Q2 2025 ProPetro Holding Corp Earnings Call

Operator: Good day, and welcome to the ProPetro Holding Corp second quarter 2025 conference call. Please note this event is being recorded. If you should require operator assistance, please press star and then zero. I would now like to turn the conference back over to Matt Augustine, Vice President of Finance and Investor Relations for ProPetro Holding Corp. Please go ahead.

Good day and welcome to the ProPetro Holding Corp. Q2 2025 conference call.

Please note, this event is being recorded if you should require operator assistance. Please press star and then zero.

I would now like to turn the conference back over to Matt Augustine, Vice President of Finance and Investor Relations for ProPetro Holding Corp. Please go ahead.

Matt Augustine: Thank you, and good morning. We appreciate your participation in today's call. With me are Chief Executive Officer Sam Sledge, President and Chief Operating Officer Adam Munoz, Chief Accounting Officer and Principal Financial Officer Celina Davila, and our new Chief Financial Officer, Caleb Weatherall. Caleb will introduce himself later in the call, but given he is new to the company and wasn't with us for the second quarter, he will not be participating in the question and answer session today. This morning, we released our earnings results for the second quarter of 2025. 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.

Thank you and good morning. We appreciate your participation in today's call with me, our chief executive officer, Sam, Sledge, president and Chief Operating Officer. Adam Munoz Chief accounting, officer and Principal Financial Officer Selena Davila. Their new Chief Financial Officer of Caleb weatherall. Caleb will introduce himself later in the call, but given he's new to the company and wasn't with us. For the second quarter. He will not be participating in a question and answer session today. This morning, we released our earnings results for the second quarter of 2024.

Matt Augustine: 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 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.

Sam Sledge: Thanks, Matt, and good morning, everyone. Thanks for joining us today. Before I discuss our results this quarter, I would like to take a moment and introduce you to Caleb Weatherall, our new Chief Financial Officer. We are excited to have him on board as his wealth of experience in the energy and financial sectors is a perfect match for us here at ProPetro Holding Corp. We are confident that he will be instrumental in helping us drive long-term shareholder value, and I look forward to having him as part of the team. Caleb, would you like to say a few words?

5. 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 factors discussed in our filings with the SEC. Also, during today's call, we will reference certain non-gaap Financial measures reconciliation 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.

Thanks man, and good morning everyone. Thanks for, thanks for joining us today.

Vectors is a perfect match for us here at propetro.

Caleb Weatherall: Thanks, Sam, for the warm welcome. I am truly thrilled to join the incredible team at ProPetro Holding Corp. Having grown up and built my career in Midland, I have long admired ProPetro Holding Corp's reputation for excellence and its deep roots in the community. It is an honor to join such a respected, first-class organization. While I just joined the company a few weeks ago, I have hit the ground running and am enjoying working closely with Sam and the rest of the leadership team. With a clear focus on capital discipline and efficiency, I am excited to help advance ProPetro Holding Corp's next chapter of success as we build on its strong financial and operational foundation.

We are confident that he will be instrumental in helping us drive long-term shareholder value and I look forward to having him as part of the team. Caleb, would you like to say a few words?

Caleb Weatherall: I want to assure you that the company's disciplined approach to capital allocation and commitment to maintaining a strong balance sheet while investing for growth will not change. I am looking forward to getting to know you all better in the coming quarters, and with that, I will turn it back to Sam.

Thanks, Sam for the warm welcome. I'm truly thrilled to join. The incredible team at propetro having grown up and built my career in Midland. I've long admired propetro reputation for excellence and its deep roots in the community. It's an honor to join such a respected first class organization while I just joined the company a few weeks ago, I've hit the ground running and I'm enjoying working closely with Sam and the rest of the leadership team with a clear focus on Capital discipline and efficiency. I'm excited to help Advance propetro next chapter of success as we build on its strong financial and operational Foundation

Matt Augustine: Thanks, Caleb. Now I would like to share some thoughts on the environment we are operating in and provide an overview of our performance in the second quarter. Despite recent macroeconomic uncertainty, ProPetro delivered a resilient quarter both operationally and financially. Our strategy is proving effective, driven by our emphasis on capital-led assets and disciplined investments, as well as our continued implementation of our industrialized business model. Our legacy completions business continues to generate sustainable free cash flow supported by ongoing cost optimization and targeted capital programs. These efforts are fueling our growth trajectory, including new initiatives like Pro Power, which I will discuss further in a moment. With regard to the current operating environment, both the broader energy markets and more specifically, the completions market in the Permian Basin continue to face challenges.

I want to assure you that the company's disciplined approach to Capital allocation and commitment to maintaining a strong balance sheet while investing for growth will not change. I'm looking forward to getting to know you all better in the coming quarters and with that, I'll turn it back to Sam.

Thanks, Caleb. Now, I'd like to share some thoughts on the environment we're operating in and and provide an overview of our performance in the second quarter.

Despite recent macroeconomic uncertainty Perpetual delivered a resilient quarter, both operational and financially.

Our strategy is proving effective, driven by our emphasis on capitalized assets and disciplined investments, as well as our continued implementation of our industrialized business model.

Our Legacy completions business continues to generate sustainable, free cash flow supported by ongoing cost optimization and targeted Capital programs.

These efforts are fueling our growth trajectory, including new initiatives, like Pro Power, which I'll discuss further in a moment.

Matt Augustine: We believe the Permian frac fleet counts are likely approaching 70 compared to approximately 90 to 100 fleets operating at the start of this year. Increased market uncertainty, driven by tariffs and rising OPEC Plus production, has resulted in more idle capacity than anticipated. Furthermore, price discipline has weakened at the lower end of the market, particularly among subscale frac providers. While we have had the opportunity to keep virtually all of our fleets active, we have proactively chosen to idle certain fleets rather than run our fleets at the sub-economic levels, therefore preserving them for more favorable market conditions in the future. That said, we are prepared to navigate this market by controlling what we can control: our everyday behaviors inside of ProPetro.

With regard to the current operating environment. Both the broader energy markets and more specifically, the completions market, and the peryam base and continue to face challenges.

We believe the Puran frac fleet counts are likely approaching 70, compared to approximately 90 to 100 fleets operating at the start of this year.

Increased Market uncertainty driven by tariffs and Rising OPEC plus production, has resulted in more idle capacity than anticipated.

Furthermore price discipline has weakened at the lower end of the market, particularly among some scale frag providers.

Well, we've had the opportunity to keep virtually all of our fleets active.

Matt Augustine: Our strategic investments, including past M&A activity, Pro Power growth, and FORCE electric frac fleets transition, have strengthened the company's foundation so that we can withstand market turbulence. ProPetro is a strong business led and operated by an experienced team with low debt and first-class customers in one of the world's leading regions for hydrocarbon production, the Permian Basin. Regardless of market conditions, we are confident that these strengths and our resilient capital-led cash flow-generated business model will enable us to continue delivering shareholder value. Market cycles like this create opportunity, as changes in the environment can offer up new ways for companies like ProPetro Holding Corp to profitably grow and better serve our clients, allowing us to emerge on the other side of the cycle healthier than before and well-positioned to operate in a market that has improved with respectable supply and demand.

We have proactively chosen to aisle certain fleets rather than run our fleets at the sub economic levels. Therefore, preserving them for more favorable market conditions in the future. That said, we are prepared to navigate this Market by controlling, what we can control our everyday behaviors inside of propetro.

Our strategic Investments including past m&a, activity Pro, Power, growth and force, electric Fleet transition have strengthened the company's Foundation.

So that we can withstand Market turbulence.

Propetro is a strong business LED and operated by an experienced team with low depth and first class customers in 1 of the world's leading regions for hydrocarbon production, the peryam basin.

