ProPetro Q1 2025 Earnings Report

ProPetro EPS Results

• Actual EPS: $0.09
• Consensus EPS: $0.06
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.18

ProPetro Revenue Results

• Actual Revenue: $359.42 million
• Expected Revenue: $344.36 million
• Beat/Miss: Beat by +$15.06 million
• YoY Revenue Growth: -11.40%

ProPetro Announcement Details

• Quarter: Q1 2025
• Date: 4/29/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, April 29, 2025
• Conference Call Time: 9:00AM ET

ProPetro (NYSE:PUMP) is an oilfield services company that provides completion and production services to exploration and production companies developing unconventional oil and natural gas wells. The company primarily serves customers in the Permian Basin, including the Midland and Delaware basins of West Texas and southeastern New Mexico.

Its principal services include hydraulic fracturing, which uses high-pressure fluid to stimulate wells, as well as wireline services used for well evaluation, perforating and other completion activities. ProPetro also provides related well-stimulation and completion support services, helping producers prepare newly drilled wells for commercial production.

Founded in 2007 and headquartered in Midland, Texas, ProPetro became a publicly traded company in 2017. Its operations and customer relationships are concentrated in the Permian Basin, one of the largest oil-producing regions in the United States.

ProPetro Q1 2025 Earnings Call Transcript

Key Takeaways

• Strong Q1 Results: Generated $55 M net cash from operations and $22 M free cash flow with Adjusted EBITDA of $73 M (20% of revenue), reflecting solid execution despite market headwinds.
• Pro Power backlog grew to 220 MW of ordered mobile gas power equipment with letters of intent for 75 MW of long-term service contracts, targeting four-year paybacks and ~$300 K EBITDA per MW annually.
• Force Electric expansion includes four Tier-4 DGB dual-fuel fleets and four Force electric fleets under long-term contracts (a fifth slated this year), representing ~50% of active hydraulic horsepower to lower earnings risk.
• Balanced capital allocation prioritizes Pro Power and electric-fleet investments alongside disciplined M&A and continued share buybacks (11% of shares retired), while preserving a strong liquidity position of $197 M.
• Facing oil price uncertainty, Q2 fleet utilization is expected at 13–14 fleets (down from 14–15 in Q1) and 2025 CapEx guidance was cut to $295–345 M (9% lower at midpoint) to align spending with activity levels.

Presentation

[Operator]

Good day, and welcome to the ProPetro Holding Corp Q1 2025 conference call. Please note this event is being recorded. If you require operator assistance, please press star then zero. I'll now turn the call over to Matt Augustine, Director of Corporate Development and Investor Relations for ProPetro Holding Corp. Please go ahead.

[Matt Augustine, Director of Corporate Development and Investor Relations at ProPetro Holding Corp]

Thank 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 Celina Davila, and President and Chief Operating Officer Adam Muñoz. This morning, we released our earnings results for the Q1 of 2025. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements covered by the Private Securities Litigation Reform Act. Forward-looking statements are subject to several risks and uncertainties, many of which are beyond our control. 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.

[Matt Augustine, Director of Corporate Development and Investor Relations at ProPetro Holding Corp]

Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Finally, after our prepared remarks, we'll hold a question-and-answer session. With that, I would like to turn the call over to Sam.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks, Matt. Good morning, everyone, and thanks for joining us today. I'd like to start with an overview of our Q1 performance and some perspective on the current market dynamics. We will then turn it over to Celina Davila, our current Chief Accounting Officer, who is also serving as our interim Principal Financial Officer until a new Chief Financial Officer is appointed. The Q1 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 OPEC+ 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

Despite the industry's 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. The investments we have made over the last few years in disciplined M&A, our new ProPower offering, and our FORCE electric fleet transition ensure ProPetro is built to withstand market turbulence and deliver durable returns over time. We have 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 4 DGB dual fuel and electric offerings.

[Sam Sledge, CEO at ProPetro Holding Corp]

We currently operate seven Tier 4 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. In 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 ProPower. As a reminder, earlier this year, we reported an approximate total of 140 megawatts of mobile natural gas fuel power generation equipment on order.

[Sam Sledge, CEO at ProPetro Holding Corp]

Since 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 ProPower equipment, approximately 220 megawatts, by mid-year 2026. 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 ProPower service capacity with two separate operators in the Permian Basin to support their in-field power needs, with final contract execution expected soon. We are encouraged by these early results but believe this is truly just the beginning for ProPower. We've made significant progress in obtaining additional customer commitments and are actively negotiating long-term contracts beyond what we have announced today.

