NYSE:PUMP ProPetro Q1 2025 Earnings Report $5.28 -0.02 (-0.28%) As of 10:03 AM Eastern This is a fair market value price provided by Polygon.io. Learn more. Earnings HistoryForecast ProPetro EPS ResultsActual EPS$0.09Consensus EPS $0.06Beat/MissBeat by +$0.03One Year Ago EPS$0.18ProPetro Revenue ResultsActual Revenue$359.42 millionExpected Revenue$344.36 millionBeat/MissBeat by +$15.06 millionYoY Revenue Growth-11.40%ProPetro Announcement DetailsQuarterQ1 2025Date4/29/2025TimeBefore Market OpensConference Call DateTuesday, April 29, 2025Conference Call Time9:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by ProPetro Q1 2025 Earnings Call TranscriptProvided by QuartrApril 29, 2025 ShareLink copied to clipboard.There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the ProPetro Holding Corp. First Quarter twenty twenty five Conference Call. Please note, this event is being recorded. I'd now like to turn the call over to Matt Augustine, Director of Corporate Development and Investor Relations for ProPetro Holding Corp. Please go ahead. Speaker 100:00:23Thank you, and good morning. We appreciate your participation in today's call. With me today are Chief Executive Officer, Sam Sledge Chief Accounting Officer and Principal Financial Officer, Selena Davila and President and Chief Operating Officer, Adam Munoz. This morning, we released our earnings results for the first quarter of twenty twenty five. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward looking statements covered by the Private Securities Litigation Reform Act. Speaker 100:00:50Forward looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and risk factors discussed in our filings with the SEC. Also during today's call, we will reference certain non GAAP financial measures. Reconciliations of these non GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Speaker 100:01:16Finally, after our prepared remarks, we will hold a question and answer session. With that, I Speaker 200:01:20would like to turn the call over to Sam. Thanks, Matt. Good morning, everyone, and thanks for joining us today. I'd like to start with an overview of our first quarter performance and some perspective on the current market dynamics. I will then turn it over to Selena Davila, our current Chief Accounting Officer, who is also serving as our Interim Principal Financial Officer until a new Chief Financial Officer is appointed. Speaker 200:01:45The first quarter was another great quarter for ProPetro, both operationally and financially. Our performance underscores our commitment to strong execution and demonstrates that our strategy is working and continues to yield solid results. This strength is even more notable in light of recent macroeconomic volatility. In particular, the impact of tariffs and the plus production increases have placed significant pressure on the energy market and crude oil prices, a dynamic that creates uncertainty for the entire energy value chain. Despite the industry stagnation over the past couple of years, our focus on more capital efficient asset investments is generating resilient free cash flow, demonstrating the effectiveness of our industrialized model. Speaker 200:02:34Investments we have made over the last few years in disciplined M and A, our new pro power offering and our forced electric fleet transition ensure ProPetro is built to withstand market turbulence and deliver durable returns over time. We've created a strong company with low debt, first class customers, a focused presence in the leading Permian Basin with hardworking and dedicated teammates, and we are confident that ProPetro will continue to perform in light of volatile market conditions. Demand for our next generation services remains strong as it encompasses 75% of our fleet through our Tier four DGB dual fuel and electric offerings. We currently operate seven Tier four DGB dual fuel fleets with industry leading diesel displacement, two of which are now recently under long term contracts. Additionally, we have four Force fleets in the field under long term contracts with a fifth force fleet expected to be deployed under contract this year. Speaker 200:03:42In total, we now have six fleets under contract, which represents approximately 50% of our active hydraulic horsepower today. We plan to increase this number as we deploy more force fleets over the next few years. Accordingly, we intend to continue to transition capital from legacy diesel equipment to force electric equipment, which is in high demand and securing committed contracts that reduce our future earnings risk. Now to Pro Power. As a reminder, earlier this year, we reported an approximate total of 140 megawatts of mobile natural gas fuel power generation equipment on order. Speaker 200:04:27Since then, we have placed additional orders for approximately 80 megawatts of natural gas reciprocating generators, which are expected to be funded from our cash flow. With this, our equipment type is split relatively evenly between turbines and natural gas reciprocating generators. We anticipate full delivery of all ordered pro power equipment approximately two twenty megawatts by mid year twenty twenty six. Moreover, we are encouraged by the sustained robust demand for these assets and have secured letters of intent on approximately 75 megawatts of long term pro power service capacity with two separate operators in the Permian Basin to support their infield power needs with final contract execution expected soon. We are encouraged by these early results, but believe this is truly just the beginning for Pro Power. Speaker 200:05:22We've made significant progress in obtaining additional customer commitments and are actively negotiating long term contracts beyond what we have announced today. We believe the demand for reliable, low emission power solutions is vast and increasing and we are positioning Pro Power to capitalize on this high growth vertical. Now, I mentioned this earlier, but I want to touch on it once again given today's macro trends. We believe in a dynamic capital allocation strategy that allows us to pursue growth through M and A, our pro power offering and our force electric fleet transition, all of which drive opportunities for shareholder returns. We expect to continue to execute on all of these moving forward. Speaker 200:06:07Now, I'd like to underscore the fact that our financial improvements over the past two years are a result of the execution of this very strategy. Selena will review our first quarter results shortly, but I would like to highlight a few things. As I shared at the beginning of the call, despite market headwinds, we generated strong free cash flow as well as solid adjusted EBITDA and lower than expected capital expenditures relative to guidance. This is due to a variety of factors, including our higher utilization across all segments, stabilization of pricing, effective cost controls, operational excellence and record efficiency. In addition to strong operational performance, we are benefiting from the resilience of our offering as both our Tier four DGB dual fuel and electric equipment remain highly utilized. Speaker 200:07:03Finally, in terms of our outlook and how our strategy will support us through current market uncertainty, we recognize that the near term outlook is unclear. Due to the recent decline in oil prices influenced by tariffs and plus production increases, along with our disciplined asset deployment strategy, we anticipate operating approximately between thirteen and fourteen fleets in the second quarter, a reduction from the 14 to 15 fleets we ran throughout the first quarter. I want to make it abundantly clear that we are committed to maintaining the health of our fleet and will not compromise it by operating assets at sub economic levels. Our primary focus is on preserving our assets to be well positioned once the broader market stabilizes and the cycle turns back around. That said, for all the reasons I've highlighted throughout these remarks, ProPetro's low debt, premier customer base, Permian focus, long term service contracts and flexible capital allocation program that safeguards free cash flow generation, along with earnings growth potential of ProPower, we are confident that we will continue to maximize long term value for our shareholders. Speaker 200:08:15With that, I'll turn it over to Selena to discuss our financial results. Speaker 300:08:20Thanks, Sam, and good morning, everyone. I am pleased to be here. As you've just heard, we continue to advance our strategy in the first quarter of twenty twenty five and in doing so, generated substantial free cash flow. In terms of results, financial performance for the quarter was strong and supported by our differentiated service offering, our loyal customer base, our Permian focus and our operational