Q1 2024 ProPetro Holding Corp Earnings Call

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Operator: Good day, and welcome to the Propetro Holding Corp. first quarter 2024 conference call. Please note this event is being recorded. I would now like to turn the call over to Matt Augustine, Director of Corporate Development and Investor Relations for Propetro Holding Corp., please go ahead.

Good day and welcome to the pro petrol holding Corp, first quarter 'twenty 'twenty four conference call. Please note. This event is being recorded.

I'd now like to turn the call over to Matt Augustine Director of corporate development and Investor Relations for Pro Petro holding Corp. Please go ahead.

Matt Augustine: Thank you and good morning. We appreciate your participation in today's call. With me today is Chief Executive Officer Sam Sledge, Chief Financial Officer David Schorlemer, and President and Chief Operating Officer Adam Munoz. This morning, we released our earnings results for the first quarter of 2024. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements covered by the Private Securities Litigation Reform Act. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations.

Matt Augustine: Thank you and good morning, we appreciate your participation in today's call with me today is Chief Executive Officer, Sam Sledge, Chief Financial Officer, David Schwimmer, and President and Chief Operating Officer, Adam and Yes. This morning, we released our earnings results for the first quarter of 2024. Please note that any comments, we make on today's call regarding projections or.

Our expectations for future events are forward looking statements covered by the private Securities Litigation Reform Act forward looking statements are subject to several risks and uncertainties many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and risk.

Matt Augustine: We advise listeners to review our earnings release and the risk factors discussed in our filings with the SEC. Also, during today's call, we will reference certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Finally, after our prepared remarks, we will hold a question and answer session. With that, I would like to turn the call over to Sam.

Factors discussed in our filings with the SEC also during today's call. We will reference certain non-GAAP financial measures reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Finally, after our prepared remarks, we will hold a question and answer session with that I would like to turn the call over to Sam.

Samuel D. Sledge: Thanks, Matt. Good morning, everyone. The first quarter of 2024 was an exciting start to the year for Propetro. Before David walks you through our financial results, I'd like to begin by covering some important business highlights. As we mentioned last quarter, this year we expect to demonstrate that our strategy is and will continue working. To start off the year, we initiated strategic actions to build on our recent progress, and we're pleased to report that those actions, coupled with recent investments, are yielding strong returns. Let's walk through some of the specifics.

Sam: Thanks, Matt and good morning, everyone.

Sam: First quarter of 2024 was I think start to the year perpetual.

Sam: Before David walks you through our financial results I'd like to begin by covering some important business highlights.

Sam: As we mentioned last quarter. This year, we expect to demonstrate that our strategy is and will continue working to start off the year, we initiate strategic actions to build on our recent progress and we're pleased to report that those actions coupled with recent investments are yielding strong returns, let's walk through some of the specifics.

Samuel D. Sledge: First, underpinning our strategy is our ongoing fleet transition from legacy equipment to next-generation assets. Over the last two years, we have worked to create a next-generation fleet to meet the needs of an evolving industry both today and into the future. We invested approximately $1 billion to recapitalize our fleet with state-of-the-art technologies and services. Today, we have transitioned over two-thirds of our fleet to next-generation equipment, delivering premium value for our customers while lowering emissions through things like industry-leading natural gas substitutions.

Sam: First underpinning our strategy is our ongoing fleet transition from legacy equipment to next generation assets.

Sam: The last two years, we've worked to create a next generation fleet to meet the needs of it of any evolving industry, both today and into the future.

Sam: We've invested approximately $1 billion to recapitalize, our fleet with state of the art technologies and services.

Sam: They we've transitioned over two thirds of our fleet to next generation equipment, delivering premium value for our customers while lowering emissions.

Sam: Things like industry, leading natural gas substitution.

Samuel D. Sledge: Strong demand for our assets and services continues to support our solid performance, and our outlook for electric equipment remains particularly bright. Having significantly upgraded and modernized the majority of our fleet, we are excited to realize strong returns in 2024 and for years to come. Our force electric fleet offering is uniquely positioned to create value for our customers. We now have three force electric fleets deployed, with a fourth deployed by the end of the second quarter and seven tier four DGB dual fuel fleets operating with industry-leading diesel displays. Our force electric fleets, which we first deployed in early September of last year, have built a reputation for performing at high levels operationally and financially.

Sam: Strong demand for our assets and services continues to support our solid performance.

Sam: Our outlook for electric equipment remains particularly Brian.

Sam: Having significantly upgraded and modernized the majority of our fleet. We're excited to realize strong returns in 2024 and for years to come.

Sam: Our fourth electric fleet offering is uniquely positioned to create value for our customers.

Sam: We now have three fourths electric fleets deployed with a forced deploying by the end of the second quarter and seven tier four DGB dual fuel fleets operating with industry, leading diesel displacement.

Sam: Our force electric fleets, which we first deployed.

Sam: September of last year.

Sam: Built a reputation of performing at high levels operationally and financially.

Samuel D. Sledge: As a testament to the success of our force offering and our execution here in the Permian, we were proud to announce earlier this week our latest contract with ExxonMobil. This agreement is a direct result of our strategy in pursuit of an industrialized model to create premium value for our customers and is supported and made possible by our first-class operating team in the Permian. I'd like to take a moment to walk through some of the highlights of our agreement with ExxonMobil to underscore why it is such a significant step and important achievement for Propetro.

Sam: As a testament to the success of our force offering and our execution here in the Permian we were proud to announce earlier this week our latest contract with Exxonmobil. This agreement is a direct result of our strategy in pursuit of an industrialized model to create premium value for our customers and it's supported made possible by a first class operating team in the field.

Sam: I'd like to take a moment to walk through some of the highlights of our agreement with Exxonmobil to underscore why it is such a significant step an important achievement.

Sam: Perpetual.

Samuel D. Sledge: This is a three-year agreement to provide our force electric-powered hydraulic fracturing services coupled with Silver Tips wireline and pump-down services to ExxonMobil. The agreement calls for the delivery of two force electric fleets paired with wireline and pump-down services in the first half of this year, with the option of a third fleet to commence operations early in 2025.

Sam: This is a three year agreement to provide our force electric power hydraulic fracturing services, coupled with Silvertips wireline and put down services to Exxonmobil.

Sam: The agreement calls for the delivery of two force electric fleets paired with wireline broadband services in the first half of this year with the option of a third fleet to commence operations early in 2025.

Samuel D. Sledge: This agreement is a significant achievement for us, showcasing Propetro as a trusted partner to a widely recognized industry leader and global supermajor. This also demonstrates our ability to successfully deliver multiple completion services through an integrated operation to our customers. The ExxonMobil agreement, along with our other contracted force, Electric Equipment, is a glimpse into what the future of Propetro will look like, inclusive of a more durable earnings profile. We work closely with our customers, creating efficiencies tied to transparency, logistics, and higher utilization. We're proud to deliver faster, more efficient, and flexible services while reducing risk and cost for our customers, all made possible by our team here at Propetro.

Sam: This agreement is a significant achievement for us showcasing perpetual as a trusted partner to a widely recognized industry leader in global Supermajor.

Sam: It also demonstrates our ability to successfully deliver multiple completion services through an integrated operation to our customers.

Sam: Exxonmobil agreement along with our other contracted force electric equipment is a glimpse into the future picture will look like inclusive of a more durable earnings profile.

Sam: We work closely with our customers, creating efficiencies tied to transparency logistics and higher utilization, we're proud to deliver faster more efficient and flexible services, while reducing risk.

Sam: Costs for our customers all made possible by our team here at perpetual.

Samuel D. Sledge: Our electric equipment is in high demand, and we plan to continue to transition our Tier 2 diesel equipment to forced electric equipment over time in a manner that minimizes our overall capital costs, garnering committed contracts that de-risk our earnings performance over the long term. Having covered our fleet transition and recent force developments, I want to move to another core attribute of our strategy: our Disciplined Approach to Inorganic Growth.

Sam: Our electric equipment is in high demand and we plan to continue to transition our tier two diesel equipment to enforce electric equipment over time in a manner that minimizes our overall capital cost garnering committed contracts that derisk our earnings performance over the long term.

Sam: Having covered our fleet transition and recent forced developments I want to move to another core core attribute of our strategy our.

Sam: Our disciplined approach to inorganic growth.

Samuel D. Sledge: Our successful capital deployment track record and value-enhancing M&A supports our resilient and improved results. We continue to pursue value-creative acquisitions like our recent acquisition of Par 5 Cementing. The accretive earnings impact and expected revenue synergies from that acquisition are already beginning to show in our results.

Sam: Our successful capital deployment track record of value enhancing M&A supports our resilient.

Sam: And improved results.

Sam: We continue to pursue value accretive acquisitions like our recent acquisition of par five semantic.

Sam: The accretive earnings impact and expected revenue synergies from that acquisition are already beginning to show in our results.

Samuel D. Sledge: This builds on the momentum of our Silver Tip acquisition, which continues to be a strong tailwind for our earnings power and free cash flow. We will stay opportunistic in our pursuit of accretive M&A opportunities at valuations that make sense. The final key element of our strategic focus is our capital allocation philosophy. With our capital allocation strategy supported by strong, resilient free cash flow, we remain opportunistic in returning cash to shareholders. Just last week, we announced that our board approved an increase and extension of our standard purchase program through May 31st, 2025 with an additional $100 million authorized for a total of $200 million.

Sam: <unk> builds on our momentum of our Silvertip acquisition, which continues to be a strong tailwind for our earnings power and free cash flow.

Sam: We will stay opportunistic in our pursuit of accretive M&A opportunities at valuations that make sense.

Sam: The final key elements of our strategic focus is our capital allocation philosophy.

Sam: But our capital allocation strategy supported by strong resilient free cash flow, we remain opportunistic in returning cash to shareholders.

Sam: Just last week, we announced that our board approved an increase and extension of our share repurchase program through May 31, 2025, with an additional $100 million authorized for a total of $200 million.

Samuel D. Sledge: Since the inception of our plan last May, 2023, Propetro has repurchased approximately 8% of our outstanding common stock. We have consistently executed on the share purchase program, and this recent increase confirms our board's confidence in Propetro's continued earnings growth and free cash flow generation. Now turning to our results.

Sam: Since the inception of our plan last may in 2023 Pro Petro has repurchased approximately 8% of our outstanding common stock.

Sam: We've consistently executed on the share purchase program and this recent increase confirms our board's confidence in pro Petros continued earnings growth and free cash flow generation.

Sam: Yeah.

