Good day, and welcome to the ProPetro Holding Corp First Quarter 2024 Conference Call. Please note, this event is being recorded. I would now like to turn the call over to Matt Augustine, Director of Corporate Development and Investor Relations for ProPetro Holding Corp. Please go ahead. Thank you, and good morning. We appreciate your participation in today's call. With me today is Chief Executive Officer, Sam Sledge, Chief Financial Officer, David Schorlemer, and President and Chief Operating Officer, Adam Muñoz. This morning, we released our earnings results for the first quarter of 2024. 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'll 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. Finally, after our prepared remarks, we will hold a question-and-answer session. With that, I would like to turn the call over to Sam. Thanks, Matt, and good morning, everyone. First quarter of 2024 was an exciting start to the year for ProPetro. Before David walks you through our financial results, I'd like to begin by covering some important business highlights. As we mentioned last quarter, this year, we expect to demonstrate that our strategy is and will continue working. To start off the year, we initiated strategic actions to build on our recent progress, and we're pleased to report that those actions, coupled with recent investments, are yielding strong returns. Let's walk through some of the specifics. First, underpinning our strategy is our ongoing fleet transition from legacy equipment to next-generation assets. Over the last 2 years, we have worked to create a next-generation fleet to meet the needs of an evolving industry, both today and into the future. We've invested approximately $1 billion to recapitalize our fleet with state-of-the-art technologies and services. Today, we have transitioned over two-thirds of our fleet to next-generation equipment, delivering premium value for our customers while lowering emissions through things like industry-leading natural gas substitution. Strong demand for our assets and services continues to support our solid performance. Our outlook for electric equipment remains particularly bright. Having significantly upgraded and modernized the majority of our fleet, we are excited to realize strong returns in 2024 and for years to come. Our FORCE electric fleet offering is uniquely positioned to create value for our customers. We now have 3 FORCE electric fleets deployed, with a fourth deploying by the end of the second quarter, and 7 Tier 4 DGB dual-fuel fleets operating with industry-leading diesel displacement. Our FORCE electric fleets, which we first deployed in early September of last year, have built a reputation of performing at high levels, operationally and financially. As a testament to the success of our FORCE offering and our execution here in the Permian, we were proud to announce earlier this week our latest contract with ExxonMobil. This agreement is a direct result of our strategy and pursuit of an industrialized model to create premium value for our customers, and is supported and made possible by our first-class operating team in the field. I'd like to take a moment to walk through some of the highlights of our agreement with ExxonMobil to underscore why it is such a significant step and important achievement for ProPetro. This is a three-year agreement to provide our FORCE electric-powered hydraulic fracturing services, coupled with Silvertip's wireline and pumpdown services to ExxonMobil. The agreement calls for the delivery of two FORCE electric fleets paired with wireline and pumpdown services in the first half of this year, with the option of a third fleet to commence operations early in 2025. This agreement is a significant achievement for us, showcasing ProPetro as a trusted partner to a widely recognized industry leader and global super major. This also demonstrates our ability to successfully deliver multiple completion services through an integrated operation to our customers. The ExxonMobil agreement, along with our other contracted FORCE electric equipment, is a glimpse into what the future of ProPetro will look like, inclusive of a more durable earnings profile. We work closely with our customers, creating efficiencies tied to transparency, logistics, and higher utilization. We are proud to deliver faster, more efficient, and flexible services while reducing risk and costs for our customers, all made possible by our team here at ProPetro. Our electric equipment is in high demand, and we plan to continue to transition our Tier 2 diesel equipment to FORCE electric equipment over time, in a manner that minimizes our overall capital costs, garnering committed contracts that de-risk our earnings performance over the long term. Having covered our fleet transition and recent FORCE developments, I want to move to another core, core attribute of our strategy, our disciplined approach to inorganic growth. Our successful capital deployment track record of value-enhancing M&A supports our resilient and improved results. We continue to pursue value-accretive acquisitions, like our recent acquisition of Par Five Cementing. The accretive earnings impact and expected revenue synergies from that acquisition are already beginning to show in our results. This builds on our momentum of our Silvertip acquisition, which continues to be a strong tailwind for our earnings power and free cash flow. We will stay opportunistic in our pursuit of accretive M&A opportunities at valuations that make sense. The final key element of our strategic focus is our capital allocation philosophy. With our capital allocation strategy, supported by strong, resilient free cash flow, we remain opportunistic in returning cash to shareholders. Just last week, we announced that our board approved an increase and extension of our share purchase program through May 31st, 2025, with an additional $100 million authorized for a total of $200 million. Since the inception of our plan last May in 2023, ProPetro has repurchased approximately 8% of our outstanding common stock. We've consistently executed on the share purchase program, and this recent increase confirms our board's confidence in ProPetro's continued earnings growth and free cash flow generation. Now turning to our results. We started off 2024 with an impressive quarter that also shows the success of our execution in the field, our strategy, and the recent investments we've made to enhance our earnings power. Our differentiated offering that supports operational excellence, our blue-chip customer base, next generation equipment, and operating density in the Permian Basin make our company strong and resilient. We are excited that this year we can reduce CapEx spending as our large reinvestment capital requirements are now behind us. This will continue to support free cash flow and our capital allocation approach in 2024 and beyond. We remain very confident in our ability to deliver durable and repeatable financial results for the long term. Turning now to the macro outlook. Despite market volatility, our approach to the market creates differentiated stability. The recent upstream M&A extends and confirms our capital discipline, mindset, and strategy we are pursuing. ProPetro offers bifurcation with the goal of being a highly sophisticated service provider that can serve the needs of the consolidating E&P space. To summarize, we're generating strong free cash flow and continue to evaluate accretive M&A opportunities to enhance our earnings power, while returning capital to shareholders through our share purchase plan. Our proven discipline and transformed bifurcated fleet gives us confidence in our strategy and earnings potential during what we see as a slow to no growth environment. We are confident that our more industrialized model will continue to drive success for ProPetro and benefit the space for years to come. I'd now like to turn it over to David to discuss our first quarter financial results. David? Thanks, Sam, and good morning, everyone. As Sam mentioned, we have some great news to discuss today regarding our financial performance and progress in our strategic initiatives. ProPetro's performance in the first quarter was a testament to the merits of our strategic priorities and our progress in achieving certain operational and financial objectives over the last few years. Let me be clear, this has been an active strategy requiring significant effort and employment of a variety of resources. All of this being possible because of the teamwork and diligence of our people at ProPetro, whom we've asked to do more with less and implement new business processes and utilize new innovative technologies. The results of their work in combining these new resources and ProPetro's superior field performance are unmistakable and are only now beginning to be realized. We also believe our strong first quarter results are a good indicator of what is possible in a more industrialized operating paradigm. Despite recent market headwinds, the company is producing more sustainable returns after having invested over $1 billion in the last few years to recapitalize our fleet and adding to and enhancing our service offerings to support lower capital intensity requirements. Due to our approach, we are now transitioning to lower capital spending and higher free cash flows. In the first quarter, revenues increased 17% to $406 million as our customers reinitiated dedicated fleets. Net income increased to $20 million from a net loss in the fourth quarter, and Adjusted EBITDA increased 45% sequentially to $93 million, with healthy 50% incremental margins. Notably, we incurred operating lease expense related to our electric fleets of $9 million for the quarter, as compared to $4 million in the prior quarter. We also achieved another strong quarter of free cash flow of $41 million. The significant improvement in our financial performance was largely attributable to activity levels rebounding from the fourth quarter seasonality. As we discussed on the prior call, our customers were expected to restore their dedicated fleet activity after year-end, and that transpired. This speaks to strong demand for our differentiated services as we saw customers pick up where they left off following the holiday season. Our effective frac fleet utilization for the first quarter was 15.0 fleets, which was at the top end of the guidance range we provided. Our second quarter 2024 guidance for effective frac fleet utilization is a range of 14-15 fleets, and we have 14 active fleets today, of which 3 are FORCE electric fleets, with a fourth expected to deploy in June of this year as part of a recently signed ExxonMobil contract. ProPetro's cash and liquidity position remains strong. As of March 31, 2024, total cash was $46 million, and our borrowings under the ABL credit facility were $45 million. Total liquidity at the end of the quarter was $202 million, including cash and $156 million of available capacity under the ABL credit facility.... Moving to our capital program. Incurred capital expenditures for the fourth quarter were $40 million. As we have demonstrated for the last few quarters, lower capital spending continues to enhance our free cash flow generation. This decrease is due to our fleet transition and the realization of benefits from our continuing optimization program. Additionally, our supply chain team, along with operations, are scrutinizing our capital spend more so than ever before, and we're also conducting supply chain assessments to maximize the returns from our vendor relationships. The work they're doing is driving favorable results. Given our progress, we now expect our 2024 incurred CapEx to be biased to the lower end of our previous guidance range of $200 million-$250 million. As we transform our fleet further with our FORCE electric fleets, we anticipate