in revenues within its logistics service lines, reflecting the importance of these partnerships in enhancing operational efficiency.

Partnership Type	Revenue Impact (Q3 2024)	Cost of Services (Q3 2024)	Key Metrics
Oil & Gas Exploration Companies	$86.7 million (9% increase)	$67.2 million	116,900 rig hours
Equipment Manufacturers	Not specified	$67.2 million (increase due to labor and maintenance)	Increased operational reliability
Logistics Providers	$36.0 million (13% increase)	Not specified	Increased revenues in rentals and logistics

Ranger Energy Services, Inc. (RNGR) - Business Model: Key Activities

Providing high specification rig services

Ranger Energy Services focuses on delivering high specification rig services, which are essential for drilling and completing wells. For the nine months ended September 30, 2024, revenue from high specification rigs increased by $14.8 million, or 6%, totaling $249.1 million compared to $234.3 million for the same period in 2023. The average revenue per rig hour also rose by 5% to $730 from $693, with total rig hours increasing slightly to 341,000 from 338,100.

Metric	2024 (YTD)	2023 (YTD)	Change ($)	Change (%)
Revenue	$249.1 million	$234.3 million	$14.8 million	6%
Average Revenue per Rig Hour	$730	$693	$37	5%
Total Rig Hours	341,000	338,100	2,900	0.9%

Conducting wireline services for well completions

Wireline services are crucial for well completions, and for the nine months ended September 30, 2024, revenue from this segment decreased significantly by $70.0 million, or 44%, totaling $87.6 million compared to $157.6 million in 2023. This decline was primarily driven by a 63% decrease in completed stage counts, which dropped to 7,600 from 20,600.

Metric	2024 (YTD)	2023 (YTD)	Change ($)	Change (%)
Revenue	$87.6 million	$157.6 million	($70.0 million)	(44%)
Completed Stage Counts	7,600	20,600	(13,000)	(63%)

Offering processing solutions and ancillary services

Processing solutions and ancillary services form another critical component of Ranger Energy Services' operations. For the nine months ended September 30, 2024, revenue from this segment saw a slight decline of $1.9 million, or 2%, totaling $91.3 million compared to $93.2 million in 2023. This segment included notable increases in revenue from rentals, plugging and abandonment, and logistics.

Metric	2024 (YTD)	2023 (YTD)	Change ($)	Change (%)
Revenue	$91.3 million	$93.2 million	($1.9 million)	(2%)
Notable Increases in Revenue	Rentals: $1.9 million	—	—	—
Plugging and Abandonment	$1.5 million	—	—	—
Logistics	$1.0 million	—	—	—

Ranger Energy Services, Inc. (RNGR) - Business Model: Key Resources

Fleet of high specification rigs

Ranger Energy Services operates a fleet of high specification rigs, which are crucial for providing quality oilfield services. As of September 30, 2024, the revenue from high specification rigs was $86.7 million for the three months ended, reflecting a 9% increase from $79.2 million in the same period in 2023. The average revenue per rig hour increased by 6% to $741, up from $700 year-over-year, with total rig hours rising to 116,900 from 112,400.

The total revenue for high specification rigs for the nine months ended September 30, 2024, reached $249.1 million, compared to $234.3 million for the same period in 2023, marking a 6% increase.

Metrics	Q3 2024	Q3 2023	Change (%)
Revenue	$86.7 million	$79.2 million	+9%
Average Revenue per Rig Hour	$741	$700	+6%
Total Rig Hours	116,900	112,400	+4.4%

Skilled workforce in oilfield services

Ranger Energy Services relies heavily on a skilled workforce to operate its high specification rigs and provide ancillary oilfield services. The company has made significant investments in workforce training and development, ensuring that employees are equipped with the necessary skills and knowledge to operate complex equipment and deliver high-quality services to clients.

As of September 30, 2024, labor costs associated with high specification rigs increased by $9.1 million, reflecting the importance of maintaining a skilled workforce.

Moreover, the company has strategically reorganized its service lines to focus on higher-margin work, which requires a more skilled labor force. This decision has led to a more efficient allocation of human resources within the organization.

Strong relationships with key customers

Ranger Energy Services has established strong relationships with key customers in the oil and gas industry, which is vital for sustaining revenue growth and ensuring repeat business. The company has focused on building long-term partnerships with clients, which has proven beneficial in navigating market fluctuations and competitive pressures.

