- Earnings call transcript Q3 2022

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Operator

Good day and welcome to the ProPetro Holding Corp.

Third Quarter 2022 Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Mr. Relations. Investor Augustin, Matt ahead. go Please

Matt Augustin

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

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

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

Sam Sledge

Thanks Matt good everyone. and morning

express foremost, I’d team. hard and high execution for and level work First of like thanks to continued the ProPetro from our

and are strategic increases to along speak a quarter high strong sequential the David we in very We excellence, this XXXX, in quarter. we and of I’ll are line line with our produce at in moment, continued record the excited third report pleased a to top operational to track of financial level, bottom more that but let execution performance.

COVID-related EBITDA the include in hydraulic key anomaly the of a the with the highest highlights our our exclusion quarter of XXXX. second margin of in of adjusted fracturing business, history Some

for effective disciplined fleet strategy. EBITDA company utilization, XX% had the adjusted returns-based margins we Next, our reflecting nearly total incremental on flat

growth closed opportunities accretive more this of oilfield our and pump-down a those and customer-rated excited Permian transactions Basin and our that potent to with hydraulic provider to portfolio value-enhancing services flow and our Completion acquisition perforating Silvertip this have based Silvertip increase pursuing transaction businesses company, diversified we stronger, Texas, number services resilient, is have wireline cementing we positive quarter is a and revenue the Silvertip excluding leading for now coupled sequential And a had Also, leading the Services, pumpdown their a Basin to and the to EBITDA our excited about share we third cementing growth. is We on was our steps on ever, income recent of and highest strategy above. and in efforts this strategy finally, focused today the adjusted the of committed XXX% There and strategy shows. company, while of Additionally, mentioned company. wireline acquisition Completion talk it lot to actions business operating quarter in fracturing margins more a announced generation for achieving company. completed cash Chief and consecutive expand we Permian impairments. Also are and our to quarter, our of more remain in disciplined to advance In Services. one took create we Midland, yesterday, among our meaningful executing free third the our Permian, our we completions-focused services. are customers. When of add one leading

it the and reflect important depth from looking the point. the which on we Silvertip about that we during other to in operating take have vantage a environment transactions step and before we speak are how executed back I in macro are want However, quarter. we at our and

long in the last of has global visibility spoke as next is global foresee resulted be oil a so in trend continues potential undersupplied, which structurally was when the for we production overhang as recession the continues levels. market it to Moreover, limited crude lag. demand we investment future as continuing into fuel a Just quarter, few new to years near-term

disciplined maintaining flat to activity to part the anticipating growth, when of comes spending limited posture capital end into this we this are a and it Given XXXX. first through visibility of and E&Ps steady the year

E&Ps, operating, stagnated Additionally, a they activity. are for the in equipment labor are contributing deliveries delays attrition, continued chain to market tight and currently supply further

their bifurcation Given service number delineation natural the sector dedicate of those between DGB those those that like a E&Ps Tier equipment to This burning clear towards efforts even safely well performing these are and we and and electric elect efficiently further are those resources in that pressure the providers and not. that being grading not. are are seeing are gas a is pumping factors, site X and their to with at that among high high-grading exaggerated

among opportunities window in at frac we And momentum ahead, continue. of As sense services, urgency this pace, contracting half look top the that margins open we increased while first-of-its-kind slower our through remains and pricing partners will The surface for continue to upstream pricing. market a the expand now continues intense of to momentum be optimistic strong. bifurcated with to this are

executed we to X fleets. sim new Natural with frac recently XXXX Additionally, a Resources contract start Pioneer with

customers pricing not current order in fleets sold effectively market-based Pioneer We XXXX is with effective continuing already and our January. with book blue-chip have and reserved full with out the other

ProPetro a we moment Next, long-term. actions like taking to position best take are highlight to our expansion strategy for the the to I’d and

in free the on operations to optimizing our cash future. to are result ability resiliency we add which First, business, and of flow meaningful to our expect we our the industrializing focused create incremental

third, are value opportunistically equipment that competitiveness our more a assets we increase And in next-generation we for continuing and pursuing manner. capital-light are Second, shareholders. accelerate transactions to strategic transition our our to

our initiated our maintenance So the operations, optimizing and internal goal first of program optimization for reliability an have operations. we

fleets. utilization initiative extend equipment, the optimizing our our therefore, and of and this opportunities of life expect to We yield downtime improve will cost-effectiveness our reducing the

our transition. is fleet Second

one with DGB in fleets conversions X are the forward beginning give deploy in We to X XXXX at youngest and Tier by dual-fuel the of operation operation XXXX. This Tier X of in the fleets size us DGB continuing to region. least X of will and middle look

discussed, we third electric manufacturer of executed from previously orders expected the have with frac As delivery fleets for in electric leading of a have XXXX. we quarter two equipment