a decline in associated maintenance capital spending, with resulting increased free cash flow and more durable profitability, particularly with the multiyear contractual coverage increasing across our fleets. In the remainder of 2024, we anticipate further validation of our strategy and a demonstration of the earnings enhancement resulting from our investments in the business. Our strong financial profile is now enabling us to return significant capital to shareholders, and we remain active in our share repurchase program. Since inception of the plan in May 2023, we have retired approximately 9 million shares, which equates to approximately 8% of shares outstanding as of the inception of the program, returning $74 million to shareholders. We remain confident that the current discount of our share price relative to our view of the intrinsic value, creates a very compelling investment opportunity. We will continue to accelerate shareholder returns by opportunistically executing share repurchases under the increased and extended $200 million repurchase program recently authorized by our board. I'd also like to reiterate that ProPetro's balance sheet remains strong, and we are committed to disciplined and dynamic capital allocations for the long term. Our strong results showcase the continuation of the improvement realized over recent years. Additionally, our strong capital foundation and capital discipline enabled us to develop and install our capital-like long-term lease agreement while executing accretive M&A to further accelerate free cash flow performance and industrialize our earnings stream. Finally, to reiterate our view of the industry, which we have outlined before, and as Sam mentioned, we believe we are in a slow to no growth environment. The industry is consolidated, and the large Permian hydrocarbon producers representing our customer base are more disciplined in their activity and spending than ever before. Our strategy is designed for this environment. We've also built a commercial architecture that is meeting the needs of leading operators in the industry. ProPetro has unique experience in this regard. We're also delivering innovative technology solutions, including our electric-powered FORCE fleets and leveraging technology throughout our organization to maximize our efficiencies. Our strategy is beginning to show clear evidence of delivering results, not only operationally, but also financially, and we are confident ProPetro will continue to deliver for our customers and shareholders as we make further progress in building our company for the future. The key to this strategy is that it benefits not only ProPetro, but also our customers, by delivering the very best commercial and industrial solutions for their completions programs. With that, I'll turn the call back to Sam. Thanks, David. Before turning to Q&A, I'd like to again summarize the key attributes of our strategy that are driving our success and why we're confident in the future of our company and our industry. With a strong first quarter behind us, we remain focused on executing on our strategic initiatives. We believe ProPetro provides a compelling investment thesis, one that our recent performance and decline in capital spending have started to highlight. Despite the headwinds and the slow to no growth environment in the energy services space, we are uniquely positioned to showcase our earnings power and free cash flow potential. We are pleased that our results to start the year have started to demonstrate these capabilities. We have been successful in simultaneously transforming our fleet, executing on buying back our shares, and pursuing accretive acquisitions, all while maintaining a very healthy balance sheet and liquidity profile. Strong returns are now showing through, and we expect that to continue. We are confident that ProPetro is well positioned to take advantage of the ongoing industry evolution here in the Permian Basin. Despite what you may be hearing across the OFS space, demand remains strong for our services. This is evident in our recent ExxonMobil contract, and we expect more opportunities like this in the future as our FORCE electric fleet demand outpaces our current supply. In addition, with our outstanding customer portfolio and operational density here in the Permian, we are insulated from the uncertainties outside of the Permian and in the spot market. As we look ahead, continued focus on the execution of our plan will remain important given the market backdrop that we face. We believe ProPetro is primed to capitalize on the evolution of the consolidating E&P industry. This consolidation demonstrates the need to combine top-notch service integration with the deployment of next-generation industrial technologies, which is directly supportive of our strategy here at ProPetro. ...As we continue to optimize our operations and transition our fleet while remaining opportunistic on M&A and share buybacks, we've significantly strengthened the business for the long term. Our goal is to be the service provider of choice for the consolidators in the E&P space, and we're well on our way to achieving that goal. We believe the strategy we've employed continues to de-risk the future earnings of our business and support a more industrialized model. We have proven electric technology that is garnering committed contracts while sharing capital costs for these value-enhancing assets. We continue to execute while maintaining a clean balance sheet with a healthy liquidity profile, which we expect to drive significant opportunity to accelerate shareholder returns over the long run. We look forward to continuing to capitalize on the tremendous opportunities ahead. Lastly, none of this is possible without the dedication of all of our ProPetro teammates, from the well site to the shop and in the office. I'm proud to be a part of a team that is always competing and striving to improve. Thank you for your continued outstanding performance, which strengthens our leadership's confidence that we have the right strategy at ProPetro as we continue to lead in the Permian Basin. With that, I'd now like to open it up for questions. Operator? 