Sam: Now turning to our results.

Samuel D. Sledge: We started off 2024 with an impressive quarter that also shows the success of our execution in the field, our strategy, and the recent investments we've made to enhance our earnings power. Our differentiated offering that supports operational excellence, our blue-chip customer base, next-generation equipment, and operating density in the Permian Basin make our company strong and resilient. We are excited that this year we can reduce capex spending as our large reinvestment capital requirements are now behind us.

Sam: We started off 2024 with an impressive quarter that also shows the success of our execution in the field our strategy and the recent investments we've made to enhance our earnings power of our differentiated offering that supports operational excellence, our blue chip customer base next generation equipment and operating density in the Perm.

Sam: Meehan base and make our company strong and resilient.

Sam: We are excited that this year, we can reduce capex spending as our large reinvestment capital requirements are now behind us.

Samuel D. Sledge: This will continue to support free cash flow and our capital allocation approach in 2024 and beyond. We remain very confident in our ability to deliver durable and repeatable financial results for the long term.

Sam: This will continue to support free cash flow and our capital allocation approach in 2024 and beyond we remain very confident in our ability to deliver durable and repeatable financial results for the long term.

Sam: Turning now to the macro outlook.

Samuel D. Sledge: Despite market volatility, our approach to the market creates differentiated stability. The recent Upstream M&A extends and confirms our capital discipline mindset and strategy we are pursuing. Propetro offers bifurcation with the goal of being a highly sophisticated service provider that can serve the needs of the consolidating EMPs. To summarize, we're generating strong free cash flow and continue to evaluate creative M&A opportunities to enhance our earnings power while returning capital to shareholders through our share purchase.

Sam: Despite market volatility our approach to the marketplace differentiator stability there.

Sam: The recent upstream M&A extends and confirms our capital discipline mindset and strategy we are pursuing.

Sam: Perpetual offers bifurcation with the goal of being highly sophisticated service provider that can serve the needs of the consolidating E&P space.

Sam: To summarize we're generating strong free cash flow and continue to evaluate accretive M&A opportunities to enhance our earnings power, while returning capital to shareholders through our share repurchase plan.

Samuel D. Sledge: Our proven discipline and transformed, bifurcated fleet gives us confidence in our strategy and earnings potential during what we see as a slow-to-no-growth environment. We are confident that our more industrialized model will continue to drive success with Propetro and benefit the space for years to come. I'd now like to turn it over to David to discuss our first quarter financial results.

Sam: Our proven disciplined and transformed bifurcated fleet gives us confidence in our strategy and earnings potential during what we see is a slow to no growth environment.

Sam: We are confident that our more industrialized model will continue to drive success pro Petro and benefit the space for years to come.

Sam: I'd now like to turn it over to David discuss our first quarter financial results David.

David Scott Schorlemer: Thanks, Sam, and good morning, everyone. As Sam mentioned, we have some great news to discuss today regarding our financial performance and progress on our strategic initiatives. Propetro's performance in the first quarter was a testament to the merits of our strategic priorities and our progress in achieving certain operational and financial objectives over the last few years. And let me be clear, this has been an active strategy requiring significant effort and the employment of a variety of resources.

David Schwimmer: Thanks, Sam and good morning, everyone.

David Schwimmer: As Sam mentioned, we have some great news to discuss today regarding our financial performance and progress in our strategic initiatives.

David Schwimmer: <unk> performance in the first quarter was a testament to the merits of our strategic priorities and our progress in achieving certain operational and financial objectives over the last few years and let me be clear. This has been an active strategy requiring significant effort and employment of a variety of resources.

David Scott Schorlemer: All of this is possible because of the teamwork and diligence of our people at Propetro, whom we've asked to do more with less and implement new business processes and utilize new innovative technologies. The results of their work in combining these new resources and Propetro's superior field performance are unmistakable and are only now beginning to be realized.

Sam: All of this being possible because of the teamwork and diligence of our people at pro Petra.

Sam: And we were asked to do more with less and implemented new business processes and utilize new innovative technologies.

Sam: The results of their work and combining these new resources.

Sam: And pro Petras Superior field performance are unmistakable and are only now beginning to be realized.

David Scott Schorlemer: We also believe our strong first quarter results are a good indicator of what is possible in a more industrialized operating paradigm. Despite recent market headwinds, the company is producing more sustainable returns after having invested over $1 billion in the last few years to recapitalize our fleet and add to and enhance our service offerings to support lower capital intensity requirements. Due to our approach, we are now transitioning to lower capital spending and higher free cash flow.

Sam: We also believe our strong first quarter results are a good indicator of what is possible in a more industrialized operating paradigm.

Sam: Despite recent market headwinds the company is producing more sustainable returns after having invested over $1 billion in the last few years to recapitalize, our fleet and adding to and enhancing our service offerings to support lower capital intensity requirements.

Sam: Due to our approach we are now transitioning to lower capital spending and higher free cash flows.

David Scott Schorlemer: In the first quarter, revenues increased 17% to $406 million as our customers re-initiated dedicated fleets. Net income increased to $20 million from a net loss in the fourth quarter, and adjusted EBITDA increased 45% sequentially to $93 million with a healthy 50% incremental margin. Notably, we incurred operating lease expense related to our electric fleets of $9 million for the quarter as compared to $4 million in the prior quarter.

Sam: In the first quarter revenues increased 17% to $406 million as our customers re initiated dedicated fleets.

Sam: Net income increased to $20 million from a net loss in the fourth quarter and adjusted EBITDA increased 45% sequentially to $93 million with healthy 50% incremental margins.

Sam: Notably, we incurred operating lease expense related to our electric fleets of $9 million for the quarter as compared to $4 million in the prior quarter.

David Scott Schorlemer: We also achieved another strong quarter of free cash flow of $41 million. The significant improvement in our financial performance was largely attributable to activity levels rebounding from the fourth quarter seasonality. As we discussed on the prior call, our customers were expected to restore their dedicated fleet activity after year-end, and that happened. This speaks to strong demand for our differentiated services as we saw customers pick up where they left off following the holiday season.

Sam: We also achieved another strong quarter of free cash flow of $41 million.

Sam: The significant improvement in our financial performance was largely attributable to activity levels rebounding from the fourth quarter seasonality.

Sam: As we discussed on the prior call our customers were expected to restore their dedicated fleet activity after yearend and that transpired.

Sam: This speaks to strong demand for our differentiated services as we saw customers pick up where they left off following the holiday season.

David Scott Schorlemer: Our effective frack fleet utilization for the first quarter was 15.0 fleets, which was at the top end of the guidance range we provided. Our second quarter 2024 guidance for effective FRAC fleet utilization is a range of 14 to 15 fleets. And we have 14 active fleets today, of which three are force electric fleets, with a fourth expected to deploy in June of this year as part of the recently signed ExxonMobil contract.

Sam: Our effective Frac fleet utilization for the first quarter was 15.0 bleeds, which was at the top end of the guidance range, we provided our.

Sam: Our second quarter 2024 guidance for effective Frac fleet utilization is a range of 14 to 15 fleets and we have 14 active fleets today of which three are forced electric fleets with a fourth expected to deploy in June of this year as part of the recently signed Exxonmobil contract.

David Scott Schorlemer: Propetro's cash and liquidity position remains strong. As of March 31st, 2024, total cash was $46 million, and the borrowings under the ADL credit facility were $45 million. Total liquidity at the end of the quarter was $202 million, including cash, and $156 million of available capacity under the ABL credit facility.

Sam: Pro Petrus cash and liquidity position remains strong.

Sam: As of March 31, 2020 for total cash was $46 million and our borrowings under the ABL credit facility were $45 million.

Sam: Total liquidity at the end of the quarter was 202 million, including cash and $156 million of available capacity under the ABL credit facility.

David Scott Schorlemer: Moving to our capital program, incurred capital expenditures for the fourth quarter were $40 million. As we have demonstrated for the last few quarters, lower capital spending continues to enhance our free cash flow generation. This decrease is due to our fleet transition and the realization of benefits from our continuing optimization program. Additionally, our supply chain team, along with operations, is scrutinizing our capital spend more than ever before, and we're also conducting supply chain assessments to maximize the returns from our vendor relationships.

Sam: Moving to our capital program incurred capital expenditures for the fourth quarter were $40 million.

Sam: As we have demonstrated for the last few quarters lower capital spending continues to enhance our free cash flow generation.

Sam: This decrease is due to our fleet transition and the realization of benefits from our continuing optimization program. Additionally.

Sam: Additionally, our supply chain team along with operations, our scrutiny scrutinizing, our capital spend more so than ever before and we're also conducting supply chain assessments to maximize the returns from our vendor relationships.

David Scott Schorlemer: The work they're doing is driving favorable results. Given our progress, we now expect our 2024 incurred CapEx to be biased to the lower end of our previous guidance range of $200 to $250 million. As we transform our fleet further with our Force Electric fleets, we anticipate a decline in associated maintenance capital spending with resulting increased free cash flow and more durable profitability, particularly with the multi-year contractual coverage increasing across our fleet.

Sam: The work, they're doing is driving favorable results.

Sam: Given our progress we now expect our 2024 incurred capex to be biased to the lower end of our previous guidance range of $200 million to $250 million.

Sam: As we transform our fleet further with our forest electric fleets, we anticipate a decline in associated maintenance capital spending with the resulting increased free cash flow and more durable profitability, particularly with the multi year contractual coverage increasing across our fleets.

David Scott Schorlemer: In the remainder of 2024, we anticipate further validation of our strategy and a demonstration of the earnings enhancement resulting from our investments in the business. Our strong financial profile is now enabling us to return significant capital to shareholders. And we remain active in our share repurchase program. Since the inception of the plan in May 2023, we have retired approximately 9 million shares, which equates to approximately 8% of shares outstanding as of the inception of the program, returning $74 million to shareholders.

Sam: And the remainder of 2024, we anticipate further validation of our strategy and a demonstration of the earnings enhancement, resulting from our investments in the business.

Sam: Our strong financial profile is now enabling us to return significant capital to shareholders and we remain active in our share repurchase program.

Sam: Since inception of the plan in May 2023, we have retired approximately 9 million shares which equates to approximately 8% of shares outstanding as of the inception of the program returning $74 million to shareholders.

David Scott Schorlemer: We remain confident that the current discount of our share price, relative to our view of the intrinsic value, creates a very compelling investment opportunity. We will continue to accelerate shareholder returns by opportunistically executing share repurchases under the increased and extended $200 million repurchase program recently authorized by our board. I'd also like to reiterate that Propetro's balance sheet remains strong, and we are committed to disciplined and dynamic capital allocations for the long term.