Additionally, Basin to beyond. the we momentum, customers continuing in are electric gain advanced solutions with are make these is to stages negotiations for large E&P their our of operators and mark contract electric-powered we oilfield. valued the Permian electrification to in and excited help of utilize XXXX in two fleets Demand

hopes electric frac of future. by additional fleet contracted both have fleets XXXX in the the orders to expect We these with end of of

will the As the customers in respective coupled efficiencies mentioned we technology, industrialization electrification most electrification. believe of with is the before, to transitions and their known This for, upcoming Permian ProPetro in support that Basin.

Given of severe in on state our we crude upcycle ProPetro at the energy a in our to view the and are stages are the confident multiyear-long undersupply continue natural we gas, are our and plan the early fleet. of and global accordingly oil associated industry convinced electrifying transitioning sustained of and

safety, of substantial accretive completions for Silvertip allows creation. of strong important represents in more accretive that leading and integration. ProPetro to oilfield combination Midland, flow service is enthusiastic as dedicated decision-making adds In of Simply takes value-enhancing well provider complementary, data-driven to a pump-bound our earnings with This Finally, site customers. of exposure are and free our expand the another strategy free growth to margins pursuing ProPetro advance this we efficiency, Acquiring organization a better with efficient, flow is cross-selling cash offer and provides E&P superior of and leg a combined are also wireline we our creates doing service and pump-down a even services services. the our in to acquisition, we that our profile, assets culture services recent generation. This Through track us positioned creating its greater opportunities pursuit existing and Texas, put, and have serve highly capital-light Silvertip completions-focused made company. record flow, and with established us Silvertip. of gives operators scale, Silvertip drive cash and to more opportunities more businesses. wireline acquisition customers particularly our high-quality diversification, so, strategy, integrated step growth, transactions, and, of based diverse together perforating cash free our Also to which our to third value with

ProPetro completion companies. best Silver ProPetro are excited significant Going practices each of Silvertip’s with focus both Indeed, and our leading while and and customers, value. this our in Co-Founder equity, for and sharing this large alongside will team we aligned meaningful we wait execution, services of within companies on Silvertip a receiving a are of professionals best-in-class and opportunities our as and forward, President, And transaction Tit Permian team value shareholder the his growth manage working deliver unlock Mike Silvertip enhancing we to capture continue the welcome transaction their inherent like-minded the our commitment services Silvertip to fully for begin together. for to in the work team and portion we bring we consideration in steadfast as other share can’t in to Wood, shareholders both ProPetro, to

flow. acquisition this to approximately $XX that EBITDA XXXX converting approximately million by adjusted increase XX% of to expect cash We free $XX while EBITDA million into

our free the our conversion this immediately Silvertip flow. across And cash these double we due current Given rate, addition rate, accretive attributes, transaction which expect of enhance conversion metrics. to significantly all to be will the is

efficiencies, call that, fund continued frac deploy Moving parallel, our fleet we capital continue I’d strategy, to David? With third deploy and financial reduce as spending performance to and and maintenance capital capital to intend like in opportunities, improvements. growth turn David conversion. to forward, investments our on to quarter with will operating operational along executing enhanced In the through technologies, our we resources. discuss we look prudently process over to innovative value-enhancing

David Sledge

morning everyone. Thanks Sam and good

area of earlier, other million and ProPetro shares customary cash, stock, As October to have of debt, acquisition transaction consisted are of as which XX-day ProPetro’s transaction can we for closed million to due costs, Sam cash flow assumed excited XX.X the free based evaluating of earnings business. to other average very subject price of approximately is on shareholders. including accelerate value Silvertip share, stock corporate and provides Permian metrics, XXXX. EBITDA was within our $XX The scale core adjustments, on upon financial capital-light of create certain per million Silvertip best-in-class XX, The a Basin, all another and business post-closing of volume free the and its the The cash us to earnings cash look accretive that implies and yesterday. share. transaction a of multiple, capital payoff we low issuance $XXX earnings intensity, of industry-leading million adjusted transaction free at per The and consideration flow completions-focused operations, acquisition forward weighted common the helping the mentioned of additional accretive $X flow opportunities our

our we the adding have believe particularly company. our environment. of consistent acquire this in always transactions, to commitment to strategy this in As disciplined evaluation supply we is existing done with that potential incremental the continuing marketplace, reiterate equipment capacity informs fiscal also our rather than across to We our want chain-constrained actions