For the nine months ended September 30, 2024, Ranger generated $428.0 million in total revenue, down from $485.1 million in the same period in 2023, indicating the need to maintain customer relationships amid fluctuating market conditions.

The wireline services segment, which experienced a significant revenue decline, highlights the importance of customer loyalty and the impact of market dynamics on revenue generation. Wireline services revenue dropped to $30.3 million in Q3 2024 from $53.2 million in Q3 2023, a decrease of 43%.

Customer Relationship Metrics	Q3 2024	Q3 2023	Change (%)
Wireline Services Revenue	$30.3 million	$53.2 million	-43%
Total Revenue	$153.0 million	$164.4 million	-7%

Ranger Energy Services, Inc. (RNGR) - Business Model: Value Propositions

High-quality, reliable rig and wireline services

The High Specification Rigs segment generated revenue of $249.1 million for the nine months ended September 30, 2024, an increase of 6% compared to $234.3 million for the same period in 2023. The average revenue per rig hour rose to $730, up from $693, reflecting improved pricing strategies. Total rig hours for this period increased by 1%, reaching 341,000 hours from 338,100 hours in the prior year.

Expertise in complex oilfield operations

Ranger Energy Services has positioned itself as a leader in complex oilfield operations, particularly through its Wireline Services segment. However, this segment faced challenges with revenue decreasing by 44% to $87.6 million for the nine months ended September 30, 2024, down from $157.6 million in 2023. The reduction was driven by a significant 63% decrease in completed stage counts, falling to 7,600 from 20,600. This reflects a strategic pivot to focus on operations with better margins, demonstrating the company’s adaptability and operational expertise.

Commitment to safety and environmental standards

Ranger Energy Services emphasizes its commitment to safety and environmental standards, which is integral to its value proposition. The company maintained a total operating expense of $408.3 million for the nine months ended September 30, 2024, down 10% from $452.8 million in 2023. This reduction includes efforts to streamline operations while adhering to stringent safety protocols. The effective U.S. federal income tax rate applicable to the company increased to 29% for the nine months ended September 30, 2024, reflecting a commitment to maintaining compliance with regulatory standards.

Segment	Revenue (2024)	Revenue (2023)	Change (%)	Average Revenue per Rig Hour	Total Rig Hours
High Specification Rigs	$249.1 million	$234.3 million	6%	$730	341,000 hours
Wireline Services	$87.6 million	$157.6 million	-44%	N/A	7,600 completed stages
Total Operating Expenses	$408.3 million	$452.8 million	-10%	N/A	N/A

Ranger Energy Services continues to leverage its high-quality services and operational expertise while focusing on safety and environmental standards, which are critical to sustaining its competitive edge in the energy sector.

Ranger Energy Services, Inc. (RNGR) - Business Model: Customer Relationships

Long-term contracts with major clients

Ranger Energy Services focuses on establishing long-term contracts with major clients, which provides a stable revenue stream. For the nine months ended September 30, 2024, Ranger's total revenue was $428.0 million, with High Specification Rigs contributing $249.1 million, a 6% increase from $234.3 million in the same period of 2023.

The average revenue per rig hour increased by 5% to $730 from $693, reflecting improved pricing strategies. The company maintains a strategic approach to client relationships, which emphasizes reliability and service quality, crucial for retaining these long-term contracts.

Regular communication and feedback loops

Ranger Energy Services emphasizes regular communication with clients to ensure satisfaction and adapt to their evolving needs. This approach has been integral in maintaining client loyalty, especially during fluctuating market conditions. For instance, the company experienced a decrease in Wireline Services revenue, down 44% to $87.6 million for the nine months ended September 30, 2024, from $157.6 million in 2023. This decline was partly offset by increased revenue in High Specification Rigs and Processing Solutions, highlighting the importance of communication in adjusting service offerings.

Feedback mechanisms are in place to gather client insights, which help in refining service delivery and operational efficiency. This includes regular surveys and direct client engagement, ensuring that Ranger can respond proactively to client requirements.

Dedicated account management for key customers

Ranger Energy Services employs dedicated account managers for key clients to foster stronger relationships and enhance service delivery. This personalized attention helps in understanding specific client needs and tailoring services accordingly. As of September 30, 2024, the company reported an Adjusted EBITDA of $57.0 million, a decrease from $66.0 million in the prior year, indicating the need for focused account management strategies.