Sam: We remain confident that the current discount of our share price relative to our view of the intrinsic value creates a very compelling investment opportunity.

Sam: We will continue to accelerate shareholder returns by Opportunistically executing share repurchases under the increased and extended $200 million repurchase program recently authorized by our board.

Sam: I'd also like to reiterate that <unk> balance sheet remains strong and we are committed to disciplined and dynamic capital allocations for the long term.

David Scott Schorlemer: Our strong results showcase the continuation of the improvement realized over recent years. Additionally, our strong capital foundation and capital discipline enabled us to develop and install our capital-like long-term lease agreement while executing a creative M&A to further accelerate free cash flow performance and industrialize our earnings stream. Finally, to reiterate our view of the industry, which we have outlined before, and as Sam mentioned, we believe we are in a slow-to-no-growth environment.

Sam: Our strong results showcase the continuation of the improvement realized over recent years. Additionally, our capital our strong capital Foundation and capital discipline enabled us to develop and install our capital like long term lease agreement, while executing accretive M&A to further excel.

Sam: Great free cash flow performance and industrialize our earnings stream.

Sam: Finally to reiterate our view of the industry, which we have outlined before and as Sam mentioned, we believe we are in a slow to no growth environment.

David Scott Schorlemer: The industry is consolidated, and the large Permian hydrocarbon producers representing our customer base are more disciplined in their activity and spending than ever before. Our strategy is designed for this environment. We've also built a commercial architecture that is meeting the needs of leading operators in the industry. Propetro has unique experience in this regard. We're also delivering innovative technology solutions, including our electric-powered force fleet, and leveraging technology throughout our organization to maximize our efficiency.

Sam: The industry is consolidated in the large Permian hydrocarbon producers, representing our customer base are more disciplined in their activity and spending than ever before.

Sam: Our strategy is designed for this environment.

Sam: We've also built a commercial architecture that is meeting the needs of leading operators in the industry.

Sam: Pro Petro has unique experience in this regard.

Sam: We're also delivering innovative technology solutions, including our electric powered for slates.

Sam: And leveraging technology throughout our organization to maximize our efficiencies.

David Scott Schorlemer: Our strategy is beginning to show clear evidence of delivering results, not only operationally but also financially, and we are confident Propetro will continue to deliver for our customers and shareholders as we make further progress in building our company for the future. The key to this strategy is that it benefits not only Propetro but also our customers by delivering the very best commercial and industrial solutions for their completions programs. With that, I'll turn the call back to Sam.

Sam: Our strategy is beginning to show a clear evidence of delivering results not only operationally, but also financially and we are constantly perpetual will continue to deliver for our customers and shareholders as we make further progress in building our company for the future.

Sam: The key to this strategy is that it benefits not only pro Petro, but also our customers by delivering the very best commercial and industrial solutions for their completions programs with that I'll turn the call back to Sam.

Samuel D. Sledge: Thanks, David. Before turning to Q&A, I'd like to again summarize the key attributes of our strategy that are driving our success and why we're confident in the future of our company and our industry. With a strong first quarter behind us, we remain focused on executing on our strategic initiatives. We believe Propetro provides a compelling investment, one that our recent performance and decline in capital spending have started to highlight.

Samuel D. Sledge: Thanks, David and before turning to Q&A I'd like to again summarize the key attributes of our strategy and are driving our success.

Samuel D. Sledge: Why we're confident in the future of our company and our industry.

Samuel D. Sledge: With a strong first quarter behind us we remain focused on executing on our strategic initiatives. We believe perpetual provides a compelling investment thesis.

Samuel D. Sledge: One that our recent performance and declining capital spending have started to highlight.

Samuel D. Sledge: Despite the headwinds and the slow-to-no-growth environment in the energy services space, we are uniquely positioned to showcase our earnings power and pre-cash flow potential. We are pleased that our results to start the year have started to demonstrate these capabilities. We have been successful in simultaneously transforming our fleet, executing on buying back our shares, and pursuing accretive acquisitions, all while maintaining a very healthy balance sheet and liquidity profile. Strong returns are now showing through, and we expect that to continue.

Samuel D. Sledge: Despite the headwinds in the slow to no growth environment in energy services space, we are uniquely positioned to showcase our earnings power and free cash flow potential.

Sam: We are pleased that our results to start the year have started to demonstrate these capabilities.

Sam: We've been successful in simultaneously transforming our fleet.

Sam: Executing on buying back our shares and pursuing accretive acquisitions, all while maintaining a very healthy balance sheet and liquidity profile.

Sam: Strong returns are now showing through and we expect that to continue.

Samuel D. Sledge: We are confident that Propetro is well positioned to take advantage of the ongoing industry evolution here in the Permian Basin. Despite what you may be hearing across the OFS space, demand remains strong for our services. This is evident in our recent ExxonMobil contract, and we expect more opportunities like this in the future as our forced E-Fleet demand outpaces our current supply. In addition, with our outstanding customer portfolio and operational density here in the Permian, we are insulated from the uncertainties outside of the Permian and in the spot market. As we look ahead, continued focus on the execution of our plan will remain important given the market backdrop that we face. We believe Propetro is primed to capitalize on the evolution of the consolidating EMP industry.

Sam: We are confident in the perpetual is well positioned to take advantage of the ongoing industry evolution here in the Permian Basin.

Sam: Despite what you may be here, maybe hearing across the Oss space demand remained strong for our services. This is evident in our recent exxonmobil contract and we expect more opportunities like this in the future.

Sam: As our force easily demand outpaces, our current supply.

Sam: In addition, with our outstanding customer portfolio and operational density here in the Permian, we are insulated from the uncertainties outside of the Permian and in the spot market.

Sam: As we look ahead continued focus on the execution of our plan will remain important given the market backdrop that we face.

Sam: We believe pro Petro is primed to capitalize on the evolution of the consolidating E&P industry.

Samuel D. Sledge: This consolidation demonstrates the need to combine top-notch service integration with the deployment of next-generation industrial technologies, which is directly supportive of our strategy here at Propetro. As we continue to optimize our operations and transition our fleet, while remaining opportunistic on M&A and share buybacks, we have significantly strengthened the business for the long term. Our goal is to be the service provider of choice for the consolidators and the EMPs, and we're well on our way to achieving that.

Sam: This consolidation demonstrates the need to combine top notch service integration with the deployment of next generation industrial technologies, which is directly supportive of our strategy are perpetual.

Sam: As we continue to optimize our operations and transition our fleet while remaining opportunistic.

Sam: In M&A and share buybacks, we have significantly strengthened the business for the long term.

Sam: Our goal is to be the service provider of choice for the consolidators in the E&P space and we're well on our way to achieving that goal.

Samuel D. Sledge: We believe the strategy we've employed continues to de-risk the future earnings of our business and support a more industrialized model. We have proven electric technology that is garnering committed contracts while sharing capital costs for these value-enhancing assets. We continue to execute while maintaining a clean balance sheet with a healthy liquidity profile, which we expect to drive significant opportunities to accelerate shareholder returns over the long run. We look forward to continuing to capitalize on the tremendous opportunities ahead.

Sam: We believe the strategy. We've employed continues to derisk future earnings of our business and support a more industrialized model.

Sam: We have proven electric technology that is garnering committed contracts, while sharing capital costs for these value enhancing assets.

Sam: We continue to execute while maintaining a clean balance sheet with a healthy liquidity profile, which we expect to drive significant opportunity to accelerate shareholder returns over the long run.

Sam: We look forward to continuing to capitalize on the tremendous opportunities ahead.

Samuel D. Sledge: Lastly, none of this would be possible without the dedication of all of our Propetro teammates, from the well site to the shop and in the office. I'm proud to be a part of a team that is always competing and striving to improve. Thank you for your continued outstanding performance, which strengthens our leadership's confidence that we have the right strategy at Propetro as we continue to lead in the Permian Basin. With that, I'd now like to open it up for questions. Operator. Thank you.

Sam: Lastly, none of this is possible without the dedication of all of our perpetual teammates from the well site to the shop and in the office I'm proud to be a part of a team that is always competing in striving to improve.

Sam: Thank you for your continued outstanding performance with strengthens our leadership's confidence that we have the right strategy at pro Petro as we continue to lead in the Permian Basin.

Speaker Change: With that I'd now like to open it up for questions operator.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star then 2. We will now pause momentarily to assemble our roster. Today's first question comes from Luke Lemoine with Piper Sandler. Please go ahead.

Speaker Change: Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw. Your question you May Press Star then two.

Speaker Change: We will now pause momentarily to assemble our roster.

Speaker Change: Today's first question comes from Luke Lemoine with Piper Sandler. Please go ahead.

Luke Michael Lemoine: Hey, good morning. Sam, congratulations on the contracts, first of all. I just wanted to touch on the force fleet some more. You know, the operating cost savings here were supposed to be 30 to 40 percent versus Tier 2 diesel. I know it's still kind of in the early innings of these, but could you just kind of talk about what you're seeing right now as far as the cost savings are concerned? Sure.

Luke Michael Lemoine: Good morning.

Luke Michael Lemoine: Sam gradually congrats on the contracts first of all just wanted to touch on the force fleet some more.

Luke Michael Lemoine: The operating cost savings here were supposed to be 30% to 40% versus tier two diesel I know, it's still kind of in the early innings of these <unk>.

Luke Michael Lemoine: Working but could you just kind of talk about what youre seeing right now as far as the cost savings.

Samuel D. Sledge: Sure, I think we'll stop short of probably pinning an exact number in any more detail than we already have, that 30 to 40 percent number you have, but early indications are very, very positive. Before we get more granular on some of those numbers, we'd like to have a little bit more run time on the equipment, but this is a tried-and-true solution that's been out in the field for years and years. So, with what we're seeing here initially and, as you can see, our customer's confidence to continue to kind of contract and demand and pull this equipment into the field via our announcements earlier this week with ExxonMobil, I think it's as good or better than expected.

Samuel D. Sledge: Sure I think it will we'll stop short of those probably pending a exact number in any more detail than we already have about 30% to 40% number you have but early indications are very very positive.

Samuel D. Sledge: Before we get more granular on some of those numbers, we'd like to have a little bit more run time on the equipment, but.

Samuel D. Sledge: This is a tried and true solution that's been out in the field for years and years. So with what we're seeing here initially with as you can see our customers confidence to continue to kind of contract and demand and pull this equipment into the field.