Regardless of market conditions, we are confident that these drinks in our resilient Capital Life cash flow generated business model will enable us to continue delivering shareholder value.

Matt Augustine: In contrast, many of our smaller peers, often the less disciplined competitors in the market, and those who have not invested in next-generation technology may struggle to withstand a downturn for as long, given their limited ability to earn returns on their deployed assets. With that, I would now like to discuss our capital-led investments. I am pleased to report that demand for our next-generation services, particularly our FORCE electric frac fleets, remains very strong. Approximately 75% of our fleet is next generation between the Tier IV DGB dual-fuel fleets and FORCE electric frac fleets. Moreover, as we reported last quarter, over 50% of ProPetro Holding Corp's active hydraulic horsepower is now under long-term contracts. This is inclusive of two Tier IV DGB dual-fuel fleets and four electric fleets.

Market Cycles like this create opportunity as changes in the environment can offer up new ways for companies like propetro to profitably, grow and better serve. Our clients allowing us to emerge on the other side of the cycle healthier than before and well positioned to operate in a market that has improved with respectable supply and demand.

In contrast, many of our smaller peers, often the less disciplined competitors in the market. And those who have not invested in Next Generation technology, May struggle to withstand a downturn for as long given their limited ability to earn Returns on their deployed assets.

With that. I'd now like to discuss our capitalized Investments.

I'm pleased to report that demand for our next Generation Services, particularly our force electric Fleet remains very strong.

Approximately 75% of our Fleet is next Generation between the tier 4, dgb dual fuel, and 4, electric fleets.

Moreover as we reported last quarter over 50% of propetro active. Hydraulic horsepower is now under long-term contracts.

Matt Augustine: Notably, one of the FORCE electric frac fleets is a very large simul frac fleet utilizing equipment equivalent to two standard zipper fleets. As a result, we currently have five fleets' worth of FORCE electric frac fleets equipment supporting four deployed fleets. Importantly, we plan to continue and potentially accelerate the transition from our Tier II diesel equipment to our FORCE electric frac fleets equipment, given its high demand, successful contracts, and commercial leverage, which we expect to offer lower risk for future earnings. On the Pro Power side, we currently have approximately 220 megawatts on order, with deliveries that began recently and are expected to be completed by mid-year 2026. We are especially proud to announce our inaugural contract during the quarter, which was executed in collaboration with a Permian-focused EMP operator and commits 80 megawatts of power generation capacity to deliver turnkey power to a distributed microgrid installation.

This is inclusive of two Tier 4 DGB dual fuel fleets and four electric fleets.

Importantly, we plan to continue and potentially accelerate, the transition from our tier 2, diesel equipment to our force, electric equipment, given its high demand, successful contracts and Commercial leverage, which we expect to offer lower risk for future earnings.

On the Pro Power side. We currently have approximately 220 megawatts on order with deliveries that began recently and are expected to be completed by mid year 2026.

Matt Augustine: Asset deployment is scheduled to begin in Q3 of this year and continue throughout 2026. This 10-year midstream-like agreement marks a major milestone for our Pro Power and serves as a future blueprint and a testament to our commitment to innovation and long-term growth. Furthermore, over the coming weeks and months, we anticipate announcing multiple long-term contracts with oil and gas customers to meet their infield power requirements. Based on our ongoing discussions, we are confident that we will secure long-term agreements for all 220 megawatts of currently ordered equipment by the end of 2025. Additionally, we are actively engaging with our power generation suppliers regarding our next equipment orders. While these developments are exciting, we believe this is still just the beginning for this business.

We are especially proud to announce our inaugural contract during the quarter, which was executed in collaboration with a puran-focused EMP operator and commits 80 megawatts of power generation capacity to deliver turnkey power to a distributed microgrid installation.

Asset deployment is scheduled to begin in the third quarter of this year and continued throughout 2026.

This 10-year Midstream like agreement marks, a major milestone for our Pro Power and serves as a future blueprint and a testament to our commitment, to Innovation and long-term growth.

Furthermore over the coming weeks and months we anticipate announcing multiple long-term contracts with oil and gas customers to meet their infield power requirements.

Based on their ongoing discussions, we are confident that we will secure long-term agreements for all 220. Megawatts of currently ordered equipment by the end of 2025.

Additionally, we are actively engaging with our power generation, suppliers regarding our next equipment orders.

Matt Augustine: We will continue to align our actions with Pro Power's mission to rethink the grid, therefore unlocking more exciting opportunities to serve our existing and prospective clients, both in oil and gas and other industries, to create long-term value for ProPetro shareholders. Now turning to capital allocation, which is more important than ever in an environment like this. Our dynamic capital allocation strategy allows us to continue to grow Pro Power and our FORCE electric frac fleets while also pursuing disciplined M&A and focusing on shareholder returns. We have been taking and will continue to take a balanced approach to executing this strategy to maximize value. In fact, our financial improvements and the value we have created over the past two years are a direct result of this very approach.

While these developments are exciting, we believe this is still just the beginning for this business. We will continue to align our actions with Pro Powers mission to rethink the grid.

Therefore, unlocking more exciting opportunities to serve our existing and prospective clients, both in oil and gas and other industries, to create long-term value for ProPetro shareholders.

Now turning to Capital, allocation.

Which is more important than ever in an environment like this.

Our dynamic capital allocation strategy allows us to continue to grow Pro Power and our force electric fleets, while also pursuing disciplined M&A and focusing on shareholder returns.

We have been taking and will continue to take a balanced approach to executing this strategy to maximize value.

Matt Augustine: Celina Davila will share more details about our financial results in a moment, but I wanted to highlight that in the second quarter, we generated resilient free cash flow in our completions business. Utilization across all segments was down due to larger macro impacts, including lower commodity prices, heightened uncertainty, and weather downtime. However, our pricing remained largely stable and our operational excellence and cost controls remain strong, particularly as it relates to maintenance capital expenses. Looking ahead, our visibility into our activity outlook remains somewhat limited. As I touched on earlier, the impacts of tariffs and OPEC Plus production increases have caused ongoing uncertainty in the back half of this year, and we expect that to persist into 2026, even with the recent stability of oil prices.

In fact, our financial improvements in the value, we have created over the past 2 years, are a direct result of this very approach.

Selena will share more details about our financial results in a moment. But I wanted to highlight that in the second quarter. We we generated resilient free cash flow in our completions business utilization. Across all segments was down due to larger macro impacts including lower commodity prices, heightened uncertainty and whether downtime. However,

Our pricing remained largely stable and our operational excellence and cost controls remain strong, particularly as it relates to maintenance Capital expenses.

Matt Augustine: Accordingly, in the third quarter, we expect to see a reduction in activity, particularly with our more conventional equipment, and we anticipate normal seasonal patterns in the fourth quarter. As a result, we expect to operate an average of 10 to 11 fleets in the third quarter, with the possibility of running fewer fleets in the fourth quarter. That said, as we navigate a fluid and uncertain environment, ProPetro remains in a solid position supported by our strong balance sheet, first-class customers, a fresh next-generation asset base, growth through Pro Power, sustainable cash generation, and long-term contractual stability. Most importantly, these results and strengths are made possible by and due to our outstanding team. On that note, Celina, I will turn it over to you.

looking ahead, our visibility in into our activity Outlook remains somewhat limited as I touched on earlier, the impacts of terrorists, tariffs and OPEC plus production increases have caused ongoing uncertainty in the back half of this year and we expect that to persist into 2026, even with the recent stability of oil prices,

Accordingly in the third quarter, we expect to see a reduction in activity, particularly with our more conventional equipment and we anticipate normal, seasonal patterns in the fourth quarter, as a result. We expect to operate an average of 10 to 11 fleets. In the third quarter, with the possibility of running fewer fleets in the fourth quarter.