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 are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, you may press star, then two. We will now pause momentarily to assemble our roster. Today's first question comes from Luke Lemoine with Piper Sandler. Please go ahead. Hey, good morning. Sam, congrats on the contracts, first of all. Just wanted to touch on the FORCE fleet some more. You know, the operating cost savings here were supposed to be 30%-40% versus Tier 2 diesel. I know it's still kind of in the early innings of these working, but could you just kinda talk about what you're seeing right now as far as the cost savings? Sure. I think we'll stop short of probably pinning an exact number in any more detail than we already have, that 30%-40% number you have, but early indications are very, very positive. Before we get more granular on some of those numbers, we'd like to have a little bit more runtime on the equipment, but you know, this is a tried-and-true solution that's been out in the field for years and years. So with what we're seeing here initially, with, as you can see, our customers' confidence to continue to kind of contract and demand and pull this equipment into the field via, you know, our announcements earlier this week with ExxonMobil, I think it's as good or better than expected. Okay. And then, I think you have a fifth FORCE fleet built in your CapEx budget this year. Could you talk about the outlook for, you know, additional FORCE fleets and then maybe possibly the timeline on how you see your overall fleet just kind of progressing to fully electric and, dual fuel? Yeah, that's correct on the fifth fleet. Thanks for calling that out. I'm not sure we had that in any materials or scripted remarks this quarter, but we did talk about it last quarter. Inside of that $200-$250 million range, we could fit a fifth FORCE fleet. That one could likely be a lease, too. But as we sit here today and we look at demand, if Exxon exercises their option for that third fleet in 2025, that's five. So demand exists for five. We're technically, we're contracted for five as we sit here today. There's multiple other conversations going on that would push that number higher than five. So, you know, the more of kind of an operating mass that we build and the more of a track record we build, the more it is, the easier and the more effective we can market these fleets. So it's just a lot of really positive momentum in that direction that we're really excited about for the future of our company. And really, all of us in the sector that are deploying technology like this should be excited about the overall stability that this type of equipment and these types of contracts will bring to our sector, making the investment thesis quite a bit different than it has in the past, has been in the past. Yeah, Luke, this is David. Just to add a little bit to that. I think what we've kind of built in long term is that we would look at between 1-2 fleets per year, but we also have to be mindful of the power availability out there. So those are some things that are some limiting factors. And the pace that we're going seems to be very good and compatible with the customer uptake there. So I think we're on a good pace right now. All right. Thanks, Sam. Thanks, David. Thank you. The next question comes from Derek Podhaizer with Barclays. Please go ahead. Hey, good morning, guys. I just wanted to expand on the Exxon contract and maybe some of the learnings that you've had from your previous Pioneer contract. Just wanted to get your thoughts on how you approached this current Exxon contract versus how the Pioneer contract was set up, as that obviously had some challenges as the industry went, you know, up in 2022, you had to rework it. So just your, just your overall thoughts on how you approached this one, knowing you've been through it in the past. Yeah, we're not, we're not the only one. First up thing I'll say is, we're not, we're not the only ones doing this, contracting electric equipment. There are others. That said, I think coming into this process with Exxon that, you know, started almost six months ago, we were able to confidently communicate that we believe we have more experience, contracting long term with this much equipment with a single customer than maybe anyone else does in the space via our experience with Pioneer, dating back to 2019 that you mentioned. Tons of learnings came out of that. Lots of really good learnings, a few not so good. But having navigated that contract through the most disruptive time in our industry, through COVID, you know, built quite the set of experiences for us to apply to agreements like this. We'd already, you know, sprinkled some of those experiences and things into the first two FORCE contracts, but even more so into what we're doing with ExxonMobil here because of the amount of work that we plan to do with them over the longer period of time. So we were able to talk through a lot of our experiences with that previous contract, and honestly, it was quite invaluable to be able to do that. Another thing I'll say about how we're doing this is that, no, I wouldn't say any two, one of these contracts are exactly the same. You know, we hear that we might have competitors that have more of a cookie-cutter approach to doing this. We really rely on our kind of commercial flexibility and putting the customer first and trying to, you know, solve for what they're most sensitive to. And on a customer-by-customer basis, that's usually a bit different. So I'd say our kind of commercial agility, we feel like is greatly benefiting us in getting this equipment and this offering into the field