Good morning, and welcome to the Ranger Energy Fourth Quarter 2020 Conference Call. [Operator Instructions] Please note, this event is being recorded. .

I would now like to turn the conference over to Darron Anderson, CEO. Please go ahead. .

Thank you, operator. Good morning. Welcome to Ranger Energy Services' Fourth Quarter 2020 Earnings Conference Call. Joining me today, as always, is Brandon Blossman, our CFO, who will offer his comments in a moment. .

Getting started here, the fourth quarter marked the first real signs of our industry rebounding from the activity low points of 2020. With WTI prices widening in the $40 range during the quarter, operators began to increase activity, translating to a 22% growth in U.S.

land rig count, and a 63% growth in frac spread count, although both metrics were starting from historic lows. Not surprisingly, Ranger experienced its first significant increase in activities within our production related rig operations.

These type of operations can be quickly mobilized to bring production back online and we expected to see this part of our diversified offering as a forefront of operator demand. .

If you recall from our June reporting, the upward trajectory of our rig activity started in late Q3 and early Q4. The trends were experiencing at the time calculated the rig hours to be up 25% to 30% in the fourth quarter. With actual rig hours up 43% through Q4, activity continued to ramp even faster than we had projected.

This growth boosted our consolidated revenue to $41.5 million, a 20% sequential increase. While we are very pleased with our top-line performance, we did experience a onetime offsetting cost in year-end disruption that resulted in an adjusted EBITDA of $3.2 million.

This figure represents our 14th quarter in a row of positive EBITDA since going public, and we are very proud of the fact that during the fiscal year of 2020, Ranger delivered positive EBITDA each and every single month of the year. .

Before I dive into the details of our quarterly results, I would like to provide a general recap of our 2020 performance and an update on the strategies that we've been working on. First, our balance sheet, in one of the most difficult years encountered in our industry, Ranger made considerable progress improving our already strong balance sheet.

For the year, we generated $26 million of operating cash flow and decreased our long-term debt by nearly 50%. Maintenance CapEx for the year was a minimal $1.1 million, which highlights one of the benefits of our outstanding asset base, and we remain disciplined with growth CapEx of $6.5 million predominantly expensed in the first quarter. .

Next, our efficiencies cost management, whether it is efficiency gain at the wellhead or within our back office, we continue to identify opportunities to create value through improved processes and technologies. At the wellhead, we made significant headway in capturing real-time data across 2020.

What began as a need for instantaneous visibility of completion drill [ parameter ] in order to drive efficiency to our customer, has evolved to a much wider range of operational and performance metrics that have been used to capture market share with top tier clients.

In regards to our back office, our 2020 corporate G&A, excluding equity cost, ran 9.7% of revenue, down 20% year-over-year. We believe we operate with one of the lowest cost structures of public OFS companies today. As a result, this places Ranger at a competitive advantage for pursuing acquisition opportunities.

Both target companies and ourselves, see the opportunity to apply Ranger's back-office processes to a broader organization to translate to immediate value creation. .

Next, our top tier clients, working for a top tier client base has been an objective for Ranger, and we continue to demonstrate that with this initiative across 2020. To put this into perspective, looking at the top 12 E&P companies in the U.S. measured by their 2020 capital spend, Ranger provided services to 10 of these 12 companies.

And given that we've added a new integrated customer in early '21, our total is now 11 of 12. In terms of revenue contribution to Ranger, this set of top tier clients contributed 43% of our 2018 revenue as compared to 74% today. These revenue contribution metrics are a great representation of Ranger's strong partnership with the top E&P producers.

The financial health of our organization is allowing us to meet their stringent [ spacing ], service and active quality demand as well as to meet their growing working capital requirements that many OSF companies will struggle with as activity continue to ramp.

Hopefully this gives you a little better insight for not only the financial accomplishments of Ranger during the very difficult market of 2020, but also the strong positions we find ourselves in as we move into a period of market recovery during 2021.

When Brandon provides comments momentarily, he will share a couple of new developments that continue to place us in a position of readiness. .

Now for more details on the quarter, starting with High Spec Rigs. A 50% increase in High Spec Rig revenue was the primary driver for our overall revenue growth. Within our High Spec Rig segment, very strong rig demand drove a 43% increase in rig hours. As mentioned in my opening comments, our rig activity growth began in Q3.