[Sam Sledge, CEO at ProPetro Holding Corp]

We believe the demand for reliable, low-emission power solutions is vast and increasing, and we are positioning ProPower 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&A, our ProPower 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, and I would like to underscore the fact that our financial improvements over the past two years are a result of the execution of this very strategy. Celina will review our Q1 results shortly, but I would like to highlight a few things.

[Sam Sledge, CEO at ProPetro Holding Corp]

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 4 DGB dual fuel and electric equipment remain highly utilized. Finally, 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

Due to the recent decline in oil prices influenced by tariffs and OPEC+ production increases, along with our disciplined asset deployment strategy, we anticipate operating approximately between 13 and 14 fleets in the second quarter, a reduction from the 14-15 fleets we ran throughout the Q1. 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

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 the earnings growth potential of ProPower, we are confident that we will continue to maximize long-term value for our shareholders. With that, I'll turn it over to Celina to discuss our financial results.

[Celina Davila, CAO at ProPetro Holding Corp]

Thanks, Sam, and good morning, everyone. I am pleased to be here. As you have just heard, we continued to advance our strategy in the Q1 of 2025, 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. ProPetro generated total revenue of $359 million, an increase of 12% as compared to the prior quarter. Net income totaled $10 million, or $0.09 per diluted share, compared to a net loss of $17 million, or $0.17 per diluted share for the Q4 of 2024. Net income for the Q1 of 2025 included a net loss on disposal of assets of $10 million, primarily related to the sale of certain Tier 2 hydraulic fracturing equipment.

[Celina Davila, CAO at ProPetro Holding Corp]

Adjusted EBITDA totaled $73 million, 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 million for the quarter. Net cash provided by operating activities and free cash flow were $55 million and $22 million, respectively. Capital expenditures incurred for the Q1 were $39 million, most of which related to maintenance and our initial ProPower orders. Net cash used in investing activities, as shown on the statement of cash flows, was $33 million 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.

[Celina Davila, CAO at ProPetro Holding Corp]

As you are aware, we have already made significant investments in our assets and capabilities, and those investments are bearing fruit. In terms of CapEx guidance, we will continue to evaluate the market and scale CapEx with activity realizations. As we sit here today, we anticipate our full year 2025 CapEx to be between $295 million and $345 million, down from the $300-400 million 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 $125-175 million, a reduction from the original guidance thanks to additional successful cost optimization efforts. Additionally, the company plans to allocate $170 million in 2025 and $60 million in 2026 to support current ProPower equipment orders that Sam mentioned. As a reminder, $104 million of the ProPower CapEx is financed.

[Celina Davila, CAO at ProPetro Holding Corp]

Importantly, cash and liquidity remain strong, which is very important in today's uncertain market. As of March 31, 2025, total cash was $63 million, and our borrowings under the ABL credit facility were $45 million. Total liquidity at the end of the Q1 of 2025 was $197 million, including cash and $134 million of available capacity under the ABL credit facility. As for our share repurchase program, we have retired approximately 13 million shares, representing approximately 11% of our outstanding common stock since the inception of the program in May of 2023. 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.

[Celina Davila, CAO at ProPetro Holding Corp]

As 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, ProPetro'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, FORCE electric fleet conversion, disciplined M&A, and ProPower 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks, Celina. In closing, we believe ProPetro is a resilient company that is built to withstand market volatility and thrive over the long term. We are 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&A, the FORCE electric fleet conversion, and our ProPower offering position our company for sustainable growth and success. Our low-debt blue-chip customers, contracted assets, and Permian-based focus will all help us to keep moving forward, even in the face of significant market volatility. I am very proud of the work our team did to generate the strong performance in the Q1. We have significant momentum that I am confident we will continue to build on.

[Sam Sledge, CEO at ProPetro Holding Corp]

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.

[Operator]

Yes, thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. If any time your question has been addressed and you would like to withdraw it, please press star then two. At this time, we will pause momentarily to assemble the roster. The first question comes from John Daniel with Daniel Energy Partners.

[John Daniel, Analyst at Daniel Energy Partners]

Hey, 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 ProPower, I mean, you all are a Permian-based company. Are you limiting, or it's 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? Could you distinguish the opportunities that's both inside the basin and outside the basin?

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah, John, good morning. Great question. I think, you know, originally when we set out to design the strategy for our ProPower 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. It's going to be just that. Those are 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

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. This is very soon going to create a platform that's going to be able to service potentially other areas and other industries. 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. Although meanwhile, we've got a very distinct focus plan to attack the Permian oil and gas operations.