excellence. Perpetua generated total revenue of $359,000,000 an increase of 12% as compared to the prior quarter. Speaker 300:08:54Net income totaled $10,000,000 or $09 per diluted share compared to a net loss of $17,000,000 or $0.17 per diluted share for the fourth quarter of twenty twenty four. Net income for the first quarter was $20.25, included a net loss on disposal of assets of $10,000,000 primarily related to the sale of certain Tier two hydraulic fracturing equipment. Adjusted EBITDA totaled $73,000,000 which was 20% of revenue and an increase of 38% as compared to the prior quarter. Additionally, we incurred a lease expense related to our electric fleets of $15,000,000 for the quarter. Net cash provided by operating activities and free cash flow were $55,000,000 and $22,000,000 respectively. Speaker 300:09:42Capital expenditures incurred for the first quarter were $39,000,000 most of which related to maintenance and our initial Pro Power orders. Net cash used in investing activities as shown on the statement of cash flows was $33,000,000 for this quarter. We have demonstrated in the last few quarters that our lower CapEx is a strong tailwind for free cash flow generation. That rings true today and is a testament to our fleet transition and the industrialization of our business segments. As you are aware, we have already made significant investments in our assets and capabilities, and those investments are bearing fruit. Speaker 300:10:24In terms of CapEx guidance, we will continue to evaluate the market and scale CapEx with activity realizations. But as we sit here today, we anticipate our full year 2025 CapEx to be between $295,000,000 and $345,000,000 down from the 300,000,000 to $400,000,000 of CapEx we discussed last quarter. This represents a 9% reduction at the midpoint from our prior guidance. Of this, the completions business is expected to account for $125,000,000 to $175,000,000 a reduction from the original guidance, thanks to additional successful cost optimization efforts. Additionally, the company plans to allocate $170,000,000.20 25 and $60,000,000 in 2026 to support current Pro Power equipment orders that Sam mentioned. Speaker 300:11:18As a reminder, dollars 104,000,000 of the Pro Power CapEx is financed. Importantly, cash and liquidity remained strong, which is very important in today's uncertain market. As of 03/31/2025, total cash was $63,000,000 and our borrowings under the ABL credit facility were 45,000,000 Total liquidity at the end of the first quarter of twenty twenty five was $197,000,000 including the cash and $134,000,000 of available capacity under the ABL credit facility. As for our share repurchase program, we have retired approximately 13,000,000 shares, representing approximately 11% of our outstanding common stock since the inception of the program in May of twenty twenty three. We view share repurchases as an important part of our strategy, showing our conviction in the future of the company while creating value for shareholders, and it is a key pillar of our value proposition for investors. Speaker 300:12:20As such, we intend to extend the program for another year, subject to approval by the Board of Directors, to enable us to continue to be opportunistic in deploying excess cash flow to share repurchases. Finally, as we have underscored several times already, Propetra's capital allocation strategy is balanced and key to maintaining flexibility and navigating uncertain conditions. Looking forward, we will remain focused on balancing investments between share repurchases, forced electric fleet conversion, disciplined M and A and pro power investments, while maintaining a strong balance sheet and liquidity profile. We are fortunate to have a strong financial profile and free cash flow to pursue all these value enhancing opportunities simultaneously. With that, Sam, back over to you. Speaker 200:13:11Thanks, Salido. In closing, we believe ProPetro is a resilient company that is built to withstand market volatility and thrive over the long term. We're prepared for the uncertain market that lies ahead and are confident in our ability to execute because we have built a business that has proven profitable through various market cycles. Our investments in disciplined M and A, the Force Electric fleet conversion and our Pro Power offering position our company for sustainable growth and success and our low debt, blue chip customers, contracted assets and Permian Basin focus will all help us to keep moving forward even in the face of significant market volatility. I'm very proud of the work our team did to generate the strong performance in the first quarter. Speaker 200:14:03We have significant momentum that I am confident we will continue to build on. None of this would be possible without our ProPetro teammates, whose efforts and dedication to operating safely, efficiently and responsibly give me and our management team that much more confidence in our ability to lead the company through this dynamic environment. Thank you for everything you do. With that, operator, we'd now like to open the call to questions. Operator00:14:29Yes, thank you. We will now begin the question and answer session. And the first question comes from John Daniel with Daniel Energy Partners. Speaker 400:14:58Hey guys, thank you for including me. Sam, I've got two questions this morning. One is on power and one is on the traditional frac business. I guess I'll start with power. The opportunities that you're seeing at Pro Power, mean you all are a Permian Basin company. Speaker 400:15:13Are you limiting or sounds not the right way to say it. Are you focused entirely on the Permian for the power side as well? Or are you guys looking at opportunities outside the basin? And just could you distinguish the opportunities that's both inside the basin and outside the basin? Speaker 200:15:29Yes, John. Good morning. Great question. I think originally when we set out to design the strategy for our pro power business, it was going to be very, very focused just on Permian oil and gas operations. It still very much is so with these first two deals that we are very close to having contracts on. Speaker 200:15:55It's going to be just that. Those deals to support production operations. That said, the longer we're in the market, the more we see across different geographies and different industries. Part of our thesis was to get in the supply chain and to acquire power generators to acquire power capacity that we know was going to be needed just in this increasing demand environment that we see ourselves in. So I think our strategy and thesis is playing out that we're going to build a really strong foundation on Permian oil and gas, something we know very well, customers we know very well. Speaker 200:16:35But this is very soon going to be service other potentially other areas and other industries. So yes, we've sought some of those opportunities out ourselves. Some of those have come in the door unsolicitedly, and we'll continue to hold an open ear to opportunities that are outside oil and gas. All the meanwhile, we've got a very distinct focus plan to attack the Permian oil and gas operations. Pretty exciting, but we know that to get this business off the ground and for it to hold true to what we're known for from operational excellence standpoint, these first couple steps we need to stick to what we know. Speaker 400:17:25Okay. Well, thank you for that. The second one is just on the traditional frac business and recognizing a lot's in flux right now and there's no shortage of uncertainty. But when you look at going from the 14 to 15 fleets down to say 13 to 14, is that a function of a customer reducing activity? Is that or you choosing to walk away from lower prices or just the consequence of continued efficiency gains? Speaker 400:17:52Just a little bit of color around the change would be appreciated. Speaker 200:17:57Yes, the simple answer is it's a little bit of both, John. As you and I both know, we all know that when oil price takes an aggressive dip, like it did after the OPEC and tariff announcements, the customers maybe that have the most flexibility or the most hindered economics are some of the first ones you hear from. And you know, it's really thankfully been a very, very small part of our customer portfolio that we've had those inbound calls from. You know, almost half of our frac capacity, as we stated in the press release and in the scripted remarks is under what we call long term contracts, contracts more than a year. So you call it the traditional frac business and it is, but 75% of our capacity is burning natural gas is what we call next generation equipment. Speaker 200:18:57And almost all of that equipment is garnering long term contracts. And we think those are going to be very valuable and useful in any