That momentum continued to improve across Q4. When comparing our Q3 entry activity level versus our Q4 exit, hours were up 76%. We were very pleased to experience increased demand for Ranger rigs across every region we serve. This significant demand for our rigs resulted in the need to reinstate or hire new field employees.

Additionally, our rig deployments were highly concentrated with top tier clients whose quality standards and a longevity of well maintenance programs, justified an appropriate level of make-ready investment. Our hiring, training and maintenance expenditure on these rigs totaled $1.3 million for the quarter.

Although this was a onetime expense associated with the make-ready of 18 rigs, we did not add it back to our reported [ EPS ] figures, which would have resulted in an adjusted EBITDA of $4.5 million. Instead, we showed the maintenance in consistency with our historical reporting methodology. .

Because our top line growth was so strong in the quarter, other revenues [ disruptors were met ]. We've been fortunate to have minimal COVID-19 related interruptions within our rig segment. But during the quarter, we lost several days on each one of our rigs due to COVID-19 concerns.

Additionally, we experienced 2 weeks of interruption at year-end on select 24-hour rigs due to customer consolidation budget adjustments. .

Moving on to our Completion and Other Services segment, within this segment, our ramping activity was not as pronounced. While we experienced revenue increases with our smaller other service offerings, that growth was offset by a 7% decline in our Wireline revenue.

Normally, we would see this decline as a positive, given the expected year-end seasonal impacts. But during the fourth quarter, we were fortunate to have only one customer [ resolve ] their 2020 budget early. Unfortunately, it occurred on November 15, resulting in a loss of a dedicated fleet for half a quarter.

This fleet has since returned on a dedicated basis as of mid-January. .

Additionally during the fourth quarter, we began discussions with many of our customers in regards to conducting simul-frac trial operations. These operations require 2 wireline units on a multi-well pad and final phase operations are conducted.

With one particular customer, our current operations was scheduled to begin in early December, but was significantly delayed due to COVID-19 amongst the frac provider's crew. While this resulted in a temporary disruption, we are pleased with the fact that we and our customer's put the health and safety of our employees first. .

And finally, our Processing Solutions segment, as expected, activity remained flat for the quarter. The traditional use of these assets have a lag for drilling and completion activity. Given the increase in commodity prices and growing activity levels, we expect to see the demand for these assets to improve as we move further into 2021.

Equally as important, we see this segment as having the opportunity to make a strong contribution to the ESG effort of our customers and to the industry. I will discuss this morning in my closing comments, and I will now turn the call over to Brandon for more detail on the numbers. .

Thank you, Darron, and good morning to everybody on the call. Let's go ahead and do our normal full walk-through of the fourth quarter details. First, to reiterate the consolidated numbers, relative to last quarter, Q4's revenues were up 20% or $7 million moving from $35 million to $42 million.

Adjusted EBITDA was down 27% or $1.2 million moving from $4.4 to $3.2 million. And as Darron mentioned just a bit ago, that $3.2 million in EBITDA does include $1.3 million of expenses associated with high-spec rig reactivations. Overall, the adjusted EBITDA margin moved from 13% to 8% for the quarter. .

And now onto the segment details, starting with revenue. High Spec Rig revenue was up a solid 50% or $7 million, moving from $14 million to $22 million on the combined effect of an increase in period rig hours, along with an increase in composite rig rates.

Specifically, revenue hours increased 43% or 12,900 hours, moving from 30,200 hours to 43,100 hours, partially on the addition of an average of 12 rigs in the quarter, bringing the Q4 average rig count to 42 rigs. Composite hourly rig rates also increased. They were up 5% quarter-over-quarter or $23 an hour, moving from $480 an hour to $503 per hour.

Increased 24-hour work supported the higher rig rigs with 26% of our activity being 24-hour operations as compared to 20% for the third quarter. .

In the Completions and Other Services segment, revenue saw a slight decrease of $300,000 moving to $18.6 million in Q4. This slight decrease was fully attributable to our Mallard Wireline business, which, as Darron detailed, on early year-end shutdown on budget's option and a COVID-related delay, along with ongoing pricing pressure.