The dedicated account management approach has been critical in mitigating revenue losses from the Wireline Services segment, where the company restructured its service offerings to align with higher-margin work. By prioritizing high-value clients and ensuring their needs are met promptly, Ranger aims to stabilize and grow its revenue base despite industry challenges.

Metric	Q3 2024	Q3 2023	Change (%)
Total Revenue	$153.0 million	$164.4 million	-7%
High Specification Rigs Revenue	$86.7 million	$79.2 million	+9%
Wireline Services Revenue	$30.3 million	$53.2 million	-43%
Processing Solutions Revenue	$36.0 million	$32.0 million	+13%
Net Income	$8.7 million	$9.4 million	-7%

Ranger Energy Services, Inc. (RNGR) - Business Model: Channels

Direct sales through company representatives

Ranger Energy Services employs a dedicated sales force to engage directly with clients in the oil and gas sector. This approach enables the company to effectively communicate its value propositions and tailor services to meet specific client needs. For the nine months ended September 30, 2024, the company reported a total revenue of $428 million, with $249.1 million derived from High Specification Rigs, $87.6 million from Wireline Services, and $91.3 million from Processing Solutions and Ancillary Services.

Industry conferences and trade shows

Participation in industry conferences and trade shows is crucial for Ranger Energy Services to showcase its capabilities and network with potential clients. These events provide opportunities to demonstrate the effectiveness of their high specification rigs and ancillary services. Such marketing efforts contribute to the company's overall visibility and market penetration, essential for sustaining revenue streams. In 2024, the company’s revenue from High Specification Rigs increased by 6% compared to the previous year.

Online platforms for service inquiries

Ranger Energy Services utilizes online platforms to facilitate service inquiries and enhance customer engagement. The company's website serves as a central hub for clients to access information about services, submit inquiries, and request quotes. This digital presence is increasingly important in the modern business landscape, contributing to a streamlined customer experience. The average revenue per rig hour has risen to $730 for the nine months ended September 30, 2024, reflecting improved operational efficiencies and effective online marketing strategies.

Channel	Revenue Contribution (2024)	Percentage Change YoY
High Specification Rigs	$249.1 million	6%
Wireline Services	$87.6 million	-44%
Processing Solutions and Ancillary Services	$91.3 million	-2%
Total Revenue	$428 million	-12%

Ranger Energy Services, Inc. (RNGR) - Business Model: Customer Segments

Oil and gas exploration companies

Ranger Energy Services, Inc. serves a variety of oil and gas exploration companies by providing high specification rigs and associated services. For the nine months ended September 30, 2024, revenue from the High Specification Rigs segment was $249.1 million, reflecting a 6% increase from $234.3 million in the same period of 2023. This growth was attributed to a 5% increase in the average revenue per rig hour, which rose to $730 from $693, along with a 1% increase in total rig hours to 341,000.

Midstream and downstream operators

Midstream and downstream operators are crucial customer segments for Ranger, as they require efficient processing and transportation services. Revenue from Processing Solutions and Ancillary Services for the nine months ended September 30, 2024, was $91.3 million, a slight decrease from $93.2 million in the prior year. However, specific service lines, such as rentals and logistics, saw increased revenue contributions of $1.9 million and $1.0 million, respectively.

Service companies in the energy sector

Service companies in the energy sector are also key customers, particularly for Ranger’s Wireline Services segment. For the nine months ended September 30, 2024, Wireline Services revenue was $87.6 million, down 44% from $157.6 million in 2023. This decline was primarily due to a significant reduction in completion services, which saw a 63% decrease in completed stage counts.

Customer Segment	Revenue (2024)	Revenue (2023)	Change (%)
High Specification Rigs	$249.1 million	$234.3 million	6%
Wireline Services	$87.6 million	$157.6 million	-44%
Processing Solutions and Ancillary Services	$91.3 million	$93.2 million	-2%

Ranger Energy Services has adapted its offerings to meet the specific needs of these customer segments, emphasizing operational efficiency and tailored service solutions.