as well. Great. No, that's very helpful and good color. You know, you talked about your results this quarter indicate the earnings power of ProPetro in the industrialized environment. How should we think about your margin expectations going forward? Are we at a new level now as you reset the expectations when you stepped up those 50% incrementals? Obviously, you're going to have the interplay of the additional lease expenses coming in, that'll be diluted to the margin. So maybe just some thoughts around the outlook on the margin profile, since we did see a significant step up this quarter. Yeah, I'll... David might want to add some detail to these comments, but I think, Derek, you outlined kind of some of the important puts and takes yourself, talking about, you know, how incrementals can change coming off of a, you know, high seasonality quarter like Q4 into Q1, that's tailwind to something like incremental margins. But also deploying more FORCE electric equipment into the system that from a, maybe an EBITDA margin, could possibly work the other way, but from a free cash flow margin, could be very positive. Overall, this is all about, you know, making a cash-on-cash return on assets we're deploying and about producing free cash flow that we can do things like, you know, stay opportunistic in the M&A market, buy back our shares, and allocate capital very dynamically. So overall, I would say what we're seeing from, you know, the progress that we've had and some of the fruits of our optimization projects starting to show through, I think that was part of Q1 as well. It's putting us in a very strong position to remain very opportunistic in what I think is a very interesting time in our sector. Yeah, I think, Derek, the only thing I would add to that is our margins will be pressured somewhat by the lease expenses as we do roll out the additional E fleet. So I think that's something to be mindful of. I think that being said, over time, as we change the complexion of our fleet to the electric equipment that has a materially lower OpEx profile and capital intensity, that's just gonna show up in our free cash flow more and more as we go along. And we're gonna see a significant differential between last year, where we were effectively neutral from a cash flow from operations to cash flow from investings to you know in the $200 million type range this year and going forward. So it's just a material differential. That's great to hear. All right, Sam and David, thank you so much. Great quarter. I'll turn it back. Thanks, Derek. Thank you. The next question is from Kurt Hallead with Benchmark. Please go ahead. Hey, good morning, everybody. Good morning, Kurt. Hey, congrats on great operational performance in a pretty tough market. I just wanted to clarify maybe a couple of things. You guys indicated, you know, given your second quarter dynamic, 14-15 fleets in operation, you got another fleet coming on in the second half of the year. And Sam, to your overall comment, you know, looking at an overall flattish environment, you know, for the year. So is there anything that is taking place with respect to, you know, this incremental E fleet that could potentially give you some sequential revenue improvement or sequential margin improvement as the year progresses? Or literally, are we kind of taking a first quarter run rate and kind of running that flat for the year? Yeah, I mean, I'll first reiterate our activity guide. That's kind of one of our main guidance mechanisms, that 14-15 fleets. So if you go to the midpoint, that would imply that technically we'd be down a half fleet from what we just printed in Q1. I don't think that should be read as a signal of, you know, the underlying structure or fundamentals of the market. That's just, you know, a fleet or two moving around a little bit during the quarter and creating maybe a little bit of white space as compared to Q1. So, other than that, this is... This seems to be the sturdiest, steadiest run of, I think, utilization and margins that we've seen, if you date back to, say, almost this time last year, and that's what we plan to experience for the balance of this year. It's just a very stable environment. We don't need activity to really, you know, improve our prospects per se. We just need to continue executing into the circumstances that exist today. We obviously, you know, are never looking for a downturn or anything like that, albeit we're very prepared for one, given our contracts and our balance sheet and kind of the customers that we work for. But this is just a very kind of rinse and repeat type of model that I think we've worked ourselves into, that if we continue to execute, you can kind of see the cash flow that comes with the business. And we remain very confident in kind of our ability to operate, I mean, ability to execute operationally, which is really what kind of leads us from a confidence standpoint to be able to continue to do this. So, you know, we use the term, you know, low to no growth, that's on purpose. That, you know, in prior cycles or, you know, over the past decade, you've heard companies like us say, "You know, the next wave is coming." We don't think it's coming, nor do we need it. So we're really proud to be in this strong position, I think, in the best, you know, basin on this side of the world, with good equipment, great people, and we think that this is something that we can replicate for a long time. Kurt, just to give you some anecdotes to what Sam was saying. You know, we're doing more with less. That was the topic or a theme that I mentioned in our comments. Looking back at the third quarter of last year, you know, revenues are down relative to that period, but we're still generating very good EBITDA and then significantly higher free cash flow. Year-over-year, our CapEx is down nearly 60%. And so those are the things that we're focusing on, and as Sam mentioned, we don't need that