Samuel D. Sledge: Our announcements earlier this week with Exxonmobil.

Speaker Change: I think I think it's as good or better than expected.

Samuel D. Sledge: Okay, and then I think you have a fifth force fleet built into your CAFX budget this year. Did you talk about the outlook for, you know, additional force fleets and then maybe possibly the timeline on how you see your overall fleet just kind of progressing to fully electric in dual fuel?

Speaker Change: Okay, and then I think that four suite built in your Capex budget this year.

Speaker Change: Additional force fleets and then maybe possibly the timeline on how you see your overall when you just kind of progressing to fully electric and dual fuel.

Samuel D. Sledge: Yeah, that's correct on the 5th Fleet. Thanks for calling that out.

Speaker Change: Yeah. That's that's correct on the fifth fleet, thanks for calling that out I'm not sure we had that in any materials or scripted remarks this quarter, but we did talk about it last quarter inside of that too.

Samuel D. Sledge: I'm not sure we had that in any materials or... Scripture Remarks this quarter, but we did talk about it last quarter. Inside of that $200 to $250 million range, we could fit a fifth force fleet. That one could likely be a lease too.

Speaker Change: $200 million to $250 million range, we could fit.

Speaker Change: A fifth force fleet that one could likely be at least two but.

Samuel D. Sledge: But as we sit here today and we look at demand, if Exxon exercises their option for that third fleet in 2025, that's five. So, demand exists for five, because technically, we're contracted for five as we sit here today. There are multiple other conversations going on that would push that number higher than five.

Speaker Change: But as we sit here today and we look at demand if exxon exercises their option for that third fleet in 2025, that's five so demand exists for five four technically we're contracted for five years as we sit here today. There is multiple other conversations going on that would push that number.

Speaker Change: Higher than five so the more of kind of an operating mask that we build and the more of a track record will be build the more it is the easier.

Samuel D. Sledge: So, the more of kind of an operating mass that we build and the more of a track record we build, the easier and more effective we can market these fleets. So, there's just a lot of really positive momentum in that direction that we're really excited about for the future of our company. And really, all of us in the sector that are deploying technology like this should be excited about the overall stability that this type of equipment and these types of contracts will bring to our sector, making the investment thesis quite a bit different than it has been in the past.

Speaker Change: More effective we can market. These fleets. So it's just a lot of really positive momentum in that direction.

Speaker Change: But we're really excited about for the future of our company and really all of us in the sector that are deploying technology like this should be should be excited about.

Speaker Change: The Oh.

Speaker Change: Overall stability this type of equipment in these types of contracts will bring to our sector, making the investment thesis is quite a bit different.

Speaker Change: And it has in the past has been in the past. Yes look this is David just to add a little bit to that I think what we've kind of built in.

David Scott Schorlemer: Yeah, Luke, this is David. Just to add a little bit to that, I think what we've kind of built in for the long term is that we would look at between one to two fleets per year, but we also have to be mindful of the power availability out there. So those are some things that are some limiting factors, and the pace that we're going seems to be slow, but very good and compatible with the customer uptake there. So I think we're on a good pace right now.

David Schwimmer: Long term is that we would look at between one to two fleets per year.

David Schwimmer: But we also have to be mindful of the power availability out there. So those are some things that are some limited <unk>.

David Schwimmer: Many factors.

Speaker Change: We're the pace that were going seems to be.

Speaker Change: Very good and compatible with the customer uptake there. So I think we're on a good pace right now.

Luke Michael Lemoine: All right, thanks, Sam. Thanks, David.

Speaker Change: Alright, Thanks, Sam Thanks, Steve.

Operator: Thank you. The next question comes from Derek Podhaizer with Barclays. Please go ahead.

Speaker Change: Thank you. The next question comes from Derik part Heizer with Barclays. Please go ahead.

Derek John Podhaizer: Hey, good morning, guys. I just wanted to expand on the Exxon contract and maybe some of the learnings that you've had from your previous Pioneer contract. Just wanted to get your thoughts on how you approached this current Exxon contract versus how the Pioneer contract was set up, as that obviously had some challenges as the industry went up in 2022; you had to rework it. So, just your overall thoughts on how you approached this one, knowing you've been through it in the past.

Speaker Change: Hey, Good morning, guys just wanted to expand on the Exxon contract and maybe some of the learnings that you've had from your previous pioneer contract just wanted to get your thoughts on how you approach. This current Exxon contract versus how the pioneer contract was set up is that obviously had some challenges as the industry went up in 2022, you have to rework it.

Speaker Change: So just your just your overall thoughts on how you approach. This one knowing you have been through it in the past.

Samuel D. Sledge: Yeah, we're not the only one. First thing I'll say is we're not the only ones doing this contracting electric equipment. There are others that, I think, are coming into this process with Exxon that, you know, started almost six months ago. We were able to confidently communicate that we believe we have more experience contracting long-term with this much equipment with a single customer than maybe anyone else does in the space via our experience with Pioneer dating back to 2019, as you mentioned.

Speaker Change: Yeah, we're not we're not the only one first thing I'll say is we're not we're not the only ones doing this contracting electric equipment. There are others that said.

Speaker Change: I mean coming into this process with Exxon.

Speaker Change: It was started almost six months ago.

Speaker Change: We were able to confidently communicate that we believe we have more experience.

Speaker Change: Contracting long term with this much equipment with a single customer than maybe anyone else does in this space.

Speaker Change: Our our experience with pioneer dating back to 2019 that you mentioned.

Samuel D. Sledge: Tons of learnings came out of that. Lots of really good learnings, a few not so good, helped us navigate that contract through the most disruptive time in our industry, COVID. [inaudible] We've built quite a set of experiences for us to apply to agreements like this. We'd already, you know, sprinkled some of those experiences and things into the first two force contracts. But even more so in what we're doing with ExxonMobil here because of the amount of work that we plan to do with them over a longer period of time.

Speaker Change: Tons of learnings came out of that.

Speaker Change: Lots of really good learnings a few not so good.

Speaker Change: But having navigated that contract through the most disruptive time in our industry through Covid.

Speaker Change: You know bill quite quite the set of experiences for us to apply.

Speaker Change: Two agreements like the suite.

Speaker Change: Already sprinkled some of those experiences and things into the first two force contracts.

Speaker Change: But even more so into what we're doing with exxonmobil here because of the amount.

Speaker Change: Of work that we plan to do with him over the longer period of time.

Samuel D. Sledge: So we were able to talk through a lot of our experiences with that previous contract, and honestly, it was quite invaluable to be able to do that. Another thing I'll say about how we're doing this is that no, I wouldn't say any two of these contracts are exactly the same. We hear that we might have competitors that have more of a cookie-cutter approach to doing this. We really rely on our kind of commercial flexibility and putting the customer first and trying to, you know, trying to solve for what they're most sensitive to. And on a customer-by-customer basis, that's usually a bit different, so I'd say our kind of commercial agility is greatly benefiting us in getting this equipment and this offering into the field as well.

Speaker Change: So we were able to talk through a lot of our experiences with that previous contract and honestly. It was it was it was quite a valuable to be able to do that.

Speaker Change: Another thing I'll say about how we're doing this is that no I wouldn't say any to one of these contracts are exactly the same.

Speaker Change: Yes.

Speaker Change: We hear that we might have competitors that have more of a cookie cutter approach to doing this.

Speaker Change: We really rely on our kind of commercial flexibility and putting the customer first and trying to.

Speaker Change: Trying to solve for what they are most sensitive to and on a customer by customer basis. That's that's usually a bit different so I'd say, our kind of commercial agility, we feel like is greatly benefiting us in getting this equipment and this offering into the field as well.

Derek John Podhaizer: Great. That's very helpful and a good color too.

Speaker Change: Great.

Speaker Change: Very helpful and good color.

Speaker Change: You talked about your results this quarter indicate the earnings power of perpetual in the industrialized environment. How should we think about your margin expectations going forward are we had a new level now as you reset the expectations when he stepped up with 50% Incrementals, obviously, you're going to have the interplay of the additional lease expenses coming in.

Samuel D. Sledge: You know, you talked about your results this quarter indicating the earnings power of Propetro in the industrialized environment. How should we think about your margin expectations going forward? Are we at a new level now as you reset the expectations when you stepped up those 50% incrementals? Obviously, you're going to have the interplay of the additional lease expenses coming in that will be diluted to the margin. So maybe just some thoughts around the outlook for the margin profile since we did see a significant step up this quarter.

Speaker Change: That'll be diluted to the margin. So maybe just some thoughts around the outlook on the margin profile since we did see a significant step up this quarter.

Samuel D. Sledge: Yeah, David might want to add some detail to these comments, but I think, Derek, you outlined kind of some of the important puts and takes yourself talking about, you know, how incrementals can change coming off of a, you know, high seasonality quarter like Q4 into Q1, that's a tailwind to something like incremental margins, but also deploying more force electric equipment into the system that, from maybe an EBITDA margin, could possibly work Overall, this is all about, you know, making a cash-on-cash return on assets we're deploying and about producing free cash flow that we can do things like stay opportunistic in the M&A market, buy back our shares, and allocate capital very dynamically.

Speaker Change: Yeah, I'll I'll have David might want to add some detail to these comments, but I think Derek you you outlined kind of the some of the important puts and takes yourself talking about.

Speaker Change: How how incrementals can change coming off of a high seasonality quarter like Q4 into Q1, that's tailwind.

Speaker Change: Two something like incremental margins.

Speaker Change: But also deploying more.

Speaker Change: Force electric equipment into the system that from a maybe an EBITDA margin could possibly work the other way, but from a free cash flow margin could be very positive.

Speaker Change: Overall this is all about you know, making a cash on cash return on assets were deploying and about producing free cash flow that we can do things like.

Speaker Change: Stay opportunistic in the M&A market buyback, our shares and allocate capital very dynamically so overall.

Samuel D. Sledge: So overall, I would say what we're seeing from the progress that we've made and some of the fruits of our optimization project starting to show through. I think that was part of Q1 as well. It's putting us in a very strong position to remain very opportunistic in what I think is a very interesting time in our sector.

Speaker Change: I would say what we're seeing from the progress that we've had in some of the fruits of our optimization projects starting to show through I think that was part of Q1 as well.

Speaker Change: It's putting us in a very strong position to remain very opportunistic and and what I think is a very interesting time in our sector.

