Some time for questions at the end of the presentation. If you do have any questions, you press that Q&A box at the bottom of your screen, type them in, and we'll get to as many as we can, time permitting. Looks like the room is just about filling up now. So with that, let me introduce Ranger Energy Services. The ticker is RNGR. We're joined today by CEO, Stuart Bodden, and CFO, Melissa Cougle. And without further ado, let me turn it over to Stuart and Melissa.
Great. Thanks, Steve. And thanks, everybody, for joining. Excited to have you here. And we will try to leave some time at the end, as Steve said, for Q&A. All right, let's get into it. So, if you're not familiar with Ranger, we are traded on the New York Stock Exchange. Our ticker is RNGR. Our market cap is, I think, as of today, about $375 million. Up in the right-hand part of this slide, just a couple of things. We're oilfield services. We are one of the largest providers of well service rigs. These are rigs that don't drill new wells, but they provide maintenance services on existing wells, which means we are much more production-focused and OpEx-focused versus some other companies in our space that are much more exposed to the CapEx cycle, whether they're a drilling company or a fracking company.
Really proud of what we've built here over the last, really, since the company's been in existence. Very high cash flow conversion from EBITDA into free cash flow, and that's allowed us to maintain a pristine balance sheet. We have zero net debt. We do pay a dividend, and we have been very aggressive on the shareholder returns front, which Melissa will get to as we go through this. To help kind of size the company for you, some 2023 numbers and 2024 will be similar. Revenue, a little over $600 million. About half of that is our well service business that we call high-spec rigs. A little less than 1/3 is in wireline, and wireline is a service where if you need to convey electricity inside of an existing well, you would use a wireline truck, and then ancillary services is the balance.
That includes our plugging and abandonment business, a small coiled tubing business, and a fishing and rental business, and then a small high-growth business called Torrent, which is infield gas processing. You can see on the bottom right, in 2023, we converted 64% of our Adjusted EBITDA to free cash. We had about $54 million in free cash flow. We tend to think about, depending on where we are in the CapEx cycle, 60% of conversion from EBITDA to free cash flow is a pretty good number. A little higher than that last year might be a little bit lower, just again, kind of depending on some growth CapEx, but hopefully, that gives you a sense of the size of the company. As I mentioned earlier, we tend to be much more production-focused or OpEx-exposed. Across the top, you have what we would call the value chain of oil and gas.
So first, you drill a well, then you complete it. Completing is when you do the fracking part of it. Then it is all in production. And then at the end, at the end of the life, you would plug and abandon the well. Most of our exposure is really on the production and the P&A side. It says here 30% to 40% completion. Given some of the pullback in completion, we're probably closer to 20% to 30% today on completion. But again, we think that being more production-focused provides a lot more, just a lot more resilience through this cycle. What we'd also tell you is, as long as the industry is drilling more wells, which we are today, than are being plugged and abandoned, our addressable market is naturally growing.
To try to put some numbers around that, so we've been saying that we're more production-focused, and that gives us more resilience. The dark line shows this is spend, this is production spend versus completion spend versus exploration and drilling spend, kind of indexed back to 2010. And so to say that we don't have volatility isn't fair, but we don't have quite some of the high highs, but neither do we have the low lows. And so in the dark or in the black line, you can see that over time from 2010 to 2023, that production spending actually increased almost 60%. Completion spending, more volatile, but only increased 20%. And then exploration and drilling spending actually declined. And again, that's a function because of certainly onshore today. We tend to know where most of the deposits are. And so we're much more in a development cycle.
But again, as long as the industry drills more wells that are being plugged and abandoned, our addressable market is naturally growing. We report in three segments. So we have, again, as I kind of mentioned earlier, our high specification rig segment, our wireline segment, and then also our ancillary segment. Our high spec rig segment's really our anchor business. One of the things to note is that we've been very acquisitive over time. And through those acquisitions, we do have capacity that we can deploy. We're very disciplined about how we do that. We're a very returns-focused company. We're not going to go put assets in the market just to gain market share. But I think it's important to know that we do think we can grow the business organically with some of the assets that we have. In the wireline, this is a very northern exposed business.