That said, as we navigate a fluid and uncertain environment, ProPetro remains in a solid position supported by our strong balance sheet, first-class customers, refreshed Next Generation asset base, growth through Pro Power, sustainable cash generation, and long-term contractual stability. Most importantly, these results.

Celina Davila: Thanks, Sam, and good morning all. In terms of the numbers, ProPetro generated total revenue of $326 million, a decrease of 9% as compared to the prior quarter. Net loss totaled $7 million, or $0.07 loss per diluted share, compared to net income of $10 million, or $0.09 income per diluted share for the first quarter of 2025. Adjusted EBITDA totaled $50 million, with 15% of revenue and a decrease of 32% compared to the prior quarter. This includes the lease expense related to our electric fleets of $14 million. Importantly, one attributable factor for lower financial performance this quarter was and is our strategic decision to maintain our idle fleets in optimal working conditions. This ensures preparation for rapid deployment once market conditions improve and that we are best positioned to capitalize on future opportunities as they arise.

And strengths are made possible by, and due to our outstanding team. On that note Selena, I'll turn it over to you.

Thank you, and good morning, all.

in terms of the numbers perpetrator,

Total revenue.

Of 320.

As compared to the prior quarter, net loss totaled 7 million or 7 cents loss per diluted share compared to net income of 10 million or 9 cents income per diluted share for the first quarter of 2025.

1 attributable factor for lower financial performance. This quarter was and is our strategic decision to maintain our Idol fleets in optimal working conditions.

Celina Davila: Net cash provided by operating activities and net cash used in investing activities, as shown on the statement of cash flows, were $54 million and $36 million, respectively. Free cash flow for our completions business was $26 million. As Sam mentioned, our legacy completions business continues to generate sustainable free cash flow. Even in today's challenging market environment, we are operating with the consistency and reliability of a mature industrialized enterprise. Capital expenditures paid were $37 million, and capital expenditures incurred were $73 million, including $30 million primarily supporting maintenance in our completions business and $43 million supporting our Pro Power orders. The difference between incurred and paid capital expenditures is primarily comprised of Pro Power-related capital expenditures that have been financed and paid directly by our financing partner and unpaid capital expenditures included in the accounts payable and accrued liabilities.

This ensures preparation for Rapid deployment, once market conditions approved and that we are best positioned to capitalize on future opportunities as they arise.

Net cash provided by operating activities and net cash used in investing activities as shown on the statement of cash flows for 54 million and 36 million respectively, free cash flow for our completions business was 26 million. A Sam mentioned, our Legacy completion business continues to generate sustainable free cash flow. Even in today's challenging Market environment, we are operating with the consistency and reliability of a mature, industrialized Enterprise

Celina Davila: In terms of CapEx incurred guidance, we will continue to evaluate the market and scale CapEx with activity realizations. As we sit here today, given what Sam shared around our activity outlook, we now anticipate our 2025 CapEx for our completions business to be between $100 million and $140 million. We do still expect to spend approximately $170 million for our Pro Power business, inclusive of financed CapEx, so our total range will be between $270 million and $310 million, down from $295 million to $345 million on last quarter's call. Importantly, cash and liquidity remain strong, which is very important in today's uncertain market. As of June 30, 2025, total cash was $75 million, and total liquidity at the end of the second quarter of 2025 was $178 million, including cash and $103 million of available capacity under the ABL credit facility.

Capital expenditures paid with 37 million and capital expenditures incurred. Were 73 million including 30 million primarily supporting maintenance and our completions business and 43 million supporting our Pro Power orders the difference between incurred and paid. Capital expenditures is primarily comprised of pro. Power related Capital expenditures that have been financed and paid directly by our financing partner and unpaid Capital expenditures included in accounts payable and accrued liabilities.

In terms of capex, incurred guidance, we will continue to evaluate the market and scale capex with activity realizations that as we sit here today given what? Sam shared around our activity Outlook. We now anticipate our 2025 capex for our completions business, to be between 100 million and 140 million. We do still expect to spend approximately 170 million for our Pro Power. Business inclusive of Finance capex. So our total range will be between 270 million and 310 million down from 295 million to 345 million, our last quarter's call.

Celina Davila: As for our share repurchase program, in May of 2025, ProPetro Holding Corp extended its $200 million share repurchase program to December of 2026. Since the program inception in May of 2023, ProPetro Holding Corp has repurchased 13 million shares, representing approximately 11% of outstanding common stock. In the second quarter of 2025, ProPetro Holding Corp did not repurchase any shares as it prioritized the launch and scaling of the Pro Power business. In terms of approach, our capital allocation strategy continues to be and will continue to be centered, while remaining flexible and dynamic so we can pivot as needed. This is between FORCE electric frac fleets conversions, Pro Power growth, disciplined M&A investments, and share repurchases, while also maintaining a strong balance sheet and commitment to capital discipline. With that, Sam Sledge, back over to you.

Importantly, cash and liquidity remains strong, which is very important in today's uncertain markets, as of June 30th, 2025 total cash was 75 million and total liquidity at the end of the second quarter of 2025 was 178 million including cash and 103 million of available capacity under the AVL credit facility.

As for our share repurchase program, in May of 2025, the company extended its $200 million share repurchase program to December of 2026.

Since the program inception in May of 2023, the company has repurchased 13 million shares, representing approximately 11% of outstanding common stock. In the second quarter of 2025, the company did not repurchase any shares as it prioritized the launch and scaling of the Pro Power business.

Matt Augustine: Thanks, Celina. I am proud of how our company and team have navigated recent market volatility and positioned ProPetro Holding Corp to thrive in any environment. Our resilience is a direct result of several things, namely a legacy completions business that is profitable through various cycles and will continue to fuel our growth in Pro Power, as well as our investments, including FORCE electric frac fleets, Pro Power, and a thoughtful M&A approach that together provide us with a rock-solid foundation to withstand market turbulence. Lastly, our core strengths of our strong balance sheet with low debt, first-class customers, and a first-class team, a team that is proactive and quick on its feet, for which I am immensely thankful.

In terms of approach our Capital allocation strategy continues to be and will continue to be centered, our remaining flexible and dynamic so we can pivot as needed between 4 electric Fleet, conversions Pro Power, growth discipline, m&a, Investments, and share repurchases, while. Also maintaining a strong balance sheet and commitment to Capital. Discipline with that Sam Beck over to you.

Thanks Delina. I'm proud of our company and team have navigated recent Market volatility in position for petrol to thrive in any environment.

Our resilience is a direct result of several factors. Namely, a legacy completions business that is profitable through various cycles and will continue to fuel our growth in Pro Power.

As well as our investments, including force, electric fleets, Pro Power, and a thoughtful m&a approach that together. Provide us with a rock solid foundation to withstand Market turbulence. And lastly, our core strengths of our strong balance sheet with low debt, first class, customers, and a first class team, the team, that's proactive and quick on its feet.

Matt Augustine: At the end of the day, we are well prepared for what lies ahead and remain confident in both our strategy and the future of our company. We have built significant momentum and a strong foundation, and I am certain we will continue to build on this progress. None of our achievements would be possible without the dedication and hard work of our ProPetro Holding Corp teammates. Your commitment to operating safely, efficiently, and responsibly inspires confidence in our ability to navigate this dynamic environment. Thanks for everything you do. With that, operator, we would now like to open the line to questions.

For which I am immensely thankful.

At the end of the day, we're well prepared for what lies ahead and remain confident in both our strategy in the future of our company.