Here in the Mallard Wireline business, our revenues were down 7% sequentially, driven by a 6% decrease in composite pricing per stage, along with the stage count that was just slightly lower period-over-period. And finally, at our Processing Solutions segment revenues held flat at $1.2 million for the quarter. .

Now moving on to segment level EBITDA and margins.

Overall, segment level adjusted EBITDA just being before corporate G&A, saw a decrease of 13% or $1.1 million, moving down from $8.3 to $7.2 million in the fourth quarter, and an increase at the High Spec Rigs segment, offset primarily -- was offset primarily by the EBITDA decline in Completion and Other Services.

On the margin front, consolidated segment margins, again before corporate G&A, were down from 24% versus 17%. G&A expense, as adjusted, was just up from flat at $4 million versus $3.9 million in Q3, which marks our third quarter at this new materially lower G&A run rate. .

And now at the segment level, for High Spec Rigs, adjusted EBITDA was up 21% or $0.5 million, moving from $2.4 million to $2.9 million, with margins moving in the opposite direction down from 17% to 13% percent.

I'll note here that adjusting out the $1.3 million of make-ready expenses seen in this segment would have resulted in an EBITDA increase of 75% sequentially, along with a margin increase to 19%. At the Completion and Other Services segment, adjusted EBITDA was down 28% or $1.4 million from $5 million to $3.6 million.

Margins here were down from 27% to 19%. As noted earlier, the primary driver of this margin reduction was ongoing rate pressure at our Mallard Wireline business. This rate pressure has been with us for several quarters now.

In the past, we've been able to at least partially offset this top line price pressure with reduction in [ frac and ] costs and labor efficiency gains. This quarter, however, we were not able to further squeeze costs and rate pressure at the top line translated into a one-for-one impact on margins.

And finally, Processing Solutions adjusted EBITDA decreased 22% from $900,000 to $700,000, while segment margins moved down from 72% to 60%. And finally, on the net income line, for Q4, we reported a net loss of $6.7 million, a $1 million decrement to Q3's loss of $5.7 million. This change was in line with the sequential EBITDA change. .

Now moving to the balance sheet. Net debt did show a modest increase in this quarter, moving up slightly from Q3's $2.4 million to a year-end balance of $26 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 balance was reduced another $2.5 million during the quarter, bringing the year-end balance to less than $18 million.

In total, over the course of the entire year, we reduced our outstanding long-term debt by $16 million or nearly 50%, moving year-over-year from a balance of $33 million to, as I said, a year-end balance of just under $18 million. .

CapEx, Q4 saw another quarter of near de minimis CapEx spend. As we noted earlier, we did see some significant spending in high-spec rigs on reactivation. However, we continued to adhere to our relatively high capitalization thresholds, resulting in little if any of that amount being capitalized.

In total, we saw less than $600,000 of CapEx reported for Q4.

Across all business lines, less than $200,000 of that $600,000 was on maintenance CapEx, with the remaining $400,000 largely driven by incremental real-time monitoring and data capturing systems, along with some expenses associated with the standup of a new human resource information system. .

Liquidity, we ended the quarter with $16 million of liquidity, consisting of $13.2 million of capacity on our revolver and $2.8 million of cash. That's up $2 million from Q3's $14 million of liquidity.

As of last quarter, the increase in liquidity was largely driven by an increase in borrowing base as our accounts receivable balances continue to [ lag ]. .

And finally, before I turn it back over to Darron, just a couple of housekeeping items on the balance sheet. Given the meaningful spread between our trading multiple and interest rates, we have long noted that it does not make much sense to keep any unnecessary fixed assets on our balance sheet.

Specifically, this means that we do not have any strategic interest in maintaining material real estate holdings and effectively we'll lease rather than buy light-duty vehicles when the lease terms are favorable to us. This brings us to a couple of near-term action items.

First, we've mentioned in the past that we've had an increase in unsolicited interest in sale-leaseback transactions on a couple of our field locations. And as a result, we have recently launched a formal sale-leaseback process on the largest of our facilities, the Milliken facility.

To date, this process has been met with significant strong interest, and we look forward to continuing that process due through to its logic conclusion. Secondly, we have now fully rightsized our light-duty vehicle fleet to match our near-term outlook and expectations.

