PUMP - Earnings call transcript Q3 2021

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Operator

Good morning, and welcome to the ProPetro Holding Corp.

Third Quarter 2021 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] I would now like to turn the conference over to Josh Jones, Director of Finance. Please go ahead.

Josh Jones

morning. good and you, Thank We appreciate today’s participation in call. your Executive Sledge; President Chief me Chief today Officer, Sam Chief is Munoz. and With Financial Officer, David Officer, Adam Operating and Schorlemer; for afternoon, the Yesterday our released earnings third of XXXX. we quarter announcement make Litigation Please today’s projections Reform future are Act. call for by covered on forward-looking note expectations comments statements our the regarding any events that we or Private Securities

the can of cause discussed factors are directly to Forward-looking results We are risks measures in several which many are certain risk to during uncertainties, These financial expectations. beyond comparable today’s subject our materially with we statements included earnings in and and to the non-GAAP review differ and SEC. these Also, uncertainties most actual to current our release from control. our filings of measures. risks our GAAP our reference will earnings Reconciliations release. listeners advise call, measures non-GAAP

session. we Finally, I after Sam. remarks, to prepared to would our a will With the over like that, turn call question-and-answer hold

Sam Sledge

good morning, everyone. and Josh, Thanks,

pleased operating customers performance, teamwork. capital reflects our focus strategy and and the and our quarter operating We’re which discipline on coupled financial with third with continued

throughout to increase ESG-friendly Our continued XX% positive introduce will discuss cash to quarter, lines, continue generating margin increase later. a by itself to solid from XX% more differentiate service flow, continuing solutions third and to free activity in which in adjusted in levels resulting an and ProPetro while revenues the increase our EBITDA. we its peers

North still the be we improvement oil and a said, to focused cycle With our the to activity executing committed and strategy, of appears it improving American in early believe, field. to we has service global steady what That remains continued the team up in and oil sustained improve. economy in are stages on oil prices, Our shows. discipline

E&P community seeing pumping plans equipment pumping modest collide pressure the attrition. stronger fleets anti with supply demand for We growth are continued as from pressure currently for of efficient

to pumping upward. full from rise as to demand pressure XXXX incremental potentially to continue trends head into public fleets expect to capacity E&Ps efficient We utilization private and as we for

higher market increases fleets. chains all coupled across gross frac led supply and forces across our have in pricing to of effective Additionally with net utilization the inflationary our

equipment, recently Our our emissions Tier conversions differentiated friendly strong DGB now including demand IV garnering dual-fuel announced pricing. are in

recovering support those add a As discounts pandemic existing We’ve effective and and will price call and discounts to fleet. conversions for transitioned all our our normalized not with shareholders. in back reminder, profitability financial to horsepower recover what do capacity also completely been performance to we active objective our improve

our Our pricing collaborative date, from pricing differentiate our track for to will has deck with all and To migrate maximizing continues industry. parties planning efficiency share manner, the and and in to quickly beneficial our customers customers continues a record effectively price to up. and needs and mutually albeit fruits corporate increases budgeting ProPetro ProPetro’s be to our have to processes. customers continue of in the of proven both their been help compliment received discussions team responding

work customers wellhead our to our make in quarter. second and equipment continuing team During manner. our for the to accomplishments relative execution safe for to quarter, the and and continued performing improvements the a pump reliable third productivity high and Congratulations for ready at those time with our their

ProPetro, only our to as forward, projects in deployment profitable disciplined This applies a is whole. but future achieving of not current the to and move equipment, sector our operating environment. success we this As essential

expectations oil in consolidation consistent method preferred predictable The in pricing, a and the Basin. smaller the development solid Of remained that very note, large of to under to schedule do earn As counts recurring we consolidation have margins. enable so consistent to operators the certainly private We belief assist the and and more companies basin in work in produce dedicated gas long-term of in targets that continues fleet model visibility steadfast our to this upstream and and of is and efficient operating in additional have opportunity that E&P operating acreage will positions continue manner. opportunities drilling efficiency rig an companies and public and sophisticated activate crews the not so quickly can operators model. lead adequate discussed increases high Permian will as we the in to benefit past, pumping without

high-performing to result turn and to pressure in for pumping David? over the incremental We resources. capital With demand we to that, quarter expect financial discuss as noted. third to performance call our activity equipment efficient previously and these increases like I’d David