market volatility or downside fluctuations and that's proving out as we sit here today. Speaker 400:19:10Okay. That's all I got for now. I'll let others jump in. Thank you very much. Speaker 200:19:15Thanks, Todd. Operator00:19:17Thank you. And the next question comes from Alex Schiegelhofer with Stifel. Speaker 500:19:24Hi, good morning everyone and thanks for taking my question. Speaker 200:19:27Good morning, Alex. Speaker 500:19:29Yes. So just to kick us off, kind of following up on that last question there. I just want to maybe put a finer point on what you're seeing in terms of pricing for pressure pumping equipment in the market. I think you said about 50% of your active horsepower is contracted. Just curious if could provide some context on like what spot versus contract is doing and exiting '24 and exiting the first quarter. Speaker 500:19:52And naturally, I'd assume that there's some benefits from your higher quality assets or newer assets. Just any color there would be appreciated. Speaker 200:20:01Yes, I'd say the benefits from the newer and high quality assets namely, I'll point out our Force Electric offering efficiencies and economics on those fleets continue to be very, very attractive and valuable for us. And as it pertains to pricing in the contracted market, I'd say it's very steady. When you're having those contracted fleet discussions, it's with a certain type of E and P, one that has a very long view of the future that's trying to create a lot of consistency, continuity, both operationally and financially in kind of their approach to executing on their acreage. So we still very still feel very confident about our thesis to continue to evolve into more electric, more dual fuel fleet over time as a portion of our portfolio because that market seems very sturdy from a pricing standpoint. It's also very sturdy from an activity standpoint. Speaker 200:20:57I mean, are customers where the plan is the plan. And a $5 dip or a $10 dip in oil prices out of nowhere, like we've seen here just recently, doesn't really make them blink. They just kind of continue on with their plan. On the other side of the market, call it, diesel or spot, those aren't the same thing, but those markets overlap quite a bit. There's just a lot of it's very fluid right now. Speaker 200:21:25I'd say you're seeing a lot of price discipline, but you're seeing some very, very small areas where, you know, there are some people willing to price enough under us where we would be willing to turn the work away. So we're seeing that happen on the fringes. And, you know, I for a company like us that is has the balance sheet that we do and the scale and density that we do, When that happens, we're happy to allow that to happen many times because pricing that's significantly below where we are, say, in the diesel or the spot market is extremely unsustainable. It's not uncommon to see competitors pricing at negative free cash flow. So from a consolidation standpoint, we're happy for that to be consolidation via attrition when those parts of the market are willing to go that low. Speaker 200:22:25Really, as we sit here today, think it's very important for anybody, especially if you're new to the space listening to this call or maybe you're coming back from a hiatus, that part of the market, which is diesel and spot is a very small part of the market as compared to prior cycles. You might only, in the Permian Basin, you might only be talking about 20 ish percent of the market that is playing in that game. So, it's changed quite a bit from both an equipment makeup and kind of a contracted dedicated situation. That's why we're making it clear, you know, calling out that 75% of our fleet is burning natural gas and 50% of our fleet is contracted. Almost 100% of our fleet is on dedicated agreements that's not contracted. Speaker 200:23:14So, yes, I can give you some fringe commentary, we're talking about a very small part of the market here today. Speaker 500:23:25Got it, appreciate it. That's excellent color there. And then kind of shifting gears a little bit here, know you touched on this during the prepared remarks, but just some maybe added color on your capital allocation framework when you're thinking about funding the power business versus buybacks and any opportunities to maybe finance some of the spending like on the initial 110 megawatts with the incremental 80 or how you're thinking about that? Speaker 200:23:51Sure. Yes, we're I think we're really proud of what we've been able to do From a capital allocation standpoint, over the last couple of years, you've quite literally seen us do all the above without ever putting our balance sheet in question. At the top of the stack today, and hopefully this comes through clear in our communications, is our power business and our Force Electric offering. Probably the main reason why those go to the top of the stack today is because of how known the returns are with those things. In large part due to the contracts that we're able to obtain and the take or pay nature of those contracts, where when you're making, when investing a dollar into one of those types of equipment or opportunities, you're all but guaranteed, at least in an oilfield services sense, you're all but guaranteed a specific return that is very attractive and frankly transformational for a business like ours. Speaker 200:24:54And maybe go one layer deeper on what we're seeing here recently on the power side and the contracts that we're obtaining, there's one of these contracts that's as long as ten years. I could almost call them data center like. So we're not just flippantly saying, these contracts are good. Like I said, transformational if we can continue to execute on that model in a large way and we think we can. The other capital allocation opportunities, look, you've seen us do M and A, three bolt on deals in the last couple of years. Speaker 200:25:36You've seen us buy back more than 10% of our market cap over the last, say, eighteen months or so. We've also, kind of in the background, continued to allocate capital to our smaller business lines like Wireline and Submitting that are two very well positioned competitive businesses that have high free cash flow conversion. So that's, I mean, that's quite literally five different categories that I just mentioned to you from a capital allocation standpoint. Power, e fleets, M and A, wireline cement and buybacks and shareholder returns. And we will keep our optionality open to do all of those things moving forward. Speaker 200:26:19We have a framework that we move opportunities through that help us make that decision. But as we sit here today, the forces that exist in the market, we really like the power and e fleet opportunities. All the meanwhile, we're going to allocate capital in a manner that also protects our balance sheet. Speaker 500:26:45Got it. Appreciate the color there. And I'll turn it back. Congrats on the quarter. Thanks. Operator00:26:52Thank you. And the next question comes from Waqar Syed with ATV Capital Markets. Speaker 600:27:05Thank you for taking my question. Good morning. Sam, given where commodity prices are today, how many crews do you expect to be working in by, let's say, June in the Permian versus where they are maybe today or where they were a month ago? Speaker 200:27:32Yes, I June, Waqar will probably for the Permian is that your question, the Permian in general? Speaker 600:27:39Right, yes. Speaker 200:27:42I think you'll see a downtick in June. I don't think you've seen much come off in total yet here since the tariff and the OPEC announcements. But I think you might see a little bit come off in June. Part of our fleet guidance being down kind of one whole fleet at the midpoint is us looking at June saying, Matt, there could be a little bit of activity come out of the system for us in June. You might this summer be headed into a setup where the Permian is running 75 to 85 fleets, something like that. Speaker 200:28:21So, yes. Speaker 600:28:23So 75, 80 five just to is it versus 100 today? Speaker 200:28:29You're probably not running 100 today. You might be closer to 85 to 90 today. Speaker 600:28:33Yes. All right. So about 10 fleets or so come out. Now just to be clear, so today you're still running around 14 crews or so? Speaker 200:28:46Correct. Yes. Speaker 100:28:48Of which I Speaker 200:28:49think interesting I think another thing interesting to note from an activity standpoint with cars that headed into May, we'll be running four single frac fleets as well. That's I know we've traditionally given fleet guidance and things like that, but in the background, some of these fleets are twice the size of, say, a normal traditional fleet. I know that kind of might create a lot of noise when you're trying to fine tune a model. But these fleets, on