And now having rightsized that fleet, we are restructuring the lease to match the current fleet size. These items taken together, when executed are expected to return more than $15 million of cash to the balance sheet with an implied interest rate of well down into the single digits. .

Now I'll turn it back over to Darron. .

Thank you, Brandon. Looking forward, I must reiterate the growing confidence that we have in the market and our business. We feel that our portfolio of services are well-positioned to participate in this new E&P dynamic of efficient capital spending while maintaining production levels.

Operators are prioritizing well maintenance 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 improvements. I will point out that our Q4 pricing is within 10% of our Q1 pre-downturn pricing.

Therefore, our current pricing discussions with our clients have been mutually beneficial and we will continue to have positive discussions as commodity prices improve. .

I also want to point out for this segment as well as our Completions and Other Services segment, the significant weather event in February will have an impact on our Q1 results. Our year has started off slightly choppy as the customer consolidation impact mentioned earlier, spilled over into early January.

But by the first week of February, our daily rig revenue was reaching the high peaks realized post downturn. Unfortunately, shortly thereafter, we began to experience a significant disruption weather event in North Dakota, which moved across each of our operating regions and ultimately into as far as South Texas.

It has taken us 19 days for our combined rig locations to return to the peak level experienced in early February. To further compound the impact, we continued to be in a ramp mode, therefore, carrying higher cost into this disruptive event.

While our optimism regarding our rig business is probably the highest it's ever been in company history, the materiality of where this business is headed will be [ played ] until Q2. .

Within our Completion and Other Services segment, our wireline activity has increased as we enter 2021. Today, we are operating 7 units compared to the 5.7 average in Q4. As completion activity continues to grow, the demand for wireline activities will increase. But as Brandon pointed out, pricing for wireline continued to decline across 2020.

As operators issued bids in the late fall for the [ Clean ] '21 programs, we experienced competitive bids at breakeven and sometimes below operating cost. This type of pricing is not sustainable, and we expect to see considerable strain on these organizations after working capital needs grow and access to government money declines.

We believe this will lead to a much needed consolidation across this sector. This segment was also impacted by the significant weather event in February.

Approximately 7 days were lost in our Permian wireline operation, not only due to the significant [ coal ], but also the [ trended ] effects of gas shortages to sand plants, thus delay sand delivery and completion activities.

Our other services within the segment will continue to see modest growth across 2021 as the majority of these are concentrated in the DJ basin, where activity has been slower to respond, but has now started to experience a stronger ramp. .

And finally, our Processing Solutions segment, increased drilling and completion activity will naturally drive the demand for our Processing Solutions assets. But ESG efforts of our industry creates a potential for additional asset demand.

As the call for the reduction or potential elimination of [ gas flare ] increases, our assets will play a part in this market.

The capture of flared gas, combined with our processing solution assets and other associated equipment, will not only support our client and our own ESG effort, but may lead to alternative revenue sources or other operational cost reductions. As we're all not aware, the current environment discussions are evolving quickly.

We think our Processing Solutions sector has great potential to be in part of these discussions and future changes. .

To conclude, Ranger is in a strong position. We have proven through our consistent 2020 positive results that we know how to manage in a difficult market. While Q4 and Q1 experienced ramp costs and weather events, these items are isolated and can be absorbed by our balance sheet, something many of our competitors will struggle with.

We are continuing to grow our market share with top tier clients. Our customers will receive excellent safety, service and the most efficient operation. And our relatively clean balance sheet continues to position us as a participant in the industry consolidation. .

Operator, this concludes our prepared remarks. And we will now open up the call for questions. .

[Operator Instructions] Our first question today will come from Jason Bandel with Evercore ISI. .

The first question, let's start on the rig side of the business. Obviously impressive increase in hours at the bottom here. Can you give a little more color around expectations for the cadence of rig deployments? I know you guys talked about deploying 12 it sounds like in Q4 there.

And obviously, you had some make-ready expenses and what that can mean in terms of hours given the other puts and takes with the weather impact that you talked about for Q1. .

Yes. So thanks for the question, Jason. Our rig demand definitely is continuing to grow across Q1. We are experiencing a continuous ramp. As I mentioned in my comments, the weather was very disruptive. We operate from the Bakken in North Dakota down to the [ Bakken in ] Oklahoma, across all of Texas, West Texas, East Texas, South Texas.