massive or significant top-line growth, although it does present potential opportunities for other growth potential. We don't need it to generate the free cash flow that we're talking about to support our repurchase program and the other capital allocation opportunities that we have. Got it. That's good color. So just on that context then, on capital allocation, so looks like you're in the first quarter, your share repurchase is about 50% of your free cash flow, give or take. You know, are you, are you effectively, I don't know what the right phrase is, but a lot of companies kind of said, "Hey, we're gonna allocate, you know, whatever percent of our free cash flow to, you know, distribution to shareholders." Is... Do you have, like, a specific percentage that you're looking at on kind of an annualized basis? We don't right now, Kurt. Something we could possibly do in the future. We use the word, you know, dynamic capital allocation. Key, you know, keyword there, dynamic, that things are always changing in our sector, even, even with the kind of steady environment that I just described earlier. Things continue to change. The business has different needs at different times, and M&A opportunities kind of surface, you know, at certain times. So right now, we'd rather stay nimble across kind of the three core areas that we allocate capital, which is equipment transition, shareholder returns, and M&A. We've been proud in the last six months to do all three of those things, basically simultaneously, and really proud to have a business that is able to fund that. So kind of more the same for us moving forward. And I don't. I think it'll be maybe a while before you see us get more prescriptive in terms of, you know, allocating a percentage of free cash flow or anything like that. We'll prefer to stay a bit more dynamic and opportunistic for the time being. All right. That's great. Appreciate it. Thank you. Thanks, Kurt. Thank you. The next question comes from Arun Jayaram with J.P. Morgan. Please go ahead. Good morning. Morning, Arun. Sam, I wanted to see if you and, you and David could give us a little bit more context around the Exxon award. You mentioned that you, you know, have been you started talking about six months ago, but, you know, could you talk about whether this was called a bake-off relative to Halliburton and, and Liberty, and just talk about the, the overall process, what you think, you know, what drove your, your success on this, and, and maybe some details around the financial impact. Is this a take- or- pay contract? You know, what kind of, you know, impact do you see from the financials, maybe from a margin perspective? Yeah, sure. I'll likely not give you the detail that you might be asking for. You know, we have some competitive, I think, proprietary things that we've used to get this done, and you know, if you wanna know more about Exxon's process, then, you know, they're probably the best person to ask about that. That said, I think it's safe to say that a company like ExxonMobil is not, you know, they have a very sophisticated operation, a very sophisticated supply chain team, and they don't go about these things flippantly. It's very planned and prescribed.... So I think it's safe to say that there's other competitors of ours that were involved in this process, and we were happy and proud to get the amount of work from a FORCE electric standpoint out of this that we did. And maybe I'll just reiterate something I said earlier, around kind of our commercial approach to these things. You know, we get some firsthand feedback from not just ExxonMobil, but from other customers that maybe we're just a bit more collaborative in the contracting process and a bit more creative. You know, we love to lead into conversations by asking customers what their main concerns and sensitivities are to doing this, and start to work on those big things. And if we... You know, we believe if we can, if we can solve for those big items, then kind of all the smaller bells and whistles that come into the agreement will begin to fall in place. So, you know, we like to fit ourselves to our customers, and we've been doing that for 12, 13, 14 years, really. That's nothing new. This is just a new technology that we're doing with it under a bit more of a structured commercial agreement. So I don't know if that's kind of helping you get at your answer, get at the answer you were asking for, but I think that kind of encompasses what we've been working on. Yeah, and around the one thing I would add is, you know, there's been maybe some questions around our ability to compete at this scale. I think this clearly shows that our field performance, we already had three fleets with Exxon. I think they were able to see that we can deliver in the field with the technology we were providing at that time, which was our Tier 4 DGB, and providing them industry-leading results. And they had confidence in our electric solution. So I think the fact that we're able to partner with a company such as ExxonMobil speaks volumes for where ProPetro has placed itself from a technology and a field performance perspective. This is a long-term contract, and that's not something, as Sam mentioned, that they do without a lot of analysis and scrutiny. So we're very pleased with being able to put ourselves in this position. And we think there's more heading our way, that's like this. Interesting. Well, let me... I'm gonna not ask you my second question, maybe just, maybe clarify some of your commentary, David. So you mentioned that you have been working 3 Tier 4 DGB fleets with Exxon. Obviously, you signed an agreement for 2 FORCE new builds. Does that suggest that you'd be at 5, or are they switching, you know, increasing the mix towards the E fleet? So maybe a little bit of a clarification there. And your other point was that you see incremental opportunities. I wonder if you could maybe just elaborate on