We built significant momentum and a strong foundation, and I'm certain we will continue to build on this progress. None of our achievements will be possible without the dedication.

And hard work of our propetro, teammates your commitment to operating safely efficiently and responsibly inspires confidence in our ability to navigate this Dynamic environment.

Thanks for everything you do.

With that operator, we'd now like to open the line to questions.

Operator: We will now begin the question and answer session. To ask a question, you may press star and one on your telephone keypad. If you are using a speakerphone, please pick up your headset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star and then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Derek Botitzer, Piper Sandler. Please go ahead, sir.

2. At this time, we'll pause momentarily to assemble our roster.

The first question comes from Derek Pizer, Piper Sandler. Please go ahead sir.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Hey, good morning, Sam Sledge. I just wanted to start off with more of a bigger picture question on the Permian Basin. We talked about approaching 70 fleets from the 90 to 100 at the start of the year. This means 20 to 30 idle fleets, and you talked about the potential for persistent uncertainty moving into 2026. Just how much of an overhang do you think this will be on the Permian Basin? How can we think about the industry working through this big oversupply with the frac equipment and how it will impact ProPetro Holding Corp going forward?

Hey uh good morning Sam. Uh just wanted to start off with more of a bigger picture question on the Permian Basin. So we talked about approaching 70 fleets from the 90 to 100 the start of the Year. This means 20 to 30 idle fleets and you talked about potential for persistent uncertainty, moving into 2026. Just how much of an overhang do you think this will be on the Parian Basin? You know, how can we think about the industry working through this big over Supply with the Frac equipment and how it will impact, you know, propetro going forward?

Sam Sledge: It is a great question, Derek. I think it is, I mean, it kind of boils down to traditional supply and demand. You have heard us talk a lot about the kind of tiering or stacking of frac supply with, you know, electric and all gas offerings at the top and all diesel offerings at the bottom. It is very obvious that the most disrupted part of that supply stack is the diesel equipment. That has been exactly what has happened to us as well. We think because of the looseness in the market and some of the lack of discipline pricing we have seen at that lower end of the market, it likely is a long-term tailwind via attrition. So we are just choosing not to play in that loose part of the market right now.

Yeah. It's a it's a great question. Derek. I think it's I mean it kind of boils down to uh traditional supply and demand. Um and you've heard us talk a lot about that the the kind of tearing or stacking of fra Supply with you know electric and all gas offerings at the top and all diesel offerings at the bottom. The

It's, it's, it's very obvious that the most, um, disrupted part of that Supply stack is the diesel equipment. That's been exactly. What's happened to us as well. Um, we think because of the looseness in the market and some of the, the lack of discipline, uh, pricing. We've seen at that lower end of the market, it likely is a long-term Tailwind via attrition

Sam Sledge: All the meanwhile, the top end of our stack, several of our dual fuel fleets, as well as all of our electric fleets, are humming along nicely with absolutely no disruptions to pricing or activity. So, I would hate to be a player in the market that has not invested in some of this next-generation equipment and is just sitting on the lower end of that stack. How long does the looseness last? Hard to see, but as you can see by our guidance and kind of our outlook in the back half of the year, we think that that kind of looseness in the market is here to stay for at least 2025, possibly into the first part of 2026.

Um, so we're, we're just choosing not to play in that loose part of the market right now. Um, you know, all the meanwhile, the top end of our stack

Uh, several of our dual fuel fleets as well, as all of our electric fleets. Are, uh, humming along nicely, uh, with with absolutely no, disruptions to pricing or activity. Um, so I, you know, I'd hate to, I'd hate to be a player in the market that hasn't invested in some of this next Generation equipment, and it's just sitting on the lower end of that stack.

You know, how long does the looseness last, uh, hard to see. But as you can see by our guidance and kind of our Outlook in the back, half of the year, we think,

Sam Sledge: Beyond that, if and when the market does turn up a little bit, I do not know if there is going to be anybody better positioned in the Permian Basin than us to play into a recovering market sometime next year.

We think that that kind of looseness in the market is here to stay for at least 2025, possibly into the first part of 2026 and beyond.

um, if and when the market does turn up a little bit, we're

I don't, I don't know if there's going to be anybody better positioned in the peryam, base in the US to play into, you know, a, a recovering Market, sometime next year.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Got it. That makes sense. I guess turning over to Pro Power, you know, excited to see the inaugural contract there. You mentioned you are kind of honing in on your next equipment orders. I am just curious if you will have any thoughts around continuing to go with the smaller turbines, or maybe you stepped into the larger turbines. Also, are you still going to be focused in on the oil and gas industry, or do you think we will see any potential to expand in more industrial applications and potentially even, you know, data centers?

Got it out. That that makes sense. Um, I guess uh turning over to Pro Power um you know excited to see the the inaugural contract there. Uh you you you mentioned you're you're kind of honing in on on your next equipment orders. I'm just curious if you'll any thoughts around continue to go with the recess or the smaller turbines or maybe you step into the larger turbines. Um, and also are you still going to be focused on the oil and gas industry or you think we'll see any potential to expand in more industrial applications and potentially even you know, data

Sam Sledge: Look, I mean, we're really happy with the flexibility of the gas resips and the smaller turbines that we have on order right now. It's giving us a lot of optionality in the market from a contracting standpoint and a type of work. So beyond the 220 megawatts that we've ordered, you'll likely see some of the same. But beyond that, we're probably going to hold kind of our cards pretty tight to the best in terms of any other types of power sources that we're getting into, given that that's pretty competitive from a supply chain standpoint. Remind me of the second part of your question.

Yeah, look. I mean, we're we're really happy with the, the flexibility of the gas recepts, and the smaller turbines that we have on order right now. It's giving us a lot of optionality in the market, from a Contracting standpoint, and a type of work.

um, so beyond the 220 megawatts that we've ordered you'll likely see some of the same

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Oh, it's just the end markets staying in oil and gas or potentially moving into industrial.

Um but beyond that, we're probably going to hold kind of our cards pretty tight to the vest in terms of any other types of power sources that we're getting into given that that's pretty competitive from a supply chain uh standpoint remind me of the second part of your question.

Sam Sledge: Really, really strong demand pull in oil and gas right now, mainly production and midstream. We in our scripted remarks and our press release hinted at more announcements coming in the near future, things that we have in the pipeline that are very close to the finish line. Those deals are likely very similar, maybe varying in size, but very similar in structure to what you saw with the first contract that we recently announced. Demand is really good in oil and gas. So, here initially, we are really going to stick to and hammer what we know right here in our backyard. Beyond that, look, we are having some really interesting exploratory conversations about non-oil and gas opportunities. It remains to be seen how quickly some of those can materialize.

Uh, I was just, uh, the at markets, uh, staying in oil and gas, or, potentially looking into industrial. Yeah.

Really, really strong demand, pulling oil and gas right now, mainly production in Midstream. Um you know, we we in our scripted remarks, in our press release hinted at um you know more announcements coming in the near future things that we have in the pipeline that are very close to the finish line.

Those deals are likely very similar um maybe varying in size, but very similar in structure to what you saw with uh with the first contract that we recently announced.

Um and demand is really good and oil and gas. So you know, here here initially we're really going to stick to and Hammer what we know.

Uh, right here in our backyard, uh, beyond that, look, we're having some really interesting exploratory conversations about non-oil and gas.

Sam Sledge: But look, if you are in the power supply chain and you are an operator of megawatts at scale, which we are, your opportunities, frankly, just show up at your doorstep. So we are sifting through a lot of a lot of different things from a long-term strategic standpoint that leave us really, really excited about the future prospects of Pro Power.

opportunities uh remains to be seen how quickly some of those can materialize but look if you're in the power supply chain and you're an operator of megawatts at scale which we are

Uh, that that leave us really, really excited about the future, prospects of Pro Power.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Got it. Thanks, Sam. I'll turn it back.

