Ranger Energy acquires American Well Services for $90.5M

Ranger Energy (RNGR) Services announced it has acquired American Well Services, a Permian Basin-focused well services provider, from Argonaut Private Equity. Strategic highlights include: Expands scale with rig count increasing approximately 25% galvanizing Ranger as the largest well-servicing provider in the lower 48; represents a compelling valuation with total consideration of approximately $90.5M, representing less than 2.5 times trailing EBITDA; generates accretion to earnings and cash flow immediately with expected synergies of $4M identified; expects future pro forma EBITDA to exceed $100M with higher earnings potential as commodity prices recover; enables strong pull-through revenue opportunities to Ranger’s high specification rig segment with the addition of new complementary service lines. The total consideration payable in the acquisition is approximately $90.5M, structured as $60M in cash, 2M shares of Ranger common stock priced at $12.51 determined in early deal discussions, and a $5M earn-out contingent on AWS achieving $36M in EBITDA in the 12 months following closing. The transaction is structured as a cash free, debt free purchase with the cash portion funded with cash on the balance sheet and borrowings on the revolving credit facility. Post-close, leverage is expected to be approximately $50M, inclusive of Ranger’s existing financing leases, putting Ranger’s leverage ratio at approximately 0.4x and lower than many peers. On a pro forma basis, Ranger’s go forward EBITDA is expected to exceed $100M with earnings potential growing significantly higher under the right macroeconomic conditions. The transaction is expected to be immediately accretive to earnings and free cash flow with expected annual synergies of $4M to be fully realized before the end of 2026. Ranger was advised on the transaction by Piper Sandler, with King & Spalding LLP serving as legal counsel to Ranger. Sofos Law was legal counsel to AWS and Argonaut Private Equity.