And literally, as storm the moved out, we watched our revenue get impacted across each location with each location, each missing about 1 week of revenue. So as I said, it takes 19 days to get back to the peak that we were seeing in early February. So it will map the performance for Q1. But to your question, the ramp continues.

I think that we're going to see, call it, another 10% increase in activity. When you think about excluding the weather impact from additional rigs across Q1. And that's with what we have in front of us from our customers. I think if we see improvement in commodity price, that will continue to grow.

But at the $60 oil level that we find ourselves at today, we're getting more demand. And it's a commodity price driven issue, but at the same time, it's a market share driven issue. The health of our rig business puts us in a unique position relative to our competitor base.

And when you think about the working capital demand as activity increases, when you think about the operator consolidation and the sophisticated processes of there being larger demand that they have, it is putting a strain on competitors. And when you don't have the balance sheet, it's very difficult to compete.

So we're picking up market share and commodity prices is definitely helping out as well. .

And then given the operator base that you're dealing with here, as your percentage of revenue has increased with the larger operators, if you look on the drilling side, that group has been, I'd say, more conservative in adding activity and trying to spend money.

On the production 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 2021, again, the large part of our demand are coming from the large E&P integrated oil companies. I think it's really boiling down to the capital discipline by the E&Ps and being trying to drive cash out of their businesses. But that's also being balanced with having to maintain the level of production.

We all know the history of horizontal unconventional wells and the decline rate. And so what that's causing is, it's causing operators to really focus more on getting wells back on line, to go offline, or doing maintenance activity to try to get production up. And then that of course is that with the capital expenditure.

So I think in a normal commodity price environment, you could see a -- or historic commodity price improvement, you would see more of a straight run to the drill bit. I think you're going to see more of a balance between the drill bit and maintenance activity in this new environment we find ourselves in. .

That makes sense. And let me get one more in here on the completion side of the business. In Wireline, you talked about how in the past, you were able to kind of offset falling prices with other -- either reducing costs or frac guns. It seemed like even though your revenue fell, your cost of services has increased in Q4.

So what kind of steps can you take here in the near term? I think I saw one of the frac gun providers talk about a possible increase in the near future. How can you reduce your cost there? Can you consider looking at a different provider? Or would you move to more of like a hybrid gun solution? Just some thoughts around that, please. .

Yes. So currently, we run an integrated gun solution right now. We like that type of solution because it calls for minimal headcount or back office shop support loading that business. So we are committed to [indiscernible] and of the type guns that we do use.

As Brandon mentioned on a historical basis, we have been able to offset our price reduction with labor efficiency as well as to our supply chain and getting cost out there. Now it was a very, very tough year.

We worked both of those as hard as we could, but you get to a point to where there is just no more [ place to meet ], 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 quality at the right cost.

So we're committed to the type of systems that we use, but we are looking at alternatives around our supply chain. .

Our next question comes from Daniel Burke with Johnson Rice. .

Let's see. I don't want to get hung up on a transitory weather impact storyline in Q1.

But do you guys have visibility to say if Q1 revenue will be sequentially higher or not versus Q4?.

Yes. So we're still in the process of collecting all of that data and figuring out what is going to happen for the full quarter. I would say that right now, we're probably looking at flat, including all of the revenue impacts, but the wildcard here will be the March ramp.

And so we're seeing early signs of -- and I don't want to oversell this, but faster, I think, than expected ramp here as we look forward to the next 2 or 3 weeks. Now whether those all come to fruition or not is a question.

But off of the weather disruptions has been pretty aggressive in terms of requests coming in to get back out in the field with incremental assets. So I think baseline we're talking flat with some risk, positive risk to the upside on March ramp. Darron, I don't know. .

No, that's [ correct ]. .

That's helpful. I appreciate that clarity and recognize it's still the quarter obviously isn't closed. All right. Just to retread on each of the 2 larger segments.

Darron, I think I heard you reference, I mean, another 10% increase in activity in your answer just a moment or 2 ago, I wasn't quite sure what the context was or maybe I misheard that, again, just trying to weigh what rig service activity could look like exiting Q1. .