Its completion segment has been a little bit challenged, but we've been strategically pivoting that to be more conventional wireline, which tends to be much more production-exposed over the last kind of 18 to 24 months, and that's really starting to get some traction today, and then on the ancillary services, smaller, but this is where some of our high-growth segments are. We talked about our plugging and abandonment business. I think if you've kind of been following things, you know of the $3.7 billion in the orphan well program. A lot of that money has been slow to trickle into the industry, but we're starting to see it today, but that's a business we're pretty excited about. Our rental and fishing business is very steady, really supports our high spec rig business, and then Torrent is infield gas processing. Infield power is a big theme right now.
A lot of times that power, generally that power is gas-fired. You need to clean up the gas stream. You need to knock out the liquids. That's what our Torrent service line does. A lot of numbers on this page and just sort of a couple of things that I would kind of point you to. One, we kind of think through the cycle that our return on invested capital is about 9%. Is it possible just to move that one to the upper right if I can? On the top on the upper right, that's our trailing 12 months of free cash flow and the amount of capital that we have returned to shareholders either through dividends or share repurchases. In the upper right, kind of highlight Q3 of 2024, trailing 12 months of free cash flow is $52 million.
We have over the last 12 months returned about 60% of that to shareholders either through share repurchases or dividends. In the middle set of numbers going across, you can see our quarterly EBITDA and again, sort of free cash flow conversion. Q4 is typically a very high free cash flow conversion. So, a little bit of a working capital unwind, that is because of seasonality. We do have some seasonality in our business given our footprint. Production spend does tend to have a little bit more seasonality associated with it. You can see, and then really the last two quarters have been really quite strong for us in Q2, $21 million of EBITDA in Q3, $25 million. Really excited about Q3 of the last year. I mean, I'm sorry, this year, that was our numbers.
That was actually the second highest quarterly EBITDA for the company. And then along the bottom, you can just see the revenue trending over time. What I would highlight is between 2021 and 2022, we were very acquisitive and we were growing the business as the market recovered, but also we had some big acquisitions in there as well. This is one that I think really highlights. Again, we talk a lot about being production-focused and how we're a lot more resilient. So in here, the line is land rig count. That's drilling rig count. Again, that's different than what we are. So we are well service rigs. We're mobile rigs. And land rig count is really what a lot of the industry follows. That's really sort of a good proxy for the CapEx that's being spent.
But you can see the land rig count had declined over time, but you can see that we've actually, in our well service business, grown kind of quarter- over- quarter. And again, I think that's a function of the resilience. And it's also a function of, which we'll talk about in a second, we have a lot of our exposure to larger customers. So the Exxons and Chevrons and Conocos of the world is really kind of our core customer group. And then on the right hand, you can see EBITDA and high spec rigs kind of quarter- over- quarter and the margin. And we'd like to highlight a little bit on Q2 and Q3 on the margin improvement. Again, a lot of that is a function of working with our bigger customers.
And also, they're now demanding. We're getting market share with them, but we're also getting more equipment out for them that tends to have really nice pull-through. And then finally, before I turn it over to Melissa, this is our hourly rates, average hourly rates, kind of quarter- over- quarter. And you see that they've been steadily growing. And again, I think that's just a function of the quality of our customer mix. We have been. Our kind of core rates for rig and crew have been really pretty consistent, but we've been able to get more equipment that has really nice pull-through out on well sites. And that's really because our customers are demanding it. As I mentioned earlier, consolidation has really been very good for Ranger just because we tend to work a lot more with the companies that have been very acquisitive.
So again, we work a lot with the Exxons, Conocos, Chevrons, Occidentals, EOGs of the world. So as they've consolidated, it's tended to benefit us. And that's really started to show up in attractive rates.
So I'll share with you some of the financial profile and sort of reinforce some of these concepts that Stuart has laid out, really tying them back into sort of the overall consolidated financial performance and speak a little bit about our capital returns and our M&A thoughts. So this really lays out the past few years of financial performance. Stuart mentioned earlier 2024 is largely on track to be somewhat similar. We've seen a little bit of revenue pullback this year. That's really been attributed to our wireline business. But if you follow, you've seen us show you already on a couple of graphs the rig count.
And what you can really see is we'll talk about in a couple of slides. We did a lot of acquisitions, three specifically in 2021, that started to really manifest themselves in 2022 and really more than doubled the size of the company. But what we did see is in 2023, we started to see a pullback in rig count and activity declines. And that's really been present now for over 18 months. It started to begin at the late spring of last year. But through that, Ranger's really been able to grow. We posted year-over-year growth last year. This year will be pretty much in line. And we think that really signals quite strongly our resilience through the cycle. So what we have had is we've had to contend with some turnover of assets and redeployment of assets.