also Silvertip’s We cash while management balance balance stock capital liquidity and aligning combination maintain appropriate and of the believe to us shareholders. a resources, was of strong healthy and enabling an sheet

financial our results. to Now

largely pricing quarter, consistently of strong is our customers net fleet million attributable generated the second performance, our a X% our for third we the activity. During the $XXX The increase ability job million to mix, cementing and expanding additional to team’s favorable quarter. from gains, outperform in revenue, $XXX increase without generated

the and for of this forward in the fleets our believe utilization We for approach to bottom disciplined fleets over fleet assets. sequentially prior deploying the XX We line XX.X continues of without quarters depreciation was will inflationary of XX quarter, propel flat further off. electric hydraulic ProPetro share third increase equipment higher with and of This pass-through and costs half quarter healthy growth to higher and in the quarter, of our gas amortization, end mix and shifts $XXX material excluding for more the the including this versus XXXX. driven labor $XXX fracturing million of effective to for the past guidance achieved margin shifting by foundation so pay impacts, year million by third any two Our asset additional natural and again our with as second services, costs. of in base market second a year. was Cost line burning

million items. million $XX excludes Depreciation and and $XX $X compared G&A quarter Third general relating second expense million and administrative quarter. the was income in was million $XX to million nonrecurring third $XX to of diluted to posted share of $XX non-cash loss $X.XX Adjusted in a second-quarter million. was $XX the or per quarter. net a net compared income million company The a

tubing Services, million. third During of income, would of step have been business we net the $XX operating sale of loss quarter, the a Energy the our to on coiled Operating sold resulting approximately loss excluding assets in positive $XX million, quarter straight income. reflecting this

the of in consideration and in of create in to receive tubing form STEP’s our we STEP, value. part cash elected confidence ability grow As shares business to the tubing coiled and coiled transaction, reflecting the

believe potential. STEP’s their position effectively appropriate the As leadership we compete part assets the now full coiled scale of have to achieve in tubing, and

this quarter. continue will investment to mark-to-market We each

pricing quarter. also to EBITDA million would Adjusted Combining issues. or $XXX EBITDA million XX%. increase compared chain by increased being for The points, the adjusted As were margins in ProPetro offset results and almost over XXX were from earlier, quarter. and fleet million other the adjusted mentioned to margins rising or coming sequentially basis as EBITDA adjusted incrementals while of million quarter quarter, repositioning cost incremental and million $XX $XX.X million in this And with XX% net third inflation by fleet to XX% supply XX% adjusted EBITDA adjusted revenues partially been EBITDA gains increased Silvertip with Annualized of second in $XXX have revenue. XX.X%. at $XX.X just sequentially performance second with sequential per primarily was continued expanding additional Sam the nearly for EBITDA attributable strong $XX strong,

is XXXX also last XX% fleet on to in call increase levels. expected XX% the quarter We EBITDA per that second to commented from

begin pleased quarter. So we were to increases seeing this those already

struggle fleet our with as for and out takes filling pricing particularly remains fleets improve, for continue quality. market-based tight market service ongoing smaller fleets will our rates, medium we to reposition calendar high-performing as fleets attrition year due to efficient, repricing some we and The seeing finish we place. of next players of urine As hydraulic are to fracturing believe equipment evidence more maintain

cycle in and that last across gives at year expectation XX-fleet least quarter form the year. full more full this leverage achieving year with the on active operating our XXXX additional adjusted million, of than the focus cash-on-cash Silvertip to double acquisition confidence steady us fleet fourth a $XXX of a Our returns of paired operating to in guide later of EBITDA of

our million range, of CapEx top-end free of or expenditures full $XXX quarter expenditures receipts and disbursements. to additional our is be as be During CapEx above of the from shown Based This difference used timing. was on timing cash This to cash due $XX investing quarter, differs the differences activities, prior prior DGB actual purchases projected flow we Tier million. in cash for to incurred outlook levels negative and of X $XXX with number slightly $XX for incurred statement capital our the pumps, year XXXX will of approximately range in midpoint million of flows our capital of million. approximately incurred is $XX CapEx cash third and in due in activity million, expected figure of our the the

in setting in to Given robust in allocation and expenditures to command next capital free us future backdrop electric XXXX we service with equipment transition come to relative the natural cycle, strategy. industry XXXX any flow are of desire strong than our pricing, burning gas capital more confident year lower cash requirements. offerings, debt our fundamentals Accordingly, which fleet our this higher and reinvestment anticipated without year, our are for expected up

acquisition total of debt the and the call As turn strong, a cash and of total in year, $XXX cash strategy execute Despite asset-based the Sam. us remains liquidity at including remained company facility. to that, the forward. quarter for million. $XX third inclusive under our now of this foundation with base, which you, million, have Total of forma in capacity was the sets back was million, receivables And our Silvertip accounts position strong $XXX over Pro their total free. our I’ll available borrowing XX, XXXX, liquidity and cycle September million end for turn cash is on credit to company’s our and reinvestment $XXX moving the liquidity

