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DATE

Thursday, March 5, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer — Stuart Bodden
  • Chief Financial Officer — Melissa Cougle

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TAKEAWAYS

  • Total Revenue -- $142,200,000 in the quarter, up from $128,900,000 sequentially and nearly flat with $143,100,000 a year prior.
  • High Specification Rigs Revenue -- $92,300,000, rising sharply from $80,900,000 the previous quarter and $87,000,000 a year earlier, with rig hours up 16% sequentially to 128,500 hours.
  • Processing Solutions and Ancillary Services Revenue -- $37,500,000, representing a 22% sequential increase, attributed to organic performance and acquired American Well Services (AWS) service lines.
  • Wireline Services Revenue -- $12,400,000, down from $17,200,000 in the third quarter, attributed to lower completed stage counts.
  • Net Income -- $3,200,000, or $0.14 per diluted share, improved from $1,200,000, or $0.05 per diluted share, in the previous quarter.
  • Adjusted EBITDA -- $20,300,000 and a 14.3% margin, compared to $16,800,000 (about 13%) sequentially and $21,900,000 in the prior year period.
  • Full-Year Revenue -- $546,900,000 compared to $571,100,000 in the prior year, with management citing "consistent execution" and "modest" decline mainly in wireline and ancillary segments.
  • Full-Year Adjusted EBITDA -- $73,200,000 at a 13.4% margin, down slightly from $78,900,000 and a 13.8% margin last year.
  • Operating Cash Flow -- $69,000,000 for the year, down from $84,500,000 in the prior year, with the decrease linked to lower wireline profitability, working capital timing, and integration costs.
  • Free Cash Flow -- $42,900,000, or $1.89 per share, versus $50,400,000 last year; a conversion rate of nearly 60% for a third consecutive year.
  • Total Liquidity -- $67,700,000 at year end, made up of $57,400,000 revolver availability and $10,300,000 cash, with $3,500,000 outstanding borrowing.
  • Capital Returns to Shareholders -- Over 40% of free cash flow returned through dividends and buybacks, including nearly 1,000,000 shares repurchased for $12,300,000 at an average price of $12.26.
  • Capital Expenditures -- $26,100,000 in 2025, down from $34,100,000 in 2024, as growth CapEx dropped to focus primarily on ECO rig rollout.
  • AWS Acquisition Integration -- Integration milestones are being achieved with "nothing approximately 120 days into our combination that would derail our long-term synergy plans," enhancing Permian Basin presence.
  • Contracted ECO Rigs -- New contract for 15 ECO rigs with a key Lower 48 operator signed at the start of the year, adding to the two existing deployed rigs and representing a "differentiated" offering per operator feedback.
  • P&A Contract Award -- Awarded a plug and abandonment contract with the Texas regulator for complex wells, occupying about three rigs at present and providing new growth exposure in government programs.
  • 2026 EBITDA Outlook -- Full-year pro forma annual EBITDA opportunity is "more than $100,000,000," supported by the AWS integration and anticipated ECO deployments.
  • Maintenance CapEx Guidance -- Expected to run at 4%-5% of revenue, but ECO investments will increase this figure; management highlighted that ECO contracts often offset this through deferred revenue or guarantees.
  • Free Cash Flow Conversion Rate Guidance -- Expected to move nearer to 50% in 2026 due to ECO rig payment timing, with most cash generation anticipated in the later quarters.
  • ECO Offering Revenue Recognition -- CFO Cougle explained, "deferred revenue, which actually turns into amortization."; for some contracts, upfront capital payments impact the margin profile rather than immediate revenue, leading to variability in reported margins.