David Schorlemer

and good everyone. Sam, morning, Thanks,

During from of due X.X% utilization $XXX was which quarter Simul-Frac. second fleets, during the the three the have million of Effective XX.X are a our working, quarter. from and currently second increase revenue higher third increased revenue, to generated we XX.X XX% generated of fleets of which million more We effective $XXX pricing jobs. in the fleets quarter, XX activity

in and for million quarter $XXX with fleets activity for and Whereas, the in range. visibility the quarter. higher on inflationary increase have fleet the of XX.X the in approximately as we reactivation levels any adjustment downtime some a quarter fourth not amortization reactivation second during impacts stacked $XXX was wage to effective guidance by to versus a fleets $X million Cost due the prior call, included quarter, of mentioned driven to did that with million costs. costs average quarter implemented the Our equipment utilization and third XX.X services, excluding second seasonality is depreciation

million consistent was to second quarter. relating $XX XXXX. in was exclusive and of $X of quarter $XX million Third to the G&A administrative and items compared with $XX quarter expense non-cash second general non-recurring the million million

We in quarter $XX third quarter. Depreciation consistent expect prior to remain in the is fourth quarter, range. was the million this G&A which with

or loss $X quarter and million $X.XX million was loss third net million first quarter Our a loss the year. in $X per of this to second compared quarter share a net of loss net $XX of diluted for a the

prior from but us the in achieve our the income. as for is So, to for underscores you net profitability quarters, see, sector sustainable improved our positive can improving this performance need

is cost profitability our by achieving pricing our success in structure. understanding appropriate driven and Our

recovery throughout quarter and the quarter service improve call, through increases our commented we increased costs actions logistics was the third we degraded on we second able for But margin. rate have EBITDA inflationary the the pricing, pumping cost proper inflationary and As our increases, team quarter experienced including our manage pressures. took cost mid-year during of and at to to other effectively pressures those would

additional of third jobs. The cost increased the increased sequentially. been quarter improvement compared EBITDA sequential sequentially the earlier, XX XXX to million Adjusted primarily $XX million recovery adjusted $XX sequential points was would XX% for activity to for increase EBITDA attributable Finally second basis margins quarter. and for experienced points, basis XX% margin we incremental margins. have on improved costs mentioned reactivation Adjusting and

to cost challenge on point remain our fleets ahead defending operations recently of Our and while this of margin. at the value work it repositioned efficient we is expanding going cycle. place to Notably, increases, with profitable higher forward customers more

expansion. portfolio of Nevertheless, operated supports visibility work appropriate have assets across in will that economics to continue our a unless to to We fleets. margin fleets put we we additional our optimize will not way currently

was was approximately equipment, million next conversions, of as be differences for until that of CapEx to million $XX shown free investing expenditures $XX incurred investments in used year. of for $XX of million we quarter, capital flows and third our This that on activities the flow supply $X.X figure million with cash to equipment other expenditures million differs from receipts was cash timing for delivered positive $X.X disbursements. capital for of Actual third amount the was reactivation due in the strategic and cash related $XX For CapEx stacked won’t quarter of statement incurred million. chain in

year. to $XXX Our incurred million regards XXXX, full accelerated to $XXX spending for to the these next delivered of an remains should range activity With approximately Tier profitability. and recent half accelerated our ensure during be expected and second outlook to will customers healthy equipment that in year Consequently, likely for to conversions mentioned current the allocated current with Sam conversions generate fleets DGB is be expected is relative announced remain investments pumps spend CapEx XX these year to IV be levels be the of but CapEx $XX recently earlier, that full million pricing of including dedicated additional CapEx XXXX higher for end pumps for toward at will outlook favorable. upper million the the

flow XXXX full to the XXXX for continue adjusting for positive expect our free when We accelerated cash CapEx. year

and million October million availability asset was of debt-free, remain XX, our total million the million. increased credit position $XXX to with quarter $XX of While million. revolving $XX $XX of by we million. on and facility cash as $XX $XX Cash we liquidity respectively during increased liquidity our based XXXX Total and cash

mentioned the back is turn financial Sam ensuring Sam. with to provides opening and maintain in success. solid capital our and to As balance operating flexibility. financial position his discipline sheet firmly I’ll critical committed of to we strength that And we to commitment are that, it comments, our And a maximum

Sam Sledge

David. Thanks,

on coming modest anticipates mentioned gains call, momentum activity today’s we’ve As is the already sector as there our over months. building

many the in we on year. look next forward to the challenges to levels Permian, industry the returns normalized service taking As expected

those today. for In fact, future preparing ProPetro’s obstacles

in signal the trend as oil the next markets prices risk oil the labor to becoming modestly continued of throughout year, reliability Specifically field issue service on field These upward expand. a greater has XXXX. service challenges sector place to are as producers activity oil

boost customers makes our to the employees price was today’s the team well. our from very and into increases action force. This labor labor pandemic, morale of understand competitive provides received reinvested these team remain only the in issues of our loyal during a A not team our markets. depths also Fortunately our but ProPetro that customers portion recent the more to back

opportunities competitive in our XXXX. advantageous ability consistent work into customers, continued offer Our schedule places pay rates, community, Permian with for position commitment blue-chip development professional and the heading team the an to to

over I to them year, the meet to working the and think to with look challenges our the I meeting come. teams years faced challenges past for forward in the

the to labor addition In issues.