[Sam Sledge, CEO at ProPetro Holding Corp]

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 an operational excellence standpoint, that these first couple of steps, we need to stick to what we know.

[John Daniel, Analyst at Daniel Energy Partners]

Okay. 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. 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? Just a little bit of color around the change would be appreciated.

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah, 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. It's really, thankfully, been a very, very small part of our customer portfolio that we've had those inbound calls from. 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. 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, and almost all of that equipment is garnering long-term contracts.

[Sam Sledge, CEO at ProPetro Holding Corp]

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.

[John Daniel, Analyst at Daniel Energy Partners]

Okay. All right. That's all I got for now. I'll let others jump in. Thank you very much.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks, John.

[Operator]

Thank you. The next question comes from Alex Schloemer with Stifel.

[Alex Schiegel, Analyst at Stifel]

Hi, good morning, everyone, and thanks for taking my question.

[Sam Sledge, CEO at ProPetro Holding Corp]

We're not.

[Alex Schiegel, Analyst at Stifel]

Yeah. 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 you provide some context on what Spot versus Contract's doing in exiting 2024 and exiting the Q1. Naturally, I just assume that there's some benefits from your higher-quality assets or newer assets. Just any color there would be appreciated.

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah, 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. 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&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. We 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

I mean, these 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. I'd say you're seeing a lot of price discipline, but you're seeing some very, very small areas where there are some people willing to price enough under us where we would be willing to turn the work away. We're seeing that happen on the fringes.

[Sam Sledge, CEO at ProPetro Holding Corp]

For a company like us that 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. 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. Really, as we sit here today, I 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

In the Permian Basin, you might only be talking about 20% of the market that is playing in that game. It has changed quite a bit from both an equipment makeup and kind of a contracted dedicated situation. That is why we are making it clear, 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 are not contracted. Yes, I can give you some fringe commentary. We are talking about a very small part of the market here today.

[Alex Schiegel, Analyst at Stifel]

Got it. Appreciate it. That's excellent color there. Kind of shifting gears a little bit here. I 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

Sure. Yeah. 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

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 investing a dollar into one of those types of equipment or opportunities, you're all but guaranteed, at least in an oil field services sense, you're all but guaranteed a specific return that is very attractive and frankly transformational for a business like ours. To 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 10 years. I could almost call them data center-like. We're not just flippantly saying these contracts are good.

[Sam Sledge, CEO at ProPetro Holding Corp]

Like I said, they're 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&A, three bolt-on deals in the last couple of years. You've seen us buy back more than 10% of our market cap over the last, say, 18 months or so. We've also kind of in the background continued to allocate capital to our smaller business lines like wireline and cementing that are two very well-positioned competitive businesses that have high free cash flow conversion. I mean, that's quite literally five different categories that I just mentioned to you from a capital allocation standpoint: power, E fleets, M&A, wireline, cement, and buybacks and shareholder returns. We will keep our optionality open to do all of those things moving forward.

[Sam Sledge, CEO at ProPetro Holding Corp]

We have a framework that we move opportunities through that help us make that decision. As we sit here today, the forces that exist in the market, we really like the power and the E fleet opportunities. All the meanwhile, we're going to allocate capital in a manner that also protects our balance sheet.

[Alex Schiegel, Analyst at Stifel]

Got it. Got it. Appreciate the color there. I'll turn it back. Congrats on the quarter.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks.

[Operator]

Thank you. Once again, please press star, then one if you would like to ask a question. The next question comes from Waqar Syed with ATB Capital Markets.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Thank 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?

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah. I think June will cover for the Permian. Is that your question, the Permian in general?

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Right. Yeah.

[Sam Sledge, CEO at ProPetro Holding Corp]

I 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. 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, "Man, 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's run 75-85 fleets, something like that. Yeah.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Seventy-five, eighty-five, just to include it, is it versus one hundred today?

[Sam Sledge, CEO at ProPetro Holding Corp]

You're probably not running 100 today. You might be closer to 85-90 today.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Yeah. All right. So about 10 fleets or so come out. Now, just to be clear, today you're still running around 14 crews or so?

[Sam Sledge, CEO at ProPetro Holding Corp]

Correct. Yeah. Of which I think interesting, I think another thing interesting to note from an activity standpoint with cars that headed into May, we will be running four simul-frac fleets as well. I know we have 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 are trying to fine-tune a model. These fleets, on average, continue to grow in size. I think that is not only true for us. I think that is true for the entire industry.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Okay. Your guidance regarding a crew, that being down, is just an expectation that come June, you do not have any requests from a customer to release a rig or?