Sam Sledge

mention optimizing, this the decades the energy will industries and across here along on like customers, other world. be home we David. improve the proud again value our partnerships. to efficiencies executing region fleet an across be to we ProPetro the natural We of gas one and Thanks, for part foreseeable To the value chain, capital the innovate oil at that sources and chain are a secure same to capabilities are producing and that transitioning, globe will and across these all how we the gas at fundamental the to I’d strategy powering for operational while peers, that our We, providing to do most States in maintenance believe energy to in we enhance outlined today, time, while of Basin and our laser-focused Permian and and and transactions produced and the spend. on so we of at circumstances, others can vital look that broader in reliable here secure be oil to reliable continue most have future. with executing prudently overall Inside here and energy and products value-enhancing United come. the reduce will that, deploy happens

services those to We the growth particularly completion identify value-enhancing to will in work continue on opportunities, and space. capitalize

ongoing coming order to additional we take we And it electric is the to we strategy the our acknowledge and fleets that net not add margin-over-market as our continue always Of any capacity note, to steps fleet. share important to tradition need will the be in market. Additionally, discussed will equipment to deployed months. anticipate the overall so, likely today under will for us do

that continue achieve will cash-on-cash are all we XXXX, portfolio certain service entire lines. striving make deployed to proper our into or Moving of assets we to returns across

I and we other. to have be we the team for and another to for to performance. our it and dedication to not forth quarter today mission, record, their Before reliable, thank ProPetro we put again customers turn operational transactions predictable results safe, reducing want without over consummated and value safety the entire our possible through The exciting our Q&A, hard of risk work and would creating each

a ability the high our move gives level to and to Silvertip. execute such our our at with Our acquisition sustained including management forward of team’s Board confidence the strategy,

Question-and-Answer Lastly, potent I continue most customers. We to line Basin, open to the again and the ability we our to to welcome like Silvertip to the family. collection the in serve our I’d questions. that, With believe will want Operator? entire team work services Session of enhance the hard have ProPetro for up Permian we to

Operator

Stephen [Operator question Instructions] Our ahead. first Gengaro. comes from Go

Stephen Gengaro

Good morning, everybody.

Sam Sledge

Stephen. Hi,

Stephen Gengaro

detail a we potential high underlying on don’t So had what mean because consistent to schedule. for about specific a I those is to price the the think maybe we two what pretty could Pioneer you know assets? the customer. a utilization the and a into it profitability relative about But of want go you How think and uplift factors should assets question, for on when lot of

Sam Sledge

of had which Sure. of for some steady the the have our this has are who pricing experienced Sam. increases our Pioneer Stephen, most year. year, been That this locked-in is said, pricing of portfolio has fleet, entire a there year. throughout Throughout with portion

came And part portion see that this margins of prepared So XXXX, that through our large we – significant lesser due continue portion are into speed. in in of probably pretty do progression. incremental to to stated a as remarks, a that expect little we there pricing a the quarter that to at albeit actually incremental is the

David Sledge

Stephen, David. this is

customer add think have I evaluates customer a our to one productivity just is sophisticated very other thing we model pricing base. across that

are productivity well improved this that believe and incorporated into be X so, levels specific the And rates pricing, will we year. as well from in the site our differences market current January at of

Stephen Gengaro

evolution. echo about other capacity are net all question you. kind And adds And the the just insights was to market. get outside What do additions. publics then, public my We the sentiment. your the in market of I’m see overall private? the think into Sam, I Thank who how mean, I mean, you what I of a far around outside of and doing. from trying operators are supply market drive you that market just sense not probably as as hear for talked Great. the

Sam Sledge

market a allow I is this might cost them, include just from standpoint, that today, important maybe I the maintenance pressure supply really operations, market’s the group to going over the a think sustain their that chain to those of I in seven Stephen, XX% all Yes, of capacity would to in pumping chains There to to like would eight of have is market this into at are frac the companies in and remaining programs, the healthy seeing fairly thing is upwards XX% entire of a persist manner standpoint, focus we and be eight ability you, in names. in say a a look and going us environment. circumstances on disadvantaged portion supply from an sophisticated we’re significant is bit that in seven to activity most next year.

