Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the ProPetro Second Quarter 2023 Earnings Call. [Operator Instructions] Please note that this event is being recorded.

I would now like to turn the conference over to Matt Augustine, Director of Corporate Development and Investor Relations. Please go ahead.

Matt Augustine

Thank you, and good morning. in participation your appreciate today's call. We today Financial Officer, me Officer, Munoz. is and Chief Chief Sledge; Adam Sam Officer, David Operating Executive Chief With Schorlemer; President and

quarter our we the comments on Private covered Act. future today's or Reform for This events that projections make earnings regarding Securities expectations we Please note Litigation released the morning, by second our of call are XXXX. any statements results for forward-looking

beyond our statements differ many filings are and Forward-looking our expectations. with in subject of can to uncertainties release risks to materially listeners factors our review current to These uncertainties, and control. the cause are several our We results SEC. and advise discussed risk earnings risks which actual from

measures. directly non-GAAP to release. Also during today's GAAP call, comparable we in financial of the measures Reconciliations will our most are non-GAAP reference included measures earnings these certain

remarks after our hold Finally, session. prepared a question-and-answer we will

turn over would I call to the that, Sam. like With to

Sam Sledge

again strong halfway quarter good Thanks, the you morning, and like ProPetro the year. a will financial David second through stock a Matt, results few where on our walk of first, over highlights results few everyone. our in to but take are I'd quarter. in from the momentum, delivered and minutes, we Building go solid through

our our Tier seventh As strategic we've hydraulic modernizing X we deploy to discussed DGB many an fleet fleet. important been fracturing quarter has pleased times, priority, and were dual-fuel this

in for market. customer blue-chip from demand diversified our portfolio bobbles our base, more given strong the expected, insulated remains dual-fuel As any near-term very and

second early deploy August fleet quarter. quarter electric our in deployments. to the we plan the begin fleet fourth fourth the our frac Additionally, in in first and fleet FORCE third We and new

to deploy first FORCE still also XXXX. in X the additional are We on half of fleets track

plan operating them. the begin ongoing, fleets this as soon receive demand to these as we equipment, we high for With

to Silvertip wireline Completion the cash earnings have free November and a we we know, of The that ProPetro's pleased significant into tailwind time. acquisition entry Services be are services, therefore for company Silvertip making since to profile. As our you in seamlessly flow all acquired continues XXXX, and integrated

a progress identifying, acquiring assets, excellent strategic record developed and initiatives. on make and has successfully high-quality our continue we strong to ProPetro integrating for track

seek opportunities to further We to growth. will value-accretive continue our acquisition enhance

will and As disciplined always, in create shareholder only cash we and will capital, opportunities be enhance deploying that prioritizing opportunistic flow value. high-return free

ProPetro Consistent also management opportunities on with acquisition our delivering investors, returns addition and return our focus overarching strong prioritizes for team in to reviewing shareholders. board capital to the our of value-enhancing

pleased based time the The of XX% to During company's the announce $XXX authorization of in a the market to announcement the repurchase million on quarter, the we were mid-May. program. the shares value approximately share second program capitalization gave of repurchase at

drive and strategy with to on share to intrinsic directly program our create The this we is dislocations aligned for cash Company's repurchase value. the growth our equity is its what value believe valuation we shareholders. capitalize public between and plan Through flow free program,

This to discount $XX.X approximately During the of at shares. current July X.X the the shares approximate XX, million for price XX% of second an represents total about quarter, repurchased share company X% million, outstanding XXXX. as

the choppiness. provide how now some through detail and and navigating we're headwinds would environment to market like the I recent address on

assets are run sub-economic strategically decision the the for us and easy we levels. overall preserve at did we during Undisciplined some circumstances, these to on pricing exposed peers to concessions now operating, keeping the the the have to not our the given was low quarter. had these pricing at some to impact the to frac sideline distant fleet have especially would keep of put we Due an forward expense market. an fleets market, This X utilized, of to from and equipment elected spot able fleet of

want we are earn fleets cash-on-cash reiterate economic I at running committed that returns. our that to full-cycle, only levels to