So it doesn't mean we haven't felt some of this market pullback. But we've had tailwinds coming from customer consolidation as well as just sort of industry rationalization as more and more of all of our customer base gravitates to more and more of what we call sort of the reputable bigger players as opposed to the smaller mom-and-pop players in the space. And we've really benefited from that over the past couple of years through this most recent down cycle. And that's a trend, frankly, that we see that will continue over the next couple of years. This really, I mentioned just now these acquisitions we did at the end of 2021. Ranger really took some bold steps on the other side of COVID to really change, I would say, our destiny forevermore. And during 2021, we made approximately $75 million of investment in these three acquisitions.
You can see here what this slide shows is those investments largely paid themselves out over the next five to six quarters. And they are generating anywhere between $15 million and $20 million of EBITDA a quarter and throwing off outstanding cash, as Stuart mentioned. So, we've had quite a flush cash flow profile for the past couple of years. And again, that's a trend we see continuing and nothing derailing that with only the ability. What we haven't talked about is we have idle asset capacity. So as the market continues to move forward and as we catch additional tailwinds, whether that be from the new administration or from other regulatory changes or just general demand signals, we will be able to take advantage of that through the existing asset capacity that we have.
We also believe strongly that if you look across the peer group of sort of Ranger's peer group, we have the strongest balance sheet. We also have the flagship business that has the largest market share, which allows us to continue to grow because it's not an outsized market share, allows us to continue to grow, but also makes us a great roll-up vehicle. S o as companies, PE-backed companies are looking to find exits in the next several years, Ranger remains the absolute best vehicle for them to take a company public, and so we are very keen to continue growing through that vein. We've been very aggressive at looking at lots of entities. There does remain to be a bid-ask spread, but it's something that we see continuing to narrow, and I think we're optimistic about that sort of coming loose for us in 2025.
We talked about shareholder returns, and I think this is really a place to spend a couple of minutes saying, if there's one thing, if any of you have shown up because it's like, wow, the stock has moved really much. We get a lot of questions, particularly lately. The stock has moved really materially in the past 60 days. What's going on. W e really think it's a combination not only of what we've talked about that's been really, truly investment thesis-driven. In a downturn, I would say this is the first downturn that's really evidenced itself, our ability to show through downturn returns, and so that's one thing, but the other thing is Ranger made a bold choice last year. A lot of bigger companies were doing share repurchases. A lot of E&P providers had moved into really robust capital returns programs.
We heard from several investors, you're small cap, that's not your thing. And we said, well, look, if we want people to truly believe in the cash flow profile of this company, we need to put our money where our mouth is. And so at the beginning of last year, as the downturn started, we went out and made a bold claim that we were going to put a base load dividend in. And we've stuck to that dividend. And I think we're very happy with the progress that we've made with it. What we also said is we feel like we're a really compelling value if you look at our share price. And so we opened a share repurchase program. And to date, we've actually repurchased approximately $35 million worth of our own shares, approximately 15% of the company.
It's worth mentioning, which I love to mention to most investors that I get in front of lately in particular, we bought 15% of the company back at $10.36 a share. We've done very right by our existing investor base to show that we can and will find the best returns on their behalf. We're really proud of not only the dividend base load, but also the share repurchases. Going forward, what we would tell you is we made a commitment last year that we have a 25% minimum free cash flow return. You will see that under all circumstances. I think what we're just thinking about now as we look to 2025 is where else do we want to grow with that other 75%? With that, rounding it out, we do feel like Ranger is a very compelling investment.
We've got strong returns on invested capital. We've got strong free cash flow conversion. We're insulated through the cycle. We have an opportunity set to grow. And we feel like we're going to continue to change our destiny into the future. And with that, I'll stop for now. And we'll take questions.
Yeah, we'll do.
Great. Thanks so much. Informative 20 minutes. We do have about 10 minutes remaining. We have a couple of questions in queue, but I'd like to remind everyone, if you do have a question, you press that Q&A button at the bottom of your screen, type it in, and we'll get to as many as we can with time remaining. We do have a question about, and you had made some brief commentary on your expectations for plug and abandonment.
It's a question about whether you think that's steady state or what the growth opportunities could be.