David Scott Schorlemer: Yeah, I think the only thing I would add to that is our margins will be pressured somewhat by the lease expenses as we do roll out the additional e-fleets. So I think that's something to be mindful of. I think that being said, over time, as we change the complexion of our fleet to electric equipment that has a materially lower off-ex profile and capital intensity, that's just going to show up in our free cash flow more and more as we go along.

Speaker Change: Yes, I think the only thing I would add to that is.

Speaker Change: Our margins will be pressured somewhat by the lease expenses as we do roll out the additional heap Leach. So I think that's something to be mindful of.

Speaker Change: That being said over time as we.

Speaker Change: Change the complexion of our fleet too.

Speaker Change: The electric equipment that has a materially lower opex profile and capital intensity, let's just go ahead.

Speaker Change: So up in our free cash flow more and more as we go go long and we're going to see a significant differential between last year when we were effectively.

David Scott Schorlemer: And we're gonna see a significant differential between last year, where we were effectively neutral from a cash flow from operations to cash flow from investments to, you know, in the $200 million-type range this year and going forward. So it's just a material difference.

Speaker Change: Neutral from a cash flow from operations for cash flow from investing too.

Speaker Change:

Speaker Change: And the $200 million type range this year and going forward. So it's just a material differential.

Derek John Podhaizer: That's great to hear. All right, Sam and David, thank you so much. Great quarter, I'll turn it back.

Speaker Change: That's great to hear Alright, Sam and David Thank you so much.

Speaker Change: I'll turn it back.

Operator: Thank you. The next question is from Kurt Hallead with Benchmark. Please go ahead.

Speaker Change: Thank you. The next question is from Kurt <unk> with benchmark. Please go ahead.

Kurt Kevin Hallead: Hey, good morning everybody. [inaudible] Congratulations on your great operational performance.

Kurt: Hey, good morning, everybody.

Kurt: We are currently.

Kurt: Hey, congrats on a great operational performance.

Samuel D. Sledge: Thanks for joining us. We appreciate it.

Kurt: And in a pretty tough market.

Kurt Kevin Hallead: I just wanted to clarify maybe a couple things that you guys indicated, you know, given your

Kurt: Hey, just wanted to clarify maybe a couple of things that you guys indicated I'm, giving your second quarter dynamic 14% to 15 fleets in operation you got another.

Kurt Kevin Hallead: second quarter dynamics, 14 to 15 fleets in operation. You got another. Briefly, coming on the second half of the year, and Sam, to your overall comment, you know, looking at an overall flattish environment, you know, for the year, so is there anything?

Kurt: If we come in on the second half of the year.

Kurt: And Sam to your overall comment you know looking at an overall flattish environment you know for the year. So is there anything.

Samuel D. Sledge: That is taking place with respect to, you know, this incremental E-Fleet that could potentially give you some sequential revenue improvement or sequential margin improvement as the year progresses, or literally are we kind of taking a first quarter run rate and kind of running that flat for the year? Yeah, I mean...

Kurt: And that is taking place with respect to this incremental E fleet that could potentially give you some sequential revenue improvement or sequential margin improvement.

Samuel D. Sledge: As the year progresses, or literally are we kind of taken our first quarter run rate and kind of running that flat for the year.

Samuel D. Sledge: Yeah, I mean, I'll first reiterate our activity guide that's kind of one of our main guidance mechanisms that 14 to 15 fleets, so if you go to the midpoint, that would imply that technically we'd be down a half fleet from what we just printed in Q1. I don't think that should be read as a signal of... Um, you know, the underlying structure or fundamentals of the market. That's just, you know, a fleet or two moving around a little bit during the quarter and creating maybe a little bit of white space as compared to Q1. So other than that, this is it.

Speaker Change: Yeah, I mean, the all all first reiterate our activity Guy that's kind of one of our main guidance mechanisms that 14 to 15 fleets. So if you go to the midpoint that would imply that technically we'd be down a half fleet from what we just printed in Q1.

Speaker Change: I don't think that should be read as a signal of.

Speaker Change: You know that.

Samuel D. Sledge: Underlying structure or fundamentals of the market that's just.

Samuel D. Sledge: Our fleet or two moving around a little bit during the quarter and creating maybe a little bit of white space as compared to Q1. So.

Samuel D. Sledge: Other than that this is.

Samuel D. Sledge: This seems to be the sturdiest, steadiest run of, I think, utilization and margins that we've seen. If you date back to, say, almost this time last year, and that what we plan to experience for the balance of this year is just a very stable environment, we don't need activity to really, you know, improve our prospects, per se.

Samuel D. Sledge: This is seems to be the Sturdiest steadiest run of I think utilization and margins that we've seen if you date back to say almost.

Samuel D. Sledge: Almost this time last year and that will be what we plan to experience for the balance of this year. It's just a very stable environment, we don't need activity.

Samuel D. Sledge: To to really.

Samuel D. Sledge: Improve.

Samuel D. Sledge: Our prospects per se.

Samuel D. Sledge: We just need to continue executing under the circumstances that exist today. We obviously, you know, are never looking for a downturn or anything like that, albeit we're very prepared for one, given our contracts and our balance sheet, and the kind of customers that we work for. But this is just a kind of rinse and repeat type of model that I think we've worked ourselves into. If we continue to execute, you can kind of see the cash flow that comes with the business.

Samuel D. Sledge: We just need to continue executing into the circumstances that exist today, we obviously.

Kurt: Our are never looking for a downturn or anything like that albeit we're very prepared for one given our contracts and our balance sheet.

Kurt: The customers that we work for.

Kurt: But this is just a very kind of rinse and repeat type of model that I think we're we've worked ourselves into.

Kurt: But if we continue to execute you can kind of see the cash flow.

Kurt: It comes with the business.

Samuel D. Sledge: And we remain very confident in kind of our ability to operate, I mean, ability to execute operationally, which is really what kind of leads us from a confidence standpoint to be able to continue to do this. So, you know, we use the term, you know, low to no growth. That's on purpose, that, you know, in prior cycles or, you know, over the past decade, you've heard companies like us say, you know, the next wave is coming.

Kurt: And we remain very confident in kind of our ability to operate I mean ability to execute operationally.

Kurt: Which is really what kind of leads us from a confidence standpoint to be able to continue to do this so we.

Kurt: We use the term low to no growth.

Speaker Change: That's on purpose.

Speaker Change: You know in prior cycles or you know over the past decade, you've heard companies like US say you know the next wave is coming we don't think it's coming nor do we need it.

Samuel D. Sledge: We don't think it's coming, nor do we need it. So we're really proud to be in this strong position, I think, in the best basin on this side of the world, with good equipment, great people, and we think that this is something that we can replicate for a long time.

Speaker Change: So we're really proud to be in a strong position I think than the best.

Speaker Change: You know basin on this side of the world.

Speaker Change: With good equipment great people.

Speaker Change: And we think that this is something that we can replicate.

Speaker Change: For for a long time.

Kurt Kevin Hallead: Kurt, just to give you some anecdotes to what Sam is saying, you know, we're doing more with less. That was the topic or the theme that I mentioned in our comments.

Speaker Change: Kurt just to give you some anecdotes to what Sam is saying.

Kurt: We're doing more with less that was the topic or a theme that I mentioned in our comments.

David Scott Schorlemer: Looking back at the third quarter of last year, you know, revenues are down relative to that period, but we're still generating very good EBITDA and then significantly higher per cash flow. Year over year, our CapEx is down nearly 60%. And so those are the things that we're focusing on, and as Sam mentioned, we don't need that massive or significant top-line growth, although it does present potential opportunities for other growth opportunities. We don't need it to generate the pre-cash flow that we're talking about to support our repurchase program and the other capital allocation opportunities that we have.

Speaker Change: Looking back at the third quarter last year revenues were down relative to that period, but we're still generating very good EBITDA and then significantly higher free cash flow.

Speaker Change: Year over year, our Capex is down nearly 60%.

Speaker Change: And so.

Speaker Change: Those are the things that we're focusing on and as Sam mentioned, we don't need that massive or significant topline growth, although it does present potential opportunities for four.

Speaker Change: Other other growth potential we don't need it to generate the free cash flow that we're talking about to support our repurchase program and the other capital allocation opportunities that we have.

Speaker Change: Got it.

David Scott Schorlemer: That's a good color. So just on that context, then on capital allocation, so it looks like you're in the first quarter. Your share repo is about 50% of your free cash flow, give or take.

Speaker Change: So just on that context, then on capital allocation. So it looks like here in the first quarter by your share repo is about 8% of your free cash flow.

Kurt Kevin Hallead: [inaudible]

Speaker Change: Give or take.

Speaker Change: Are you are you actively.

Kurt Kevin Hallead: I don't know what the right phrase is, but a lot of companies kind of said, hey, we're going to allocate, you know, whatever percent of our free cash flow to distribution, as a shareholder says, you have like.

Speaker Change: What's the right freight days, but a lot of coffee and kind of said hey, we're going to allocate.

Speaker Change: Whatever the percent of our free cash flow to a patient.

Speaker Change: Holder says.

Samuel D. Sledge: You have like a specific percentage that you're looking at on kind of an annualized basis. We don't right now, Kurt. Something we could possibly do in the future, we use the word, you know, dynamic capital allocation. You know, keyword there, dynamic, that things are always changing in our sector, even with the kind of steady environment that I just described earlier. Things continue to change. The business has different needs at different times, and M&A opportunities kind of surface at certain times.

Speaker Change: Do you have like a.

Speaker Change: The percentage that you're looking at on kind of an annualized basis.

Speaker Change: We don't right now Kurt.

Speaker Change: Something we could possibly do in the future we use the word.

Speaker Change: Dynamic capital allocation.

Speaker Change: Keyword there dynamic that.

Speaker Change: Things are.

Speaker Change: Always changing in our sector, even even with the kind of steady environment that I. Just described earlier things continue to change the business has different needs at different times, and M&A opportunities kind of surface.

Speaker Change: At certain times, so right now, we'd rather stay nimble across kind of the three core areas that we allocate capital, which is equipment transition shareholder returns and M&A.

Samuel D. Sledge: So right now, we'd rather stay nimble across kind of the three core areas that we allocate capital to, which are equipment transition, shareholder returns, and M&A. We've been proud, in the last six months, to do all three of those things basically simultaneously, and really proud to have a business that is able to fund that. So, kind of more of the same for us. Moving forward, and I think it'll be maybe a while before you see us get more prescriptive, in terms of allocating a percentage of free cash flow or anything like that. We'll prefer to stay a bit more dynamic and opportunistic for the time being.