Yes. And that was my comments on rig [ activity ]. It was when we think about kind of our average market rate for Q4 compared to where I believe we'll exit Q1 will be about a 10% increase. Now again, that's taking out the disruptive events that we had.

So I've rated that [indiscernible] flat revenues, you would think with that [indiscernible], you would be up. But again, my [indiscernible] is just on the absolute numbers for rigs working coming into the quarter versus exiting the quarter. .

Okay. Got it. That helps. And then a final one on the completion services side. Again, I understand you'll take a hard look at the supply chain, and it's plausible that pricing pressures, that the pricing has bottomed and with certain activity scenarios, maybe later this year, there's some pricing upside.

But I mean, is the completion services segment in the first half of '21, now a 20% business as it was in Q4? Or can it return to the mid-20% that you all had really held very well as frankly other competitors experienced some pressures over the preceding 2 years?.

Well, I think the margins that were reflected here in this quarter are probably more relative to the margin than compared to what we've gotten, call it, in '19 or first quarter of '20, unfortunately. I think when the operators to their credit and benefit went out to the 2021 bid, commodity pricing wasn't at this point.

And on the wireline side, they tend to go for annual contracts. And so a lot of pricing was locked in. Now 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 pricing, it's pretty much base for Q1, anything we get on price improvement will not start to occur until Q2. So I'd really look at the back half of the year to start to get back to more of a Ranger Mallard historical wireline margin profile you've seen in the past. .

Our next question comes from Tom Curran with B. Riley Securities. .

Darron, with the M&A prospects where you've advanced the farthest but couldn't reach a deal; what have been some of the insurmountable obstacles? I'm asking 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 valuation and seem resolvable?.

Yes. I think when we look at the acquisition opportunities that we've been looking at historically or have looked at, there have been various issues why we haven't consummated [ start with ], right? I think when you look at our activity in the last, call it, 9 days it definitely sets up -- our phone is ringing quite a bit. We are in active dialogue.

There's some things that are being delayed relative to [indiscernible] organizations that may have took PPT money. And it is a risk that we see by consummating the transaction while a loan hasn't been forgiven that we may just make the decision to hold off and complete those transactions afterwards.

So I would say my guiding principle or thoughts on some acquisitions that we're running a good organization. Yes, we had some disruptive events in Q4. But we're very pleased with where we are. We have a strong balance sheet. We've proven that we know how to operate efficiently.

And all those things are attracting some good candidates for potential mergers and acquisitions, and we will continue to work with the process. .

Okay. And then thank you for that update you gave on the customer high grading success you've had over the last few years with penetrating and growing your share of total revenue derived from those top 12 E&P operators.

Zeroing in on the majors, what do the majors specifically represent as a percentage of your active rigs or rig fleet revenue?.

Gosh. I don't have those exact figures in front of me. I'm looking at Brandon, my head of rigs right now... .

Well, you did comment that 74% of our revenue comes from that top 12 list. As you might guess, the vast majority of that is majors with some very large independents in that list. Of that, [ 74% ] call it, it's not the vast majority, but it's certainly well north of 50%. It's probably closer to 75%. .

Great.

And Brandon, that would specifically be for the High Spec Rig division?.

That's correct. Sorry, yes. .

Right. And then I'll close with one for you, Brandon.

And I'm sorry if I missed this, but what is your debt reduction target for 2021, whether it's a specific level or a range, just where would you like to exit this year at?.

Where would I like to end it? And so that's our target. Now I did mention those 2 items that will add cash to our balance sheet. And on a net debt basis, obviously, that's a one-for-one addition. If we get those 2 items executed, and I think I'd like to say we're very optimistic about both of those, then it is very realistic to think of net debt as 0.

But that's an aspiration, not a promise. .

[Operator Instructions] Our next question comes from John Fichthorn with Dialectic Capital. .

Just one thing for everybody's benefit, if you guys could do this call not in a room with a speaker phone, we could all hear you a little bit better. It's a little fuzzy. So I appreciate that this quarter is tricky with the weather, but I'm just kind of curious if you can give us some idea of how you see the year playing out.

This is the time of year where you will give annual guidance or one might love to know what your thoughts are on the matter. .