that, on that comment at the end. Yeah, I'll kind of pick that up, Arun. This is Sam. This is technically replacement for Exxon for our existing fleet. So we're out marketing those dual fuel fleets, and they've already found the home home for the majority of those fleets as these FORCE fleets replace our dual fuel assets on the ExxonMobil operation. So it's not growth for us or Exxon. It's simply replacement. And then David alluding to, you know, future opportunities, and I said, you know, earlier in the call, that the demand continues for these solutions. I think the demand continues. Our track record of being, you know, a first-class operator with this equipment, it's not just it's not hitting the ground and limping along. This stuff is working at efficiencies very comparable to our conventional equipment, which is a major, you know, a major selling point for our customers that, like, ExxonMobil, that have not deployed a significant amount of electric equipment previously. So we're able to, you know, generate some comfort with them operationally very quickly because we have a track record with the other fleets that we're running. But demand is good. I mean, this is something like we've said, I think, multiple times here today, that we plan to replicate. Our capital allocation approach, our preference, is to allocate more capital to these more industrial technologies like electric equipment, and less capital to things like diesel equipment. That diesel equipment will continue to attrit at some level over time, as it always has. So I think the kind of the cadence that we've, whether it was kind of by luck or grand design we've been deploying at, has been very similar to the cadence we've seen some of the attrition in our fleet, and we'll see continue, we'll see going forward, kind of on the diesel side. It doesn't mean that we won't, that we're getting rid of all of our diesel operation. It just means that we're trying to high grade the dollar that we spend, the dollar that we invest in an asset, to something that's gonna last longer, be more marketable, and garner more, more, you know, more sticky contractual terms. Great. Thanks, gentlemen. Thank you. The next question comes from Waqar Syed with ATB Capital Markets. Please go ahead. Great, great quarter. Congrats on that. Just a clarification question. The adjusted EBITDA number for hydraulic fracturing is $86.1 million. Does that include expensing for the operating lease $8.6 million, or that $8.6 million number is embedded in the other reconciling items? Well, Carl, this is David. The EBITDA is inclusive of the lease expense. We have in the segment information line items, the lease expense of $8.5-odd million, roughly $9 million for the quarter. So you should see that in our press. Yeah, no, I see that. Okay. And then, Sam, I saw that this, the other operations, or other, all other line item, EBITDA fell quarter-over-quarter quite a bit from, you know, close to $8 million to $4.8 million. I'm assuming that's cementing. Anything in particular going on there? Well, Carl, this is David. You know, our cementing operation had a bit of a slow start. Things are picking up in that area. But keep in mind, you know, the service lines are gonna, they're gonna move around a little bit. They've got different, little bit different customer complexion in each one of those, and so, that's what we're seeing. Overall, top line has been improving, and so we like to see that, but, we think, we'll see a bit of recovery into the second quarter for that business. Okay. Great. Yeah, all my other questions have been answered before. Thank you very much. Thank you. The next question comes from Stephen Gengaro with Stifel. Please go ahead. Thanks. Good morning, everybody. Morning. I guess two for me. Hi, thanks. The first is, on the wireline side of the business, should we think about that business as growing and tracking your pressure pumping fleet utilization? Or is there growth above and beyond your internal assets that we should be thinking about? I like, as David actually just mentioned, wireline and cementing both have, you know, a bit of a different customer base. So they, you know, they could move in different directions. That said, I don't think you should see that as large movements in different directions. The best way to look at it is, Stephen, relatively flat. It's the wireline market, I think, is a tad spottier in 2Q, but it's not like falling off a cliff or anything. It's just a little bit looser than it was in 1Q, but relatively flat throughout the year as we model it. Okay, thank- Steven, one of the things we did wanna talk a little bit about was just being able to bundle those services, and I think the ExxonMobil contract is an opportunity for us to deliver those services in connection with our fracturing fleet. So, that's something that I think is something that we look to do more of. They don't share significant overlap as it relates to customers. I think there's an opportunity there for us to do more of that, but it is happening on the ExxonMobil contract. Okay. Thank you. And then as we think about your fleet makeup over time, and you talked about the you know, the four fleets going forward. How do you, at this point, I mean, obviously, you've got a couple working, things are going really well, but how do you think about the buy versus lease decision at this point? And is the provider willing to continue to arrange, you know, make these arrangements with you? Yeah, I don't think you should see the lease mechanism that we're using. Really, it's lease to own. We're buying these things over the span of the lease and have a buyout option at the end of the lease period. This is likely just a transitory mechanism that we're using here to allow us to multitask from a capital allocation standpoint. There could be, you know, a little bit more leasing, but I would say beyond this year, likely not. And these would be assets