Got it. Thanks Sam. I'll turn it back.

Operator: The next question comes from Waqar Syed with Barclays. Please go ahead.

The next question comes from Eddie Kim Barclays. Please go ahead.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Hi, good morning. Thanks for all the commentary about the market conditions. Just wanted to ask about how we should think about the trajectory for Q4. You mentioned in prepared remarks kind of normal seasonal patterns. But looking at the past two years, your revenue in Q4 had a double-digit sequential decline. Is that the level of decline sort of consistent with how you typically think about normal Q4 seasonality? In particular this year, should we potentially expect maybe some incremental softness on top of normal seasonality, just given the market conditions currently? Any thoughts there would be great.

Hi, good morning. Um

Thanks for all the commentary, uh, about the market conditions. Um, just wanted to ask about how, how we should think about the trajectory for, for 4q, you mentioned and prepared remarks kind of normal seasonal patterns. Uh, but looking at the past 2 years, your Revenue in 4q had a, a double digit sequential decline, uh, is, is that the level of decline, sort of consistent with how you typically think about, um, normal 4q seasonality, uh, and just I mean, in particular, this year should we potentially expect maybe some incremental softness on top of

Sam Sledge: Yeah, look, to be honest, it is a little bit hard to see into Q4 right now. We are very confident about our Q3 guide that we gave 10 to 11 fleets. That said, look, your numbers are correct on the last year or two from like a Q3 to Q4, but we have also seen quarters that have gone the opposite direction as well. I think it kind of all depends on what the commodity price does and what the forward look looks like for the E&P space, if they can gain more certainty around their plans going into 2026 and do they want to secure some of that work earlier rather than later. Also, when we talk about seasonality, just to clarify, it is usually off of that Q3 mark. So, our 10 to 11 fleet guide.

Uh, normal seasonality just given, uh, that the market conditions currently, uh, any thoughts there would be great.

I mean, to be honest, it's it's a little bit hard to see into few into 4 q right now.

Uh, we're very confident about our Q3 guide, uh, that we gave 10 to 11 fleets. That said, I mean, look, there's.

Um your your your numbers are correct on the last year or 2 from like a 3Q to 4 queue, but we've also seen quarters that have gone the opposite direction.

As well. So, I think it, I think it kind of all depends on. Uh, you know what, what the commodity price does, and what, um, you know, what the forward look looks like for the EMP space if they can gain more certainty around, um, you know, their, their plans, going into 2026 and do they want to secure some of that work?

Um,

Earlier rather than later. Um, also, you know, this, the when we talk about seasonality, just to clarify, it's usually off of that 3Q mark. So, you know, our 10 to 11 fleet guide.

Sam Sledge: Would there be regular holiday white space on top of the 10 to 11 fleets, which we expect to be active through the end of the year? I think we just right now are being conservative with some holiday white space. But look, we also here, we sit with a pretty pessimistic near-term market view. But at the same time, we continue to have conversations with our customers and prospective customers about projects that could change that outlook pretty drastically and pretty quickly. We just do not have any certainty of that right now. So we are going to be pretty conservative and realistic as we look into the back half of the year.

Um, so would there be helped regular holiday white space on top of the 10 to 11 fleets? Which we expect to be active through through the end of the year. I think we just right now are being conservative with some holiday white space. Um, but look, we're also here we sit with the pretty um,

You know, pessimistic near-term, Market view, but at the same time, we continue to have conversations with our customers and prospective customers about projects that could change that Outlook. Uh, pretty Jack drastically, and pretty quickly. We just don't have any certainty of that right now. Uh, so we're going to be, uh, pretty

Pretty conservative and realistic, as we look into the back half of the year.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Got it. Great. That is helpful. Thank you. Just shifting to Pro Power, it is great to hear your confidence in securing long-term contracts for that entire 220 megawatts by year-end. I am a little surprised just given the challenging market conditions in oil and gas currently. Does that just suggest the power demand, even for microgrids, is almost independent of, I guess, drilling and completions activity? Only I guess it is more tied to midstream and production. Or, you know, are operators kind of looking past kind of near-term weakness in it, maybe in anticipation of market conditions kind of rebounding next year? Any thoughts there would be great.

Got it. Great, that that's helpful. Thank you. Uh, just shifting that to Pro Power. It's great to hear your confidence in in, uh,

in securing long-term contracts for that entire 220, megawatts by year end. Uh, I'm a little surprised just given the challenging market conditions in, in, in oil, and gas currently. But I mean, does that just suggests that power demand, uh, even for micro grids, uh, is almost independent of

Sam Sledge: Yeah, these first few steps from a power standpoint for us as it pertains to our entrance into the market are non-completions related. Production and midstream, like you mentioned and like we've mentioned the last couple of calls here. That is quite bifurcated or maybe disconnected from some of the volatility that we see in the drilling and completions market. It is really aimed at, at the end of the day, cost savings for our customers. Even if they cycle down, you know, overall the space cycles down on the drilling and completion side, it does not mean that they quit producing their wells and that they are not continuing to look for ways to lift that production and move it in a less expensive manner. That is right what we are aimed at right now.

Uh, I guess Drilling and completions activity. And only I I guess it's more tied to to, to Midstream and production. Um, uh or or you know, our operators kind of looking past kind of near-term weakness. Uh in at maybe in in in anticipation of market conditions, uh, kind of rebounding next year, any any thoughts there would be great.

Yeah these these these first few steps from a power standpoint for us as it pertains to our entrance into the market. Our our non-comp completions related so production and Midstream like you mentioned and like we've mentioned the last

Um, couple of calls here. So that is that's, that's quite bifurcated or, or maybe disconnected from some of the volatility that we see in the drilling and completions market. And it's really aimed at uh, at the end of the day cost savings for our customers. So even if they cycle down, you know, over all the space Cycles down on the drilling and completion side, it doesn't mean that they quit producing your wells and that they're

Sam Sledge: As the Permian continues to have power demand needs, then mainly on the production side, we think we are really well positioned to create quite a bit of stability in our business long-term by being a bit separated from the completions and drilling space with our power offering.

Not continuing to look for ways to to lift that production and move it, um, in a less expensive Manner. And that's right what we're aimed at right now. So as as the Permian continues to have power demand needs, um, then then on the on the mainly, on the production side we think we're really well positioned to create um quite a bit of stability in our business, long term uh by being a bit separated from the completions and drilling space with our power offering.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Great. Thank you. I will turn it back.

Great, thank you. I'll turn it back.

Operator: The next question comes from Grant Hines, JP Morgan. Please go ahead.

Morgan, please go ahead.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Hey, good morning, team.

Hey, good morning, team.

Sam Sledge: Morning.

Morning.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): You guys' message 10 to 11 fleets kind of in Q3, down about 20% from the 13, 14 in the second quarter. But in your prepared remarks, you highlighted some of the simul frac work, particularly on the FORCE electric frac fleets side. Could you maybe give us some color, I guess, on how much more simul frac might be working kind of in the second half versus the first half and perhaps, you know, utilization on a horsepower basis when we just think about sequential change kind of versus the 20% reduction in fleet count?

So, you guys, uh, message 10 to 11, please, kind of in Q3, uh, down about 20% from the 13 to 14 and in the second quarter. But in your prepared remarks, you highlighted some of the similar frac work, particularly on the force F side.

Could you maybe give us some color? Uh, I guess on. How much more similar act might be working? Kind of in the second half for super the first half uh and perhaps, you know, utilization on on a horsepower uh, basis when we just think about sequential change, kind of versus the 20% reduction in in Fleet count.