Speaker Change: We've been proud and in the last six months to do all three of those things basically simultaneously.

Speaker Change: And really proud to have a business that that.

Speaker Change: That is able to fund that so kind of more of the same for us.

Speaker Change: Moving forward.

Speaker Change: And I don't I think it'll be may be a while before you see us get more prescriptive.

Speaker Change: In terms of allocating our percentage of free cash flow or anything like that we will prefer to stay a bit more dynamic and opportunistic for the time being.

Kurt Kevin Hallead: All right, that's great. I appreciate it. Thank you.

Speaker Change: Alright, that's great appreciate it thank you.

Operator: Thank you. The next question comes from Arun Jayaram with J.P. Morgan. Please go ahead.

Speaker Change: Thanks Kurt.

Speaker Change: The next question comes from Arun Jairam with J P. Morgan. Please go ahead.

Arun Jayaram: Hey, good morning.

Arun Jayaram: Sam, I wanted to see if you and David could give us a little bit more context around the Exxon Award. You mentioned that you, you know, have been, you started talking about six months ago. But, you know, could you talk about whether this was called a bake-off relative to Halliburton and Liberty and just talk about the overall process? What you think drove your success on this and maybe some details around the financial impact: is this a take-or-pay contract? You know, what kind of impact do you see from the financials made from a margin perspective?

Arun Jayaram: Sam I wanted to see if you had even David could give us a little bit more context around the Exxon Award.

Arun Jayaram: You mentioned that you.

Arun Jayaram: It had been just start talking about six months ago.

Arun Jayaram: But could you talk about whether this was called a bake off relative to Halliburton and Liberty and just talk about the overall process.

Arun Jayaram: Do you think you know what drove your success on this and maybe some details around.

Arun Jayaram: The financial impact is this a take or pay contract what kind of.

Arun Jayaram: You know impact you see from the financials, maybe from a margin perspective.

Samuel D. Sledge: Yeah, sure. I'll likely not give you the details that you might be asking for. You know, we have some competitive, I think, proprietary things that we've used to get this done. And, you know, if you want to know more about Exxon's process, then, you know, they're probably the best people to ask about that. That said, I think it's safe to say that a company like ExxonMobil is not, you know, they're a very sophisticated operation, a very sophisticated supply chain team, and they don't go about these things flippantly. It's very planned and prescribed.

Speaker Change: Yeah sure I'll likely not give you the detail that you might be asking for them. You know we have we have some competitive I think proprietary.

Arun Jayaram: Things that we've used to get this done and if you want to know more about exxon's process then.

Speaker Change: They are probably the best person to ask about that.

Speaker Change: That said.

Speaker Change: I think it's safe to say that a company like Exxonmobil is not.

Speaker Change: They're very sophisticated operation a very sophisticated supply chain team and they don't go about these things flippantly, it's very planned and prescribed.

David Scott Schorlemer: So I think it's safe to say that there are other competitors of ours that were involved in this process. We're happy and proud to get the amount of work from a forced electric standpoint out of this that we did. Maybe I'll just reiterate something I said earlier about kind of our commercial approach to these things. You know, we get some first-hand feedback from not just ExxonMobil but from other customers. Maybe we're just a bit more collaborative in the contracting process and a bit more creative.

Speaker Change: So I think it's safe to say that there is there is other competitors of ours that were involved in this process.

Speaker Change: We were we're happy and proud to get the amount of work from a force electric standpoint out of this that we did in.

Arun Jayaram: Maybe I'll just reiterate something I said earlier around kind of our commercial approach to these things.

Arun Jayaram: We get some firsthand feedback from not just exxonmobil, but from other customers that.

Arun Jayaram: Maybe we're just a bit more collaborative in the in the contracting process and a bit more creative.

David Scott Schorlemer: You know, we love to lead into conversations by asking customers what their main concerns and sensitivities are about doing this, and we start to work on those big things. And we, you know, we believe that if we can. If we can solve for those big items, then kind of all the smaller bells and whistles that come into the agreement will begin to fall in place. So we like to fit ourselves to our customers, and we've been doing that for 12, 13, 14 years now.

Arun Jayaram: We love to lead into conversations by asking customers what their main concerns and sensitivities are to doing this and start to work on those big things and we believe if we can.

Arun Jayaram: If we can solve for those big items been kind of all the small smaller bells and whistles that come into the agreement will will will begin to fall in place. So.

Arun Jayaram: We like to fit ourselves to our customers and we've been doing that for 12 13 14 years really that's nothing new this is just a new technology that we're doing with it under a bit more.

David Scott Schorlemer: That's nothing new. This is just a new technology that we're doing with it under a bit more of a structured commercial agreement. So I don't know if that's kind of helping you get at your answer, get at the answer you're asking for, but I think that kind of encompasses what we've been working on.

Arun Jayaram: The structured commercial agreement.

Arun Jayaram: So I don't know if that's kind of helping.

Arun Jayaram: Helping you get it get it your answer get it get it the answer you were asking for but.

Arun Jayaram: I think I've kind of encompasses what we've been working on.

Samuel D. Sledge: Yeah, Arun, the one thing I would add is, you know, there's been maybe some questions around our ability to compete at this scale, but I think this clearly shows our field performance. We already had three fleets with Exxon. I think they were able to see that we could deliver in the field with the technology we were providing at that time, which was our Tier 4 DGB, and provide them with industry-leading results.

Arun Jayaram: Yes.

Speaker Change: Thank you.

Speaker Change: The one thing I would add is you know there's been maybe some questions around our ability to compete at this scale I think this clearly shows that.

Speaker Change: Our field performance, we already had three fleets with Exxon I think they were able to see that we can deliver in the field with the technology. We were we were providing at that time, which was our tier four DGB.

Speaker Change: And providing them industry leading results.

Samuel D. Sledge: And they had confidence in our electric solutions. So I think the fact that we're able to partner with a company such as ExxonMobil speaks volumes for where Propetro has placed itself from a technology and a field performance perspective. This is a long-term contract, and that's not something, as Sam mentioned, that they do without a lot of analysis and scrutiny. So we're very pleased with being able to put ourselves in this position. And we think there are more heading our way that are like this.

Speaker Change: And they had confidence in our electric solution. So I think the fact that we're able to pass.

Speaker Change: Partner with companies such as Exxonmobil.

Speaker Change: Speaks volumes for.

Speaker Change: Petro has placed itself from a technology and a field performance perspective. This is a long term contract.

Speaker Change: And.

Arun Jayaram: That's not something as Sam mentioned that they do.

Arun Jayaram: Without a lot of analysis and.

Arun Jayaram: Scrutiny.

Arun Jayaram: We're very pleased with being able to put ourselves in this position and we think theres more more heading our way that's like this.

Arun Jayaram: Interesting. Well, let me, I'm going to not ask you my second question, but maybe, just maybe, clarify some of your commentary, David. So you mentioned that you have been working on three tier four DGB fleets with Exxon. Obviously, you signed an agreement for two. Force, New Builds. Does that suggest that you'd be at five, or are they, you know, you know, are they switching, you know, increasing the mix towards the e-flate? So maybe a little bit of clarification there. And your other point was that you see incremental opportunities. I wonder if you could maybe just elaborate on that and that comment at the end.

Speaker Change: Interesting well, let me I'm going to not ask you My second question maybe just.

Speaker Change: Maybe clarify some of your commentary David.

Speaker Change: You mentioned that you had been working three tier four DGB fleets with Exxon, Obviously, you signed an agreement for to force a newbuild.

Speaker Change: Does that suggest that you'd be at five or are they you know.

Speaker Change: Are they.

Speaker Change: Switching.

Speaker Change: Increasing the mix towards the E fleets, so maybe a little bit of a clarification there.

Speaker Change: And your other point was that you'd see incremental.

Speaker Change: Incremental opportunities I Wonder if you could maybe just elaborate on that and that comment at the end.

Samuel D. Sledge: Yeah, I'll kind of pick that up, Arun. This is Sam.

Speaker Change: Yeah.

Speaker Change: And what kind of pick that up or in the Sam. This is technically replacement for for Exxon for our existing fleet. So we're out marketing those dual fuel fleets and they've already found the home home for the majority of those of.

Samuel D. Sledge: This is technically a replacement for Exxon for our existing fleet. So we're out marketing those dual-fuel fleets, and I've already found the home for the majority of those fleets as these force fleets replace our dual-fuel assets on the ExxonMobil operation. So it's not growth for us or Exxon, it's simply replacement. And then David was aluding to future opportunities, and I said earlier in the call that the demand continues for these solutions. I think the demand continues, and our track record of being, you know, a first class operator with this equipment. It's not just that it's not hitting the ground and limping along.

Speaker Change: Of those fleets as these force fleets replace our dual fuel.

Speaker Change: Assets on on the on the Exxon Mobil.

Speaker Change: Operation So it's not it's not growth for us.

Speaker Change: Or or Exxon, it's simply replacement.

Speaker Change: And then David alluding to future opportunities and I said.

Speaker Change: Earlier in the call.

Speaker Change: The demand continues for these solutions I think the demand continues.

Speaker Change: Our track record of being.

Samuel D. Sledge: This stuff is working at efficiencies very comparable to our conventional equipment, which is a major selling point for our customers that, like ExxonMobil, that have not deployed a significant amount of electric equipment previously. So we're able to, you know, generate some comfort with them operationally very quickly because we have a track record with the other fleets that we're running. But demand is good. I mean, this is something, like we've said, I think multiple times here today, that we plan to replicate.

Speaker Change: You know first class operator with this equipment, it's not just it's not <unk>.

Speaker Change: Getting the ground and limping along this stuff is working at efficiencies very comparable.

Speaker Change: To our to our conventional equipment, which is a major.

Speaker Change: A major selling point for our customers that like like Exxonmobil that have not deployed a significant amount of electric equipment previously.

Speaker Change: So we're able to generate some comfort with them operationally very quickly because we have a track record with the other fleets that were running.

Speaker Change: But demand is good I mean, it's this is this is something like we've said multiple times here today that we plan to replicate our capital allocation approach our preference is to allocate more capital to these more industrial technologies like electric equipment and less <unk>.

Samuel D. Sledge: Our capital allocation approach, our preference, is to allocate more capital to these more industrial technologies, like electric equipment, and less capital to things like diesel equipment, because diesel equipment will continue to attrit at some level over time, as it always has. So I think that the kind of cadence that we've been deploying at, whether it was kind of by luck or grand design, has been very similar to the cadence we've seen.

Speaker Change: Capital to things like diesel equipment that.