I to or ways, of have including been offering, disciplined directly our positioned to much that able we various is on continue and market. our to pricing contracting on bifurcated believe and approach materials of and services location. note services because in the that pursue and more more We handling do to pressure materials want effectively ProPetro effectively of handle offset that location, we'll

headwinds Even we in ability mentioned, in deliver the face continue just I financial to to our confident of remain results. strong the

and supported of and on the cycles. chapter we will bullish And is a more ProPetro's believe space, new creation that succeed years. into future, the well next this early for in the our still upcycle we Looking growth sustained ProPetro believe stages previous the over value potential the of to we We frac remain for be which are several resilient is industry. industrialization by disciplined than positioned in

current the We do levels we operational first already rig bottom approaching is it half from saw down that the possible and expect only the slightly bottom. will the half. Therefore, second of year count might be it's on be the in believe we

in this and the bifurcation the our directly also Importantly, internally differentiation operational challenges spot service the and despite inconsistency continues differentiation to slowing of Permian of us believe from in We Permian. quality, density ProPetro our of these in market some offers down. market. customer insulate hear our equipment, from the This customers. not this industry, are some we outside in across portfolio and

flow that move opportunistically our balance share executing confident our continued strong a will to also program. are capital us discipline forward repurchase and as sheet maintain on improved We profile allow while we free cash

throughout to various As always, returns superior our remain strategy, shareholders. for we on cycles, proven executing focused deliver has which economic successful

continued a quarter and helps achieve consistently their our like incredible us It's thank moment take over solid I'd hard to dedication team. results that work ProPetro to quarter. Finally,

second financial Now to I'll David turn to call the over discuss our David? results. quarter

David Schorlemer

morning, good Sam, everyone. Thanks, and

We to our in some and great today regarding strategic have initiatives. performance news our progress financial discuss

announcing nearly as liquidity. share July program, the executing XX. price increased strong million down $XX ProPetro's we repurchases, repurchase to Since While the share continued of and XX% share debt maintain paid also in has

telling our financial believe beginning is community. our value the to by Coupled working been analysts hard investors to and our the months. engagement relative thanks resonate And we've with in story strategy ProPetro's to evidenced with part our enhance transparency. program, us strong investor performance execution, Increasingly, last potential. that compelling three share they over and This leading price recognize is are we

amount year. X.X% resulted of our to results. Moving approximately Xx of pricing. year, generated weather a and fleet impacts May $XX during with X We quarter on we the severe $XX to lost idled we nearly lightning second first revenue, most during over quarter due and last These over financial a in the relative experienced million, Basin, of revenue million Notably, $XXX impacts quarter the the the for days million to month of increase to also due in to Permian significant June. this inadequate

idled Adjusted related EBITDA and crew costs to weather decreased the to X% unabsorbed increased sequentially to million, and decision largely the going the to days $XXX retain our fleet due forward. continuity, for

XX fleet our XX equipment impacts with will in frac those XX.X end of margin-over-market of XXXX our the our quarter, strategy, or for utilization deployment, frac half utilization levels. we asset fleets fleets. not high to to second at guidance is fleets. run on spite fleet disciplined our Therefore, effective down, of slightly XX Consistent guidance sub-economic was the of prior In share to XX our

replacement in mentioned we've in expand fleet transition line diesel hydraulic capacity not market, second XX,XXX does net strategy additional Tier we and with our the equipment in retired horsepower X that and the previously of conventional As an frac quarter.

retirements with this XXX,XXX of more we expected in equipment, Tier X horsepower have So quarters. retired year, the coming far

of quarter across level the Moving driven our the on, service activity was versus first services, million, million excluding a higher the cost lines. depreciation of second $XXX amortization, with increase 'XX primarily and $XXX quarter, of for in by

of and $X of to $XX nonrecurring noncash of revenue. management other $XX quarter. as flat million, including general items. and was based G&A expense or quarter expense Second Management administrative include adjustments stock- and compensation was adjustments million million prior items, excluding the compared X.X%

million forward. to in to Depreciation quarter, continue expect we range, second in and was $XX and going D&A the be this amortization

quarter. $X.XX share, is income by per our quarter to positive of XXXX fourth highest diluted of the and quarter The consecutive company or net compared net prior the income million, quarterly $X.XX diluted net first achieved increasingly $XX of reported the of This income since $XX company net million, in per share, the or income.

During used CapEx cash second flow expenditures, number capital receipts investing million. of cash the as Actual on $X shown $XXX in with and differs to timing capital for cash the the statement incurred from of million, expenditures. million quarter, proceeds, equipment figure of we differences in This incurred $XXX activities, our disbursements. free quarter was in cash flows, net due of of

million, $XXX deployments end year. range for reaffirming our DGB to XXXX, the million previously Tier expect our with toward and FORCE $XXX to this are range We of be which a fleet electric CapEx between and upper we due the X bias provided

Additionally, in flow the as debt free be to opportunistic reduction, share second to over accelerating quarters, of cash the for and quarterly contribute repurchases decreases strategic year, coming utilized we CapEx further expect half the to other opportunities. this

capital our to structure. on Moving

execution sheet balance liquidity to support and strong Our our position remain of strategy.

under of the $XX million, the of cash As capacity credit million under the cash facility of million. $XXX the including million end total June 'XX and ABL $XXX our second and of XXXX, liquidity was were borrowings XX, Total $XX at was available quarter ABL.