Sam Sledge: I do not know how much detail we want to give there. I would say proportionally, it is pretty similar. Simul frac continues to be a big part of our business, especially on the electric side. We do not think there is any better, you know, safety, cost, efficiency way to approach completing your wells other than with an electric simul frac setup. More of that probably going into next year as we continue to expand our FORCE electric frac fleets offering. Quarter over quarter, it is pretty proportional from a simul zipper standpoint.

Yeah, I don't I don't know how much we want to detail. We want to give their I'd say proportionally, it's pretty similar.

Um, simult continues to be a big part of our business, especially on the electric side. Uh, we don't think there's any better, you know, safety cost efficiency way to approach, uh, completing your wells other than with an electric simal fra setup. So, uh, more of that probably going into next year as we continue to expand our Force offering but kind of quarter over quarter. It's pretty, it's pretty proportional from a simal zipper standpoint.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Gotcha. Then maybe transitioning to power, you know, you mentioned sort of the initial deployment for that 80 megawatt contract starting in Q3 2025 into 2026. How should we think about sort of the lead time on the asset deployment and, you know, anything in terms of sort of startup costs and the deployment there?

Gotcha. And then maybe transitioning to to power. Um, you know, you mentioned sort of the initial deployment for for that 80 megawatt. Um, contract starting in in 3Q 25 into 2026. How should we think about sort of the lead time on, on the asset deployment? And, you know, anything in terms of sort of startup costs and, and the deployment there?

Sam Sledge: You will see a little bit of startup costs that are already being bared in our numbers that we disclosed in our press release information. There will be a little bit of that. It is really not much. This business is much more personnel-like than our legacy completions businesses. That equipment will deploy in a pretty linear manner from Q3 through mid-year next year. As we mentioned in our remarks, we mentioned earlier, we are also in very developed discussions with our suppliers on our next orders that likely we could take delivery of in 2026, inside of 2026 as well if those orders are placed fairly soon.

Yeah, I mean you'll see a little bit of startup costs that are being Baird. Um, in our numbers uh that we discussed in our in our press release information. Um so there will be a little bit of that. It's it's it's really not much. I mean, this, this, this business is much more Personnel. Like,

Than our complete, our Legacy completions businesses.

Um and that equipment will deploy in a pretty linear manner from 3Q, uh, through mid-year next year, you know, as I

As we mentioned in our remarks, we mentioned earlier, uh, we're also in in, you know, very developed discussions with our suppliers on, on our next orders.

Sam Sledge: That could even be a tailwind to estimates and expectations as it pertains to our Pro Power business in 2026. I will also say as it pertains to whatever that next order may look like, we will be pretty quiet on what type of equipment that is going to be. In terms of size, we think each one of our orders in the Pro Power space will likely be very meaningful. We do not have any interest in kind of trickling out the size of Pro Power. We have every interest in multiplying the size of this business as quickly as possible, given the pipeline of opportunities that we are seeing. We are quite serious and focused about scaling that business as quickly as possible into the opportunity set that we are seeing.

Um, that that likely we could take delivery of in 2026 inside of 2026 as well, if those orders are placed fairly soon. Uh, so that could even be a Tailwind to, you know, estimates and expectations as it pertains to our power business in 2026. I'll also say as it pertains to whatever that

That next order may look like, we'll, we'll be pretty quiet on what type of equipment that's going to be. But in terms of size, uh we think each 1 of our orders in the power space, uh will likely be very meaningful. We don't have any interest in kind of, trickling out the size of Pro Power. We have every interest in, multiplying the size of this business as quickly as possible given the pipeline of opportunities, uh, that we're seeing. So, uh, we're we're, we're quite serious and focused about scaling that business, uh, as quickly as possible in into the opportunity set that we're seeing.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Appreciate the calling. Thanks.

Appreciate the call, thanks.

Operator: As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Waqar Syed, ATB Capital Markets. Please go ahead.

As a reminder, if you wish to register for a question, please press star, followed by 1. The next question comes from ATB Capital Markets. Please go ahead.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Thanks for taking my question. Sam, a big picture question. We are all trying to figure out how this decline in completion activity in the Permian is going to impact the production in the basin. But from your perspective, as this activity declines, and the number of crews decline, it is likely a lot of that is being offset by the simul fracs. Do you have a sense that if activity, your completion crews is down by 25%, then in terms of the total footage that is fracked, how much lower that is?

Thanks for taking my question. Um, Sam a a a big picture.

Question. Um, you know, we are all trying to figure out like how this decline in completion activity in the palmy and how it's it's going to impact the production in in the Basin. But from your perspective, you know, as this activity declines, um, you know, in the number of Crews decline it is likely in a lot of that is being offset by the Simon fra. So do you have a sense that if activity? Completion Crews is down, like, by 25% then in terms of

The total footage that is fracked. How much load is that?

Sam Sledge: Hard to say, Waqar Syed. I can tell you, and this is my personal opinion, viewpoint on this. It has been quite surprising to me that we have not seen production, at least in the Permian Basin, but domestically in the U.S. roll more than it has. I think it is starting to plateau and show signs of potentially developing an early downward trend. As we sit here, boots on the ground, counting every crew that we know of working and counting up the simul frac crews that we know of here in the Permian Basin across the whole space, it is really, really hard for me to believe that we are at an activity level that is going to sustain Permian production today. As you mentioned, there have been several efficiency developments over the last few years, things like simul frac that have increased, maybe completed footage per crew.

Live here in the peryam Basin across the whole Space.

It's really, really hard for me to believe that we are at an activity level that's going to sustain Parian production today. Um, there has, as you mentioned, been, you know,

Sam Sledge: I do not think at all that we are outrunning that right now. I would expect sometime in the future, Permian production to roll just from our point of view, kind of in the completion services space.

Several efficiency developments over the last few years. The things like simal frag that have increased, you know, maybe completed footage per crew. I do not think at all that we are out running that right now. Um so you know, I would I would expect sometime in the future peryam production to roll. Just from just from our Point of View, kind of in the completion Services space.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Great. Thank you. By our calculations, you have like seven Tier IV DGB fleets, let us say four FORCE electric frac fleets. Should we assume that everything that is working for you, those 11 fleets, all of them are the next-generation fleets? Do you have one of the Tier IV DGB fleets being down and a Tier II working?

Right. Thank you. And then um, you know, by our my years uh calculations you've got like 70 or 4 DB fleets, let's say for um uh Force fleets. So you should be assumed that everything that's working is uh for you is 113? All of them are the Next Generation 3. So do you have any

Uh, you know what, any 1 of the tier 4, dgb fleets, being down and and uh a due to working.

Sam Sledge: There's a little bit of diesel still in the system right now. But as I mentioned earlier, when I kind of described the supply stack, the dual fuel and electric have been far more resilient.

There's a little bit of diesel.

Still in the system right now. Um, but as I mentioned earlier, when I kind of described the supply stack

um, the, the dual fuel in electric have been far more resilient

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): So you do have a Tier IV DGB fleet down?

But so, so do you do have a tier 4 dgb Fleet down?

Sam Sledge: We have some Tier IV DGB equipment down right now. We will not say much more than that.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Okay. If I look at your quarter-over-quarter progression for the different business lines, it seems like wireline is tracking the fracking business relatively closely. As we look into Q3, does wireline track the same trajectory as fracking?

We have some tier 4 dgb equipment down right now. Will not say much more than that.

Okay. And like if I look at your quarter of a quarter, uh, Aida progression for the different business lines, seems like w line is tracking, um, uh, the fracking business, uh, relatively closely. So, as we look into Q3, uh, again, does it track fairly quick? You know, W line track has the same trajectory as uh, as fracking.