SUMMARY

Management emphasized progression on both the integration of American Well Services and the ECO Hybrid Electric Rig rollout as central to its growth strategy, highlighting milestone execution and technology validation. The ECO platform demonstrated improved customer engagement, signing a contract for 15 additional rigs, and management described accelerated adoption among leading operators seeking emissions reduction and operational efficiency. The awarded plug and abandonment contract for complex wells with the Texas regulator introduced a revenue stream within regulated government programs, occupying three rigs and providing further diversification. Liquidity remained strong, with disciplined capital allocation allowing over 40% of free cash flow returned to shareholders, and management signaled ongoing focus on capex efficiency and cash returns. Pro forma guidance indicated expectations for annual EBITDA to top $100,000,000 in the upcoming year, anchored by integration synergies and expanded differentiated offerings.

  • CEO Bodden said, "The pipeline of interest [for ECO rigs] remains robust . we expect those conversations will continue to mature."
  • Management guided that maintenance CapEx excluding ECO investment will follow historical norms, but flagged that upfront capital for ECO deployments is often recouped through deferred revenue or guaranteed commitments.
  • CFO Cougle noted most ECO CapEx and cash flows will "really ramp up in the back half of the year," with minimal upfront drag in the first half.
  • Wireline Services remained challenged, with recent customer awards cited as early signs of segment stabilization.
  • Legacy high-spec rigs demonstrated resilience through seasonal volatility, particularly around holiday scheduling and winter storm impacts.
  • CEO Bodden said, "The operational overlap continues to progress well, and we see nothing approximately 120 days into our combination that would derail our long-term synergy plans. We have maintained transparency with our teams and customers, and we have ensured continuity of service while beginning the process of capturing efficiencies that the combined platform enables. The AWS team has been collaborative, and their operational culture aligns well with Ranger Energy Services, Inc.’s emphasis on safety, efficiency, and reliability. The acquisition also strengthens our customer reach and enhances our competitive position. We are solidifying relationships with operators who value scale, responsiveness, and the ability to execute consistently. We continue to see opportunities to drive incremental value from this combination as we move through 2026, and we are encouraged by early results."

INDUSTRY GLOSSARY

  • ECO Rigs: Hybrid electric well service rigs designed to reduce emissions and improve operational control, powered primarily by onboard batteries supplemented with minimal generator usage and optional grid or field power.
  • P&A (Plug and Abandonment): Service activity involving the permanent closure of non-producing or end-of-life oil and gas wells, often under regulatory supervision.
  • Deferred Revenue: Payments received in advance for services to be performed or assets to be delivered, recognized as revenue over time as contract obligations are fulfilled.

Full Conference Call Transcript

Stuart Bodden: Thanks, Joe, and good morning, everyone. I appreciate all of you joining us today to discuss our fourth quarter and full year 2025 results. I will spend some time walking through our operational performance during the quarter, highlight the strategic milestones we achieved in 2025, and then talk more broadly about the trajectory we see for the business as we move into 2026. Let me start with an overview of the year. We posted total company revenue of $547,000,000 with adjusted EBITDA of $73,200,000. I am pleased with how the organization executed throughout 2025, particularly against the backdrop of a market environment that required discipline, adaptability, and continued focus on operational performance.

Across the board, our teams delivered consistent execution in the field, maintained strong alignment with customers, and supported the integration of new assets and capabilities that will position Ranger Energy Services, Inc. well for the long term. In the fourth quarter specifically, activity levels were generally consistent with our expectations. The market continued to reflect the same characteristics we have spoken about over the past several quarters: relatively stable demand, customers focused on high-quality service execution, and a continued emphasis on efficiency and cost management. Against that backdrop, Ranger Energy Services, Inc. continued to perform well.

Our well service operations, wireline offerings, and ancillary services demonstrated solid utilization and maintained the margin profile we had built through disciplined pricing, cost control, and operational efficiency.

Let me turn now to a few of the strategic initiatives that shaped the year. Starting with the American Well Services acquisition. We completed this transaction with a strategic intent to broaden our footprint, enhance scale, and strengthen our service offerings in the Permian Basin. I am pleased to report that the integration is progressing well. Our focus during the fourth quarter, and continuing into early 2026, has been on ensuring that the combined operations function cohesively, that our teams remain aligned with the expectations we established at the outset, and that our shared best practices are implemented efficiently. All of these areas have integration milestones that are on track and being achieved.