$XX quarter ABL, second million. down had under our as the million million of our since balance borrowings July of facility close mentioned, we $XX cash And million, total with As $XXX was of credit by liquidity. the XX, paid and we $XX of our

strong, our This improves of architecture us during that This benefit operating reduces to and cost the in capital to are deployment noted electric-powered requirements ProPetro discipline long-term commercial our As for accelerate transformation in and agreement the committed while develop the our company that frac install fleet capital-light, to and and to namely, assets lease long to I quarter remain our call, capital is emissions-friendly fleets. our lease enabled demand balance will ProPetro's certain market. enabling our FORCE capital strength the we sheet first profile, high come; agreement disciplined years term. for for

important is the our one fleets valued ProPetro youngest over and to Lastly, and the our XX the our real will customers transformed in understand this we this the industry nearly about few prove and $X billion have and year, By through it. and recapitalizing state-of-the-art become of accolades you'll completion of talk technologies last will to year fleet the a investor in incredibly conferences most the industry. of difference. end or bringing the have have ProPetro. It's ProPetro, fleet services Attend months the and end and about to this to we invested we hear

earnings continued customers strategy our fleet repurchases, our visible: differentiation strengthening shareholders. share successful cash an proposition desirable opportunity positive strength, share indicators This and are price of transformed the flow, services, for and for a outperformance of tremendous assets reduction, in highly value our already and liquidity. has free strategy delivered a And clearly debt

our as success, essentially to strong for investment down significant financial future a a this With payment yield many foundation, we continued years come. to on returns expect

back remarks. now to me for turn Let closing Sam some the call

Sam Sledge

David. you, Thank

it turn like to ProPetro's again differentiated over I'd we Before Q&A, touch offering. to on

We that to quality will proud early robust equipment of be X/X that and XXXX portfolio capabilities service industry-leading next-generation Basin. offer with are in the customer in with operational service density Permian and fleet comes a our

continue are advantages architecture and execution we the our in commercial pressures some to While field for ProPetro. in best-in-class face areas, market competitive distinct superior

expense sacrificing and our As not our disciplined deployment pricing asset fleet our concessions. of decisions, remain supports sophisticated model we demonstrated, by the pricing at will

stress Furthermore, manner focused in near with on system focus. levels. are at navigating to in we're operating long-term term sub-economic Instead, going the disciplined operating with fleets value a we not our

for beyond. and a outsize believe upside result, in we us XXXX this up will As set

fundamental Here earlier, letting ProPetro, on strategy, recognize execution have relentlessly the focus at We and are change industrialization. on we in no we space I up. plans to servicing the of needed stated our have the focused as of

business We of that operations the will expect flow growth. continued industrialization also optimization of cash unlock and our continued our free

not also the manner our opportunistic and continue capital-light for strategic capacity shareholders, marketplace. transactions value to transition pursue that In addition, in fleet a expanding we our accelerate in while will

this shareholder enhanced generating our We achieve are we and discipline all through approach. confident of capital strategic while that can returns

and safe Finally, like outstanding to quarter with this their this strategy. once thank I'd the management and enabling forward ProPetro confidently our again entire to performance move team team for

open now to up questions. like I'd line that, the With Operator? for

Operator

is we Piper of Instructions] question Luke first Sandler. have [Operator Lemoine The from

Luke Lemoine

half and as pretty flat. second Sam, but your be you calendar, your first in think the pretty sum maintain XQ Do per fleet? fleet fleet the on can pricing, far your per rev to close of you with comment discipline stacking the to and as operational half was overall performance frac EBITDA

Sam Sledge

might those it here things. we the picking mentioned adjusting be of other recently, few parts, those in logistics, prepared Luke, of up I think sand, other slightly wireline can I where some think we on margin There's a our close. parts but remarks moving pricing, all be location,

So I in think how out. here next see the settles couple that we're of looking months to

look, think in XX we're handle remain we're pretty that should to But we confident XX fleet that. us anything range. comes that activity downside, If to positioned the at well to

