Good morning. Welcome to the Ideas Conference. I'm Sandy Martin, Investor Relations for ProPetro. These guys have been through a major transformation and really a lot of industrialized solutions, the last couple of years, so some exciting story here. Today, presenting for the company is the Chief Financial Officer, David Schorlemer, and I'll hand it off to David. Thanks, Sandy, and thanks everyone for being here this morning. We'd like to start off and talk a little bit about the name of the company, ProPetro. That means that we're in favor of petroleum products, and we believe that petroleum improves human flourishing across the globe. You'll notice I've got a pin here, says, "I love fossil fuels." It's created by Alex Epstein, the author of Fossil Future, and if anyone would like a signed copy of that book, we'd be happy to get it to you. But he's really helped define a new narrative in energy and we're incorporating that in some of our sustainability reporting and other companies as well. So we're very proud of what we do, and we're gonna talk a little bit about it today. So the investment thesis here, we think, is very compelling. We've got a very strong balance sheet with the company. We're generating increasing free cash flows. We've done some work in our strategy to put us in that position. We believe there's a dislocation in the valuation of our stock. We trade at a discounted multiple, and I think there's some reasons for that historically. But it's a different company today. As Sandy mentioned, we've transformed the asset base, the operations, and the complexion of the company, as well as the financial performance, and we'll talk about that today. We've got a very focused exposure to oil in the Permian Basin and superior field performance, along with industrial technologies that we're introducing, including our electric Force fleet. Just to show you our most recent quarter, second quarter, our financial numbers were down a little bit in the second quarter. We had some white space, but what I think we're wanting to talk about today is free cash flow. As a matter of fact, that's a lot of what investors have asked us about over the last two, three years. "Talk to me about free cash flow." And we've been building a company that can generate free cash flow on a sustainable basis, and I think we'll prove that here, in just a moment. We've got a few different services. We're focused in what we call premier completion services, and that is really the process that comes after drilling a well when you want to bring that well online. So we help customers through our cementing business, the cement, the steel casing, and the wellbore, and then the wireline business. Now, we acquired a business in 2022 that perforates that casing and cement, and then we fracture the well with our hydraulic fracturing service line. We have built a strategy specifically for the environment that we're in. We talk about an industrializing oil and gas business. I think some of you have heard about the manufacturing process that exists in the oil field today. Companies aren't going out there and trying to wildcat prospects and see if they can hit their drilling targets. They know where the oil and gas is. There's a renaissance in the United States in oil and gas. We are essentially the Saudi Arabia of oil and gas, which is a remarkable statement, but it's something that creates competitive advantage for our country if we use it, and also promotes human flourishing. So in that environment, it has been one of significant efficiency improvements. We're seeing greater production from fewer drilling rigs, from fewer completion crews, and we'll talk about why in just a moment. But in that environment, where you have a bit more stagnation, no longer the boom and bust cycles of the past, but one of stagnation, you have to do more with less. And so the first part of our strategy was, we need to optimize our business and make sure we're extending the lives of our equipment and operate a very finely tuned machine. We spent a lot of time bringing in third parties to help us with that: lean manufacturing, industrial engineering, and what have you. And we've seen significant improvements there. We also focused on a fleet transition. Just a few years ago, we were a diesel-only fleet, so that was equipment that was used to pump the water and sand downhole. That was diesel only. We've spent our resources in replenishing that asset base with more relevant assets, including industrial technologies for the industrial application. We also believe that there's no bid in the marketplace anymore. There's not private equity that's fighting for good companies in the marketplace. And so because of that, we believe we're a natural acquirer of otherwise very good businesses, particularly those that are less capital-intensive than our own business. And so we applied this three-step process over the last two and a half years that we believe would ultimately generate more durable earnings and free cash flow. A number of those achievements are listed on this page, and we'll talk about them in just a moment. So looking at our most recent financial performance, again, relative to the first quarter and second quarter, we had a nice, robust first quarter. Second quarter, we had a little more white space that popped up. Some of our customers had a liquidity strategy ongoing, and they extended and deferred some of our activity. But in spite of that decrease in some of those primary financial metrics, our free cash flow stood up and generated very strong returns. So, we'll talk about that in a