average, continue to grow in size. I think that's not only true for us. Speaker 200:29:25I think that's true for the entire industry. Speaker 600:29:28Okay. So your guidance regarding Accruis, that is just being down is just an expectation that come June, you don't have any requests from a customer of to release a rig or? Speaker 200:29:48Yes, there's just some one or two very small spots where we're getting some pricing pressure that we're probably not going to be willing to meet on the low side. So we're right now expecting to pull at least one fleet out of the mix in June if kind of the broader circumstances don't change from a macro standpoint. Speaker 600:30:15Okay. And secondly, on your CapEx cuts for on the pumping side, is that mostly related to one fleet lower? Or you mentioned optimization. Is that optimization benefits mostly on the e fleet side? Or are you seeing across your entire fleet, including your Tier four DGBs and others? Speaker 200:30:41It's almost all optimization, Waqar. If you I mean, if you go back and look at our last several call scripts and what my team and I have been communicating about the continued wins on the optimization front, I. E. Extending the life of equipment and the large components on that equipment has just been phenomenal. Adam and his team and the work that they've been doing every quarter just seems to continue to surprise to the upside in different ways. Speaker 200:31:17So we've continued to issue the challenge to our operations and maintenance teams and they've continued to raise the bar and knock it out of the park. So there's probably a very small bit of activity in that CapEx guide lower, but I'd say almost all of it is optimization. Matt, do you want to add to that? Speaker 100:31:38Yes. Waqar, this is Matt. I think the point on the activity is really indicative in the range we're providing on the completion side, the 125 to 175. And that wider range is more an indication of our flexible CapEx program depending on how activity flushes out through the rest of the year. Speaker 600:32:02Okay, great. And then in terms of your mobile power, you mentioned there's a mix between turbines and reciprocating engines. Why are you deciding between one versus the other? Or is it all the recent orders have been all reciprocating engines and these turbines are mostly the some of the legacy equipment that you have? Speaker 200:32:28No, these are all new. We have a team in our Pro Power leadership team that has vast experience in both. Our initial approach has also been one of flexibility and modularity. We want to be able to open ourselves to many different types of opportunities. These first couple of deals that we announced and communicated today are going to go to oil and gas production operations. Speaker 200:32:59But those assets will be usable across more than just that, midstream, frac, industrial applications. That's a big part of our strategy and another part is just availability, right? This is a crowded supply chain that we're continuing to compete in and try and carve out our spot. And so a very small part of this is what you can get your hands on. But what we've been able to get our hands on thus far has been very well fit to our strategy to be able to do many different things. Speaker 200:33:35So and we will continue to evolve this portfolio over time. We're simply just getting started and we expect this Power business to be a very meaningful part of the overall business moving forward. So Speaker 400:33:50we'll look to grow from here. Speaker 600:33:53Great. Well, thank you very much for your answers. Speaker 200:33:56Thanks, Waqar. Operator00:33:59Thank you. And the next question comes from Arun Jayaram with JPMorgan. Speaker 700:34:04Hey, Sam. How are you and team? Speaker 400:34:06Good morning, Arun. Speaker 700:34:07I wanted to see if you could kind of elaborate on your longer term ambitions on the force newbuilds as we think about capital allocation over the balance of the year and into 2026? Speaker 200:34:22Yes. I think you've always heard us say that we think electric frac is the future. If you just look long, long term, ten, twenty plus years, we fully expect North America shale to continue to industrialize and we think a huge part of that is electrification. So that's been the thesis for years frankly. That said, you have to be able to carve out opportunities in the market and we did that pretty aggressively with our first four fleets because the fleet market was frankly just growing very quickly at that time and opportunities were vast. Speaker 200:35:01I'd say we're kind of starting to trend from growth to maturation in the e fleet market. The first wave of e fleets that were built even before ours are coming off of their initial contracts and many of the largest E and P operators have gotten most of what they need. That doesn't mean that it's still growing, I think it's just growing at a slower rate. That's why I say it's kind of trending on maturation. So I think you should look for us to continue to transition into more e fleets maybe at a rate of one to two a year in perpetuity because we think those opportunities are going to be there. Speaker 200:35:43We think it's the right thing to do for our financial returns and the consistency in those returns. And we'll be very tactical and picky about how we choose to do that and who we choose to do that with. So as we said in our remarks earlier, we've got a fifth coming this year. Another thing that I think is interesting to note, we have four running today, one of which is a 200 barrel a minute simul frac. So that's basically two regular fleets. Speaker 200:36:13So however you want to slice and dice it, you could say we have technically a five worth of horsepower working today going on six, but that's five, four real profit centers as it pertains to crude fleets and customers going on five today but we're going to stay in the market there and look I think we should expect the existing e fleets we have, many of them to look to transition to Simul in the future too. That's these e fleets are really built for that type of work and I think our customers that are running zipper e fleets are starting to understand that. I think there's an interest to convert many existing e fleets to SIML as well. So sorry that was a long winded answer. Hopefully I answered your question. Speaker 700:37:01No, super helpful. You mentioned a couple of LOIs for 75 megawatts of power generation. Can you help us think about what type of returns you're seeing on these type of opportunities versus maybe some opportunities you have of reinvesting in the frac side of the business? How are the returns looking? Speaker 200:37:28Yes. I'd say we're executing on exactly what we've said previously that you're looking for four year paybacks, if not a little bit better on those assets, cash on cash paybacks, which in turn ends up generating in the ballpark of $300,000 of EBITDA per megawatt per year. That will equate to that four year payback pretty closely. But so those that still holds true. We'll keep it pretty tight. Speaker 200:38:02We'll hold our cards pretty tight in terms of other parts of those contracts because we think we're doing kind of unique things in the market commercially. But we're super excited about this and the willingness and the openness of the E and Ps to contract with us is definitely there. This is not kind of a new thing that we have to be worried about them taking us up on. This is we're doing things that are frankly right now on the production operations side in P space that are just ensuring their operation in general, while at the same time we're helping them lower their OpEx significantly and lower their emissions significantly. So it's pretty exciting stuff. Speaker 200:38:46It's a real win win opportunity. Speaker 500:38:49All right, great. Thanks a lot. Operator00:38:53Thank you. And this does conclude the question and answer session. I would like to turn the conference back to Sam Sledge for any closing comments. Speaker 200:39:03Thanks everybody for tuning in today. Thanks for your interest in the company. We look forward to talking to you again soon. Have a great day. Operator00:39:09Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallProPetro Q1 202500:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) ProPetro Earnings HeadlinesAnalysts Offer Insights on Energy Companies: Propetro Holding (PUMP) and Enterprise Products Partners (EPD)May 3 at 2:09 AM | theglobeandmail.comAtb Cap Markets Forecasts ProPetro's Q2 Earnings (NYSE:PUMP)May 3 at 2:03 AM | americanbankingnews.comShocking AI play that’s beats Nvidia by a country mileYou’ve seen the headlines about Nvidia. Now Tim Sykes is sounding the alarm — because what CEO Jensen Huang is about to announce could change the AI market once again. Experts already predict the total addressable market could climb past $20 trillion. But Sykes believes most investors have missed what’s coming next. He’s tracking a new shift — and says the biggest gains are still ahead.May 6, 2025 | Timothy Sykes (Ad)Earnings call transcript: ProPetro beats Q1 2025 forecasts, stock risesMay 1, 2025 | uk.investing.comProPetro Holding price target lowered to $8 from $11 at BarclaysMay 1, 2025 | msn.comProPetro Holding Corp. (NYSE:PUMP) Q1 2025 Earnings Call TranscriptApril 30, 2025 | msn.comSee More ProPetro Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like ProPetro? Sign up for Earnings360's daily newsletter to receive timely earnings updates on ProPetro and other key companies, straight to your email. Email Address About ProPetroProPetro (NYSE:PUMP) operates as an integrated oilfield services company. The company provides hydraulic fracturing, wireline, cementing, and other complementary oilfield completion services to upstream oil and gas companies in the Permian Basin. 