while some that would adds of most players, with the from those are may see market. throughout of So as you keeping somewhat bigger I net ads attrition overall perceived up the say are

Stephen Gengaro

you for details. Great. the Thank

Operator

Barclays. Podhaizer, ahead. next go Please Derek question comes Our from

Derek Podhaizer

morning. good Hey,

in wanted more. a Just to little dig Silvertip deal the on bit

wireline the synergies the Just talk about or integration. the cross-selling with

Just is Or $XX year. inclusive integrating mentioned expect EBITDA get is But for You million to million fleets? now vertically of a that that profitability are EBITDA with Fran. sense of wireline an a the of on more the the this uplift by that next you $XX to wireline the per you’ll perspective get expected you standalone uplift of of and more want figure? integrated fleet

Sam Sledge

is that it business you to The and the Silvertip legacy to model see question. we addition is million in mentioned This million in it Derek. adjusted as Great EBITDA today. $XX Sam. to Sure, attributable $XX

on for year. of goes could just you next – So that that any estimates you us top have

that excited pretty about One of we customer significant this the deal are is Silvertip a things inside overlap. of

and there push locations excited is And into industrializing us. we’re is some the possibly more need those and few today trimming processes, on maybe locations labor even locations there down some where load practices with for a kind out to on our of So the a quite by to we’re that frac of those better Silvertip with packaged of providing kind of customers. sharing of service

David Sledge

Yes. Derek, this is David.

Just to add to that. This story. is not a synergy

goodwill We’re not acquiring have of because we this and modeled business the of synergies Silvertip, any and here. reputation

on a collaboration synergies this no We’ve development upside, So we and that’s very groups been between basis. that seen is already but some modeled. think stand-alone our business positive, has

Derek Podhaizer

Okay. Understood. more get integrating wireline could obviously the had some expect should just you you out considering flow utilization through frac? to and system. cost uplift synergies I redundancies some that mean, would us you You mine of

from that. for can see looking you uplift of sense the really that Just a

Sam Sledge

is short Yes, that the I to answer think yes.

Derek Podhaizer

fair. that’s Okay,

it’s and as replacement does fleet Just ProPetro, where look tangible I the switch coming maybe be most for that six fleet underperforming and X It I if the investors How of mentioned. then pumps, some orders. your coming like how with want with coming to are going these of X are in. where line from you like frac not Tier walk a making some like actually in? of slow to guys does again. additional think attrition that’s those topic us fleet through you the far Could evidence over down that see we as will of really the fleets your particularly, newer sounds complete into mean, how seven top look have addition net or to you’ll that that – the you more DGBs attrition struggling Tier

Sam Sledge

to people Yes. question. think, come our is, This important a sector. few very I around is for Derik, mind inside topic A to that different understand Sam of again. This things

past. One we of years pumpers as how we’re as were different just in is pressure today operating which

uncommon compare per for to and equipment uncommon average XXXX of site is say, not And If XX% XXXX the you individual to location. that rewind is be you to site to, each equipment more pumping, more frac there to upwards today, not a XX% in say, XX% on hours it – be to it day. frac for

really have said, – at offering. especially understanding is on our I from equipment DGB fleet early the innings seeing the in the – everything entire existing as in speed most to we’re attrition of effects us That this we attrition specifically, long-term broader away look diesel that DGB So electric Tier those discussed X as and think things do that from market. converting migrate from and market, equipment a capacity. of are is going to like general, internally new goal, investment burns The perspective us, And more we here, that gas. is natural our for that things you’re towards dual-fuel burns

opportunities to conversion key with work want at which execute on the market that conversion. So balancing we program, real-time speed we’re

Derek Podhaizer

turn I Very Got back. it. helpful. it will

Operator

Gruber, Our ahead. next Please question comes Citigroup. from go Scott

Scott Gruber

year. David, on for CapEx good wanted morning. I next touch to

wanted pieces. it’s going to moving the of guys few mentioned about but You to down, directionally a be ask

remind when hits us of kind you And the fleets on year you just additional this potentially mentioned So order. ordering between those spending fleets over and time. for two e-frac year? Could fleet next

of would that So for component So spend kind next is that of any could dimension us? the that of of kind e-frac thinking about the budget can if hit XX of into any you built be year?