disruptions We also anticipate year. supply persist chain next to

made against supply anticipated reliability chain our As to recently call, hedge investments and issues we customers. for our mentioned strategic previous ensure on

allows point focus us balance a debt-free at be the Our with discipline capital this strong in coupled to on cycle. opportunistic sheet,

XXXX. our to We will may pressure be pumping view our chain year. continue power and positive the for supply that enhance disruptions opportunities in that for earnings next look maintain to in Is space

As utilization and equipment cycles. past to investments the speculative to may in secure a that and effective important very We barrier and activity lives. next made expansions as sector builds capacity, inability understand that timely approaches in rates a also believe lead widely finite our miscalculated is are pressure over fashion modestly industry with It year. provide been to fleet long pumping the assets times, operates have attrition

most positions respective on two consolidated to across goals. have demand Over hands achieve the the day more past more and their the pumping per into of order operators. And acreage efficient hours those U.S. equipment operators years, largely in the location investment

While accelerated North pressure pumping most paradigm new pressure this in shift operating the opportunities have better standards in attrition for space, across efficient the to creates our America. development and pumpers led

to For as year. disciplined significant will continue across utilized commit moves activity pumping to North pricing a levels. further industry’s America’s economics the to net approach will entire sector. continue next it and Therefore space pandemic the goals the disciplined Maintaining our in ProPetro take further of said, this That our in pricing gains paired be pressure and manner industry reason pumping a for ESG likely activity sector with the increases. supporting energy for underinvestment to pressure won’t fleets improved reliability require ProPetro away collective and from fully

We to and to with ensure their work customers respective will our sustainability of reliability operations. continue

of that in my be execution service, over to to This a to execution enabled success will for remain marketplace. has continued ProPetro leadership committed under our remains legacy enabling and dynamic competitive fundamental excellence our XX years. and Lastly, teams excellence our

up to business to and undoubtedly believe our challenge. our continue to team will mentioned, that we’ve is we evolve, to have As compete,

show both operationally. will differentiation We financially to continue and

area improving Permian Moreover, to provider job. community shared continually over the and our expect culture our we safety safety a impact commitment the and the fervent strong the Our to to our maintain Q&A. also We while like basin With ownership on involvement. our in that, customers as strive to service and enthusiastically reputation will grown forward ProPetro, preserving to serve I’d teammates it. through team, best-in-class maintaining turn we off the very look to for Kate? a lead positively operator I’m proud and customers. our have and for we at of call

Operator

go The Ian ahead. Instructions] Sandler. of Piper Please [Operator is MacPherson from question first

Ian MacPherson

good Sam and Hey, team. morning,

Sam Sledge

Good morning Ian.

David Schorlemer

morning. Good

Ian MacPherson

not quarter what to know results good do an is in so. delivered we You easy

about to couple term the and a commitments by what longer customers the there. should more the next cycle, given spot lock-in you want tightness based to getting you firm evidence seeing on congratulations we’re the term So the recognize of pioneer cost year outside the respect over next team play quarters? more the be up for to service to pricing is appetite the customer creep appetite by year you’ve and capacity budget when is that stated a of of way Sam, with what arrangements dialogue ProPetro’s now for of customer market, your for to versus this inflation, where point next of to net

Sam Sledge

fantastic a that’s Ian, question. Yes,

next I’ve try your than I’d that and service in may of market year experienced compare going six in even that as is our to for things efficient in year programs them play years our a try possible effectively that effort next offering recently, part to I out a Year ensure as have a they years, cycles a new efficient need are and to these customer past of repositioning seen active budget their active more capacity probably of the this on interest budget question, New to say term seen belief in with ever grab that And lies and in or part the maybe to demand. fleets five conversations I’ll If as we’ve that how We’ve high our to performing portfolio, highlight own to the what as more of customers the and crews to think position the capacity. pick execute. tightness through into much that efficient of possible. service few to we customer have pretty lock-in larger past,

really the just pumping But well next ProPetro for talking dynamic bodes that’s customers, evident. been just that this directly very one So think to industry pressure the – is we the this year. and

Ian MacPherson

didn’t it, run, EBITDA of if down a it like but you as about QX dip just into Good. bit on provided have, the talked you of David, you margins over That’s helpful. in but Thanks. terms still QX normal higher, I you the seasonal activity, or the the if it’s but margins progression that in you directions did guided in little of did, you, be also progression QX it that hear is medium the general comment seasonality? pulled margins sounds by true in or will QX from