moment. This slide here, we're really excited about this slide. You know, over the last eighteen months, we've been vision casting that our strategy would ultimately result in more consistent free cash flows. What you see in this slide is the demonstration of that. So in 2022, negative free cash flow, we were in a big reinvestment cycle. In 2023, same thing, pretty much break even. We spent $1 billion over the last couple of years in replenishing our asset base. But in 2023, through the accomplishment of the M&A activity and also the reinvestment, we generated $110 million of free cash flow prior to acquisition consideration year to date. So this is not a full year in 2024 that we're showing. It's just year to date. We've been able to redirect capital investment away from CapEx and into what we think are higher-grade capital allocations, things like share repurchases and M&A. Talking about the last few years, we spent over $1 billion in CapEx. Again, something that we don't think is really a high-end or highly valued investment to M&A and also converting the fleet. It's something that we needed to do, but we didn't overstress our balance sheet. What has resulted is the transformation of our fleet. If you look at the pie chart on the left-hand side of the page, you can see that we have, we believe, the youngest fleet of equipment in the industry. And then, at the bottom of the middle of the page, this is a bar chart showing the configuration of our assets. Back in 2021, we were, as I mentioned before, a diesel-only fleet. It was a tired, exhausted asset base. It really wasn't bringing the new technologies that were available to customers, and we were impacted by that. But we knew that we needed to convert that asset base, and we've done that. Today, we now have introduced Tier 4 dual-fuel equipment. That's basically a diesel engine with some additional technology to be able to take natural gas and fuse that into the system. That benefits customers by reducing their costs and also improving the emissions profile of the business. We also invested in electric technology. With electric technology, you're able to power the equipment with electricity driven by natural gas generators that are mobile generators in the field. Eventually, companies will continue to electrify their oil fields and natural gas fields and create microgrids that will then be able to tap into and eliminate the generators and just run off of those microgrids. So it's a much more efficient delivery and industrial solution as opposed to producing oil, sending it via pipeline to the Gulf Coast, refining it into diesel, sending it back to the Permian Basin, using it in your diesel-only fleet to again produce the oil and run that same process. Now, and we'll show you what we're doing here in a minute, it's a much more industrialized process. So when you think of this bar chart here, particularly the 2024 bar chart, it is the technology that our customers are looking for. It can save them $10 million - $ 15 million - $ 20 million or more a year if they use that technology, because they're using low-cost natural gas instead of diesel. It improves their emissions profile, and so they value those assets more, and that creates greater demand. Let's talk about Tier 4 DGB. It's Dynamic Gas Blending. It's a technology that's delivered by Caterpillar with their equipment, and it enables you to feed in natural gas along with diesel to displace that diesel. You can see that we've increased our natural gas substitution rates. It requires a lot of fine-tuning and configuration of your fleet, and that delivers value to our customers. We've got seven dual-fuel fleets today operating. One thing to remember, though, is that when you look at this, this piece of equipment here, right in the middle there is really a diesel engine still. It's got 3,500 parts, many of which are moving, and then another 100 parts are added to it to add those natural gas ports. So still a complex piece of equipment that requires maintenance but delivers a lot of savings to the customer. Once the customer tastes that savings advantage, they say, "Okay, how do we displace more?" Well, you gotta go electric for that. And so this is our electric fleet. We call it our Force fleet, and we have three Force electric fleets operating today. We're deploying a fourth as we speak. We signed a three-year contract with ExxonMobil, most recently in April, for two electric fleets with an option of a third, and we're now delivering all of our services to Exxon on those fleets. They're seeing record performance. One thing I would like to make note of here is you see the equipment with the lightning bolt on it. Those are our electric pumping units, and those two big black boxes, one of them is a transformer and the other is a variable frequency drive. The notable moving parts are the door hinges to the cabinets, okay? And so think about that in comparison with that diesel or Tier 4 dual fuel equipment that has thirty-five hundred parts, a lot of moving parts, requires a lot of maintenance intensity. It's a paradigm shift for what goes on location. What we've also done is been very targeted in our acquisitions. Silvertip was an acquisition we completed in November of twenty twenty-two that added wireline services. Wireline services are delivered as part of your hydraulic fracturing process. You gotta send a perforating gun down the hole. It perforates through the steel and cement into the formation. Then they pull that gun out, and then we frack the well with sand and water under pressure. That was something that was delivered on