Yes. So as you know, from a historical standpoint, we have a [ in fact ] of full year guidance. I think when I talk about the optimism that we have in the market and our business, that is absolutely true.

And while Q1 will be tough due to the weather, as Brandon has mentioned, what we're seeing right now as our ramp has continued post the weather event, it is very strong and it continues to get stronger.

On the rig side of our business, we will be looking at considerable improvement in the back half of the year compared to what we've run in the last few quarters, and I will say considerable improvement. On the completion side of our business, our wireline business, we have to give some level of pricing back.

We talked about the pricing and the cost side there. So we'll see improvement, but that will be muted by some other things that we have to get accomplished there. And I think the real upside that we can have for 2021 could be with our Processing Solutions, as I talked about in our comments.

With what we're seeing with the ESG efforts, what we're thinking the gas capture side. Net bids has definitely leveled off, given the drop-off in drilling and completion activities.

As that activity comes back it's going to drive demand for our Processing and Solutions assets, but we think the gas capture is going to drive an equal and even greater demand for those assets. So if you add all that together, we're very, very optimistic, John, for 2021.

Again, Q1 will be muted, but I really think that you'll start to see the take off in Q2 and beyond. And I do want to apologize for the conditions of the call today. This is the first time we're taking the call from our new office. The beauty of our new office is that we reduced our annual rent cost significantly and dropped our square footage down.

So it's a cost saving for all our investors, but unfortunately, it's the first time we're taking the call from this new room. And so we'll correct that in the future. .

Well, that's a great excuse. I'm happy to listen more carefully if you're saving money. I like it.

So when do you think -- or if you had to guess, 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 in the visible future?.

On the rig side, we definitely see a path to exceeding peak revenue and probably sooner than later, and that's the optimism I have in that business. On the wireline side, the pricing in the market has come down materially over the last 1.5 years. And so reaching those peak levels will be difficult here in the short term.

We will need pricing help to get back to those type of levels with the same asset. .

Great. And so once again, I know Tom asked about acquisitions and what the kind of hurdles were. Do you still think the window is open to get some done? Do you think it's the first half of the year? Is it just too difficult to tell? I mean I know you've been focused on it for the better part of 6 months, maybe 9 months at this point.

So I don't know, how do you handicap it?.

You're right. Every time we have the call, we have a note on acquisitions, and we felt like a broken record. So yes, we've been working on them for quite a while. But I can honestly say that we feel like that we're getting close and there are things on the horizon that are near term.

And so we hope to get 1 or 2 of these over the fence and have some interesting announcement. .

I couldn't quite understand what you said, but it sounded like you're -- you still hope you're going to get one done.

Is that a fair summary?.

Yes. It's fair summary. Yes, sir. .

And my last question is really based on everything you've said today and even to my questions, you should be generating 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 is going to be at 0 or approaching 0. So I feel like it's exactly 1 year ago today.

I think I asked the same question.

What's your plan on that free cash? Are you going to return it to shareholders? Are you going to do some share buybacks? What are your thoughts?.

This is Brandon, John. The thoughts are, as they have been, that we will evaluate that when we come to that juncture. And we've historically had active conversations in the boardroom about strategy, thought processes and what to do specifically. No decisions have been made at this point.

And then I'll add to Darron's point, in your question earlier, M&A is on the horizon for us. So we will need to incorporate that into our thought process, so depending on what transactions we get done. At the margin, we're talking about small amounts of money here.

Some of those transactions could require a little bit of cash to get across the finish line and get the synergies taken out of that transaction, again, a little bit of cash, we're not talking about a lot. And conversely, some of the transactions will bring incremental cash to the balance sheet.

So that changes the calculus on that capital disposition question just a bit at the margin. So the short answer is, all options are on the table. All options continue to be discussed around capital allocation, and we'll see what the right answer is when the time comes to make that decision. .

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. I think my final closing remark is that I just want to thank our team. 2020 was a very difficult year for the industry, a very difficult year for Ranger, but our team did an absolutely outstanding job stepping up to the challenges, so job well done. I also want to thank everyone on the phone for your interest in Ranger.

And again, we apologize for the sound quality, and we'll take care of that next quarter. This concludes our call. Thank you. .

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