David Schorlemer

progression. Well, about perspective talk we margin didn’t

seasonality that, normal quarter of some think net we really quarter. that end by least at we’re expecting that the during I be the increases the we will the or discussed, pricing seasonality at some third achieved that of offset and

and are prevalent others there. I those we think So inflationary will discussed there have out still some impact that are pressures things and

helpful. that’s some I That’s think So, guidance. hopefully

Ian MacPherson

Yes.

sounds understand be like So, close or flat range fairly it EBITDA to within to higher lower? should correctly, closer traumatically opposed a, if as I

David Schorlemer

some think if did per our approximately And I that’s revenue per say. amount. I we numbers, that mentioned, margin improvement you nearly look and to EBITDA fair at fleet as up fleet is XX% up see

more start XXXX. good of some had we think progressions that I see really But we’ll this to quarter. So, in

Ian MacPherson

Thank Right. you.

Operator

is Partners. question Please of next go from Energy The Daniel John Daniel ahead.

John Daniel

these you’re Hey Where get on XX you CapEx do IV question in delivered? XXXX? guys, engines think is a that just number Tier the once all

David Schorlemer

entire not XXXX have budget. we nailed down CapEx Well, our

our the could XXXX gate. equipment activity supply do is what certain to for chains of to that think I out we secure support make we wanted

still to what be we’re fleet think looking support activity needs done and our going at entire be I to to level.

guidance more have we’ll on So, on call. XXXX the next

Sam Sledge

we this add able to continue continue to Yes, need, be is I’ll like to is John, our add to migrate that. that Sam, we that to up to economics need equipment

we need we’ve investments front. today. made the positive with on comfortable movement the very But We’re profitability continued

just move. components that like make to next difficult you We the to it’s why year, some going reason in be general part also get saw think of that

John Daniel

I egg, I it’s Right? no. and the well, No, kind chicken the right. of mean, guess

balance You’ve profitability but lead got right the extending. sheet, right now, the are times

or it customer the of then you basis get you and it about. sort do with for just something the on is that, the ahead So wait That’s of lead question, negotiation of the behind think to times.

Sam Sledge

I term and a Yes, place, term. orders think for the certainly position, the we that in near put us good longer

John Daniel

Okay.

you of obviously customer really want care look benefits? at your asked percent about question, to what As names you don’t like this the when but them base don’t emissions I

David Schorlemer

small. Very

John Daniel

last Fair one right. then Okay. enough. the from… All And

Sam Sledge

not any, a That’s to minority. it’s there aren’t that say but

John Daniel

something years it, multi-year them of if you’re they making money, see, become up from a it XXX% sort friendly, just emission process, do you like, it’s do of state now steady It XX-ish conceptually get you and the… two is now, ever there takes and when where time it But and but from does is fleets, obviously right. where

David Schorlemer

is David. this John,

think CapEx the talk customer had of emissions much component their important I customers smaller completions I still. their some total program. and about is, from we’ve really being that, a spending to is emissions think And smaller,

Some activity. it really mentioned more companies production than they’re completions as relates to that on focusing so have emissions

to equipment, asking are total of this are of completion type customers costs still is there for also but programs. that some their So, there sensitivity

are but to, other top So, really making few take continue, think lower still now to time. But specific going Sam putting customers And solutions. I emissions efficiency. a that’s at earlier, efficiency other will mentioned moves the that are electric and as customers there’s the migration frac right some

Adam Munoz

recently, just even actually our here equipment, a the Yes. of help some of long-term a horsepower to II This customers too. is them ensure completions just to Tier make with supply Adam, add their with would just year. next customer John, couple had agreements We’ve or I

Just to chain market supply sheer, tightness due of tightness.

John Daniel

spoke one Okay. your super us the take Permian you, the core in for up, one just I’ll on Adam, and you just it me. give sneak for quick in that’s since out market

Adam Munoz

mean, mean, well the market. just requires in it’s or but market, very unlike Frac like I well pump a it’s tough I John, divisions pool that’s Simul-Frac It’s jobs, the every Simul it, Yes. every our requires like pressure tough a a, [ph] competitive. and not

and higher We some competitive. highly in so pricing where back the have focused really remains the the it’s there complete creep at been to just out Delaware highly – to wells able pressures more are, drill

John Daniel

it. Got

and nice quarter me thanks for Well, in. Okay. putting

Adam Munoz

John. Thanks,

Operator

Stephen next ahead. The Stifel. question is Please from Gengaro of go

Stephen Gengaro

gentlemen. Thanks. Good morning

Sam Sledge

Good morning.

Stephen Gengaro

me, to it of things including Two right? you fleets, five current So the XX CapEx six? just low or emission? one will it new your DGBs. Is a follow-up that is announced for the is many be XX, How or call active it

David Schorlemer

little be fleets mid-year dual-fuel equipment next more a worth than It’ll bit four of by year.

Stephen Gengaro

Got it, okay.