Sam Sledge: Yeah, it is going to track pretty closely with everything else, as cementing has tracked kind of recount, kind of the changes in recount fairly closely as well.

Yeah it it it's it's going to track pretty closely uh with everything else as is uh submitting his tracked kind of recount per uh kind of the changes in recount fairly closely as well.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Now, I noticed that in cementing, your quarter over quarter was down almost 42%, 43% versus 24%, 25% declines for wireline and cementing. Is there anything in particular going on with cementing, or is it just a scale thing? It is small, so a small change makes a bigger difference.

No, I I I noticed that some in cementing but our quarter of a quarter was down about almost 42, 43% versus 24 25%, declines for w, line and cementing. It's just, uh, you know, is there anything uh, uh, in particular going on with cementing or it's just the scale thing small. So, you know, a small change makes a bigger difference.

Sam Sledge: That and a full quarter effect of drilling rigs, parking, you know, that always happens ahead of frac fleets and wireline units. So, you know, we started to see cementing deteriorate really towards the end of Q1. So you are seeing a full quarter effect of some of that.

Uh, that and a full quarter effect of drilling rigs parking. Um, you know, that always happens ahead of.

Frac fleets and waterline units. So you know we started to see submitting deteriorate in really towards the end of the first quarter. So you're seeing a full quarter effect of of some of that.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Thank you, sir. Appreciate all the color.

Thank you, sir. I appreciate

Operator: The next question comes from Jeff LeBlanc, TPH. Please go ahead.

The next question comes from Jeff Leblon tph. Please go ahead.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Good morning, Sam and team. Thank you for taking my question.

Sam Sledge: Morning.

Uh, good morning, everyone. Thank you for taking my question.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Regarding your contracting capacity long-term, should we be aware of any price reopeners? Or I guess more broadly, how should we think about the stability of the pricing, given that historically you've expressed a willingness to work with your long-term customers? Thank you.

Uh, regarding your Contracting capacity, long term. Uh, should we be aware of any price reopen? Um, or I guess more broadly, how should we think about the stability of, of the price? And given that historically?

You've expressed a willingness to work with your long-term customers. Thank you.

Sam Sledge: The contracts are pretty set on, you know, the contracts that we have talked about that we have on the dual-fuel and electric side. There is, on average, some semi-annual adjustments to those prices, but they are pretty formulaic and passive, usually resulting in low single-digit changes that are pretty hard to see, probably from the outside point of view. So, pretty stable.

You have contracts that are pretty set on, you know, the contracts that we've talked about that we have on the dual fuel and electric side.

There's, you know, on average, there's some semi annual adjustments to those prices but they're pretty formulaic and passive usually resulting in you know, low single digit changes that are pretty hard to see. Probably from the outside point of view.

Um, so pretty. Pretty stable.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Okay. That works. Thanks for the color. I will hand the call back to the operator.

That works. Thank you for the color. I'll hand the call back to the operator.

Operator: Once again, if you would like to ask a question, please press star followed by one. The next question comes from Don Christ, Johnson Rice. Please go ahead.

Once again, if you would like to ask a question, please press star followed by 1.

The next question comes from Don Christ Johnson Rice. Please go ahead.

Sam Sledge: Morning, Sam. Most of my questions have been answered, but I did want to ask one kind of more macro question, and it relates to the broader equipment out in the space today. You have seen some of your smaller competitors sell their equipment, and that equipment is going overseas. Then NOV talked about five or six different countries around the world that are exporting unconventional technology to go frack their wells. Just a broader question as to, are you seeing demands for the sale of your kind of diesel stuff to go overseas? Do you think that can more balance the market as we kind of look out a year or two as more of this equipment moves overseas?

The market, as we kind of look out a year to, as more of this equipment moves overseas.

Sam Sledge: Look, I think the demand is there, and I think there are a lot of different places globally that are taking notice of how we do what we do over here as an industry. No surprise, but America innovates and works harder to figure out how to do more with less than any other country of the world. That is maybe more evident in the energy space than any other place. We have fielded inquiries from other countries about not only equipment, but expertise and services as well. It is hard to say if that is like a meaningful variable in what happens domestically to supply and demand, but I think it definitely helps. We will watch that closely.

look, I think I I I think the demand is there, and I I think there's a lot of different

Places, uh, globally that are taking notice of how we do what we do over here as an industry.

Um, no surprise. But you know, America innovates and works harder to figure out how to do more with less than any other country in the world. And that, that is maybe more evident in the energy space than in any other place. And, um,

We have fielded inquiries from, you know, other countries about not only equipment, but expertise and services as well.

Um,

It's hard to say if that's like a meaningful, uh, you know, variable in.

What happens domestically to supply and demand, I think it definitely helps.

Sam Sledge: We have been a pure Permian pressure pumping frac provider for the history of our company, but it does not mean that we do not answer some of those phone calls and entertain some of those ideas because there are some instances where that could make a lot of economic sense because of some of these other areas across the globe being so interested in what we do and how we do what we do. So I think it could be a help, Don. I think it will likely improve the supply and demand equation a little bit. Hard to say how much.

Um, so, you know, we'll we'll watch that closely and, and, you know, we've been a, we've been a pure Parian, uh, pressure pumping Frac provider, uh, for the history of our company, uh, but it doesn't mean that we don't answer some of those phone calls and entertain some of those ideas. Um,

Because there are, there are some instances where that could make a lot of economic sense because of some of these other areas across the globe. Um, you know, being so interested in you know what we do and how we do what we do. So I think I think it could be a help Dawn, I think it will. Um,

It will likely improve.

The supply and demand equation. A little bit hard to say how much.

Don Christ: I appreciate that color. If I could sneak in one more, if you were going to order some new solar turbines today, what would the lead time on that be? We are hearing it is extending out pretty far.

I I appreciate that color and if I can sneak in 1, more is if you were going to order some new solar turbines today. What what would the lead time on that be? And we're hearing it's extending out pretty far.

Sam Sledge: is not getting any shorter. I will probably stop short of quoting you an exact number, but we have got a great relationship in that part of the supply chain. We are pretty confident that we will be utilizing those relationships to continue to scale our Pro Power business in a meaningful way.

It's not getting any shorter, uh, and I'll I'll I'll probably stop short of quoting you an exact number. Um, but we've got a great relationship in in that part of the supply chain, uh, and we're pretty confident that, you know, we'll be, we'll be utilizing, uh, those relationships to to continue to scale our power business in a meaningful way.

Don Christ: I appreciate the color. Thanks, Sam.

I appreciate the color. Thanks, man.

Operator: Once again, to ask a question, please press star followed by one. The next question comes from John Daniel, Daniel Energy Partners. Please go ahead.

Once again to ask a question. Please press star followed by 1. The next question comes from John Daniel. Daniel Energy Partners. Please go ahead.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): Hey, Sam. Sort of a big picture question. On the release, you note the market in the Permian has gone from, call it, 90 to 100 to maybe down to the 70 range. I am just curious, if no one had reduced pricing six to nine months ago, would the frac fleet be 60 or would it still be 70? What do you think it would be?

Hey, Sam, sort of a big picture question. Um, you're on the release. You noted the market, and the premiums gone from, call it, 90 to 100, and maybe.

Down to this, you know, the 70 range. I'm just curious like

If No. 1 had reduced pricing 6 to 9 months ago, would the Frog sleep be $60? Or would it still be $70? What would it?

What, what do you think it would be?

Sam Sledge: I do not know. I mean, six to nine months ago, I do not know if there was a ton of pricing change in the market. I think the activity disruptions we at ProPetro Holding Corp have seen most recently have been due to pricing movements in the last 30 to 60 days.