Sure. Thanks for the questions. So on P&A, we do think that that's a market that should grow. I think there's a couple of different elements to it. So first is, and these are working, this is outside of the orphan well program. This is working with our core customers. And a couple of jurisdictions, the regulators have, in essence, said, if you want a new drilling permit, you need to P&A some of your existing wells. So that's actually driven some kind of positive demand for us. And again, I think with our core customers, they're now increasingly viewing P&A as just part of their license to operate. And so we actually have some pretty, really, I'd say kind of steady programs. The third element is on the orphan well program.
We haven't done a lot with the orphan well program, which has been more a function of just the money has taken a while to trickle from the federal governments through the states and into us. We do think that is starting to change with a couple of the larger states in particular. We're starting to see kind of more aggressive bidding programs, RFPs out of the market. So that's a space we're pretty excited about. All in all, we've invested a fair amount in it over the last, what, 24 months. So I think we do expect it, certainly for us, to grow.
Excellent. Have a question about everyone's getting this question. This won't surprise you at the conference, which is new administration, your expectations, positive, negative, neutral.
Yeah, I think generally we would say it's a positive.
I think a couple of sort of nuances to that, I would say, is I think on the positive side, I think generally people would argue that just the regulatory environment will be easier to deal with. That said, in our core basins, if you think about really where we operate, so we're Permian Basin, we're Eagle Ford, we're Bakken, we're in very established basins. That's driven much more by economics than it really is by kind of one administration or the other. I think activity in those core basins, we would say, will be more driven by what are our customers' plans and the oil price more than anything else, so I would say, yeah, I'm not sure we see a huge change. We talked about P&A. We're kind of making the assumption that the orphan well money will stay intact.
If it does get pulled back, that could obviously have an impact, but we don't have a lot of exposure there. I think the last thing I would say, and this isn't a near-term catalyst, but could be a longer-term catalyst, is if the moratorium on LNG exports is lifted, that actually could, now, this isn't going to be a 2025 phenomenon or even potentially a 2026, but if that did happen and there were more exports and therefore you need more natural gas drilling, that would have a positive impact on that. So probably a long-wave thing, Steve. I'm not sure there's a, we see a real near-term impact. B ut I think longer-term, there could be some tailwinds. I think most would probably say that still trying to figure out if depreciation rules change and things like that, what does that mean?
Hopefully, I mean, I think that's kind of how we're. Certainly it's not a negative, but I'm not sure we're saying it's going to be dramatically different for us in the near term.
That's fair. You touched on the moratorium, but we know certainly folks who have a significant exposure to the gas basins, including ones who have been at this conference, are talking about the dual effect of the increasing LNG export capacity, which is definitely coming. It's scheduled and being built through 2030. Throw in the data center power consumption. And while it's not a 2020, may not be a 2025 story, as you said, start thinking 2026, 2027, 2028, how that can all play out and what that could mean.
Yeah. I mean, what I would say, we were talking to an investor earlier today about it.
The way Ranger, so for anyone who's been following the industry the past couple of years, the LNG export capacity has sort of been the looming tailwind we've all been looking for, right? A nd it remains to be seen whether we'll see any of that in 2025. What we do, I think there is increasing confidence it's going to materialize at some point. What we know is that's a big catalyst for Ranger. And what we also know is until that catalyst comes, we've still got a great cash flow profile and a great return profile. So the way we laid it out to an investor earlier today is if you think Ranger is kind of compelling as is, whether that catalyst happens next year or in 2026 or even, let's say, in 2027, when that catalyst comes along, we will be able to take advantage of that.
That will be really, we feel like a strong advantage to us, both on pricing as well as activities. On multiple fronts, we feel like that will be a real needle mover for us.
Excellent. That's helpful.
Steve, I'm sorry to interrupt. I thought I saw a question on M&A. Was there one?
Yeah, that was the next one I was going to read to you. If you want to touch on what you think out there and generally capital, you can expand that into general, how you're thinking about capital allocation.
Yeah, sure. On M&A, we've been pretty open that we think that we need to be larger, right? I mean, we certainly have aspirations to be larger, and we think that M&A is an important part of that.
That said, I think as you get to know us, we're very, very disciplined about how we think about it. I mean, part of the reason we bought as many shares back as we did is we looked at it and said, well, this may be more attractive than, our own shares could be more attractive than M&A, but so we know that whatever we do has to be accretive. We do feel like that the bid-ask has been closing kind of over time. We talked to lots and lots of players. We look at lots of opportunities, so I think we do feel like it's closing with the stock price having a little bit more support at higher levels. We think that could potentially breeze some things up. We do think we're the logical consolidator and a logical home for some of these stranded assets.