David Schorlemer

we already system in that which portion Of today. of a have the

Stephen Gengaro

Okay.

I’m Are range as seeing you’re you into of you kind curious – provide? double-digits that year just are because pricing, go types EBITDA what question, competitors are range or some And order about, you you sort you so more the of on upgrade sort per talked assets, need the fleet is you of about seeing? talking any little could get, of and we close to and are pricing kind or equipment a next top to low you this, to basically the referenced other when or in of thinking your that, have of you’re just high returns teens, bit appropriate of of as

Sam Sledge

to offering from It’s is because customer. – a our by unique customer change basis on more it’s or Sam. this customer customer unique probably It’s, can to

economics size ProPetro nearest may sustain that materials, providing may providing. from peers you’re other today. for we companies if like we said, not operations That our not the far are and even of are any in that services to be If appropriate you’re you or

I in most operate remarks, scripted which finite which As does on equipment. have in mentioned hours that my is of this equipment lives, dependent you

post sector entire our pandemic economics across coupled very with experienced poor some across significant pretty we've under-investment sector. So, our

now so We tangible into for pressure our way so back said, So to space's the equipment, to we feel little much to a now. the closer us pricing, that to pumping utilization why being to question strongly been got needs recover and that's there on next to going we thought where feel kind momentum a economics year near hard like to in that issue we've answer. an that about opportunities there be it's better and right the go. I leave but full E&P could more long term, become recovering to – amount going a give of of you bit make think just has than market under-investment serve That not. throughout economics year think right is a more profitability we good can focused We're next to

Stephen Gengaro

you. enough, Thank that's Fair great color.

Operator

JPMorgan. The ahead. Please go next question Jayaram is from Arun of

Arun Jayaram

with Yes, I more I they're of wanted some a gains efficiency completed significant Simul-Frac. per on three feet – day are Pioneer are know fleets maybe Sam presumably Diamondback how with good morning. doing to zipper frac. mentioned citing XX% the customers Diamondback – pretty versus working ProPetro you Simul-Frac, it completion standard on lateral mentioned start their call and your customers,

I you're if so the you Simul-Frac talk bit customer about of that your So, the wondering with share model base? seeing a around some can pricing benefits little you could was

Sam Sledge

and pumping growing our February is well, this fleets we first definitely first Simul-Frac Sure. earlier for second Simul and Arun, importance Frac and space January think in in deployed – our pressure the I just yes context year.

adding third which we've seen year pretty a So this new of referenced efficiency into eight in that of Frac. a learned customers. of the or Simul this gains said, yes Simul we've a we're some last That amazing kind with lot XX operating you Frac technique of technique operating in those months while some almost

that with we more right. operational day improve right need economics that that Frac our we're Simul there these deploy customers those it One need move efficiencies. We sized learned Therefore, operational seems working want forward thing is right learn about to a of to return and have on we amount something more our customers locations. well, as we to every equipment it. maintain now efficiencies those we that that those that's hard that is to equipment because that So,

some good benefit We quite So, hoping in mutual there operation. that there just don't feel like yet. type this we're of we're is

Arun Jayaram

up us on just just Okay that give niche you're then can in in update you right follow my ProPetro's of the market? e-fleets, the how an be, DuraStim thinking great. solution would and this where you're apparently market And but at customers growing terms on to or participation about for is

Adam Munoz

we that, that as you that about half – continue solutions DuraStim. looking constantly to to to to around be nose the that equipment to solution out game we're know work. is that Yes customers in continue know, We're Adam. test e-fleet first as been Arun. and type preparing the of to or little market currently of and to hindered by to and This might the you in half uniqueness that possibly a reliability probably bit of to at and DuraStim continue supply kind test XXXX, provide add first of e-fleet supply, the the keep of of of into is be look so what out to even put road solution tighter but there expendables normally the news is product or than for of as supply consumables is the probably the DuraStim able to redeploy in little other bump that a we'll more certain far to are involved there, in of in we year we're the is To chain that and a as continuing particular to ran

Arun Jayaram

do to you see units? how market demand IV over for relative Tier And that developing time,

Adam Munoz

probably electric the of of I customers majority stepping Steve Tier IVs market. a kind think to a is the our stone

equipment lot things still going I of the there's lot acreage. on customers' and and of the our changing electric a a electrification development think of side

well. So, IV I location going type acreage for electric electrification Tier horsepower to of as to used as evolve they market a cleaner, be efficient to continue up and the to more provide evolve their think that think continues heat start the highly will to as I DGB is

Sam Sledge

almost this our technology you base, – having that interested Arun a customer it's, that Sam. for and direction. knowing and couple in well We do around the fairly of we're electric we'll equipment economics that are do a equipment to type in and of potential contracting that have migrating obviously conversations highly we terms customers think type continue basis on daily right We that. are of

terms we remain able want So, solutions attractive provide to if our to and are be parties. to customers both to opportunistic there