location, along with our fracturing business, and we thought we could benefit from that. Also very much less capital-intensive business. Par Five was a cementing business in southeastern New Mexico, which is the western part of the Permian Basin. Permian Basin has a few different areas in it. The Midland Basin, which is primarily around Midland, and then the Permian, the Delaware Basin on the western side, and so Par Five extended our cementing business to give us a full service capability there. Aqua Prop is one that was a bit unique to us in that it was a new business delivering wet sand solutions, so if you think about hydraulic fracturing, what you're doing is you're taking sand and water. Sand is the proppant that we then pressurize and pump down hole, fracture open the formation. That sand props open the formation and enables the hydrocarbons to flow out. Aqua Prop really changed the game in that a lot of that sand was delivered and stored in sand silos, metal fabricated systems, a lot of technology around them, and a lot of capital investment. This now provides a sand pile, which you might think, "Gosh, that's pretty easy. Why didn't I think of that?" But it's creating some creative destruction, and we think adding a lower cost value to the customer. All of these businesses are much less capital intensive, generate a lot of free cash flow conversion from their EBITDA. This just shows you what we're doing with those businesses. This is one of our large customers. This is a fracturing operation that's going on. If you look at the top of the page, you can see a unit on the edge of that field. That's the 35 megawatt gas turbine generator. That's taking field gas from the field, converting it into electricity, powering our electric fleet that are shown in the top part of this picture here. Exxon was not quite comfortable with our tier with our electric equipment because it was the first location, and so they kept all of our dual fuel equipment on that location as well. Shortly thereafter, they said, "Okay, we're convinced," and that equipment was able to go off to another customer. But on the left side of the page, Aqua Prop is the wet sand solution, containment, and logistics solution. What you can see there is really it's just a big sand pile, and it's got some cement blocks that provide containment. That wet sand is delivered. It doesn't have to be dried to the extent that the conventional sand does. It doesn't require all those steel structures that conventional location does, and so it provides a very cost-effective solution to the customer, and we're now delivering those services on four of our locations. So this is just an example of where we're delivering industrial solutions to our customer. One of the things that we had been talking with our board about was this desire for investors to see capital returns. And also, with the valuation dislocation, we felt like our shares were very favorably valued, and we convinced our board to enable us to approve a $100 million share repurchase program back in May of 2023. Since that time, we've acquired close to $100 million of our shares, and we recently extended that an additional $100 million. So, this is an investment that doesn't require integration. It doesn't require a lot of explanation because of that valuation differential, and you can see here, this slide shows that ProPetro, as compared to some of our peers near us, along with much of the oil field service space, is a significant differential to these other companies from an enterprise value to EBITDA multiple. We think that, again, historically, maybe there was some basis for that. We had an older fleet. We had less technology, less service diversification, less of a cash flow profile. That has changed, and so we think there's reason to believe that it's a very good investment. This slide here shows the industrial index compared to the oil service index, and that differential really started in the 2014, 2015 time period, where the oil service index began to decline relative to that industrial index. There were some good reason for that, which are enumerated on the left-hand side of the page. There was a lot of excess capital in the industry, a lot of private equity capital, plenty of debt capital, that really incentivized companies to overbuild, and it was a very undisciplined environment, even at the oil and gas operator space and level. Companies and CEOs were incentivized to create production growth and not really be disciplined in their capital distribution. That has changed. E&P companies have consolidated. Very disciplined operators are driving the industry activity, and there's not a lot of volatility that we've seen in the past. The amplitude of the cycles we're seeing shrink quite a bit, and that may be less interesting for you know, short-term investors looking for you know, a quarterly operating leverage and a pop. But I think it's certainly more attractive for long-term investors looking for excess free cash flow generation and companies that are gonna be sustainable over a longer period of time. Now, when does that change? When does that valuation multiple begin to converge again? We don't know, but we think there's a case to be made that there should be some convergence back from where it has been historically. You know, as it relates to oil and gas, I think, the thing that we like to talk about is that hydrocarbon industry is here to stay. There's been a lot of talk about transition fuel. That really is not happening. It hasn't happened in the last 40 years. We don't think it's gonna happen in the future. The