that we would be buying in the future. I think that's. I think I could also say that's probably mutual preference of both us and our supplier. Great, thanks. Just one kind of reclarification of Kurt's question. Your adjusted EBITDA of $86.1 million in hydraulic fracturing, that is, obviously, it's before D&A, but it's after deducting the lease expense? Correct. Yes. Okay, great. Just wanted to make sure we, we had that right. Thank you for the color, gentlemen. Thank you. The next question comes from Scott Gruber with Citigroup. Please go ahead. Yes, good morning, and congrats on the results. Thank you. Thanks, Scott. Sam, I want to come back to the new contracts since it's a great win for ProPetro. Can you touch on the performance incentives in the new contracts? You know, was that a new point of focus or kind of more standard fare? And as we think about those in terms of your EBITDA impact, you know, those kind of on the margin, or could they be more meaningful? ... Yeah, I would say that the performance incentives are basically standard fare. They might look a little bit different from customer to customer, but that's something that, you know, we're always after to try and get paid for our performance. So, you know, without getting into competitive information, I'll kind of leave that there. And I'm forgetting your second question. Would you mind repeating your second question? Oh, that was. No, you touched on it. You touched on it. I do wanna clarify on the CapEx comment. You mentioned lower end, you know, towards the $200 million for the year. You also mentioned you could still execute on the fifth fleet. So, if you do that and stay towards the lower end, we should assume you're probably gonna lease that fifth fleet. Is that the way to think about it? That'd be correct. Okay. And maybe I'll squeeze one more in. Just thoughts on the, the Permian, in the rest of the year. You guys mentioned kind of a slow growth outlook. I, I'm just wondering whether, you know, the, the gas egress constraints right now are really, you know, limiting, the, the growth in the basin. You guys obviously, you know, don't do a whole lot of work for the privates, but to watch them, you know, from a, a market tightness perspective, do you think these gas egress constraints are limiting, you know, the response of the privates to, to higher oil prices or, or not really? You know, I'm not—I don't know if we're the best people to ask in terms of, is it holding privates back from putting more rigs to work? That said, we think it could have maybe minimal to no effect on the activity that we already have planned into the year, and I think a lot of that is due to our customer base. Look, we've got, I'm biased for obvious reasons, but I think we've got the best Permian customer base out there. You know, there's maybe one or two others that we're not working for that we're working on, but I think we've got the who's who of the Permian Basin, that are the smartest, most sophisticated, you know, best planners with the best infrastructure. So we don't have any indication right now that tells us that it will affect our activity. Things like that will affect our activity for the balance of the year. I got it. Thanks, Sam. Appreciate the color. Got it. Thank you. The next question comes from Jeff LeBlanc with TPH. Please go ahead. Good morning, Sam and team. Thank you for taking my question. One question I had was, co e -fleets? Thank you. Yeah, good, good, good question. We've been heavily involved in Simul-Frac, dating back to, what was it? Early 2020 or 2021. Yeah. So we've got a great history at that operation and a really good track record. I think, you know, Simul-Frac and -fleets do pair really well together because of kind of the power and horsepower density you're able to generate. That said, I mean, as we look at it right now, we have a mix of both just regular zipper operations and Simul-Frac operations in our FORCE fleets. I think naturally, as E&P space continues to consolidate, it enables more things like Simul-Frac So maybe there's a little bit more of it in the future, but it's not anything, I think, massive swings like in the job type across our portfolio or the sector. Thank you very much. I'll hand the call back to the operator. Thank you. The next question comes from Blake McLean with Daniel Energy Partners. Please go ahead. Hey, good morning, y'all. Morning, Blake. Morning, Blake. Hey, a lot of good questions already asked. I've just got one. I was hoping to get maybe a little bit of color on R&M going forward. You know, e-fleets generally characterized as having lower maintenance. I was hoping you could maybe provide a little context around kind of Tier 2 versus Tier 4 versus electric on that metric, and maybe quantify some of the range of savings you might see between them. Yeah, Blake, this is David. You know, I think right now, we're our maintenance overhead allocation is about 60% lower for the E-fleets. That gives you a sense of some of the lower capital intensity and operational intensity that exists. I think, as Sam mentioned, we'd like to take a bit more time as we roll these fleets out. We've got three of them operating today, one of which is only, you know, a week into their operations. We've got another one going out in June, so we'll have more data to share on that. But I think overall, we're looking at, you know, 40%-50% lower OpEx and, you know, much lower capital intensity for those fleets going forward. Yeah, the mechanics are looking for things to do. Good stuff. All right, well, thank you all. Thank you all very much. Great quarter. Thanks, Blake. Thank you. This concludes our question and answer session. I would now like to hand the call back to Sam Sledge for closing remarks. Thanks, everyone, for joining us today, and we hope to talk to you again soon. The conference has now concluded. Thank you for your participation. You may now disconnect your lines.