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah. There's just 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. We are 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.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Yeah. Secondly, on your CapEx cuts 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 4 DGBs and others?

[Sam Sledge, CEO at ProPetro Holding Corp]

It's almost all optimization with CapEx. 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. We have 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. There is 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?

[Matt Augustine, Director of Corporate Development and Investor Relations at ProPetro Holding Corp]

Yeah. This is Matt. I think the point on the activity is really indicative in the range we're providing on the completion side, the 125-175. That wider range is more of an indication of our flexible CapEx program depending on how activity flushes out through the rest of the year.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Okay. Great. In terms of your mobile power, you mentioned there is 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 some of the legacy equipment that you have?

[Sam Sledge, CEO at ProPetro Holding Corp]

No, these are all new. We have a team in our ProPower 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. Those assets will be usable across more than just that midstream frac, industrial applications. That is a big part of our strategy. Another part is just availability, right? This is a crowded supply chain that we are continuing to compete in and try and carve out our spot in. A very small part of this is what you can get your hands on.

[Sam Sledge, CEO at ProPetro Holding Corp]

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. 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. We'll look to grow from here.

[Waqar Syed, Head of Equity Research at ATB Capital Markets]

Okay. Great. Thank you very much for your answers.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks, Waqar.

[Operator]

Thank you. The next question comes from Arun Jayaram with JPMorgan.

[Arun Jayaram, Research Analyst at JPMorgan]

Hey, Sam. How are you and team?

[Sam Sledge, CEO at ProPetro Holding Corp]

Morning.

[Arun Jayaram, Research Analyst at JPMorgan]

I wanted to see if you could kind of elaborate on your longer-term ambitions on the FORCE new builds as we think about capital allocation over the balance of the year and into 2026.

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah. I think you've always heard us say that we think electric frac is the future. If you just look long, long-term, 10, 20-plus years, we fully expect North America's shale to continue to industrialize. We think a huge part of that is electrification. That's been the thesis for years, frankly. That said, you have to be able to carve out the right opportunities in the market. We did that pretty aggressively with our first four fleets because the E fleet market was frankly just growing very quickly at that time, and opportunities were vast. I'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. Many of the largest E&P operators have gotten most of what they need.

[Sam Sledge, CEO at ProPetro Holding Corp]

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. 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. We think it's the right thing to do for our financial returns and the consistency in those returns. We'll be very tactical and picky about how we choose to do that and who we choose to do that with. 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. That's basically two regular fleets.

[Sam Sledge, CEO at ProPetro Holding Corp]

However you want to slice and dice it, you could say we have technically a five-horsepower working today going on six. That is four real profit centers as it pertains to crewed fleets and customers going on five today. We are going to stay in the market there. I think we should expect the existing E fleets we have, many of them, to look to transition to simul in the future too. These E fleets are really built for that type of work. I think our customers that are running zipper E fleets are starting to understand that. I think there is an interest to convert many existing E fleets to simul as well. Sorry, that was a long-winded answer. Hopefully, I answered your question.

[Arun Jayaram, Research Analyst at JPMorgan]

No, that was 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 types of opportunities versus maybe some opportunities you have of reinvesting in the frac side of the business? How do the returns look?

[Sam Sledge, CEO at ProPetro Holding Corp]

Yeah. 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. That still holds true. We'll keep it pretty tight. We'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. We're super excited about this. The willingness and the openness of the EMPs 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.

[Sam Sledge, CEO at ProPetro Holding Corp]

We're doing things that are, frankly, right now on the production operations side of the piece base 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. It's pretty exciting stuff. It's a real win-win opportunity.

[Arun Jayaram, Research Analyst at JPMorgan]

All right. Great. Thanks a lot.

[Operator]

Thank you. This does conclude the question-and-answer session. I would like to turn the conference back to Sam Sledge for any closing comments.

[Sam Sledge, CEO at ProPetro Holding Corp]

Thanks, 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.

[Operator]

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

Participants

Executives

• Matt Augustine, Director of Corporate Development and Investor Relations
• Celina Davila, CAO
• Sam Sledge, CEO

Analysts

• Alex Schiegel, Analyst at Stifel
• John Daniel, Analyst at Daniel Energy Partners
• Waqar Syed, Head of Equity Research at ATB Capital Markets
• Arun Jayaram, Research Analyst at JPMorgan