The operational overlap continues to progress well, and we see nothing approximately 120 days into our combination that would derail our long-term synergy plans. We have maintained transparency with our teams and customers, and we have ensured continuity of service while beginning the process of capturing efficiencies that the combined platform enables. The AWS team has been collaborative, and their operational culture aligns well with Ranger Energy Services, Inc.’s emphasis on safety, efficiency, and reliability. The acquisition also strengthens our customer reach and enhances our competitive position. We are solidifying relationships with operators who value scale, responsiveness, and the ability to execute consistently.

We continue to see opportunities to drive incremental value from this combination as we move through 2026, and we are encouraged by early results.

The other strategic initiative that saw meaningful progress in 2025 was our ECO rig program, which has been one of the most exciting internal developments in our history. As many of you know, ECO represents a significant advancement in well technology—one that reduces emissions while also delivering greater overall control and safety on location. As we rolled out our first two ECO rigs in 2025, we continued to validate the platform's performance with customers, and the feedback has been very reassuring.

As one example of the efficiencies of our ECO rigs, in the first 450 hours of deployment last year, one of our ECO rigs used less than 22 hours of generator power, with the balance coming from the onboard battery system being recharged through the regenerative capabilities of the rig. At the beginning of this year, we signed a contract for 15 ECO rigs to be built with a key operator in the Lower 48. This contract reflects a few important themes. First, customer interest remains strong. Operators are increasingly looking for ways to improve operational efficiency and safety on-site while also reducing emissions.

ECO directly addresses those needs and provides a flexible platform that can work independently or leverage infield or coal power. Second, the platform is beginning to demonstrate real, measurable value. We have worked to quickly address any issues identified, and we are starting to quantify the operational efficiencies produced. The theme we continue to hear from operators is that the ECO platform is differentiated. We are still early in the broader adoption curve, but the pace is accelerating—faster than what we initially expected when we launched ECO. The pipeline of interest remains robust, and as customers gain more experience with this technology, we expect those conversations will continue to mature.

ECO is one of the most meaningful strategic investments we have made as a company. We are excited about the momentum it continues to generate heading into 2026.

Outside of the accomplishments on the growth side with AWS and ECO, our legacy core Ranger Energy Services, Inc. businesses have continued to perform well despite the headwinds that were present through most of 2025. Our high-spec rig fleet continued to benefit from operational consistency, steady workload, and disciplined labor management—areas that have long been strengths for Ranger Energy Services, Inc.—with holiday scheduling at year-end showing more resiliency than expected. Although our ancillary services segment performed well as a whole, the situation was more nuanced, with some service lines finding new growth avenues in the fourth quarter, while others contended with white space. Finally, our wireline services continued to navigate a challenged business environment in the fourth quarter.

That said, we have seen recent signs of improvement and experienced a couple of key customer awards.

We also maintained our commitment to capital discipline throughout the year and deployed capital in a balanced and deliberate manner, investing in opportunities that support our strategic goals while maintaining flexibility on the balance sheet. As Melissa will discuss in more detail later, our free cash flow generation allows us to both pursue growth opportunities and return meaningful capital to shareholders. In 2025, we used approximately $40,000,000 of our free cash flow towards the purchase of American Well Services, while also repurchasing nearly 1,000,000 of our own shares last year, which represents almost 5% of shares outstanding.

This disciplined approach to capital deployment positions us well as we move into 2026, where we expect to continue generating healthy levels of cash while also supporting the rollout of our ECO fleet and completing the integration of AWS.