I don't know, I mean, I don't 6 to 9 months ago, I don't know if there was a ton of pricing changed in the market. I think

You know, the, um, activity disruptions we at ProPetro have seen most recently have been due to pricing movements.

Analyst (various: Derek Botitzer, Waqar Syed, Grant Hines, Jeff LeBlanc, John Daniel, Stefan Gengaro, Don Christ): That is fine. I just called it 90 days ago. My question is, what is the right level of demand? Do you follow me? Is service pricing really having an influence on whether they keep or release the fleet? I guess that is what I am getting.

Sam Sledge: I do not know. There are probably 10 to 20 fleets in the market that are doing what I just frankly call stupid stuff right now. Could it be lower? I have to commonly remind ourselves and remind others, discipline in the frac space is either saying no to work that does not make a return or saying no to building the next piece of equipment. In a way, we are doing both right now. It would encourage others at the bottom end of the market to do the same because it does not turn out well when you are making decisions that do not cover your cash cost to operate your fleets.

In the last 30 to 60 days and so that's fine. I I call it 90 days ago and I just my my my my question is what what's the right level of demand you? Follow me and as Service pricing really having an influence on whether they keep or release the fleet I guess that's what I'm getting. There's I don't know. There's there's there's probably 10 to 20 fleets in the market that are doing what I just frankly call stupid stuff right now, okay.

Um, so could it be lower? And look I have I I have to commonly remind ourselves and remind others.

Um, you know, discipline in in the Frac space, is either saying no to work.

that doesn't make a return or saying no to building,

The next piece of equipment. Um, in a way, we're doing both right now, right?

Um, you know, it would encourage others at the bottom end of the market to do the same because it doesn't turn out well when you're making decisions that don't cover your cash cost to operate.

Sam Sledge: Another thing I think that maybe is lost a little bit that we have recently talked about is, if fleets have moved from, say, 90 to 70, and we have moved from 15 fleets to 10 and a half fleets at the midpoint of our guidance, we have not lost any market share at all. That is the same market share of the activity that exists in the Permian right now. We are prioritizing protecting our margins and protecting our equipment because we think that that is the rational, right business decision for us.

operate your fleets and other thing I think in this that,

that maybe is lost a little bit that that we've recently talked about is

You know, if fleets have moved from, say, 90 to 70.

And we've moved from 15 fleets to 10 and a half fleets, at the midpoint of our guidance. We've not lost any market share at all. That's the, that's the same market share of the of the activity that exists in the Permian right now and we're prioritizing protecting our margins and protecting our equipment.

Uh, you know, right? Right business decision for us.

Operator: Sam, I guess another one, if you will entertain this one, like the guys that you, when you go from, say, 15 down to 10.5, the customers that were using those four fleets, do you have any indication from them whether this is budget related, just pure price competition? Do they come back next year? Just some thoughts on maybe where the Permian frac market might be normalized for, if there is ever a word in this business, for next year.

Fair enough. And then Sam, I guess another 1, uh, if you'll entertain this 1, but like the guys that you

when you go from, say 15 down to 10 and a half, the customers that were using those 4 fleets,

Do you have any indication from them? Whether this is budget related just pure you know price competition do they come back next year um just some thoughts on maybe where the puran Frac Market might be.

Sam Sledge: Yeah, this is an interesting question, John Daniel. I am glad you asked that. To be candid with you, this is mainly one customer of ours that we are talking about that has had a fairly frantic response to changes in commodity prices and outlook. So, you know, we then, back to my kind of description of what discipline looks like, we then have to make our own voluntary decisions. Do we want to help them with that issue or do we want to save our equipment and our margins for a better day? We have chosen the latter.

Normalized for, if there's ever a word, uh, if there's in this business, but, uh, for next year.

Yeah, this is this is an interesting question. John, I'm glad you asked that it's to to be candid with you. This is this is mainly 1 customer of ours that we're talking about. That's had a fairly frantic response.

To changes in commodity prices and Outlook.

Um so you know, we we then back to my kind of um, description of what discipline looks like. We then have to make our own voluntary decisions. Um, do we want to help them with that issue? Or do we want to save our equipment and our margins for better day? We've chosen the latter

Operator: Fair enough. Okay. Thanks for keeping the call going and letting me on. I appreciate it.

Fair enough. Okay, well, thanks for keeping the call going. And let me on. I appreciate it.

Conference Specialist: The next question comes from Stefan Gengaro, Stifel. Please go ahead.

The next question comes from Stephan Gengar, please go ahead.

Matt Augustine: Thanks. Good morning, everybody. I joined late, so I apologize, Sam Sledge, if you answered this. When we think about the efficiency gains across the drilling and completion lifecycle of a well, is there a way, or have you guys thought about how do we get the fair value we are extracting? To the extent you are more efficient than you were a year or two ago, is it just not possible or is there a way to drive value for ProPetro Holding Corp or the high-end pressure pumpers for the efficiencies you bring to the table?

Uh, thanks. Good morning, everybody. Um, I joined late. So, I apologize. Sam if you answered this, but when we think about

The efficiency gains, you know, across the drilling and completion, uh, life cycle of a well,

Is there a way or have you guys thought about how do we get the fair value where extracting, right? So the extent, you're more efficient,

uh,

than you were a year or 2 ago, like is it?

Is it just is it just not possible or is there a way to to drive value for you or the high-end pressure? Bumpers for the efficiencies you bring to the table?

Sam Sledge: I can tell you this much pretty plainly. When you have next-generation equipment, you are able to contract that equipment. We are doing that inside of those contracts. I do not want to say too much more about our commercial model and architecture because we are pretty proud of how creative and innovative we have been on that end. There is light at the end of that tunnel, Steven, and we are doing that in some instances. It is mainly around our electric equipment. That is another reason why, given our bullish long-term outlook and our confidence in things like our electric equipment, we start to discuss, should we accelerate investment in deployment of more equipment like that?

Uh, I can I can tell you this much pretty, pretty plainly. When you have next Generation equipment, you're able to contract that equipment. Um, we're we're doing that inside of those contracts.

Um, I don't want to say too much more about kind of our commercial model model and architecture because we're pretty proud of, uh, how how, how creative and Innovative, we've been on that end. Um, but there is, um, there is light at the end of that tunnel. Uh, Stephen and we are doing that in some, in some instances. It's mainly around our electric equipment.

Um that's that's another reason why, you know, given kind of our bullish long-term Outlook and our confidence in things like our electric equipment. Um, we we start to discuss. You know, should we accelerate, um, investment in deployment of more equipment like that.

Sam Sledge: We really like that idea, and we are working through how we can do that going into next year so that we can capitalize on those efficiency gains and the other benefits that things like electric equipment bring to bear.

We, we really like that idea, and we're kind of working through how we can do that going into next year so that we can capitalize on those efficiency gains and the other benefits that things like electric equipment bring to bear.

Matt Augustine: Great. Okay. That was all for me. Thank you.

Great. Okay, that was all for me. Thank you.

Conference Specialist: Ladies and gentlemen, this was our last class question, and this concludes our Q&A session. I would now like to turn the conference back over to CEO Sam Sledge for closing remarks.

Ladies and gentlemen, this was our last class question and this concludes our Q&A session. I would now like to turn the conference back over to CEO, Sam, Sledge for closing remarks.

Sam Sledge: Thanks, everyone, for joining us today. Thanks for your interest in ProPetro. We look forward to talking to you again soon. Have a great day.

Thanks everyone for joining us today. Thanks for your interest in propetro. We look forward to talking to you again soon. Have a great day.

Conference Specialist: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Goodbye.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Goodbye.