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There are 8 speakers on the call. Operator00:00:00Good day, and welcome to the ProPetro Holding Corp. First Quarter twenty twenty five Conference Call. Please note, this event is being recorded. I'd now like to turn the call over to Matt Augustine, Director of Corporate Development and Investor Relations for ProPetro Holding Corp. Please go ahead. Speaker 100:00:23Thank you, and good morning. We appreciate your participation in today's call. With me today are Chief Executive Officer, Sam Sledge Chief Accounting Officer and Principal Financial Officer, Selena Davila and President and Chief Operating Officer, Adam Munoz. This morning, we released our earnings results for the first quarter of twenty twenty five. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward looking statements covered by the Private Securities Litigation Reform Act. Speaker 100:00:50Forward looking statements are subject to several risks and uncertainties, many of which are beyond our control. These risks and uncertainties can cause actual results to differ materially from our current expectations. We advise listeners to review our earnings release and risk factors discussed in our filings with the SEC. Also during today's call, we will reference certain non GAAP financial measures. Reconciliations of these non GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Speaker 100:01:16Finally, after our prepared remarks, we will hold a question and answer session. With that, I Speaker 200:01:20would like to turn the call over to Sam. Thanks, Matt. Good morning, everyone, and thanks for joining us today. I'd like to start with an overview of our first quarter performance and some perspective on the current market dynamics. I will then turn it over to Selena Davila, our current Chief Accounting Officer, who is also serving as our Interim Principal Financial Officer until a new Chief Financial Officer is appointed. Speaker 200:01:45The first quarter was another great quarter for ProPetro, both operationally and financially. Our performance underscores our commitment to strong execution and demonstrates that our strategy is working and continues to yield solid results. This strength is even more notable in light of recent macroeconomic volatility. In particular, the impact of tariffs and the plus production increases have placed significant pressure on the energy market and crude oil prices, a dynamic that creates uncertainty for the entire energy value chain. Despite the industry stagnation over the past couple of years, our focus on more capital efficient asset investments is generating resilient free cash flow, demonstrating the effectiveness of our industrialized model. Speaker 200:02:34Investments we have made over the last few years in disciplined M and A, our new pro power offering and our forced electric fleet transition ensure ProPetro is built to withstand market turbulence and deliver durable returns over time. We've created a strong company with low debt, first class customers, a focused presence in the leading Permian Basin with hardworking and dedicated teammates, and we are confident that ProPetro will continue to perform in light of volatile market conditions. Demand for our next generation services remains strong as it encompasses 75% of our fleet through our Tier four DGB dual fuel and electric offerings. We currently operate seven Tier four DGB dual fuel fleets with industry leading diesel displacement, two of which are now recently under long term contracts. Additionally, we have four Force fleets in the field under long term contracts with a fifth force fleet expected to be deployed under contract this year. Speaker 200:03:42In total, we now have six fleets under contract, which represents approximately 50% of our active hydraulic horsepower today. We plan to increase this number as we deploy more force fleets over the next few years. Accordingly, we intend to continue to transition capital from legacy diesel equipment to force electric equipment, which is in high demand and securing committed contracts that reduce our future earnings risk. Now to Pro Power. As a reminder, earlier this year, we reported an approximate total of 140 megawatts of mobile natural gas fuel power generation equipment on order. Speaker 200:04:27Since then, we have placed additional orders for approximately 80 megawatts of natural gas reciprocating generators, which are expected to be funded from our cash flow. With this, our equipment type is split relatively evenly between turbines and natural gas reciprocating generators. We anticipate full delivery of all ordered pro power equipment approximately two twenty megawatts by mid year twenty twenty six. Moreover, we are encouraged by the sustained robust demand for these assets and have secured letters of intent on approximately 75 megawatts of long term pro power service capacity with two separate operators in the Permian Basin to support their infield power needs with final contract execution expected soon. We are encouraged by these early results, but believe this is truly just the beginning for Pro Power. Speaker 200:05:22We've made significant progress in obtaining additional customer commitments and are actively negotiating long term contracts beyond what we have announced today. We believe the demand for reliable, low emission power solutions is vast and increasing and we are positioning Pro Power to capitalize on this high growth vertical. Now, I mentioned this earlier, but I want to touch on it once again given today's macro trends. We believe in a dynamic capital allocation strategy that allows us to pursue growth through M and A, our pro power offering and our force electric fleet transition, all of which drive opportunities for shareholder returns. We expect to continue to execute on all of these moving forward. Speaker 200:06:07Now, I'd like to underscore the fact that our financial improvements over the past two years are a result of the execution of this very strategy. Selena will review our first quarter results shortly, but I would like to highlight a few things. As I shared at the beginning of the call, despite market headwinds, we generated strong free cash flow as well as solid adjusted EBITDA and lower than expected capital expenditures relative to guidance. This is due to a variety of factors, including our higher utilization across all segments, stabilization of pricing, effective cost controls, operational excellence and record efficiency. In addition to strong operational performance, we are benefiting from the resilience of our offering as both our Tier four DGB dual fuel and electric equipment remain highly utilized. Speaker 200:07:03Finally, in terms of our outlook and how our strategy will support us through current market uncertainty, we recognize that the near term outlook is unclear. Due to the recent decline in oil prices influenced by tariffs and plus production increases, along with our disciplined asset deployment strategy, we anticipate operating approximately between thirteen and fourteen fleets in the second quarter, a reduction from the 14 to 15 fleets we ran throughout the first quarter. I want to make it abundantly clear that we are committed to maintaining the health of our fleet and will not compromise it by operating assets at sub economic levels. Our primary focus is on preserving our assets to be well positioned once the broader market stabilizes and the cycle turns back around. That said, for all the reasons I've highlighted throughout these remarks, ProPetro's low debt, premier customer base, Permian focus, long term service contracts and flexible capital allocation program that safeguards free cash flow generation, along with earnings growth potential of ProPower, we are confident that we will continue to maximize