Let me now touch briefly on the broader 2026 outlook. We expect the operating environment to remain generally stable and similar to 2025 from an activity level standpoint, making 2026 a year of execution and strategic evaluation. We will continue to integrate American Well Services, support our teams in the field, advance the rollout of the ECO platform, and explore opportunities to strengthen our service offerings where it aligns with our capabilities and our financial strategy. We will stay focused on the fundamentals: safety, efficiency, cost control, and customer service, and we will continue to make decisions that support long-term shareholder value. Despite expectations for a relatively flat 2026, there is reason to be excited about the future looking to 2027 and beyond. Our pro forma financial profile with the AWS acquisition gives us an annual EBITDA generation opportunity of more than $100,000,000 in 2026, with room far beyond in a supportive macro environment when commodity supply begins to tighten. By 2027, we expect to have 15 new ECO rigs operating in the Lower 48, and we believe more contracts for further rig deployments will be underway, providing for an ever more differentiated service offering with best-in-class assets.

Over the next 18 to 24 months, we believe the U.S. onshore market will see activity improvement, and Ranger Energy Services, Inc. will be ready with high-quality assets to be deployed. Both oil and gas markets are seeing more incremental support than expected this year, even before geopolitical developments in the past seven days. Whether taking a near, medium, or long-term view, we will remain disciplined in our deployment of capital, ensuring long-term value creation.

Before I hand things over to Melissa, I want to again thank the entire Ranger Energy Services, Inc. team for their hard work and commitment throughout 2025. The company delivered solid results through consistent execution, thoughtful decision-making, and strong discipline at every level of the organization. We have momentum entering 2026, and we are confident in our ability to continue building on that foundation. Our field personnel continue to be the heartbeat of this organization, and throughout 2025, our crews delivered safe, reliable, and efficient work for our customers in a variety of operating conditions. And our commitment is evident in the trust we continue to earn from operators across all service lines.

As we have said before, Ranger Energy Services, Inc. differentiates itself through execution, and our teams continue to validate that every day. With that, I will turn the call over to Melissa to walk through our financial results.

Melissa Cougle: Thanks, Stuart, and good morning, everyone. I will now take you through our financial results for the fourth quarter and full year 2025. Starting at the top line, revenue for the fourth quarter was $142,200,000, up from $128,900,000 in the third quarter and essentially flat with $143,100,000 reported in 2024. The sequential increase reflects higher activity in our High Specification Rigs and Processing Solutions and Ancillary Services segments brought about from a partial quarter of included AWS results. These increases were partially offset by continued softness in wireline. Breaking out the revenue by segment, High Spec Rigs generated $92,300,000 of revenue in the quarter, up meaningfully from $80,900,000 in the third quarter and up from $87,000,000 in 2024.

Rig hours grew 16% sequentially to 128,500 hours in the quarter. Processing Solutions and Ancillary Services contributed $37,500,000 of revenue, representing a 22% sequential increase from Q3. This reflects both organic performance and the contribution of service lines acquired through the American Well Services transaction. Wireline Services revenue was $12,400,000, down from $17,200,000 in the third quarter and consistent with expectations given lower completed stage counts during the quarter. On the profitability side, net income for the fourth quarter was $3,200,000, or $0.14 per diluted share, compared to $1,200,000, or $0.05 per diluted share, in the prior quarter.

Adjusted EBITDA for the quarter was $20,300,000, representing a 14.3% margin, compared to $16,800,000, or about 13%, in the third quarter and $21,900,000 in the fourth quarter of the prior year. The sequential improvement reflects stronger revenue and margins in our High Specification Rigs and Processing and Ancillary segments, partially offset by continued margin pressure in wireline. When looking to 2026, we did see heavy winter storm impact in January that will likely put our first quarter results largely in line with Q4, although early March activity levels give us confidence that our full year 2026 goals remain within reach.

Turning to the full year, Ranger Energy Services, Inc. generated $546,900,000 of revenue compared to $571,100,000 in 2024. While modestly below last year, the result reflects consistent execution and a generally stable operating environment in our core business, with some softening in activity in specific service lines in wireline and ancillary segments. Full year adjusted EBITDA was $73,200,000, representing a 13.4% margin, compared to $78,900,000 and a 13.8% margin in 2024. From a segment perspective, full year financial results remain stable and aligned to the drivers we have outlined throughout the year. HSR continued to anchor our earnings profile with strong utilization and disciplined pricing. Processing and Ancillary delivered improved performance driven by the incremental contribution from the AWS acquisition.