David Sledge

make transitioning the able just any electric very equipment. a Sure, to something this without our we material asked of aspect lease very This We transition to Scott. question. capital I’m favorable a is essentially, is that you favorable have that think we’re investment. actually glad agreement. And

cost in our maintaining some be with our healthy revenues We’re still matching going margin. to regard that and

– occurring in spending XX%, total that year. the some and of be be of will about first consider XX%, will it I deployment, XX% be the will there next equipment. of would probably customer-supplied half fleet the cost We

So again, we’ve that very incorporated you guidance the minimal capital giving we’re general investment, now. and that into

hopefully finish on as call. some XXXX our guidance planning more specific out will to the able be we We provide next

Scott Gruber

leased, owned? be will fleet The not e-frac

David Sledge

is That to and us have is very our lease a This us a that to very negotiate that capital-light into is exclusive transaction were effectively to favorable the pretty enables correct. very e-fleet we and think going We space. efficiency forward. able entry favorable something capital

Scott Gruber

Got legacy fluid next it. is you end year guys when per-fleet a on the how And think on about you much maintenance fleet? the component running do basis? for guys And for

David Sledge

as But that equipment mentioned electric speaking, talking generally just equipment and going to essentially think are significant is time, the similar would we’ve intensity have to the location, think, have regarding model Sam how utilized I that, what program CapEx. will continue we’ve I refurbishment to requirements, on that equipment equipment in now, in decrease over approximately given right used experienced $X which although I’m what expand a lengthen invest – So very doesn’t past, the same maintenance of we our I we the the million. what recently. And and to to help is be life. it’s optimization about

Scott Gruber

Is – pumps And so mitigant year, middle in what new? equipment. by just maintenance fairly terms the just a having the the next DGB have new expense, going I that fleets mean, seven you’re of of those to

David Sledge

investments assets and and in significant slide the made investor age years of year of have utilization as Sam and the times mean up is and the gives last and have as location, over our a still seen the we well. Sam finishing young deck on our have I fleets a That to mentioned, we the couple year us showing into fleet. we this being are continuing mentioned that with significant continue equipment of said, the somewhat of next size pumping there increase how

as some understate fleet spend, of goes want to we the we So, location. that renew see don’t continue on our I that should what but intensity of overall, think mitigating to

X replace I pursuit electric here some think is over going to DGB to our Tier and even with diesel time, but big time. motors that’s engines take

Scott Gruber

Got digits, it. still kind million per overall, inclusive the And the of kind legacy like you thinking just fluid…? maybe the fleet, $X of of like are high-single

David Sledge

That’s Yes. right.

it if that keep biased we could given that then be that in eases inflation, I think to XXXX, able are maybe hire. somewhat in range. But to

Scott Gruber

Okay. color. you. Appreciate all the Thank

Operator

ahead. JPMorgan from of come Arun Our Chase. next go is question going Jayaram Please to

Arun Jayaram

you follow-up lease if the us about we the the for including how e-fracs maybe margins, on the help think moving Scott’s to two work? think wondering will some of was kind how about about to pieces the maybe I just model. do could think accounting David, So, obligations? the around And question a of leases, trying Yes.

David Sledge

how Sure. services we believe and are leases, characterization continuing some specific cost they we we that looking very fleet degradation it. think evaluate and the the the priced our the to that that of those at of EBITDA per are XX-plus And slight will way be with still but But will are in we have that’s embedded high-quality fleets, cost. you we I generating in range,

that overall, with think degradation. are are XXXX EBITDA the still fleet. company, industry, a it per be in I think next our as sticking So, But expecting slight for of the re-pricing given we far we overall, the year total I may cadence as guidance and

Sam Sledge

this is just will Arun, said. Sam. I Hey. to David on add what

perspective, sector flow cash pretty investing and out, big smooth lumpy around absolute with in a Our a was an free this from passed gets overall chunks. structure capital standpoint, traditionally risk what where been has from and jagged goal to

type you accustomed past. hear our line longer, economic model, mention to investing fits volatility type in the has that that so flatter working this So, industrialize rather of of us than business, when sector to our kind been we think the of

David Sledge

have those will accrete those the we use on leases through obligations we of and then options cost minimum equipment. we that. more balance end choose sheet services them. quarter should the we delivery we lease of will take as the second late one the our assets Yes. we on those to And gross back acquire note When in then will essentially third purchase of next early quarter, And up for Arun, year, of

Arun Jayaram

quick, is the or is And just a the of with leasing real arrangement manufacturing David, third-party company? the kind of financing equipment, with

David Sledge

It manufacturer. is the with

Arun Jayaram

then maintenance give for And incorporating as our Great. CapEx and can bit think Okay. give acquisition little model, under us any about that can – business? thinking you help a on DD&A, the about me you G&A, we of

David Sledge

ideas. Yes, can I you give general some

going I million quarter. to are think million quarterly to a we be depreciation $XX $XX that next perspective from probably year, per in

We will incorporate into model. that that business continue to refine we as our

deck in of reflects have CapEx business. kind some Investor As we provided less the $XX year maintenance than forward, far our for as next that going of CapEx million information Relations

Arun Jayaram

lot. a Thanks Great.