long term value for our shareholders. Speaker 200:08:15With that, I'll turn it over to Selena to discuss our financial results. Speaker 300:08:20Thanks, Sam, and good morning, everyone. I am pleased to be here. As you've just heard, we continue to advance our strategy in the first quarter of twenty twenty five and in doing so, generated substantial free cash flow. In terms of results, financial performance for the quarter was strong and supported by our differentiated service offering, our loyal customer base, our Permian focus and our operational excellence. Perpetua generated total revenue of $359,000,000 an increase of 12% as compared to the prior quarter. Speaker 300:08:54Net income totaled $10,000,000 or $09 per diluted share compared to a net loss of $17,000,000 or $0.17 per diluted share for the fourth quarter of twenty twenty four. Net income for the first quarter was $20.25, included a net loss on disposal of assets of $10,000,000 primarily related to the sale of certain Tier two hydraulic fracturing equipment. Adjusted EBITDA totaled $73,000,000 which was 20% of revenue and an increase of 38% as compared to the prior quarter. Additionally, we incurred a lease expense related to our electric fleets of $15,000,000 for the quarter. Net cash provided by operating activities and free cash flow were $55,000,000 and $22,000,000 respectively. Speaker 300:09:42Capital expenditures incurred for the first quarter were $39,000,000 most of which related to maintenance and our initial Pro Power orders. Net cash used in investing activities as shown on the statement of cash flows was $33,000,000 for this quarter. We have demonstrated in the last few quarters that our lower CapEx is a strong tailwind for free cash flow generation. That rings true today and is a testament to our fleet transition and the industrialization of our business segments. As you are aware, we have already made significant investments in our assets and capabilities, and those investments are bearing fruit. Speaker 300:10:24In terms of CapEx guidance, we will continue to evaluate the market and scale CapEx with activity realizations. But as we sit here today, we anticipate our full year 2025 CapEx to be between $295,000,000 and $345,000,000 down from the 300,000,000 to $400,000,000 of CapEx we discussed last quarter. This represents a 9% reduction at the midpoint from our prior guidance. Of this, the completions business is expected to account for $125,000,000 to $175,000,000 a reduction from the original guidance, thanks to additional successful cost optimization efforts. Additionally, the company plans to allocate $170,000,000.20 25 and $60,000,000 in 2026 to support current Pro Power equipment orders that Sam mentioned. Speaker 300:11:18As a reminder, dollars 104,000,000 of the Pro Power CapEx is financed. Importantly, cash and liquidity remained strong, which is very important in today's uncertain market. As of 03/31/2025, total cash was $63,000,000 and our borrowings under the ABL credit facility were 45,000,000 Total liquidity at the end of the first quarter of twenty twenty five was $197,000,000 including the cash and $134,000,000 of available capacity under the ABL credit facility. As for our share repurchase program, we have retired approximately 13,000,000 shares, representing approximately 11% of our outstanding common stock since the inception of the program in May of twenty twenty three. We view share repurchases as an important part of our strategy, showing our conviction in the future of the company while creating value for shareholders, and it is a key pillar of our value proposition for investors. Speaker 300:12:20As such, we intend to extend the program for another year, subject to approval by the Board of Directors, to enable us to continue to be opportunistic in deploying excess cash flow to share repurchases. Finally, as we have underscored several times already, Propetra's capital allocation strategy is balanced and key to maintaining flexibility and navigating uncertain conditions. Looking forward, we will remain focused on balancing investments between share repurchases, forced electric fleet conversion, disciplined M and A and pro power investments, while maintaining a strong balance sheet and liquidity profile. We are fortunate to have a strong financial profile and free cash flow to pursue all these value enhancing opportunities simultaneously. With that, Sam, back over to you. Speaker 200:13:11Thanks, Salido. In closing, we believe ProPetro is a resilient company that is built to withstand market volatility and thrive over the long term. We're prepared for the uncertain market that lies ahead and are confident in our ability to execute because we have built a business that has proven profitable through various market cycles. Our investments in disciplined M and A, the Force Electric fleet conversion and our Pro Power offering position our company for sustainable growth and success and our low debt, blue chip customers, contracted assets and Permian Basin focus will all help us to keep moving forward even in the face of significant market volatility. I'm very proud of the work our team did to generate the strong performance in the first quarter. Speaker 200:14:03We have significant momentum that I am confident we will continue to build on. None of this would be possible without our ProPetro teammates, whose efforts and dedication to operating safely, efficiently and responsibly give me and our management team that much more confidence in our ability to lead the company through this dynamic environment. Thank you for everything you do. With that, operator, we'd now like to open the call to questions. Operator00:14:29Yes, thank you. We will now begin the question and answer session. And the first question comes from John Daniel with Daniel Energy Partners. Speaker 400:14:58Hey guys, thank you for including me. Sam, I've got two questions this morning. One is on power and one is on the traditional frac business. I guess I'll start with power. The opportunities that you're seeing at Pro Power, mean you all are a Permian Basin company. Speaker 400:15:13Are you limiting or sounds not the right way to say it. Are you focused entirely on the Permian for the power side as well? Or are you guys looking at opportunities outside the basin? And just could you distinguish the opportunities that's both inside the basin and outside the basin? Speaker 200:15:29Yes, John. Good morning. Great question. I think originally when we set out to design the strategy for our pro power business, it was going to be very, very focused just on Permian oil and gas operations. It still very much is so with these first two deals that we are very close to having contracts on. Speaker 200:15:55It's going to be just that. Those deals to support production operations. That said, the longer we're in the market, the more we see across different geographies and different industries. Part of our thesis was to get in the supply chain and to acquire power generators to acquire power capacity that we know was going to be needed just in this increasing demand environment that we see ourselves in. So I think our strategy and thesis is playing out that we're going to build a really strong foundation on Permian oil and gas, something we know very well, customers we know very well. Speaker 200:16:35But this is very soon going to be service other potentially other areas and other industries. So yes, we've sought some of those opportunities out ourselves. Some of those have come in the door unsolicitedly, and we'll continue to hold an open ear to opportunities that are outside oil and gas. All the meanwhile, we've got a very distinct focus plan to attack the Permian oil and gas operations. Pretty exciting, but we know that to get this business off the ground and for it to hold true to what we're known for from operational excellence standpoint, these first couple steps we need to stick to what we know. Speaker 400:17:25Okay. Well, thank you for that. The second one is just on the traditional frac business and recognizing a lot's in flux right now and there's no shortage of uncertainty. But when you look at going from the 14 to 15 fleets down to say 13 to 14, is that a function of a customer reducing activity? Is that or you choosing to walk away from lower prices or just the consequence of continued efficiency gains? Speaker 400:17:52Just a little bit of color around the change would be appreciated. Speaker 200:17:57Yes, the simple answer is it's a little bit of both, John. As you and I both know, we all know that when oil price takes an aggressive dip, like it did after the OPEC and tariff announcements, the customers maybe that have the most flexibility or the most hindered economics are some of the first ones you hear from. And you know, it's really thankfully been a