Wireline saw headwinds related to lower utilization and pricing and remains an opportunity set for Ranger Energy Services, Inc. in the future.

Turning to CapEx, Ranger Energy Services, Inc. continues to invest capital in a disciplined and measured manner. Total capital expenditures for 2025 were $26,100,000, down from $34,100,000 in 2024. The year-over-year decrease reflects reduced growth spending, as 2024 included approximately $10,000,000 of growth-related CapEx. Growth capital in 2025 was deployed selectively and focused predominantly on the ECO rig deployments. We continue to employ the same rigorous return on capital screening for growth investments that have served us well for several years. Our full year 2026 pro forma financial profile of more than $100,000,000 of annual EBITDA remains supported with a highly disciplined approach to capital deployment.

Maintenance CapEx is anticipated to be aligned with historical trends and run at approximately 4% to 5% of revenue. ECO CapEx will push that number higher this year, but recall that these contracts include provisions that include upfront CapEx in many cases that will result in deferred revenue and/or guaranteed hourly commitments in the future. We will call out specific ECO spend that is significant in future periods.

Turning now to cash flow, which continues to be one of the most important elements of Ranger Energy Services, Inc.’s financial profile. For the full year 2025, cash provided by operating activities was $69,000,000 compared to $84,500,000 in 2024. The year-over-year decline reflects financial dynamics such as lower profitability in wireline, timing of working capital, and costs associated with integration activities. Free cash flow for the full year was $42,900,000, or $1.89 per share, compared to $50,400,000 in 2024. Our EBITDA-to-free-cash-flow conversion rate posted at nearly 60% for a third straight year in a row.

This strong and consistent cash flow generation continues to be a hallmark of Ranger Energy Services, Inc.’s financial model and reflects disciplined operational execution and tight control over capital spending. In 2026, we expect that our free cash flow conversion rate will be closer to 50% as a consequence of the timing of ECO rig capital, and we will be transparent about those impacts and expectations as the year develops and as delivery and payment timing is more solidified. We also ended the year with $67,700,000 of total liquidity, consisting of $57,400,000 of availability on our revolving credit facility and $10,300,000 of cash on hand. We finished the year with $3,500,000 in outstanding borrowing.

Ranger Energy Services, Inc. was able to optimize working capital through the end of the year and finish in an incredibly strong liquidity position. We do expect to see borrowings in the first quarter as we anticipate a working capital build as spring arrives and activity levels increase, coupled with typical labor costs unique to the first quarter.

On the capital returns front, we take great pride in sharing that we returned over 40% of free cash flow to shareholders in 2025 through a combination of dividends and stock repurchases. During the year, we repurchased nearly 1,000,000 shares at an average price of $12.26, totaling $12,300,000. This capital return strategy continues to be an important part of our value creation framework and reflects our confidence in Ranger Energy Services, Inc.’s long-term cash generation capability. As we enter 2026, we remain focused on maintaining operational discipline, supporting the integration of AWS, pacing the deployment of our ECO fleet, and continuing our track record of consistent financial performance. With that, I will turn the call back over to Stuart.

Stuart Bodden: Thanks, Melissa. As we close out the fourth quarter, I want to reflect on the progress we have made and the opportunities ahead. The acquisition of American Well Services is a clear example of our disciplined approach to growth. It is a transaction that enhances our scale, expands our service offerings, and strengthens our position. With AWS, we are not changing who we are. We are building on what we do best. Our integration plan is already in motion, and we are confident in our ability to execute. We have done this before, and we will do it again with measured urgency, precision, and a focus on creating value for our customers and shareholders.

At the same time, our ECO Hybrid Electric Rig program continues to gain traction. These rigs represent the future of well servicing, and the AWS acquisition gives us a better platform upon which we can accelerate that future. We are committed to being the best well services provider in the Lower 48 on behalf of our customers, employees, and shareholders. Strong free cash flows and strong returns to investors remain our guiding principles, and we will continue to make our strategic decisions and allocate our capital with discipline and foresight.