reality is, the chemistry requires the use of hydrocarbons to power our world, and 85% of power use was hydrocarbons 40 years ago. That number hasn't changed. We think there's been a dramatic misallocation of resources that has resulted in things like the de-industrialization of Europe, which you might think that, you know, h ow could Germany, that creates things like the BMW and Mercedes, have to de-industrialize because they can't provide power to their country? That's happening today because of these misallocations. We think that there's been a bit of an awakening there, that we've got to invest in oil and gas to drive our world, and we're a big part of that. So where is that gonna happen? You know, we used to show a slide here that showed the various transactions of companies investing in the Permian Basin, and these are transactions of the $10, $20, $30 billion range. Companies like ExxonMobil, who went global and international for decades and exited the Permian Basin decades ago, now reinvesting with the acquisition of XTO and the acquisition of Pioneer, and now saying, "Look, this is where we're gonna stake our claim, and this is where we're gonna invest." That, to us, speaks volumes. And then, when you have a company like that, signing a three-year contract for our industrial solution, you know, to us, that means that we're doing something right. We're delivering that low-cost, high-quality solution that companies like ExxonMobil want, and that companies like ExxonMobil and others who are consolidating in that space are gonna look for. And then, where are they gonna do that? In the Permian Basin. That's where we're focused, that's where we have our roots, and that's where we're gonna be playing. I'm gonna flip through this slide and talk a little bit about— You know, people say, "You know, you claim things, but, you know, bring receipts." Well, here are the receipts right here. ProPetro has a reputation in the Permian Basin for first-class performance in the field. Now, we did that, I would say, from a CFO's perspective, not very efficiently from a capital perspective. A lot of that was putting new equipment out in the field and running it to exhaustion. What we said, we have to do that in a better way. We can't compromise our field performance, but we also have to make sure that we're maintaining our fleet and also providing the industrial solutions that the industrial application requires. So now we're doing that with those technologies, and again, that's what those companies, those leading companies, are looking for, and we're breaking records all across the board. We believe we're at the top of the market from a performance perspective. We now have the technologies that we didn't have two years ago, and so we can deliver those solutions that our customers are looking for. We also have a commitment to our people and our community and the environment. We, last year, published a sustainability report. We call it the ProPetro Pro Energy ProPeople, and we think that's really the right way to look at it, particularly if you're thinking about human flourishing as something that drives your company and your employees, and we're very proud of that. We think if you take a look at that report, we've produced a most recent sustainability report just last month, and we've increased our capability of capturing the data that we think investors are looking for, and so I would encourage you to go to our website and take a look at that. I think just to wrap it up, you know, we think that our three-pronged strategy is very focused for this industry in the environment that we're in. It's not one of high volatility that we've seen historically. It's maybe a little bit less exciting, but for investors that were... that are maybe looking for less excitement and more sustainability over the long term, we think that we're a very attractive company for that, and it's proving out. You know, we've had five consecutive quarters of free cash flow, and I'm talking about free cash flow as measured on the cash flow statement. When you look at it on a year-over-year basis over the last couple of years to this year, we're so far ahead of what we've been over the last couple of years with $110 million of free cash flow just year to date. We think that can double for the year, and we believe that our capital investments going forward will continue to remain lower than historically because of the industrial applications that we're putting in place. We've got a very strong balance sheet, a very strong board and management team, we believe, and we're very proud of that. So happy to end the presentation there and answer any questions that you have. Yes, sir? You mentioned that you had three electric fleets and a fourth coming online. What's the makeup of the fleet? The fleet makeup consists of, you know, hydraulic fracturing equipment, pumping units, blenders. The blenders on the bottom of the page take in that water and sand and mix that together and pump that under low pressure to the frack pumps. The frack pumps then take that and energize that to high pressure down the manifold into the wellbore, and so you need blenders, you need pumping units, you need a power distribution unit for the electric fleets, and then a frack van, where the engineers and the company man on location monitor the job. That's essentially what a fleet looks like. In terms of horsepower, that's probably what people talk about today. You know, years past, a fleet consisted of probably 40-50 thousand horsepower of pumping equipment on location. That has changed and increased