Arun Jayaram

a thanks lot. Great,

Operator

is question from of Citigroup. Please Scott ahead. next Gruber The go

Scott Gruber

good morning. Yes,

Sam Sledge

Scott. morning Good

Scott Gruber

drawn see that it disproportionate trend, timing just wondering whether year will of greater will improvement expecting like in standpoint. greater it course ask because have peers the benefit hear, but I same out to about reset them improvement after which in are a from the the in XXXX, their in will in occur is you is is or in the early XXXX? profitability or good E&Ps, XQ and of some rate some share of to early greater sounds So, profitability the improvement their ProPetro they already the you going guys bleeding have you're that into over more improvement, they of of secured a just expecting XQ, expecting pricing net pricing pricing XQ, are your year? as some that talking I'm be reset MSAs budgets,

Sam Sledge

call earlier time our customers' an ability well today We, in conversations to a to up question is few past and analysts to to Scott, this I they is behind is us customers, our customers. are we in pricing Thankfully, great creeping with of trying that positive CapEx companies like happen healthier play. with the next of like these happening and alluded of over the to the moving a our Sam, see peers that question. to think When our things our a you'll plan I collaborative things as comment that approach the alluded year. remarks, one of pricing of continue E&P have as in way, not one CapEx plans ProPetro while budgets and months, position happened a are our in disrupting our on in think and space economics for many lot our economics and pricing this scripted

I are pricing of as year current next that year. around with that need to movements early January to and going all to even best So, could so push momentum lives say portfolio, of condition as almost will as possibly all additional draw has our potential that customers to into next relatively so efficiencies, might our we in places different next increased doing pumping year. say happen We're but this of going down continue and effect to to we pressure for timing different equipment look into because the asset our continue it be across to these continue customers,

thing one going we're customers of is experienced lot well and of business with we that understand very way, conversations in have a our myself and that customers have that sophisticated we many our think which I've smart, doing into economics personally sector. to but we and for them been just us, educate we'll year. look goals on not those is very fruitful next our have for and what Most those healthy our think best our going to continue of conversations I

Adam Munoz

so with that toward a with forward, customers mid are of new expand better see Sam impact Scott, helped heard us The scripted thing, repositioning at cycle this fleets going both remarks year priced fleets into of of is better the of a well just have beginning quarter David. few our the also the going pricing. you moving new as fourth as our from couple Adam and and – one add I would in a pricing portfolio of couple also we'll the more those

Scott Gruber

next color lot Appreciate frac the the rigs, obviously demand to across ask And continued which private I this cohorts; continues suggest but grow customer color. incremental to then also major year, year. if around of demand incremental trends it. Got a some about could growth they've would the demand been add maybe

We of incremental majors seeing color color on public curious from terms the and demand of I'm provide from and privates the but have Permian? public you terms just today, good E&Ps, what for incremental here, in in you're some demand all the in could the E&Ps additional

Sam Sledge

Sure.

I way think accurate. you've it that the is described fairly

had a That from of operation. to the added inventories most things think just-in-time rigs I and slowly of uncompleted undrilled large more last couple – migrate we've of [ph] well of like in E&P's the seen more throughout months. just-in-time a backlogs dug we've the said, – Permian

year, that continue adds ballpark drilling year fleets next frac across of is America. adds will support in mid view next will North XX rig XX activity to through that the into you probably Our

more Next year, or that the to market. really or completions really think tighten that and much takes don't it tighten we than

So, going see way, you'll oil through see see oil and more to North publics for that continue rigs the frac market more is I and privates cannot add to the that small we're lead crude without can the we're America think you as maybe independents but to call gradually the confident the continuing States the build. more and and and crews to United more system prices

David Schorlemer

Scott, Yes this David. is

the dedicated Just also privates, of in those to calendar. rig to the some more smaller pick a periodic our to be smaller as from that of some to the the two that's up privates spot some migrating complexion Companies that, schedule or the and of counts add continue anecdotes – up. companies customers consolidate public picking efficient of frac of are the new are will that more a

so, that in part to of marketplace going participating cycle, that in be where and talking migrating we're so And to Sam's positioned the things and that's think in frac that support are the about that. I of we're XXXX opening part more and efficient in comments capacity

Scott Gruber

Thank Appreciate Got you. it. the color.