With our balance sheet in excellent shape, our integration playbook in action, and our technology roadmap expanding, I am more optimistic than ever about the next chapter for Ranger Energy Services, Inc. I want to thank our Ranger Energy Services, Inc. employees, customers, and shareholders for their partnership and commitment this past year. With that, operator, we will now open for questions.

Operator: We will now begin the question-and-answer session. The first question comes from Don Crist with Johnson Rice. Please go ahead.

Don Crist: Morning, guys. Hopefully, you all are doing well this morning.

Stuart Bodden: Yeah. We are. Good morning, Don. How are you?

Don Crist: I am doing well. My first question is surrounding the ECO buildout and the conversations you are having with customers there. Just an update on how those conversations with other operators are going and, as a second step to that, what is the capability of your partners? Do you have a lot of capability there to put a lot more orders on the books? Just any comments around that.

Stuart Bodden: Yeah. Thanks for the question. Obviously, very excited about the contract that we signed earlier in the year. We are in a couple of pretty advanced conversations. I think what we found historically is sometimes it takes a while and then it happens really fast. But we are having really, you know, kind of very productive conversations. As far as manufacturing, we have been working with our vendor pretty closely and feel like we can expand manufacturing if needed. I would highlight these are refurbs, and so there are some things that we can do on our side to streamline the process and increase throughput. So we do not feel like manufacturing should be a bottleneck for us.

There are some long lead time items that we are pretty mindful of, but other than that, again, we feel like we can respond to the market demand.

Don Crist: That is reassuring. And I do not believe you mentioned it in your prepared remarks—I did want to touch on the plug and abandonment contract that you put in the press release. The comment about regulatory agencies, I do not know if you want to disclose who this contract is with, but if I remember correctly, this could probably expand your P&A fleet pretty significantly. Any comments around that?

Stuart Bodden: Yeah. It is the Texas regulator, so it is public—you can look it up. What this is, Don, and I think one of the reasons we are excited about it and wanted to call it out in the script, is that these are for complex wells in particular. We really have been trying to position ourselves on some of the government P&A programs as a contractor of choice for some of the more complex P&As. And so that is really what this represents. And you are right. I think it is something that we think we have growth opportunity within this regulator and in other states as well.

Don Crist: Okay. And how many rigs do you think that is going to occupy? I mean, if I remember correctly, it was low single digits that were kind of dedicated to P&A in the past. Any kind of metrics around that?

Stuart Bodden: Yeah. It is still kind of three-ish, plus or minus depending on the program at the moment. But certainly, if we needed to ramp it up, we could. But it is kind of low single digits right now. That is right.

Don Crist: Okay. And one for you, Melissa. As we kind of think about CapEx for the ECO rig program through the year, any kind of metrics around quarter-by-quarter dollar amounts that we could kind of put in the model?

Melissa Cougle: So what I would say, Don—it is a very good question, that is part of my comments around it—we will let you know. A lot of it depends because there are progress milestone payments. You will see a little bit start to trickle in the first half of the year, but the reality is most of that CapEx really starts to show up as we make milestones and we start to have deliveries month after month in the back half of the year. So I think we have got a long way to really organize how that flows.

We have a model, but I also think we are too early in the build cycle to probably give hard guidance on that. That said, I think you will see light build in the first half of the year as just kind of some progress payments are made, but then it will really ramp up in the back half of the year. And just calling attention to the wording was pretty intentional when we said the conversion rate has deteriorated a bit this year on timing, because in some cases we have capital coming in from customers timed alongside this.

So what you will see is—and I am just trying to get a sense of the complexity—you might see us lay out capital that ultimately ends up getting refunded to us further down the line too. But we will try to call that out each quarter to any degree it is material, which I suspect it will start to be material as well in 2026.

Don Crist: But it is safe to say that you should still build cash through the quarters, even with this CapEx?