Operator

Luke of Please from comes question go next Our Sandler. Lemoine Piper ahead.

Luke Lemoine

Hey. Good morning Silvertip. and congratulations on

at fleets order additional you are more replacement this forward going about then think about XX in probably couple be about talked ordering fleets, And probably all these to fleets as see deliveries? ordering I point, Can think DGB or more? coming you do X believe would a – additional electric? need have And do the we So, you Tier months. you a talked guess this I

Sam Sledge

question. great a That’s

in of I ballpark fleet at think yes, the orders look fair to couple. a it’s additional

said have for like at supply we times specific trigger the our outstrip like before committing to like strategy past. this new demand really, in ProPetro, to our of this, see And certain is of for especially demand orders been fleets. things pull electric terms a it’s multiple We to equipment long that on here we ability time ProPetro

the is multiple Q&A, remarks. in demand strong, cornerstone strategy, I if of in scripted and made a equipment conversion gas-burning equipment a fleet investment So, to of not natural is up diesel-burning winding it. earlier times down still key tie a mentioned in back very we winding to our as investment mention part And in

think position Tier we standpoint, a are are good we in DGB X where from I So, now. pretty

wait a of couple materialize the opportunities to before change We will probably program. we conversion specific see speed more that

XX fleets are are looking So, out number running of next X X-years-old the natural of year fleets a than less that at we and same you our we we are gas-burning. of fleet have would today, if

So, we very significant advantage. think that’s competitive a

Luke Lemoine

the or did be point? more order ‘XX be then, it. at delivery, a still ‘XX it And months, in this could coming equally Got would you late it if

Sam Sledge

not but very direct it have on if cutting be would would close. yet, close. It I be Yes. it that we am comment sure a

Luke Lemoine

Okay. Got it. Alright. Thanks so much.

Operator

next question Please Our ahead. Daniel Energy from Daniel comes of go John Partners.

John Daniel

get a here but the you I old, stick for with me. to docs have simply said this to just Thanks the is on Can I when electric. heard and who follow including you the the and them? getting own on may power remind because going this fleets electric you I morning. lead Luke’s am got me, going few Yes. last call, and

Sam Sledge

of be will of basis. two going Sam. on them. moving John, them And fleets, Each of supplying had probably they forward. be front is be for the power these we on to likely will this we first power remain kind third-party sourcing the through look on the prospective customer-by-customer we It’s other, a on – will one customers, nimble themselves directly. And to earmarked that

John Daniel

Okay.

here. obviously, are, multiple sort guess couple you whether fine. – expected you my looking know and different be Just they not replace who at know e-fleets, to to But are question you the is to is, looking Does more But you been ways a just asked for are housekeeping, yours? customers are one look on fleet, And which are an make to the be it of when a sense? if e-fleets, probably have Are existing looking incremental? won’t how they two I on these say is they of they these fleet? replace they that they I additions.

Sam Sledge

of John, each. sits could as it be today, it one

John Daniel

Okay.

Sam Sledge

to could how both. we little want the and as year hold to to throughout be well, we it So year but against – of what a bit measure activity are level we next want trying up

John Daniel

more couple I for and apologize a A Okay. here. hog being

on You a investments push in and your frac fuel dual clearly, electric, that’s the big on mentioned side.

to are that What’s – demands they electric. from capital cost or what’s there at say, what out are the there hey, curious, companies to been the it. been a am all dabbling be these in I that for the what As we for like guys you that? with respect customers the wireline? you And Silvertip, fuel electric There demands the has of have if few want integration just look happens? if dual

Sam Sledge

Sure. question. Great

is probably focus lower fuel equipment, intensity, demand the much given think like it frac on right. than just I is the something or consumption

You wireline a fleet pretty play that offerings, consuming a and of into given don’t our more oilfield. to really significant gas units fraction and a of burning like this that of this have frac the natural into of the run conversion becomes fuel electrification only kind X% electrified said, transition consumes. something That

forward, that can So, diligence we Silvertip going e-fleet definitely of them been of on the through together work especially conversations side. a has our about part and how and

David Schorlemer

Yes. convert is it’s to And David. to support able a John, significant electric It’s – those be expense this to capability. not

John Daniel

final in thoughts market on My very Sam, one Permian just it. ‘XX. But big is Got your the picture. a Basin frac

see in incremental talking if you just go opine, are big stable, are or gains you you frac budget with crew the customers, to As starting Permian you Do will? through process. count

Sam Sledge

fleets good I dual There conversions be coming new a it number think relatively system. stable, is will fuel obviously the and of into John.

fairly of of the market. the all adds are We confident on that outstripping is those end attrition bottom

tight out we will So, it think year throughout virtually year. the remain sold and next entire

John Daniel

allowing me Great. Thank you for in.