I this said, mean, and very pertains here programs customers story currently that There's our the it exposure this That story working know to is, with. of market the we're dedicated almost a a as you is focused, much X very well, spot approach. and

well great as opportunity And on compared So per-fleet we profitability think QX, up basis. think as in really there's a hangs we yes, we're holds there a that confident to that well. activity

Luke Lemoine

your another quarter, fleet XX,XXX this just believe; Okay. I And retirements, year-to-date. on XXX,XXX

to Is how fair up as that? e-fleets basically think fleets. assume later we Or So deployed more are this this picks year? about two should it the

Sam Sledge

to David been to an old tandem the want I we've bringing already conversions equipment it's basically think retiring system A that is doing, might steady new make throughout year. that into just the with the additional of transition in this, lot pretty but dual-fuel happens. as equipment and comment

you a XXXX. think us look retirement for if it's the I of fairly span So process linear over

David Schorlemer

Yes, agree. I would

Operator

of The next JPMorgan. from question Arun is Jayaram,

Arun Jayaram

seeing diesel, for a if kind of I are you're being and premiums are you you the gas-to-diesel terms seeing between of you dual-fuel Sam, bifurcated the of seeing for those of reflect kind was in kind the wondering placed and dual-fuel on even arbitrage? Or what describe more could of market equipment dual-fuel fleets? premium

Sam Sledge

Arun. question, great a That's

by be big is story not a affected pertains a in of here might sector, think part be might to way, the -- players a the for ProPetro, our huge that frac it dynamics we this bifurcation. I but story these Permian most this large maybe at is whole positive only this as

And transition in spot seeing future just some investments those think There little us are we differentially different across look, the fleet, arrangements. is certain which our that almost that how dedicated a equipment the wanted standpoint. a the and none that that things crude be we are. of electric dual-fuel of more a case Almost so lines made, happened to they and talk about would. exposure, we weak along get players you pricing positioned that our for that from equipment dual-fuel QX. you points that thought to was were pricing And customers things competitive type probably in had of mentioned, or confirmation market and play even with that few out of with the exactly We will really to of continue

So the a offerings. that's on just kind into what's of look happening differentiated equipment

to from back work previously and in pricing scripted and dedicated we and I to decision let go like the the to back in even remarks. RFQ showed assets that think, spot in where were for market, dedicated better and a Also, that different market of market. were while in where got too-good-to-be-true I that headwinds customers, the the crosswinds, are happy the just future. people quarter, smaller pursue customer a too completely the dedicated the just conversations the to Easy we some our a saw with we either. in some of conversations our changing fleet process serving preserved than said us, competitors, spot I customer parked attack We their we call wouldn't we were fleet for spot through returns some out our went the them them

A standpoint market on location. happening a the in execution just from third that's thing is bifurcation

our about heard these is time better We this wellhead anybody You've competitive us earnings is. be talk else the think time calls. of at this and again on moats, to one is just than greatest

that as as market pertains a it So remains there bifurcated to still well.

Arun Jayaram

helpful. end far your renewal bifurcation David of this do now. expand of X on the expect at think plan those have Do the influence terms you that $X That's views I XXXX how X future over do Tier time? thus or, that CapEx I CapEx? have any you to mentioned Sam, the guess, fleets almost in fleet CapEx of thoughts or of on preliminary And DGB program? number dual-fuel And billion you

Sam Sledge

year, have diesel The we'll from three that next standpoint, X by from QX of, top fleets X be a maybe different offerings dual-fuel X have or -- be fleets X, will we'll to and kind electric the fleets. difference, bottom fuel will electric

future, X are those. that believe competitive the E&P all if of we we consolidation we Today, In most continues. have

very active plan out. to dual-fuel begin further that think and Some these here. only customers electric and strengthens of for ours of We demand and from E&Ps further the

mean to the the we that So of It can: offering that diesel diesel-only look lens, we're less allocation we it X refurbish say, top CapEx a ago. X, equipment piece dual-fuel push rebuild it apt or tells or were, away, of means dollar towards doesn't of as year through completely electric. to at and every that us goes but years CapEx than that we a end

electric. electric, it more we quarter us future year what or taking look So year, well and you than and best are I kind and can positioned is more the better dual-fuel more understand into think the comes We that I as think help very to to going X/X each for be next mix. we're of being in dual-fuel think us

going to to build So for as budget the into reassess on start hard XXXX. we lean we're that and going next year

David Schorlemer

This is David.

stepping as think in you XXXX another begin a have XXXX give configured we of not saw but to fleet our we we're in ready around color, and deploy offerings. to as Just our again, most expect down newer little CapEx to XXXX would I guidance, down, you step you give

