ProPetro Holding Corp.

Good day, and welcome to the ProPetro Holding Corp. 4th Quarter 2022 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 Shulimer, and President and Chief Operating Officer Adam Munoz. Yesterday afternoon we released our earnings results for the fourth quarter and full year of 2022. 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. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release. Additionally, during today's call, we will discuss January 2023 results. Of note, these results are preliminary and based upon information available to management as of the date hereof. These results are subject to change and may differ materially from our reported results for the three months ended March 31st, 2023. Lastly, 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. 2022 was a transformational year for ProPetro, and we are pleased to be off an even stronger start in 2023. David will speak to our financial results for the fourth quarter and the full year of 2022 in a moment. But before that, I'd like to take a step back and acknowledge some of the key achievements and milestones from our team in 2022. As you know, in November, we closed on our acquisition of Silver Tip Completion Services, a step that positioned ProPetro not just as a leading pressure pumping company, but now is a leading completions-focused oilfield services company. Integration of Silvertip into ProPetro has been successful, and since closing, we've begun to capitalize on the strategic vision that drove this transaction. With Silvertip, we've expanded our portfolio to include a best-in-class wireline company that enables us to pursue accretive growth opportunities and positions us to further expand our margins and increase free cash flow generation. As previously announced in December, shortly after the closing of Silvertip, to meet the increasing demand for next-generation hydraulic fracturing services, we were pleased to announce our first contract for one of our electric fleets, order two additional E-Fleets under the master lease agreement used for our first two electric fleet orders, and deploy our fifth tier four dynamic gas blending or DGB fleet with our sixth to come online in the coming weeks. We expect that Perpetro will have at least seven tier four DGB fleets and four electric fleets by the end of 2023, making approximately two thirds of our frac offering natural gas capable. These recent actions significantly advanced our strategy to industrialize our business And we are confident that we are well positioned to execute on the many value enhancing opportunities ahead in 2023 and beyond. The fourth quarter was also a significant transition period for ProPetro. As we noted during our third quarter call, we laid the groundwork and prepared a significant portion of our portfolio for repricing and repositioning effort that occurred in early January. This repositioning of fleets has enabled us to pursue opportunities with other customers under accretive terms, and we're very excited to renew some prior relationships and expand others. Our operating team's excellence at the well site, along with a very intentional approach by our business development team, has enabled this part of our strategy to be a success. Ahead of the repricing of our fleets in January, we decided to temporarily curtail one of our active fleets in the second half of the fourth quarter to prioritize our overall fleet health in order to position us best to capitalize on the pricing uplift we were able to capture in January. In the fourth quarter, we also experienced an increased amount of seasonality and holiday impact, along with the impacts from the winter storm that occurred throughout the U.S. leading up to the holidays, with the storm ultimately affecting several of our customers focused here in the Permian Basin. At ProPetro, we pride ourselves on a commitment to best-in-class corporate governance, including the board's focus on director refreshment and building a strong bench of outstanding leaders and employees at ProPetro. To that end, recently we were pleased to welcome Mary Re Cardello to our board of directors and look forward to benefiting from her expertise. Additionally, the new year also saw the appointment of Jody Mitchell as ProPetro's new general counsel and corporate secretary. Jody is an industry veteran and has quickly become an integral member of our core leadership team. Another important element of good governance is enhanced sustainability practices. We are pleased to announce that in 2023, we will be issuing our first ever sustainability report, which will provide an in-depth look at the work underway to deliver on our commitment to transition our fleet in support of more efficient operations with reduced emissions while also leading efforts in the community to promote a cleaner and safer environment across the Permian Basin and for our teammates here at ProPetro. Being a Midland-based and Permian Basin-focused oilfield services company that serves leading upstream oil and gas operators gives us a unique vantage point into the market and into current trends. To that end, before I turn it over to David, I'd like to take a few moments to discuss the broader oil and gas market and what we are seeing. Despite recent pressure on the price of natural gas, we believe both oil and natural gas remain in structural undersupply, especially globally, and may remain so for the foreseeable future. As it pertains to the recent decline in natural gas prices, being 100% located in the Permian, with customers that have large drilling programs and full calendars does insulate us from some of the risk that our peers working in gas-focused basins may face. Furthermore, if demand for frac services temporarily declines in gas-focused basins and a few competitor fleets subsequently move to the Permian, we believe the demand gap is large enough to absorb the new fleets without disruption, especially when considering the bifurcation in service quality and equipment offerings, as small privates and other subscale competitors do not have the next-generation capabilities that ProPetro has compiled. Notably, The continued spread between diesel and natural gas price bolsters our fleet transition strategy. Diesel displacement in our customer's completions programs will continue to become more and more valuable for the foreseeable future. As we move forward, we remain acutely focused on taking our business to the next level and executing on our strategic goals to drive meaningful returns. To achieve this, first, We are actively optimizing our operations through a more industrialized approach to our business, which we expect will unlock additional free cash flow generation into the future. Second, we are continuing to transition our fleet in a way that minimizes our overall capital costs while delivering next generation services that are in high demand from our customers. And third, we're continuing to pursue opportunistic strategic acquisitions that increase our competitiveness and are in the best interest of all of our stakeholders. All of this is being done with the ultimate goal of generating strong returns and value for our shareholders, and we are already beginning to realize a portion of the tremendous value that we are confident this strategy will deliver. I'll now turn it over, but before I do, I'd be remiss if I did not take a moment to thank the ProPetro team for their outstanding work in 2022. Without them, we would not have been able to achieve all that we did during this incredible year, and just as importantly, we would not have been able to lay the groundwork for all that is to come in 2023 and beyond. With that, I'll turn the call over to David to discuss our fourth quarter and full year financial performance.