Ranger Energy Services, Inc. (RNGR) - Business Model: Cost Structure

Major expenses in personnel and equipment maintenance

The cost structure of Ranger Energy Services, Inc. (RNGR) is significantly influenced by personnel and equipment maintenance expenses. For the nine months ended September 30, 2024, the cost of services associated with High Specification Rigs increased to $198.8 million, up from $185.6 million in the previous year, reflecting a $13.2 million rise primarily due to employee-related labor costs, which accounted for $9.1 million of the increase. Additionally, repair and maintenance costs contributed $2.2 million, while travel costs accounted for $1.9 million.

Variable costs linked to operational activity levels

Variable costs at Ranger Energy Services are closely tied to operational activity levels. For the nine months ended September 30, 2024, total cost of services decreased to $356.0 million from $402.0 million, a reduction of $46.0 million. The decrease was mainly driven by a $55.9 million reduction in Wireline Services costs, which fell to $84.4 million, influenced by a restructuring to focus on more profitable service lines. The cost of services as a percentage of revenue remained constant at 83%.

Segment	Cost of Services (2024)	Cost of Services (2023)	Change ($)	Change (%)
High Specification Rigs	$198.8 million	$185.6 million	$13.2 million	7%
Wireline Services	$84.4 million	$140.3 million	($55.9 million)	(40%)
Processing Solutions and Ancillary Services	$72.8 million	$76.1 million	($3.3 million)	(4%)
Total Cost of Services	$356.0 million	$402.0 million	($46.0 million)	(11%)

Fixed costs associated with administrative functions

Fixed costs related to administrative functions for the nine months ended September 30, 2024, were reported at $20.7 million, down from $22.7 million in 2023, marking a decrease of $2.0 million or 9%. This reduction was primarily attributed to lower personnel costs and decreased legal fees incurred in the prior year. Depreciation and amortization expenses also increased to $33.3 million from $29.3 million, reflecting higher capital expenditures.

Expense Type	2024 Amount	2023 Amount	Change ($)	Change (%)
General and Administrative	$20.7 million	$22.7 million	($2.0 million)	(9%)
Depreciation and Amortization	$33.3 million	$29.3 million	$4.0 million	14%

Ranger Energy Services, Inc. (RNGR) - Business Model: Revenue Streams

Hourly billing for rig services

Ranger Energy Services generates significant revenue through hourly billing for high specification rig services. For the three months ended September 30, 2024, revenue from high specification rigs was reported at $86.7 million, an increase of 9% from $79.2 million for the same period in 2023. This growth is attributed to improved pricing, with the average revenue per rig hour rising to $741, up 6% from $700 in the previous year. The total rig hours also increased to 116,900 hours compared to 112,400 hours in the prior year.

Period	Revenue ($ million)	Average Revenue per Rig Hour ($)	Total Rig Hours
Q3 2024	86.7	741	116,900
Q3 2023	79.2	700	112,400

Fees for wireline completion services

Fees for wireline completion services represent another crucial revenue stream for Ranger Energy Services. However, for the three months ended September 30, 2024, revenue from wireline services decreased significantly, totaling $30.3 million, down 43% from $53.2 million in the same quarter of 2023. This decline was primarily due to a 63% decrease in completed stage counts, falling to 2,500 from 6,800 year-over-year. The drop reflects a strategic decision to focus on projects with better margins amid lower operational activity.

Period	Revenue ($ million)	Completed Stage Counts
Q3 2024	30.3	2,500
Q3 2023	53.2	6,800

Revenue from ancillary services and rentals

Ranger Energy Services also generates revenue from ancillary services and rentals. In the three months ended September 30, 2024, revenue from processing solutions and ancillary services increased by 13% to $36.0 million, compared to $32.0 million in Q3 2023. This increase was supported by higher revenues in various segments, including rentals, plugging and abandonment, logistics, and coil tubing, which contributed $1.7 million, $1.4 million, $0.6 million, and $0.4 million, respectively.

Service Type	Revenue Increase ($ million)
Rentals	1.7
Plugging and Abandonment	1.4
Logistics	0.6
Coil Tubing	0.4

Overall, the revenue streams of Ranger Energy Services reflect both growth in certain segments and declines in others, indicative of the company's strategic adjustments in response to market conditions and operational focus.

Article updated on 8 Nov 2024

Resources:

1. Ranger Energy Services, Inc. (RNGR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Ranger Energy Services, Inc. (RNGR)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Ranger Energy Services, Inc. (RNGR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.