to, you know, 50,000, 60,000, 70,000 horsepower on location, depending on the application. Some companies are also doing things like Simulfrac. This is a job that is what we would call a zipper job, which really means that you've got one fleet pumping down one wellbore at a time. This is an impressive picture because really you've got two fleets on location. You've got a dual fuel fleet, and you've got our electric equipment. We wanted to show this because it had all of our services on location. We've got a new slide that shows a zipper operation with just our electric equipment, and all of this, all of the equipment right in the middle there is gone, and there's only eight pumping units, electric pumping units on location and then two blenders, and that's essentially your fleet. And so it's a much more intense, equipment profile and smaller profile, that requires, less maintenance. The equipment doesn't have to move. You can maintain that equipment in place, and so in this case, you know, that diesel and dual fuel equipment had to go back to the maintenance facility a lot of times, very frequently. So, hopefully, that answers your question. Yes, sir. I'm a journalist, so I, I'm just curious about Aqua Prop and the movement to wet sand and how about- Sure. Actually, what you 'cause it make it sound like it's a new competitive advantage. I'm curious as to, you know, how much of the field, you know, what percentage of the field is actually doing wet sand? Sure and why it's better? Yeah. So the question was on wet sand and dry sand. You know, dry sand, again, was the conventional way to deliver proppant. We originally had to ship it down from Wisconsin. And that was called, you know, out-of-basin sand. And it had to come dry because of the weight through the transport, and then the way it was delivered and stored into these structures. Then they determined, particularly in the Permian Basin, that, well, we've got sand dunes out here in the middle of the desert. Why don't we check some of this sand to see if we can use this? And so there's sand mines, dry sand mines that popped up in the Permian Basin in places west of Midland, like Monahans and Kermit, where these big sand dune reservoirs exist. Then companies decided, "Wow, we've got infield sand." You know, the sand doesn't just exist in these dunes. It and it exists in the ground, and we test that, and companies began to use these mini mines that one of our competitors provides. It's a sand company, and so you have less transportation required. But in that case, they didn't wanna build a complete mine. Yeah. So they said: How do we do that without building all this heating equipment and natural gas infrastructure? And so they said, "Well, we're just gonna deliver it wet 'cause we don't have to go as far, and we can just dump it in a pile." And so that started the last couple of years, and there's probably 10% of the fleets operating in the Permian Basin that are using wet sand solutions today. We're probably, you know, we've got four fleets that are currently using wet sand. It is a major paradigm shift. You know, so you think about, you know, in the old days, you have this giant computer, right? This mainframe computer that needed this big building, and you said, "Well, we can replace that with the laptop here." You know, a lot of people said, "Well, that doesn't make any sense," and it took a while for that change to happen. I think we're working on customer adoption today, but when you have ExxonMobil and companies like that saying, "Yeah, that works," you know, it's a lot less cost. You could save 10, 20, 30% in your sand costs by utilizing that solution. That's gonna become more prevalent over time, so we think that's where the direction of the business is moving. It's gonna take some time 'cause there's a lot of status quo infrastructure in place, and whenever that exists, it takes time for that to play out. Any other questions? Yes, sir. Can you say a little bit about your background, as well as the background of the team at the top, and what was the big driver of the success of it? Sure. Talking about the team of ProPetro, you know, it is primarily, you know, some young, talented, multi-generational oil field individuals from the Permian Basin. Sam Sledge, our CEO, his father was one of the executives in what I would call ProPetro 1.0. There were some problems that occurred with the company back in nineteen. There wasn't really public company experience on the board or in the management team, and that caused some problems. Ultimately it resulted in the entire C-suite being reconfigured. I was really the first individual who had some public company experience that came in to start the reconfiguration of that team. You know, my background, I started with Accenture in their technology practice, working in you know, Fortune 500 companies, AT&T, Ryder System, Tenneco, you know, building enterprise solutions for them, shared services organizations. Then I got into the oil field in 1997. I had a lot of M&A practice in my background and then most recently, public company experience. The team has got a lot of local homegrown talent that are coaching their, you know, football teams with the E&P operators, CEOs, as well as other executives in those companies. It really gives them a lot of comfort when they can work with a home team and also, you know, a team that is being innovative and rebuilt the company in such a way that we have. I think I'm out of time, happy to answer any more questions if you all wanna grab me on the way out, but thanks for being a part of the presentation today.