very, very small part of our customer portfolio that we've had those inbound calls from. You know, almost half of our frac capacity, as we stated in the press release and in the scripted remarks is under what we call long term contracts, contracts more than a year. So you call it the traditional frac business and it is, but 75% of our capacity is burning natural gas is what we call next generation equipment. Speaker 200:18:57And almost all of that equipment is garnering long term contracts. And we think those are going to be very valuable and useful in any market volatility or downside fluctuations and that's proving out as we sit here today. Speaker 400:19:10Okay. That's all I got for now. I'll let others jump in. Thank you very much. Speaker 200:19:15Thanks, Todd. Operator00:19:17Thank you. And the next question comes from Alex Schiegelhofer with Stifel. Speaker 500:19:24Hi, good morning everyone and thanks for taking my question. Speaker 200:19:27Good morning, Alex. Speaker 500:19:29Yes. So just to kick us off, kind of following up on that last question there. I just want to maybe put a finer point on what you're seeing in terms of pricing for pressure pumping equipment in the market. I think you said about 50% of your active horsepower is contracted. Just curious if could provide some context on like what spot versus contract is doing and exiting '24 and exiting the first quarter. Speaker 500:19:52And naturally, I'd assume that there's some benefits from your higher quality assets or newer assets. Just any color there would be appreciated. Speaker 200:20:01Yes, I'd say the benefits from the newer and high quality assets namely, I'll point out our Force Electric offering efficiencies and economics on those fleets continue to be very, very attractive and valuable for us. And as it pertains to pricing in the contracted market, I'd say it's very steady. When you're having those contracted fleet discussions, it's with a certain type of E and P, one that has a very long view of the future that's trying to create a lot of consistency, continuity, both operationally and financially in kind of their approach to executing on their acreage. So we still very still feel very confident about our thesis to continue to evolve into more electric, more dual fuel fleet over time as a portion of our portfolio because that market seems very sturdy from a pricing standpoint. It's also very sturdy from an activity standpoint. Speaker 200:20:57I mean, are customers where the plan is the plan. And a $5 dip or a $10 dip in oil prices out of nowhere, like we've seen here just recently, doesn't really make them blink. They just kind of continue on with their plan. On the other side of the market, call it, diesel or spot, those aren't the same thing, but those markets overlap quite a bit. There's just a lot of it's very fluid right now. Speaker 200:21:25I'd say you're seeing a lot of price discipline, but you're seeing some very, very small areas where, you know, there are some people willing to price enough under us where we would be willing to turn the work away. So we're seeing that happen on the fringes. And, you know, I for a company like us that is has the balance sheet that we do and the scale and density that we do, When that happens, we're happy to allow that to happen many times because pricing that's significantly below where we are, say, in the diesel or the spot market is extremely unsustainable. It's not uncommon to see competitors pricing at negative free cash flow. So from a consolidation standpoint, we're happy for that to be consolidation via attrition when those parts of the market are willing to go that low. Speaker 200:22:25Really, as we sit here today, think it's very important for anybody, especially if you're new to the space listening to this call or maybe you're coming back from a hiatus, that part of the market, which is diesel and spot is a very small part of the market as compared to prior cycles. You might only, in the Permian Basin, you might only be talking about 20 ish percent of the market that is playing in that game. So, it's changed quite a bit from both an equipment makeup and kind of a contracted dedicated situation. That's why we're making it clear, you know, calling out that 75% of our fleet is burning natural gas and 50% of our fleet is contracted. Almost 100% of our fleet is on dedicated agreements that's not contracted. Speaker 200:23:14So, yes, I can give you some fringe commentary, we're talking about a very small part of the market here today. Speaker 500:23:25Got it, appreciate it. That's excellent color there. And then kind of shifting gears a little bit here, know you touched on this during the prepared remarks, but just some maybe added color on your capital allocation framework when you're thinking about funding the power business versus buybacks and any opportunities to maybe finance some of the spending like on the initial 110 megawatts with the incremental 80 or how you're thinking about that? Speaker 200:23:51Sure. Yes, we're I think we're really proud of what we've been able to do From a capital allocation standpoint, over the last couple of years, you've quite literally seen us do all the above without ever putting our balance sheet in question. At the top of the stack today, and hopefully this comes through clear in our communications, is our power business and our Force Electric offering. Probably the main reason why those go to the top of the stack today is because of how known the returns are with those things. In large part due to the contracts that we're able to obtain and the take or pay nature of those contracts, where when you're making, when investing a dollar into one of those types of equipment or opportunities, you're all but guaranteed, at least in an oilfield services sense, you're all but guaranteed a specific return that is very attractive and frankly transformational for a business like ours. Speaker 200:24:54And maybe go one layer deeper on what we're seeing here recently on the power side and the contracts that we're obtaining, there's one of these contracts that's as long as ten years. I could almost call them data center like. So we're not just flippantly saying, these contracts are good. Like I said, transformational if we can continue to execute on that model in a large way and we think we can. The other capital allocation opportunities, look, you've seen us do M and A, three bolt on deals in the last couple of years. Speaker 200:25:36You've seen us buy back more than 10% of our market cap over the last, say, eighteen months or so. We've also, kind of in the background, continued to allocate capital to our smaller business lines like Wireline and Submitting that are two very well positioned competitive businesses that have high free cash flow conversion. So that's, I mean, that's quite literally five different categories that I just mentioned to you from a capital allocation standpoint. Power, e fleets, M and A, wireline cement and buybacks and shareholder returns. And we will keep our optionality open to do all of those things moving forward. Speaker 200:26:19We have a framework that we move opportunities through that help us make that decision. But as we sit here today, the forces that exist in the market, we really like the power and e fleet opportunities. All the meanwhile, we're going to allocate capital in a manner that also protects our balance sheet. Speaker 500:26:45Got it. Appreciate the color there. And I'll turn it back. Congrats on the quarter. Thanks. Operator00:26:52Thank you. And the next question comes from Waqar Syed with ATV Capital Markets. Speaker 600:27:05Thank you for taking my question. Good morning. Sam, given where commodity prices are today, how many crews do you expect to be working in by, let's say, June in the Permian versus where they are maybe today or where they were a month ago? Speaker 200:27:32Yes, I June, Waqar will probably for the Permian is that your question, the Permian in general? Speaker 600:27:39Right, yes. Speaker 200:27:42I think you'll see a downtick in June. I don't think you've seen much come off in total yet here since the tariff and the OPEC announcements. But I think you might see a little bit come off in June. Part of our fleet guidance being down kind of one whole fleet at the midpoint is us looking at June saying, Matt, there could be a little bit of activity come out of the system for us in June. You might this summer be headed into a setup where the Permian is running 75 to 85 fleets, something like that. Speaker 200:28:21So, yes. Speaker 600:28:23So 75, 80 five just to is it versus 100 today? Speaker 200:28:29You're probably not running 100 today. You might be closer to 85 to 90 today. Speaker 600:28:33Yes. All right. So about 10 fleets or so come out. Now just to be clear, so today you're still running