Operator

next Pickering ahead. Zurcher of Tudor go and [Operator Holt. Instructions] question The is Please Taylor from

Taylor Zurcher

you're frac equipment the certainly like about working market so and of Thanks million talking you've team. you about is that XX sounds wonder own your – it and about fleets fleet, three question is My horsepower, fleet some sitting those really and pricing I today you X.X specific – the so how Simul-Frac, and you've for demand horsepower are your to currently my first utilization Simul today many my Sam point in reactivate, questions. one within location full talked commentary Frac idle the just could is frac at we just think your taking if outlook more tight on at Hey, potentially market XXXX fleets. today? But, XXXX made some if of how getting just much got there, for the fleets on fleet for was incremental those

Sam Sledge

question. great Taylor, Yes.

hours we in asking XXXX you honestly to to think just every our become the and here Many efficiencies the right the operated space more be what’s pressure not equipment in competitors more the efficiency that's peak and and and effect attrition the context I therefore XX in pumper some at can is ones the only the provide And I call tell already and that we’re question that these XX fleets. back peers shorter we’ve well horsepower, that to to of quote that, the X.X we’re going multiple on number. of is million is, the which lives. increased as efficient today is gains that’s the we have never the pumping the Hard that. what than have alluded pressure way follow-on it assets and operating, have with – in but space. we’re the we’re less on equipment that think behind exact number times I definitely to

anecdotes the on us make we’re So paper, of are the the the Basin, about in constraints space. starting in pressure horsepower Permian supply feel convicted to it’s more hard in see the that ground, to on potential but pumping seeing and Permian, the here more

Taylor Zurcher

itself, piece And the XXXX course have Whether driving efficiency, over Simul-Frac understood. suspect maybe more exclude really strong the design that? just a my gains moment, what’s to well question of completion even been is for these emissions clearly a and wonder Simul-Frac the or clearly have if operation realized is, efficiency getting that, outside on Simul-Frac is – those real fuel cost for technologies IV if I some just from operators noticeable lower and that an I Tier of are seems equipment having equipment perspective benefit there, equipment location or and efficiency there types savings perspective today. out – mean emissions there operators on but reduction if of fuel it’s and really benefits a sort of DGB guys follow-up and big cost equipment you we from emissions of but a is I it the like efficient that of Okay, savings it’s the

Sam Sledge

have there few sector is margins activity more to we one and peers, and in our through draw entire we our our activity think go efficiencies. team lows many operating it I our you mentioning team try of our there and Taylor, equipment to sector. people. think, quarter-on-quarter. that our the down protect shows is almost the When can’t We That the our a said, without in thing each all performance factors deployed average leading of We high-performance best our Yes, and play pandemic, companies equipment. think to is at location time what’s our after saw efficiencies like all our space, ProPetro I

Our to expect customers have come that now.

attributable is So at efficiencies on higher disposal to nearly tools our the being teammates in be to execute need probably It’s continue having frankly to impossible our they those ability most system going equipment that push to the efficiency all and take away. to efficiencies. their more to

goal equipment. I drive customers of But cost Our for is we and play game anything pay things than increases while cost have can’t that programs like continue at is help that’s efficiency this structure internally to maintenance our a just our structure, price more our down. more that there through to our efficiency extra try us in will – say to look

David Schorlemer

equipment crews a year, algorithm We issued with share report such credit it David, and our productivity. high anecdote of us XX%. executing Yes, for not that and by there. Simul-Frac were level at in activities, was fact this Rystad any performing were Early the Simul-Frac is attributed XXXX broke market gave conventional this the a our about Taylor, zipper just another is Simul-Frac there that

out, I we generates that Adam and productivity to we at when and referenced assets customers really as it’s some ProPetro efficient that that is have it are you really our activity So, we see certainly will different hallmark see think customers see ProPetro and the Sam that equipment as migrating look the things but that have well. that team frac and comes the and from what different your

Taylor Zurcher

appreciate interesting. answers, Very the I thanks.

Operator

next The of Please Syed go Capital Markets. Waqar question is ATB ahead. from

Waqar Syed

my go were this margins question. you thank but a back right, quarter XX.X% different for I’m The question going the in around going in to and in All back call, to around way. XXXX were Stephen’s it XX.X%. to earlier taking ask EBITDA just Sam,

you price some range continue as inflation So, increases, but you XX% visibility kind – plus margins do input getting any see EBITDA in XXXX? to the to get to have in inflation, you of cost

Sam Sledge

of seeing I Waqar, we’re smaller in think green that cases. already shoots Yes

I activity have that. that already So, seeing in we more move we’re with slowly, some some of Waqar, our a may customers doses think but more where little small of

Waqar Syed

new face like a between referenced type nature are reliability that industry reinvestment in E&Ps here, Good or contracts Is new returns that as so handshake to there the most and those you upgrades, pumping pumpers of cycle the push money to is contracts. things more kind to were to you question contracts by likely E&Ps know. second now investments? And or of change of a guys companies like past you kind the there of with the is into invest fleets that, in