But again, I think we would say definite appetite for M&A. That said, we're going to be pretty disciplined about it.
I would only add to that because I see the other part of the question is what areas are most appealing. So what we would tell you is our well services or high spec rigs segment, as you see it in our financials, is certainly our highest margin business. It's also our biggest business, but at the same time, we only have, let's say, 18% market share. So meaningful market share, but plenty of room to grow. So I think if we were to rank and stack our order, we want to grow over the existing service lines we already have with that one being the most attractive.
At some point down the road, as we continue to sort of manifest that, we might look to add the third stool to the leg, things like that. But I think that's where we would look to be first and foremost too.
Couldn't operator consolidation be driving service sector consolidation? To your point, you're the big player, even at 18%, but you have the bigger businesses, which are bigger customers that are getting bigger, and they're more likely to want to use one player who's in more basins, right?
Yeah, I think that's exactly right, Steve, and that is something that we have been seeing over time is that I think a multi-basin player like us with a clean balance sheet and a good reputation for safety and service quality, we've really been gaining share.
I do think some of the small regional players, we've been probably taking share at their expense, right? So the market does feel a little bit of like the high-quality companies are doing pretty well and some of the smaller ones are struggling exactly because of this consolidation going on.
Can you talk about how you're, I mean, is the strength in the Permian? We know there's been some parts of the Rockies that have been better. How are you breaking out there? Is it Permian versus the rest of the U.S. in terms of where the strength is?
So you mean from our footprint?
Yeah, where you see the demand. Is the growth all, is it all very much?
No, it's actually, it's not all Permian, right? So most of our, most of our exposure is on the oil side.
And a lot of that's just a function of how the M&A played out over time in our footprint. We do have some gas exposure, but it's, excuse me, kind of more than 80% on the oil side. We're very, very roughly 1/3 , 1/3 , 1/3 . So that being 1/3 Permian, 1/3 kind of the Rockies North and 1/3 Texas, non-Permian Texas and Mid-Continent. I think what we see is in the core basins, demand is really solid. I mean, the last well in the U.S. will probably get drilled in the Permian Basin would be if you were a betting person. And certainly the Permian is strong, but I think we do see pretty consistent demand in the other basins as well.
Okay. You talked about growth in Torrent. I know you've been here before, and we haven't gotten into Torrent too much.
Can you just talk a little bit about, and we don't have a ton of time left, but I just wanted to get a chance for you to touch on a little bit about what's going on wi th Torrent.
Yeah. So what Torrent, what it is, its core service offering is skid-mounted mechanical refrigeration units. What that means is, so we're seeing a big demand for infield power. That power could be used for dual fuel frac. It could be used for gas lift systems. It could be powering a field. It could be crypto. It could be sort of backup power for the grid. But a lot of that infield is gas-fired. And a lot of times the gas stream is high liquid content and you need to knock out those liquids.
So our services, we can go in, take a high BTU gas stream, take out the liquids, right, that condensates. We're able then to sell those, right? And then you have a cleaner gas stream for generation or putting back in the pipeline. So relatively small business for us and getting a lot of growth. If it's okay, I think in the last minute we had, there was a question just about how do we think about long-term demand in the face of hydro and nuclear and things like that. I think what we see, there's two quick comments. One is, at least what we see and given all the power demand for data centers and all of that, I think it kind of feels like it's a, we're going to need everything. So I don't think we feel like that it's the end of the industry.
I think the other thing I would just say is because what we really do is maintain the existing wells, that's always the cheapest incremental barrel, right? And so once you have a well drilled, you're going to do everything you can to keep it economic and producing until it comes to the end of its life. And that really benefits us over the long term.
Should that be your closing comments or anything you want to leave everyone with?
No, I appreciate everyone's time.
Yeah, yeah. Yeah. Thanks for everybody. Thanks for the time. Appreciate it.
Great. CEO Stuart Bodden and CFO Melissa Cougle from Ranger Energy Services. If we didn't get to your question, you can email me here at Sidoti or reach out to them directly. I'm sure they'll be happy to answer any follow-up questions.
Thanks for being here, and thanks everyone for watching, and enjoy the remainder of the Sidoti conference. Thank you.
All right. Thanks, Steve. Good to see you.