So the there some favorable year. certainly CapEx progression side next on

Operator

The Gruber, from next Citigroup. question have is of Scott we

Scott Gruber

question. curious, gas the in I maximize DGB the gas availability it in today? for I'm wanted to is the often how the Or pretty advantage good DGB CNG? out you're diesel stay to I'm on of the to fleets? take displacement shortages on versus really how field able marketplace? there Is just are Permian And curious the

Sam Sledge

question, things. me of a Thanks It couple makes the different Scott. think about for

I think gas availability. one which the just regional of is

Maybe a gas a high seeing. have to are use as We to or rates with CNG of bit of little pair field in-field with have keep can. couple up we're that that to customers times, trying they we as much that displacement at the

But I puts regionally, think location our in in out and the what or are more there. the kind of a leads available. sometimes CNG is is some is they the Midland Basin where way readily There's stranded very takes Delaware customer in

with I in to much think displacing, than to And we which electric partner, we're trucking better, whether move vital and is in-field that into as be as or of space this that, displacement, gas be maybe can just transportation peers Second that of is think, how good, the that the as well. a CNG, gas that having any we're going our realm. or keep we doing up

of So regionally good to part gas close sources. we it are is

operation The other is to lot think and services to all we good right there. partners And a of part have look, I gas. we're high-performing me, do the of it, consumes doing pretty a that support

these want done. our with to customers our We the value not to to assets. push But pleased envelope displacement. we're think of are maximize the continue I

Scott Gruber

And good prospects. on just color. one Got it. of the kind then That's near-term

second mentioned in fleets the could today, you're of XX the to XX but You XX potentially see year. half at

prospects today the the another the before put year? of fleet end to to work back So what's

Sam Sledge

I think depends. it

the least out in macro were where in to in back of decisions there. we're you were the an at we good in where of outlook think $XXs and now kind Permian crude I half time And saw because trying a we make the economic $XXs strong kind in for of back back interesting low right see just the time E&Ps believe coming crude I the pretty many now they pulling of a of period crude year, that. think we're and the

of waiting kind as to make disciplined we're only how that at sense pairs us. with decisions around in customer just putting see think remaining prices as to that I So field and the possible assets

is think So think if I persist we'll the the pretty see the end of putting But I the the that's market good. XXth through $XX-plus you gives likelihood the if back see year, crude what of us. in system

Operator

is Hallead, question next from Our of Kurt Benchmark.

Kurt Hallead

X the e-fleets I was of year, of in look in and at next the 'XX half and that you curious, -- are coming half kind the if of second you've here other first deploying years. terms are of recent players that major kind as they're the indicated as some with some business e-fleets contract long X in seeing discussions well the as have that of got

having, what what term So to of I'm front. the discussions that like does kind curious as of kind structure on you're look

Sam Sledge

of agreement, like e-fleet just remind We're about excited lot e-fleet a you just that. to our we that I'd operator a experience on question. mentioned. It's everybody that similar the have contracted do Good first very long-term really has that with space. to in a a frame premier time

excited get the just here fleet we're in on to the few ground next So really weeks. that

great, great got and #X demand for #X. We've #X,

standpoint fleets The when negotiations to today. ownership we fleets. purpose-fit get have are developed would say, those from put assets We jobs work cost the I lower. more an those economic of contract going we're we right to is them. doing That said, on incentivized for with conversations, various, are The very

we are get to the motivated So in field. that equipment

fleets are to to be going confident super long-term they're these them. as and have we're take-or-pay type X And a personally on minimums of mechanisms or that just that of contracted agreements in leader look, really participant more agreements this going to all think the like purpose-fit or across a you're some and I'm X space, in the going to But next years And so, with this over more more heavy see excited proud we're committed about assets. into transition more that work be space, I that. in be equipment,

Kurt Hallead

$XX of impact commentary had the weather the and in a Okay. million with it of the million Then guys of That's $XX second referenced idling relative in decline your fair. in first to some frac progression. 'XX to terms of that talk the some your combination half EBITDA you in about crew. half you quarter you modest here, And second

of looking second the for of And the what So can take out EBITDA magnitude guesswork decline you half? in of this? us in you help are kind

David Schorlemer

think, Sam as it We the of one from on is what significant here. mentioned forward. XX like looking we're I questions, prior at like, not to going looks XX feel declines about

just June, of revenues July a be look changes we're So material and to little bit up from from not level. kind expecting any activity that

I think with we opportunities, feel good but the remainder the year. there's of

in mean, this the running having keep next the And several the And next for it quarter; company we're I not mind, and making investments, pricing we're years. for the the discipline asset And mix e-fleets our like like on. I the is think deployment the doing we'd term. industrial into like for things also bringing strategy that's what equipment really long and focus to running

Kurt Hallead

Okay.