Operator

Johnson [Operator is to of come question Next going Please from Instructions] ahead. Don go Crist Rice.

Don Crist

gentlemen. Good morning

are Are one me. utilized? for the the utilization units on Silvertip Just Can they XX wireline what fully say today? you of

David Sledge

XX of right shy now. Just

Don Crist

Okay.

David, some for your So, neighborhood go XX% last the And I somewhere being EBITDA on the in if EBITDA work. of increased there is of those XXXX. cash upside call, there for three flow about believe to you free talked

XX% flow Am or I close acquisition? that the And to XX% estimated cash million this free is With Silvertip the is to additive? now and $XX about of right? after that acquisition $XX thinking million, that

David Sledge

for we are to to be Look, and numbers going the continuing incorporate Don, evaluating year. next budgets financial our

thoughtful I and want will very you that provide to that guidance. further So, let we be about know

Investor information blend we help I certainly an for a think in conversion I it but can our provided upwards. definitely at, you some cash on accretive And sure would deck look that flow basis. have think our to Relations take absolute free

for out our So, more let us some year. planning next finishing spend time

guidance more bit a the you call. give will next on We

Don Crist

wasn’t I on specific wanted to a I accretive. Yes. trying to nail know number. it you Okay. that down just was

Okay. I Thank appreciate color. you. all the

David Sledge

bet. You

Operator

Syed will come of Waqar ahead. ATB Please go [Operator Instructions] or from question Next Capital.

Waqar Syed

Sam, assets to XX [ph] also the kind XX pump-down recreate that. more What and as it. very there difficult would is the buy Silvertip, trucks my cranes at assets? comes chain replacement the of It’s always is than But and somehow, challenges. units. just there I be? look like you with wireline were like question. let’s all company other other There understand is all of taking that the equipment a you Thanks for a these the is Because cost lot all to say, what cost theoretically, supply

your replacement be the And in so, cost view? what would

Sam Sledge

coupled We we the a are fact a above, of service the with for complementary rather be this us May has tight environment, been correct another said, competitive to some that’s to what that cost chain, equipment, we think very that’s in. supply of That is bit historically labor, ProPetro Yes. this frac. all way that Waqar, the that enter of I not is definitely you the would what business a think line information. little is right comment not perceive. on of inside replacement

with pretty cash what’s that excited the compelling think for free most I two the reputation, offering. they their and of along from for things profile performance execution So, team bring us to expertise, business. us, flow brings one, we push is Those XXXX way standpoint, into lead a are the with the Silvertip and them, that

David Sledge

is this Yes. Waqar, David.

add comment. one Just little to

We have to marketplace. desire capacity no equipment create in additional the

right our capability, strategy done we strategy free cash believe And have earnings and flow acquiring and here. that. we around So, is high-quality operations that the pursuing

have in We Mike way his team, think a to right and and that’s we of the got Wood go. confidence lot

Waqar Syed

or who Okay. buying, the you And are then different What out there manufacturer multiple there. are e-fleet designs design is?

Sam Sledge

Yes.

been tell globe. publicly these not and across a name on operation you that and manufacturer, we but the and this the in systems conventional of are that tried the have disclosing true solution has exists pumping back can very years we Mainly, will trailers. is the of for We years

portion of significant that is team ProPetro will legacy very be here at our familiar fairly a equipment So, already with. something this

us operationally with So, electric running this the hit to can offering. look to ground you

Waqar Syed

much. very you Thank Great.

Sam Sledge

Waqar. Thanks

Operator

call our Please CEO. question-and-answer back the go I over ahead. Sledge, Q&A to Sam concludes session. turn now like of to End This would

Sam Sledge

on and thanks call. Thank to joining today’s us you for again everyone

join love part globe. the everyday we life I here to and for We to again, oil talk you remain the would soon mention to mentioned industry gas before, to and play critical you and hope a call. hope very to across I proud energy us at where ProPetro in are we next As innovative our

Operator

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

may disconnect. You now

ProPetro Holding (PUMP) 3 Nov 222022 Q3 Earnings call transcript