Speaker Change: That diesel equipment will continue to attrit at some level over time as it always has.

Speaker Change: So I think the kind of the cadence that we've whether it was kind of by luck or Grand design. We've been deploying that has been very similar to the cadence we've seen.

Samuel D. Sledge: Some of the attrition in our fleet and we'll see continue. We'll see going forward kind of on the diesel side. It doesn't mean that we won't get rid of all of our diesel operation. It just means that we're trying to high-grade the dollar that we spend, the dollar that we invest, in an asset to something that's going to last longer, be more marketable, and garner more sticky contractual terms.

Speaker Change: Some of the attrition in our fleet and we will see continue.

Operator: Thank you. The next question comes from Waqar Syed with ATB Capital Markets. Please go ahead.

Speaker Change: We will see going forward kind of on the diesel side. It doesn't mean that we won't that we're getting rid of all of our diesel operation. It just means that we're trying to high grade the dollar that we spend the dollar that we invest.

Speaker Change: In an asset to something thats going to last longer be more marketable and garner more more.

Yes.

Speaker Change: No more sticky contractual terms.

Speaker Change: Great. Thanks, gentlemen.

Waqar Mustafa Syed: Thank you. The next question comes from Waqar Sayed with ATB capital markets. Please go ahead.

Waqar Mustafa Syed: Great quarter, congrats on that. Just a clarification question, the adjusted EBITDA number for hydraulic fracturing is $86.1 million. Does that include expensing for the operating lease $8.6 million, or is that $8.6 million number embedded in the other reconciling items?

Waqar Mustafa Syed: Great great quarter, congrats on that.

Waqar Mustafa Syed: Just a clarification question.

Waqar Mustafa Syed: The adjusted EBITDA number for hydraulic fracturing is $86 $1 million a.

Waqar Mustafa Syed: Does that include expensing for the operating lease are at one $6 million or that $8 $6 million number is embedded in the other reconciling items.

David Scott Schorlemer: Waqar, this is David. The EBITDA is inclusive of the lease expense. We have in the segment information line-itemed a lease expense of $8.5 million. $5 million, roughly $9 million for the Corps. So you should see that in our press.

Kurt Kevin Hallead: It works.

David: Waqar this is David.

Waqar: EBITDA is inclusive of the lease expense, we have in the segment information.

David Scott Schorlemer: Line items, the lease expense of $8 five.

David Scott Schorlemer: Million roughly $9 million for the quarter.

David Scott Schorlemer: So you should see that in our press.

Waqar Mustafa Syed: Yeah, no, I see that. Okay.

Speaker Change: Yeah, No I I S.

Speaker Change: Okay, and then Sam I saw that this the other operations Oh.

Waqar Mustafa Syed: The line item EBITDA.

Waqar Mustafa Syed: EBITDA fell quarter over quarter quite a bit from there.

Waqar Mustafa Syed: Two eight to $4 $8 million I'm, assuming that's cementing anything in particular going on there.

Waqar Mustafa Syed: And then, Sam, I saw that this, the other operations, or all other line items, IPTA fell quarter over quarter quite a bit from, you know, close to $8 to $4.8 million. I'm assuming that's cementing. Anything in particular going on there?

David: Waqar this is David.

David: Our cementing operations.

Sam: Had a bit of a slow start things are picking up in that area, but.

David Scott Schorlemer: Well, Karthus, David, you know, our submitting operation had a bit of a slow start, but things are picking up in that area. But keep in mind, you know, the service lines are going to move around a little bit. They've got different, a little bit different customer complexions in each one of those, and so that's what we're seeing. Overall, the top line has been improving, and so we like to see that, but we think we'll see a bit of recovery into the second quarter for that business.

David Scott Schorlemer: But keep in mind the service lines are going to they're going to move around a little bit they've got different little bit different customer complexion, and each one of those and so that's what we're seeing overall top line, it's been improving and so we'd like to see that but.

David Scott Schorlemer: We think we'll see a bit of a recovery into the second quarter for that business.

Waqar Mustafa Syed: All my other questions have been answered before. Thank you very much.

Derek Podhaizer: Okay.

Waqar Mustafa Syed: Okay.

Waqar Mustafa Syed: Great.

Speaker Change: My other questions have been answered the phone. Thank you very much.

Operator: Thank you. The next question comes from Stephen Gengaro with Stiefel. Please go ahead.

Waqar Mustafa Syed: Thank you. The next question comes from Stephen <unk> with Stifel. Please go ahead.

Stephen David Gengaro: Thanks. Good morning, everybody. I guess two for me. The first is, on the wireline side of business, should we think about that business as growing and tracking your... Pressure Pumping Fleet Utilization, or is there growth? above and beyond your internal assets that we should be thinking about.

Stephen: Thanks, Good morning, everybody.

Stephen David Gengaro: Good morning, I guess two for me hi, Thanks.

Stephen David Gengaro: The first is.

Stephen David Gengaro: On the wireline side of the business.

Stephen David Gengaro: Should we think about that business is growing.

Stephen David Gengaro: And tracking your.

Stephen David Gengaro: Pressure pumping fleet utilization or is there growth.

Stephen David Gengaro: Above and beyond your internal assets that we should be thinking about.

Samuel D. Sledge: I did like, as David actually just mentioned, wireline and submitting both have, you know, a bit of a different customer base, so they, you know, they could move in different directions. That said, I don't think you should... You should see that as large movements in different directions. The best way to look at it is that Stephen is relatively flat. The wireline market, I think, is a tad spottier in 2Q, but it's not like falling off a cliff or anything. It's just a little bit looser than it was in 1Q, but relatively flat throughout the years we've been.

Stephen David Gengaro: They didn't like as David actually just mentioned wireline and submitting both have.

Stephen: Bit of a different customer base. So they could move in different directions, but that said I don't think you should.

Samuel D. Sledge: You should see that as large movements in different directions.

Stephen: Best way to look at it as Stephen is relatively flat.

Samuel D. Sledge: It's.

Samuel D. Sledge: The wireline market I think is a tad spot ear into.

Samuel D. Sledge: Into Q, but.

Samuel D. Sledge: But it's not like falling off a cliff or anything it's just.

Stephen: A little bit looser than it was in <unk>.

Samuel D. Sledge: But relatively flat throughout the year as we as we model it.

David Scott Schorlemer: Stephen, one of the things we did want to talk a little bit about was just being able to bundle those services, and I think the ExxonMobil contract is an opportunity for us to deliver those services in connection with our fracturing fleet, so that's something that I think is something that we look to do more of. They don't share significant overlap as it relates to customers. I think there's an opportunity for us to do more of that.

Samuel D. Sledge: Steven.

Samuel D. Sledge: One of the things we did one of them.

David Scott Schorlemer: Talk a little bit of allergist being able to bundle those services and I think the exxonmobil contract.

David Scott Schorlemer: As an opportunity for us to deliver those services in connection with our fracturing fleets.

Stephen: That's something that I think.

Speaker Change: Got it.

Stephen: It is something that we look to do more of they don't share a significant overlap as it relates to customers I think there's an opportunity there for us to do more of that but.

David Scott Schorlemer: It is happening on the Exxon Mobil contract. Okay, thank you. And then, as we think about your fleet makeup over time, and you talked about the force fleets going forward, how do you, at this point? I mean, obviously, you got a couple working, things are going really well, but how do you think about the buy versus lease decision at this point? And is the provider willing to continue to, arrange, you know, make these arrangements with you?

David Scott Schorlemer: It is happening on the Exxonmobil contract.

Speaker Change: Okay. Thank you and then.

David Scott Schorlemer: As we think about your fleet makeup over time and you've talked about the force fleets going forward.

Stephen: How do you at this point I mean, obviously, you've got a couple of work and things are going really well, but how do you think about the buy versus lease.

David Scott Schorlemer: Decision at this point and is the provider willing to continue to.

David Scott Schorlemer: Our range.

David Scott Schorlemer: These arrangements with you.

Samuel D. Sledge: Yeah, I don't think you should see the lease mechanism that we're using, and really, it's lease to own. We're buying these things over the span of the lease and have a buyout option at the end of the lease period. This is likely just a transitory mechanism that we're using here to allow us to multitask from a capital allocation standpoint. There could be, you know, a little bit more leasing, but I would say beyond this year, probably not. And these would be assets that we would be buying in the future. I think that's, I could also say that it's probably a mutual preference between both us and our supplier.

Speaker Change: Yeah, I don't think you should see the least mechanism that we're using really its lease to own we're buying these things over the span of the lease and have a.

Samuel D. Sledge: And have a buyout option at the end of the lease period.

Samuel D. Sledge: This likely just a transitory mechanism that we're using here to allow us to multitask from a capital allocation standpoint.

Samuel D. Sledge: There could be a little bit more in leasing, but I would say beyond this year likely not.

Samuel D. Sledge: And these would be.

Samuel D. Sledge: Assets that we would be buying.

Samuel D. Sledge: In the future I think that's.

Stephen: I could also say, that's probably mutual preference of both us and our supplier.

Stephen David Gengaro: Great, thanks. And just one kind of re-clarification of Waqar's question: you're just even to have 86.1 million in hydraulic fracturing. Obviously, it's before DNA, but it's after deducting the leasing.

Speaker Change: Great. Thanks, and then I guess, one kind of reclassification on cars question. Your adjusted EBITDA of $86 1 million in hydraulic fracturing that is.

Stephen David Gengaro: Obviously, it's before DNA.

Stephen David Gengaro: After deducting the lease expense.

David Scott Schorlemer: Correct. Yes. Okay, great. Just wanted to make sure we had that right. Thank you for the call, gentlemen.

Speaker Change: Correct, yes, okay, great just wanted to make sure we have that right. Thank you for the color gentlemen.

Operator: Thank you. The next question comes from Scott Gruber with Citigroup. Please go ahead.

David Scott Schorlemer: Thank you. The next question comes from Scott Gruber with Citigroup. Please go ahead.

Scott Andrew Gruber: Yes, good morning, and congrats on the results.

Scott Andrew Gruber: Yes, good morning, and congrats on the results.

Scott Andrew Gruber: Thank you thanks Scott.

Samuel D. Sledge: Sam, I want to come back to the new contracts since it's a great win for Propetro. Can you touch on the performance incentives in the new contracts? You know, is that a new point of focus or kind of more standard fare? And as we think about them in terms of your EBITDA impact, are those kind of on the margin, or could they be more meaningful? Yeah, I would say that the performance incentives are basically standard fare.