Melissa Cougle: Yes. I think the one thing we were calling out, Don, is Q1. There are a few things going on in Q1—actually less so on the ECO side, more just to do with seasonality and working capital builds. So I think you will not see cash start to really come in until Q2, Q3, Q4. But our guide right now is closer to a 50% conversion rate for the year, and most of that will show up, as is typical, in the later quarters of the year and not in Q1.

Don Crist: I appreciate the color. Thank you so much. I will turn it back.

Melissa Cougle: Thanks for the question. Thanks, Don.

Operator: The next question comes from Derek Podhaizer with Piper Sandler. Please go ahead.

Derek Podhaizer: Good morning.

Stuart Bodden: Good morning, Derek.

Derek Podhaizer: Patrick is my cousin. Sticking on the ECO rig buildout, should we think about the 15 rigs plus the two rigs under operation as far as maybe like a percentage of your fleet? And then where could this go if you continue to execute on additional contracts? And then also, are these all incremental rigs to the fleet, or are you replacing some of your older legacy assets? Just maybe some color on that as well.

Stuart Bodden: Yes. I will try to take it in pieces. Obviously, we have the two in the field and a contract for 15 to 17. Right now, once they are deployed, that would be a little less than 10% of the active fleet, which does include some rigs that are constantly in refurb, repaint, maintenance, etc. As far as the conversations, I think it is really hard to put a number on it, and the reason I say that is that based on the conversations we are having, there is a scenario where it could be the same number again, but I think probably it looks like the next contract would be for less than 10, most likely.

So that gives you a sense. And then I think depending how the next 18 to 24 months go, we do think there is longer-term demand for this. Remind me of your second question, sorry, Derek.

Derek Podhaizer: Just as far as incremental or replacement.

Stuart Bodden: It is very customer dependent on that answer. I think for a lot of the ones that we are deploying right now, if there is not a change in the macro environment, they will do some replacement of existing rigs. I think what we had highlighted is that given who the customers are that are interested in ECO, the rigs that get displaced tend to be high-spec and very high-quality rigs, and so we are certainly thinking that they will find homes pretty quickly. That said, I think we want to be open and transparent that the first wave of ECO rigs will replace some of our existing rigs.

Derek Podhaizer: Right. That makes sense. That is helpful. And then how should we think about the earnings power with the ECO rig buildout? Just looking at your margins right now in High Spec, you are in the low 20s to end the year. As we move over the next 18 to 24 months and these start to become a bigger part of your rig mix, where could those margins start going to when we also start thinking about integrating AWS, and now with the buildout of ECO, how should we think about the margin profile?

Melissa Cougle: It is a good question, Derek, and I would tell you we are still working on how that can come together. Again, you have a little bit of timing. Each one of these contracts sort of looks and flavors itself out differently. So in some cases where you would have a contract that has more upfront capital, we will have deferred revenue, which actually turns into amortization. So you are not going to get—even though we are getting probably pulled-forward returns—it is not going to be as readily obvious in margins because it will be an amortization item as opposed to a current revenue item and collection item.

On the inverse side, where we get more hardcore rate uplift over the like, you will see margin uplift. So it is going to be a little bit of a mix of both coming through the pipeline. On the AWS side, what we are seeing is the best of operating leverage and the worst of operating deleverage, because what we saw, for example, in December, where we had a lot of good activity in utilization, we saw real margin expansion in just one single month. That said, the winter storm in February hit us hard, and we had the opposite effect. So I think we are still trying to get a better cadence and flow.

I think there is margin to be expected this year. I just think it is too early to tell you that it is 200 bps or 100 bps or 300 bps. It is probably not 5%, though, I would tell you that.

Derek Podhaizer: Right. Right. Great. That is all helpful. Thank you. I will turn it back.

Stuart Bodden: Thanks, Derek.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Stuart Bodden for any closing remarks.

Stuart Bodden: Thank you, operator. Thank you, everyone, for joining. Thank you for your interest in Ranger Energy Services, Inc., and have a great day and a great rest of the week. Thank you.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.