around 14 crews or so? Speaker 200:28:46Correct. Yes. Speaker 100:28:48Of which I Speaker 200:28:49think interesting I think another thing interesting to note from an activity standpoint with cars that headed into May, we'll be running four single frac fleets as well. That's I know we've traditionally given fleet guidance and things like that, but in the background, some of these fleets are twice the size of, say, a normal traditional fleet. I know that kind of might create a lot of noise when you're trying to fine tune a model. But these fleets, on average, continue to grow in size. I think that's not only true for us. Speaker 200:29:25I think that's true for the entire industry. Speaker 600:29:28Okay. So your guidance regarding Accruis, that is just being down is just an expectation that come June, you don't have any requests from a customer of to release a rig or? Speaker 200:29:48Yes, there's just some one or two very small spots where we're getting some pricing pressure that we're probably not going to be willing to meet on the low side. So we're right now expecting to pull at least one fleet out of the mix in June if kind of the broader circumstances don't change from a macro standpoint. Speaker 600:30:15Okay. And secondly, on your CapEx cuts for on the pumping side, is that mostly related to one fleet lower? Or you mentioned optimization. Is that optimization benefits mostly on the e fleet side? Or are you seeing across your entire fleet, including your Tier four DGBs and others? Speaker 200:30:41It's almost all optimization, Waqar. If you I mean, if you go back and look at our last several call scripts and what my team and I have been communicating about the continued wins on the optimization front, I. E. Extending the life of equipment and the large components on that equipment has just been phenomenal. Adam and his team and the work that they've been doing every quarter just seems to continue to surprise to the upside in different ways. Speaker 200:31:17So we've continued to issue the challenge to our operations and maintenance teams and they've continued to raise the bar and knock it out of the park. So there's probably a very small bit of activity in that CapEx guide lower, but I'd say almost all of it is optimization. Matt, do you want to add to that? Speaker 100:31:38Yes. Waqar, this is Matt. I think the point on the activity is really indicative in the range we're providing on the completion side, the 125 to 175. And that wider range is more an indication of our flexible CapEx program depending on how activity flushes out through the rest of the year. Speaker 600:32:02Okay, great. And then in terms of your mobile power, you mentioned there's a mix between turbines and reciprocating engines. Why are you deciding between one versus the other? Or is it all the recent orders have been all reciprocating engines and these turbines are mostly the some of the legacy equipment that you have? Speaker 200:32:28No, these are all new. We have a team in our Pro Power leadership team that has vast experience in both. Our initial approach has also been one of flexibility and modularity. We want to be able to open ourselves to many different types of opportunities. These first couple of deals that we announced and communicated today are going to go to oil and gas production operations. Speaker 200:32:59But those assets will be usable across more than just that, midstream, frac, industrial applications. That's a big part of our strategy and another part is just availability, right? This is a crowded supply chain that we're continuing to compete in and try and carve out our spot. And so a very small part of this is what you can get your hands on. But what we've been able to get our hands on thus far has been very well fit to our strategy to be able to do many different things. Speaker 200:33:35So and we will continue to evolve this portfolio over time. We're simply just getting started and we expect this Power business to be a very meaningful part of the overall business moving forward. So Speaker 400:33:50we'll look to grow from here. Speaker 600:33:53Great. Well, thank you very much for your answers. Speaker 200:33:56Thanks, Waqar. Operator00:33:59Thank you. And the next question comes from Arun Jayaram with JPMorgan. Speaker 700:34:04Hey, Sam. How are you and team? Speaker 400:34:06Good morning, Arun. Speaker 700:34:07I wanted to see if you could kind of elaborate on your longer term ambitions on the force newbuilds as we think about capital allocation over the balance of the year and into 2026? Speaker 200:34:22Yes. I think you've always heard us say that we think electric frac is the future. If you just look long, long term, ten, twenty plus years, we fully expect North America shale to continue to industrialize and we think a huge part of that is electrification. So that's been the thesis for years frankly. That said, you have to be able to carve out opportunities in the market and we did that pretty aggressively with our first four fleets because the fleet market was frankly just growing very quickly at that time and opportunities were vast. Speaker 200:35:01I'd say we're kind of starting to trend from growth to maturation in the e fleet market. The first wave of e fleets that were built even before ours are coming off of their initial contracts and many of the largest E and P operators have gotten most of what they need. That doesn't mean that it's still growing, I think it's just growing at a slower rate. That's why I say it's kind of trending on maturation. So I think you should look for us to continue to transition into more e fleets maybe at a rate of one to two a year in perpetuity because we think those opportunities are going to be there. Speaker 200:35:43We think it's the right thing to do for our financial returns and the consistency in those returns. And we'll be very tactical and picky about how we choose to do that and who we choose to do that with. So as we said in our remarks earlier, we've got a fifth coming this year. Another thing that I think is interesting to note, we have four running today, one of which is a 200 barrel a minute simul frac. So that's basically two regular fleets. Speaker 200:36:13So however you want to slice and dice it, you could say we have technically a five worth of horsepower working today going on six, but that's five, four real profit centers as it pertains to crude fleets and customers going on five today but we're going to stay in the market there and look I think we should expect the existing e fleets we have, many of them to look to transition to Simul in the future too. That's these e fleets are really built for that type of work and I think our customers that are running zipper e fleets are starting to understand that. I think there's an interest to convert many existing e fleets to SIML as well. So sorry that was a long winded answer. Hopefully I answered your question. Speaker 700:37:01No, super helpful. You mentioned a couple of LOIs for 75 megawatts of power generation. Can you help us think about what type of returns you're seeing on these type of opportunities versus maybe some opportunities you have of reinvesting in the frac side of the business? How are the returns looking? Speaker 200:37:28Yes. I'd say we're executing on exactly what we've said previously that you're looking for four year paybacks, if not a little bit better on those assets, cash on cash paybacks, which in turn ends up generating in the ballpark of $300,000 of EBITDA per megawatt per year. That will equate to that four year payback pretty closely. But so those that still holds true. We'll keep it pretty tight. Speaker 200:38:02We'll hold our cards pretty tight in terms of other parts of those contracts because we think we're doing kind of unique things in the market commercially. But we're super excited about this and the willingness and the openness of the E and Ps to contract with us is definitely there. This is not kind of a new thing that we have to be worried about them taking us up on. This is we're doing things that are frankly right now on the production operations side in P space that are just ensuring their operation in general, while at the same time we're helping them lower their OpEx significantly and lower their emissions significantly. So it's pretty exciting stuff. Speaker 200:38:46It's a real win win opportunity. Speaker 500:38:49All right, great. Thanks a lot. Operator00:38:53Thank you. And this does conclude the question and answer session. I would like to turn the conference back to Sam Sledge for any closing comments. Speaker 200:39:03Thanks everybody for tuning in today. Thanks for your interest in the company. We look forward to talking to you again soon. Have a great day. Operator00:39:09Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.Read morePowered by