What's Happening?
Ranger Energy Services, Inc. has announced an agreement to acquire American Well Services (AWS) from Argonaut Private Equity in a transaction valued at approximately $90.5 million. This acquisition will
expand Ranger's well-servicing scale by roughly 25%, positioning it as the largest well services provider in the Lower 48 states. The deal includes $60 million in cash, 2 million shares of Ranger stock, and a $5 million performance-based earn-out contingent on AWS achieving $36 million in EBITDA within the first year. Ranger expects the acquisition to be immediately accretive to earnings and cash flow, with identified annual synergies of $4 million and projected pro forma EBITDA exceeding $100 million.
Why It's Important?
The acquisition of AWS by Ranger Energy is a strategic move to strengthen its presence in the Permian Basin, a key area for oil and gas production in the United States. By expanding its service capabilities and scale, Ranger is positioning itself to better compete in the well services market, potentially increasing its market share and operational efficiency. This transaction reflects the ongoing consolidation trend in the energy sector, where companies are seeking to enhance their service offerings and improve financial performance through strategic acquisitions. The deal also highlights the importance of the Permian Basin as a critical region for energy production and investment.
What's Next?
Following the acquisition, Ranger Energy plans to maintain a conservative leverage ratio and continue share repurchases, ensuring balance-sheet flexibility. The company will focus on integrating AWS's operations and realizing the projected synergies to enhance its service capabilities. As market conditions improve, Ranger aims to exceed $100 million in pro forma EBITDA, leveraging its expanded footprint in the Permian Basin. The successful integration of AWS could lead to further growth opportunities and potential future acquisitions as Ranger continues its growth journey.