Scott Andrew Gruber: Sam I wanted to come back it didn't do contracts since its a great win for pro Petro.

Samuel D. Sledge: Can you touch on the performance incentives and the new contracts was that a new point of focus or kind of more standard fare.

Samuel D. Sledge: As we think about those in terms of your.

Samuel D. Sledge: EBITDA impact those.

Samuel D. Sledge: It was kind of on the margin or could there be more meaningful.

Samuel D. Sledge: Yeah, I would say that the performance incentives or.

Samuel D. Sledge: Basically standard fare.

Samuel D. Sledge: They might look a little bit different from customer to customer, but that's something that we're always after to try and get paid for our performance. So, you know, without getting into competitive information, I'll kind of... Leave that there. And I'm forgetting your second question. Would you mind repeating your second question?

Samuel D. Sledge: It might look a little bit different from customer to customer, but that's something that.

Samuel D. Sledge: We're always after to try and get paid for our performance.

Samuel D. Sledge: So without getting into competitive information on kind of.

Samuel D. Sledge: Leave that there and I'm.

Samuel D. Sledge: Forgetting your second question do you mind repeating your second question.

Scott Andrew Gruber: Oh, that was, no, you touched on it. You touched on it.

Speaker Change: Oh that was no you've touched on you touched on it.

Scott Andrew Gruber: I do want to clarify on...

Scott Andrew Gruber: But I do want to clarify on the on the Capex on that.

Scott Andrew Gruber: You mentioned lower end towards the $200 million for the year. You also mentioned get to execute on the fifth fleet. So.

Scott Andrew Gruber: If you do that and stay towards the lower end, we should assume you'll probably get at least that we've got the way to think about it.

Scott Andrew Gruber: That'd be correct.

Scott Andrew Gruber: Okay.

Scott Andrew Gruber: And maybe I'll squeeze one more in just thoughts on the Permian.

Scott Andrew Gruber: And the rest of the year, you guys mentioned kind of a slow growth outlook I'm just wondering whether.

Scott Andrew Gruber: The gas egress.

Scott Andrew Gruber: Constraints right now really limiting.

Scott Andrew Gruber: The growth in the base and you guys, obviously don't do a whole lot of work for the privates.

Scott Andrew Gruber: But the watch them.

Scott Andrew Gruber: Market tightness perspective.

Scott Andrew Gruber: We think these gas egress constraints are limiting.

Scott Andrew Gruber: Our response to the privates, the higher oil prices or not really.

Scott Andrew Gruber: Oh, no I'm not I don't know if we're the best people to ask in terms of is it holding privates back from putting more rigs to work that that said, we think it could have maybe minimal to no effect.

Scott Andrew Gruber: On the activity that we already have planned into the year and I think a lot of that has to do to our customer base look we've got.

Scott Andrew Gruber: I'm biased.

Scott Andrew Gruber: For obvious reasons, but I think we've got the best Permian.

Scott Andrew Gruber: Customer base out there.

Scott Andrew Gruber: There's maybe one or two others that were not working for that.

Scott Andrew Gruber: We're working on but I think we've got the who's who of the Permian Basin that is are the smartest most sophisticated.

Scott Andrew Gruber: Best planners with the best infrastructure.

Scott Andrew Gruber: So we don't we don't have any indication right now that tells us that it should affect or it will affect our activity things like that will affect our activity for the balance of the year.

Speaker Change: Got it thanks, Tim I appreciate the color.

Scott Andrew Gruber: Right.

Scott Andrew Gruber: [inaudible]

Scott Andrew Gruber: Thank you. The next question comes from Jeffrey Leblanc with T. P. H. Please go ahead.

Scott Andrew Gruber: and stay towards the lower end. We should assume you're probably going to lease that fifth fleet, is that the way to do it?

Speaker Change: Good morning, Sam team. Thank you for taking my question. One question I had was could you provide any color on some of Frac operations as you continue to deploy fleets.

Scott Andrew Gruber: Okay. And maybe I'll squeeze one more in. Just thoughts on the Permian.

Speaker Change: Yeah. Good good good question.

Scott Andrew Gruber: In the rest of the year, you guys mentioned kind of a slow growth outlook.

Scott Andrew Gruber: I'm just wondering whether, you know, the gas egress constraints right now are really, you know, limiting.

Scott Andrew Gruber: And we've been we've been heavily involved in simultaneous dating back to pool is it early 2020.

Scott Andrew Gruber: The Growth in the Basin.

Scott Andrew Gruber: You guys obviously, you know, don't do a whole lot of work for the privates, but go watch them, you know, from a distance.

Scott Andrew Gruber: 2021, yeah. So we've got you've got a great history at that operation or a really good track record I think simultaneously E fleets do pair really well together because of kind of the power and horsepower density your behavior, you're able to generate that said I mean, as we look at it right now we have a mix of both just regular zipper opt.

Scott Andrew Gruber: Market Tightness A perspective.

Samuel D. Sledge: The gas egress constraints are limiting the response of the privates to higher oil prices, or not really. Uh, you know, I'm not, I don't know.

Scott Andrew Gruber: I don't know if we're the best people to ask in terms of, is it holding privates back from putting more rigs to work? That said, we think it could have, maybe, a minimal to no effect on the activity that we already have planned for the year. And I think a lot of that has to do with our customer base. Look, we've got I'm biased for obvious reasons, but I think we've got the best Permian.

Scott Andrew Gruber: Customer base out there, you know, there's maybe one or two others that we're not working for yet. We're working on it, but I think we've got the who's who of the Permian Basin that are the smartest, most sophisticated. You know, the best planners with the best infrastructure, so we don't, we don't have any indication right now that tells us that it should affect our, it will affect our activity, things like that will affect our activity for the balance of the year.

Scott Andrew Gruber: <unk> and simulcast operations in our.

Scott Andrew Gruber: In our forced fleets.

Scott Andrew Gruber: I think naturally as E&P space continues to consolidate it enables more things like simultaneously, so maybe theres a little bit more of it in the future, but it's not anything.

Scott Andrew Gruber: I think massive swings in the in the job type across our portfolio or the sector.

Scott Andrew Gruber: Thank you very much shelf tend to fall back to the operator.

Scott Andrew Gruber: Thanks, Sam. I appreciate the call. Thanks. Bye.

Scott Andrew Gruber: Thank you. The next question comes from Blake Mclean with Daniel Energy Partners. Please go ahead.

Speaker Change: Hey, good morning.

Speaker Change: Good morning Blake.

Operator: The next question comes from Jeffrey LeBlanc with TPH. Please go ahead. Good morning, Sam and team. Thank you for taking my question.

Speaker Change: Hey, a lot of good questions already asked I've just got one I was hoping to get maybe a little bit of color on.

Jeffrey LeBlanc: R&M going forward each week generally characterized as having lower maintenance and I was hoping you could maybe provide a little context around kind of tier two versus tier four versus electric on that metric and maybe maybe quantify some of the the range of savings you might see between.

Jeffrey LeBlanc: Yeah, good question. We've been heavily involved in SimulFrac dating back to, what was it, early 2020 or 2021. Yeah, so we've got a great history of that operation and a really good track record. I think SimulFrac and eFleets do pair really well together because of the kind of power and horsepower density you're able to generate. That said, I mean, as we look at it right now, we have a mix of both just regular zipper operations and SimulFrac operations in our force fleets.

Operator: Yeah.

Jeffrey LeBlanc: I think naturally, as the E&P space continues to consolidate, it enables more things like simulfrac. So maybe there's a little bit more of it in the future, but it's not anything I think will cause massive swings in the job type across our portfolio or the sector.

Samuel D. Sledge: Thank you. The next question comes from Blake McLean with Daniel Energy Partners. Please go ahead.

Operator: This is David I think right now we are.

Blake McLean: Our maintenance.

Operator: Hey, a lot of good questions have already been asked. I've just got one.

Blake McLean: I was hoping to get maybe a little bit of color on R&M going forward. You know, e-fleets are generally characterized as having lower air maintenance. I was hoping you could maybe provide a little context around kind of Tier 2 versus Tier 4 versus electric on that metric, and maybe quantify some of the range of savings you might see between them.

Samuel D. Sledge: Allocation is about 60% lower for the fleets.

David Scott Schorlemer: Yeah, Blake, this is David. You know, I think right now our maintenance overhead allocation is about 60% lower for the E-fleets. That gives you a sense of some of the lower capital intensity and operational intensity that exists. I think, as Sam mentioned, we'd like to take a bit more time as we roll these fleets out. We've got three of them operating today, one of which is only, you know, a week into its operation.

Blake McLean: That gives you a sense of.

David Scott Schorlemer: Some of the lower capital intensity.

David Scott Schorlemer: Operational intensity that exist I think as Sam mentioned.

David Scott Schorlemer: We'd like to take a bit more time as we roll. These fleets out we've got three of them operating today.

David Scott Schorlemer: One of which is only a.

David Scott Schorlemer: Our weekend to their operations.

David Scott Schorlemer: We've got another one going out in June, so we'll have more data to share on that, but I think overall we're looking at, you know, 40 to 50% lower OPEX and, you know, much lower capital intensity for those fleets going forward. Yeah, the mechanics are looking...

David Scott Schorlemer: We've got another one going out in June so we will have more data to share on that but I think overall, we're looking at.

David Scott Schorlemer: 40% to 50% lower Opex in.

David Scott Schorlemer: And much lower capital intensity for those fleets going forward yes.

David Scott Schorlemer: Yeah, the mechanics are looking for things to do.

David Scott Schorlemer: The mechanics are looking for things to do.

David Scott Schorlemer: [laughter].

Blake McLean: Good stuff. All right. Well, thank y'all. Thank y'all very much. Great course.

Speaker Change: Alright, well. Thank you all thank you all very much great quarter.

Speaker Change: Thanks Budd.

Operator: Thank you. This concludes our question and answer session. I would now like to hand the call back to Sam Sledge for closing remarks.

Blake McLean: Thank you. This concludes our question and answer session I would now like to hand, the call back to Sam sledge for closing remarks.

Samuel D. Sledge: Thank you everyone for joining us today, and we hope to talk to you again soon.

Samuel D. Sledge: Thanks, everyone for joining us today, and we hope to talk to you again soon.

Operator: The conference is now concluded. Thank you for your participation. You may now disconnect your lines.

Speaker Change: The conference has now concluded. Thank you for your participation you may now disconnect your lines.

Operator: [music].

Operator: Yeah.

Operator:

Operator:

Operator: [music].