Just maybe for Sam. more one

kind fleet, your mentioned Just forward. economic of I'm economic part part the being just incentive diesel asset or still what's curious, diesel have context your be mix? of of you moving of benefit to still in the

Sam Sledge

a the cost gas, correctly, what that's between executed diesel, million $XX XXX% the I on when for the and somewhere more our and on the I the and to makes million about because savings, maybe use of maybe benefit ability dual-fuel us and look itself upwards think gas us you at price, it's the that really incentive could to if can think displace gas excited customer just the and be side XX% natural $X in and is decrease. depending electric, manifest And a year, pretty big. customer price XX% pure

their is it's But to trust purchasing. kind transition [spool E&P the in up] transition gas that or those like coming the logistics are what of and that and do willingness gas things back operation diesel, on to your this to question with savings just about side also an needs

a here world these into a So that going that as to as best load it Permian in We've Permian the the just transition frac and around. from to pertains of dual-fuel the a will base more some moving of being in we the future, standpoint. infrastructure Basin bit it's you're persist got of the we see operations think out molecules think

more we're as E&Ps chain opportunities more and sophistication the the of more dual-fuel and to what understand there, going to and I So start the up in more think the likely are down system. see more kind

say equipment is this It bit that more, the we don't like I'll costs dual-fuel that diesel, can XXX% really so burn that too. a but to one thing it also about little like do often, the we burning make pricing it if pricing sense very dual-fuel assets as still tight from leg a levels. up could a in XXX% takes market current while likely to diesel, future, in deploy

So it's also like really very flexible, that as well. and we

David Schorlemer

configuration. And David. is We're running fleet different Kurt, this scenarios on

to that types So a assets, going facilitate and higher comments, any other be about if in But the architecture that. our we're we commercial electric how we about proportion the do pivot, in we market way, is demanding of of talked disciplined have ability to to particularly the that. using

Operator

question The we Derek Podhaizer, have from of is next Barclays.

Derek Podhaizer

pricing idled with market talked the fleet you customer you got that good be about was too that on that So the They true. spot to guys.

believe you into ask, Or will dedicated the be of to do thinking a about weigh to market as you season, one-off? what pricing RFP as this wanted pricing move XXXX forward you start we on do Just and consider more profitability? just happened

Sam Sledge

could. it think I

that couldn't RFP I it naive it won't for we're that to weigh on Derek, think weigh, XXXX. think,

it it if remains think to seen will. be I

very confidence be if minimal. does, So I hope hold out won't, will and it it that it and

we've seen discipline. anybody to that a career. OFS system just more specifically, the in I maybe attention couple remind to the price that's in in much XX-year paying seen my of this That important is there's sector, frac or it's think discipline said, definitely, decades; than more I've pricing never

cycle. things certain away a that in to think have in always happen you're we goes is parts of I market volatile going don't the play ever full maybe some logical of So less entrepreneurs, that that in totally.

us I confident sector, ever than ProPetro seen irrational general. call, is is that in long-term we'll we've type the think for our future medium- the years couple what of and what amount over and for it's makes been, behavior of, the in less that which of last

David Schorlemer

we're the now barrel a Derek, over thing, sitting with a million Well, $XX at on $XX inventories. draw other and oil

I supply into to that constraint the also are beginning into play people see think crude market prices. and

the market the quarter could securing that's of might months, as larger year, sensitivity be favorable call So from of a the service for more And and than move dynamics more persisted into year. has this first I that something peers, I the pricing second and what we of companies. into second maybe the next dynamics. year to as think to it, be think our X think year And I akin to bit in for us supply looking for we X half over next create that half at oil the would you're terms year get and pricing hearing we other of the last, service

Derek Podhaizer

and to that some standard more that starting to that you the I over having providing sand arena. Wanted really -- guys you services part mentioned don't What that memories? assets being Great. integrated our progressing appreciate some recall you color. in refresh and to maybe of see logistics we're we this partner this seeing next move I Can you're you with your around of in move logistics are offering color doing year. into Are up differently? arena? as how you you Just the companies now.