Sam Sledge

think I answer the that is Yes, yes. to

like. be around think, these conditions, these this contractual, this helpful lives are. we’re is a contractual. push operating from education commercial How I’d what it’s guess, might looks commercial do healthier small through more and of contractual. perspective a of current Waqar operate I the our to We very to But think some been more in more which mutually I model sustainable what with think place in customers Pioneer’s efficiencies those have effects relationship from well. to I is time we little to Obviously, equipment what take some that beneficial model going that very conversations to perspective It’s examples of probably our to, is trying Pioneer as with the call a some our long

E&Ps to emissions about customers reducing revolves willing opportunities talk of this into that next generation system. to to at Some around the to that the are the the the more some trying are the of more contracts contractual equipment, more equipment, be equipment, and with on pull electric near-term envelope the our dual-fuel equipment table of push

David Schorlemer

Waqar. This And David. is

no of I migrating probably nice more be And it at look of any think that, some be is to going that looking going in and is something to generation, the to about or a tight in be talk very about, it team is talked if of it portfolio. it the to that to believe we’re a speculative across that’s frac be and for have was as more we across type today, Sam contractual so, of way the is ultimately company the a Adam electric some outside going to go there. think would and and industrial to to but of past, there building really as companies model, capacity I and our appetite been, whether contractual entire we it’s solution see industry next that an terms there exposure the we require marketplace, has had other

Waqar Syed

much. a will development. be That for great Thank you Thanks very answer. your

Sam Sledge

Thanks Waqar.

Operator

next The Derek Please go question ahead. Barclays. is of from Podhaizer

Derek Podhaizer

you stepping for the Can year talked this in Simul-Frac morning. of stacked we this this to up on or ongoing other not into Was fourth want this through to your year. expand you reconcile next quarter type reactivation Good fleet any fleets? and and count a about? of operations as to be you go equipment Just expect

David Schorlemer

stacked was The to equipment. some this reactivation related previously Yes of is Derek, David. our

for – that, to We that we’re we’ve we want to seeing go. preparation that what in equipment make sure ready and in is XXXX done are

without you know having So, our additional see we proper fleets I but fleets when we additional that of think to we’ll be in going we going we’re let portfolio as that economics as projects, best not stated we’re deploy our can, comments, deploying. to across

Sam Sledge

Yes of going happen our this me, a for It’s of just year. what’s Derek, matching to with next readiness in the is market us product Sam. our conviction

Derek Podhaizer

And would current, incremental year some incremental this trying but replacing think it. could the equipment is next or just look like your more about to fleet fleets your helping rolling older Yes. replace year what and is Got be of count or stuff, of out exclusive just next just DGB the these converted just Tier more updated fleets are IV to fleets efficient which equipment? II, are more these legacy your of the get Tier new to this of

Sam Sledge

both. think little bit mean, a of I I

that seeing enough acceptable and because seeing and conversations to pricing we levels. profitability I performance market think, opportunities either customers take talking of at or with share, are we’re about our and add to

Derek Podhaizer

helpful. Okay, that’s

want switch to Just to e-frac. over

your for So, fleets. wanted about to talk the just DuraStim turbines

a one the the much unlock has competitors your third value to their power your months number help and get how that this on leaseback, to party players over go market through? the saw to of new road this some evolved, enter something that value is going of unlock just turbine the market wanted we’ve You and in sell given cycle past to a six will down this some you’re you support seen that recap of thoughts

Sam Sledge

own. almost general, Sure, preparation years significantly. DuraStim turbines, the well bought with market sale currently in for our also the We used those as fleets it’s two those in at great watched power ago pretty development looking question. we project. market deploy for that evolve assets That two in XX-megawatt to the e-frac multiple continued options our as We’ve whether turbines said, or specific DuraStim. we’re power We’ve since and lease testing of electric

the very capture all the to be or able ways might of open-minded different those value we to we’re assets. So, unlock

are have used assets but constantly. for creating materializes we interest value the We’re they not now, sure exactly our of lives being how shareholders working and want that that those ensure to best value high right and in that do we’re on long and

David Schorlemer

world the are is And to a and of there of very these you assets going of lot Derek, these relevant those power as some respect most to think I throughout with dynamics know, issues. I on resolve are think – demand so

Derek Podhaizer

it. Got

Okay, Appreciate color. the great.

Operator

remarks. would Instructions] over time. Sledge conference to This are like concludes back no the I Sam our at session. So, for closing question-and-answer [Operator to turn there questions this

Sam Sledge

Thanks on enjoyed the today everyone. We discussion. the call for joining us

quarterly We’re for to critical where globe. industry energy also hope and part remain across life innovative the us oil proud you an gas great a Have play earnings next everyday We in join to day. a call. our

Operator

presentation. today’s The attending conference Thank has concluded. you for

You may now disconnect.

ProPetro Holding (PUMP) 3 Nov 212021 Q3 Earnings call transcript