Sam Sledge

to, we Well, brokering our or say a our sure our model sand the about one But contracts mean, we sand wanted this really of and better and pricing and of back maybe was have our go for market and tweak and this extrapolate then try in-housing, And do. an a and terms directly, for in I'd they we're instances or say, of just the and who in a leveraging couple maybe negotiating to with themselves you do I'll pricing that of we here negotiate best and pricing times better with out fleet. to wireline that we anecdotal pricing. in example whole kind better of customers, hourly contract. that these found chemical and hate customers some than the looks. contractual make that recently kind might our on you contract can how logistics of find the that give be like themselves different something sand across customer, us has I where customer what

trade, volume commitments we maybe the on contract So we side. already to the then a offer hourly tweak sand to have the a a and leverage that will to pricing

our to So that mining that trucking with make generates the sure we're that supply best it's value best to in partnerships or for also we're our forward the customer return that not us. we're our It's own pushing chain assets. using

to chain and just little our we and a return. kind ensure of supply the of around So margin that bit our protect blocking tackling

Derek Podhaizer

it. Got

sort if think I Okay. any versus expecting for diesel should mean, X Great. could then [fluid I maintenance Tier maybe just you X assets. are know not one that just you to you're don't if And it having But would DGBs us CapEx. be XXXX give and your ends] we now squeeze an Tier be outlook I of down the anymore, more know to X maintenance coming step-change? you're CapEx, but e-fleets CapEx capitalize that in. legacy I going suspect X ready I about

that, you So on far? guys where so are seeing any that color out shake

David Schorlemer

to a ready I there's earlier, but mentioned of think our really not as I you that fleet now to be the electric-focused model. believe, gone 'XX, because we an have recapitalized and we we're continued going majority progression, to give

some think, certainly, is very to be going progression on. in I and favorable 'XX So

Sam Sledge

Sam. add just to This I'll Derek, on that. is

don't David as we're that electric. of much. ready be how to, think story per-fleet part expect big it to we on think, is I you do down I alluded tell by a to basis. The

side and sure of really, that optimization call seen. of of efforts processes focused, are the very, and And of we've work we've our lot remiss off a the undergone just intentional maintenance And really And especially responsible business, to inside we're change last I'd been year. our manner progress be internal for for, organizing been that internally. a teams very make in our for, get we Another reassessed a some done a that intentional the arena we've that has team of to of the I'd pursuing the about we're is We've in cross-functional year proud in that now, the without efforts things. every very say, that team part arena. the story lot on of maximizing asset recognizing of

you necessarily from see Day that come some of said, results that X. don't the up That show that

So foundation XXXX, and industrialization. built my mindset team transitioning bit fruits more the and that company which the labor, a that about little is growth-oriented that a of in that into our how mindset, is confidence company growth hope ProPetro, a of and and in our from kind optimization my talking we're of and some on a built we really was derive taking of

in of bear going and think the that middle into now, we year. right right next some transition are We fruit it's going to

Operator

question from Gengaro, of Stephen next have we The is Stifel.

Stephen Gengaro

things some that. end was Sam, activity quarter. hearing fourth that and this and conversations just are what thoughts the on of U.S. if some others the sort support even optimism lull of in as heard you're perhaps of from that as one we But recovering your curious anecdotes of around sort that soon your

Sam Sledge

that and is that's Look, not here quarter. maybe depending I various we're said, that got through into that we in strong business. a what we hope out times live the what of said our fourth think into some we Like plays That really mean, is our volatile value and We happens whatsoever. future. what prepared going sitting to on and work look, here, create Q&A a remarks vehicle through the we've that

players a curves. Stephen. smooth out services we're things other pull and in of great customers that doing and oilfield our think I confident regardless, the some volatility lot I of we're to think are But --

quarter. own, pick lot there's and more more, in if X-month, bottom the of made to completions that bit of the coming X- lag it into to a does your hard rigs those comments, added the opportunities say say of space and will or those near up, midyear, create Look, today part and when maybe past very that's count some in the maybe a for the rigs back We're our been rig potential good very, a are about term, question. frac there's and generating we work. fourth to I system it's rigs of the actually

next back the Sure. we But a out the So the I here system frac we're to over rigs happen come tailwind few kind it that's create think QX see could and sitting Could don't space? I into began how of weeks? for that of question. think whatsoever. depending don't the more here that the on answer, I

Stephen Gengaro

question were mentioned, some that it. year, the the prices. that mentioned spot sand. response prices things because I a bit. a the then, Got I've basis to the down activity of second on offset slightly lower was And maybe the of and/or And in And follow-up, I you thought sand half about think you curious, frac

I wrong? So Am lose is second lower frac through that And from I of a there thinking in think sand quantify would half? to that. I just about little Because was you'd impact? kind the any thinking that way prices

Sam Sledge

It's a bit Stephen. there, nuanced

in kind is density to I other certain what big purchaser and question it also and service a to to and answering sand of Permian. has that scale a Derek's as was of maintain I how think down using a And scale who compared margin, we're our lever E&Ps sand. purchase comes earlier this sand as because of a as companies better the to market position the we're in basin about operational

movements in be of there's our we do to the and and like opportunistic. our market sand that can and we kind when power, flex scale So purchasing

that, less about think have sand a and it's margin we the same customer. in about providing at and ourselves to top I what it purchasing -- it's put so So more on we time directly mining power for do can like what sand of business product the not while us, our being ourselves,

about us. what more I think for that's it's so

Operator

Johnson question Rice. next Our is of from Don Crist

Donald Crist

repurchases came put in the debt back to lower balance once a how lot of has gate the plan now debt rebounded, buying off bought go out do back repayment. share ask Obviously, we at paying of as shares versus was and about forward? since I stock just versus But you price. wanted place you a the shares

Sam Sledge

Don. for a Great from allocation top mind of moving capital standpoint, us question, forward. That's

the as ProPetro we're to at that capital we allocating effective have. responsibilities being opportunities make across is as of all our that One is chief leaders table. Really, as possible the on everything at sure

we a is like to to that think low run I debt. no business

mix. So that in definitely the plays

pleased Look, we've with the market in equity repurchase and value was gotten program our have success are had when share to our great depressed. very very

most long-term to to allocate capital possibly off finish transition have we're competitive that the sure also business this fleet We can. and to we make building

capital So all today. of those competing for things are

that's here at our and think in stock mentioned how times think the I call, couple said, program we it. looking an sense That a opportunistic of repurchase I we're on

So stay as to out to and in come we'll just the happy and market please. We're continue authorization we to be And opportunistic of have flexibility there. the tuned. say, the I'd

David Schorlemer

David. Don, this is

Just in relative depressed some stock a to we're intrinsic believe discounted up a to bit a peers, either. still levels, we We're that situation significant value little don't very our and that, our add a from market to from near valuation seen perspective. we've move discount

others the I appropriate built, on our don't strategy talk going the that valuation We that's the thing. for some seen that believe you've well. think I and is informs business So that something about think that as calls. believe we've same on their We market forward that

Operator

turn for like This concludes CEO, to conference over Sledge, closing our to remarks. any the I session. question-and-answer Sam would back

Sam Sledge

Irene. Thanks,

Adam about like more FORCE Before we give and out, bit it a we're our out rollout to close here there. President close Chief to excited I Operating briefly about Munoz, talk before it and I'd e-fleet today Officer, our what little

Adam Munoz

Happy Sam. provide Thanks, there. color more to a little

first getting been FORCE at has ready deploy team for units. our everything X Our hard work to

the best-in-class. in are expected we additional our deploy be of Moreover, As electric deploy in and XXXX. we expect deployed fleets to X half expect These first fleet first to quarter. FORCE in call, heard the in here earlier early second fourth to you the fleets August

they're and pumping to units, independent, give driven by and powered are motors, of the by X,XXX-horsepower enabling near kind of FORCE description trailers, XX%. which pumps, To redundant X,XXX-horsepower the fully X a the us independent X,XXX-horsepower X brief on by wellhead electric location reduce pump footprint redundant fully

very a already these providing dual-fuel mentioned. units as units are high that DGB fleet our we Additionally, as diesel X we with displacement, Tier hybrid a will alongside also be deploying

for lastly, emissions powered be cost reduction customer, from the XXX% with natural gas our helps diesel. essentially natural and a will providing units displacement generator, turbine over And by which savings gas diesel significant

Sam Sledge

more in we're times multiple the the are super field to excited out the to in on to said I that excited get and come. Like share Adam. call, FORCE quarters detail fleets Thanks, in

the overall American the out the the I'd the cleanest, closing energy be to and Permian most and to of world part energy call, will our Before ProPetro the part mix, gas at remind like we important that remain with most system. continue the We're energy. here reliable oil affordable, both proud will country confident confident vital everyone of how company and Basin a community that provide are to and we're our

joining Have for again again great we with day. and Thanks us a to you today, soon. hope speak

Operator

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

You disconnect. may now

ProPetro Holding (PUMP) 2 Aug 232023 Q2 Earnings call transcript