ProPetro Holding Corp.

and has provided significant tailwinds for our company's earning power. While we were confident about our acquisition of Silvertip, this move is exceeding our initial expectations, delivering more operational synergies between our two companies than we initially anticipated. This was evident in the first quarter as Silvertip delivered record revenues and profitability. At the same time, we continue to make significant progress with the transition of our legacy diesel equipment two dual fuel and electric offerings. We took delivery of our sixth tier four DGB dual fuel fleet in the first quarter and expect to have the seventh operating in the coming months. We also expect to take delivery of our first two electric fleets in the third quarter and are working to secure contracts for the second, third, and fourth E-Fleets. Additionally, while we are still in the early stages of our optimization program, that we have talked about on prior calls, we have achieved several big wins, including extending the life of and therefore reducing expenses on key equipment components, while also reducing maintenance turn time. These improvements will give us the foundation to sustain and improve efficiencies into the second half of this year. It has been a truly rewarding quarter for us here at ProPetro as we began to realize the tremendous benefits of our strategy. Over the last year, we have taken an intentional approach to building a strategy that will strengthen the resilience of our business for the long term. While we are pleased with the progress we have made, we are not stopping here. We will continue to advance on our goal of building a company that reduces volatility and competes for years to come to the benefit of our customers, our shareholders, our employees, and our community. I'd like to now take a step back and discuss the broader energy and completions environment. Despite recent headwinds, including natural gas price weakness and the fear of near-term oil and gas demand uncertainty, we still believe that hydrocarbons remain in structural undersupply, especially globally, and will likely remain so for multiple years, creating a longer than normal cycle. This belief further underscores why the investments we've made in our assets to date are so important to our future success. By the end of this year, approximately two-thirds of our frac fleet will use next-generation equipment that burns natural gas as a primary fuel source, with all of this equipment under two years of age. The bifurcation of our offering coupled with the experience and success in the Permian Basin gives us a clear competitive advantage from our peers and competitors of all sizes that don't share these capabilities. This allows us to meet the demand we are experiencing from customers across the basin. That said, the combination of ongoing equipment attrition, supply chain constraints, and more pricing and equipment discipline in the OFS space than has existed in recent history This gives us confidence in a strong market that puts a premium on a bifurcated next-generation service offering. Accordingly, and in conjunction with our fleet transition strategy, we are actively taking steps to protect and improve efficiencies across the business. As you've heard us say before, we're focused on the industrialization of our business, and we are confident that leaning into this shift in operating mindset will propel us forward as we adapt to the fundamental needs of the service space. This industrialization will manifest through many different operating methods, several of which are already happening today, therefore providing the next set of opportunities for our industry to push efficiencies even higher. The future result of this industrialization will be lower operating costs for service companies and their customers, making the Permian Basin and American Energy even more competitive than it already is. Of course, none of this would be possible without our talented ProPetro team, who continue to deliver tremendous results for our company time and time again. A major thanks to our team for all the continued hard work and dedication. With that, I'll turn the call over to David to discuss our first quarter results. David?

Thanks, Sam, and good morning, everyone. Before I dive in, I would also like to emphasize the appreciation of our team members' hard work and commitment to ProPetro. The work our team is doing in the field and throughout our support services is enabling the pursuit of our strategic priorities. We believe our first quarter financial performance, the best in over three years for adjusted EBITDA, margin, and net income, is a catalyst to improved cash flow generation through the remainder of this year and into the future, and is evidence of our new strategy at work. Now let's move on to our first quarter financial results. During the first quarter of 2023, we generated $424 million of revenue, a 21% increase from the $349 million generated in the fourth quarter of 2022. This increase was largely attributable to increased utilization, improved net pricing across our service lines, the full quarter effect of Silvertip's revenue contribution, and the frac fleet repositioning effort we undertook in the fourth quarter of 2022. Our effective frac fleet utilization of 15.5 fleets for the first quarter of 23 was at the top end of our prior guidance of 14.5 to 15.5 fleets. We expect steady fleet utilization through the second quarter of 23 And as Sam mentioned, our frac fleet remains effectively sold out and strategically positioned in committed completions programs with efficient customers who value and appreciate our industry-leading field performance. Our guidance for second quarter frac fleet utilization is 15 to 16 fleets with steady activity in our wireline and cementing businesses as well. Additionally, and in accordance with the company's fleet transition and replacement strategy that does not expand net capacity in the market, we plan to retire approximately 140,000 hydraulic horsepower of Tier 2 conventional diesel frac equipment during 2023. These retirements will be scrapped and will not return to service. Before we discuss costs and earnings, I would like to note that effective January 1st, 2023 the company began to record utilization of fluid ends as an operating expense rather than capital expenditure this change to fluid ends expensing was made after an analysis of the useful life for these components and was implemented prospectively numbers that we discuss or present for periods prior to 2023 do not include the impact of expensing fluidance moving on Cost of services excluding depreciation and amortization for the first quarter of 2023 was $280 million versus $243 million in the fourth quarter of 2022, with the increase driven by a higher level of activity across our service lines and the full quarter effect of Silvertip. First quarter general and administrative expense was $29 million compared to $27 million in the prior quarter. G&A expense excluding non-recurring and non-cash items, including stock-based compensation of $4 million, and other items totaling $1 million, including insurance reimbursements, legal settlements, transaction expenses, retention bonuses, and severance expenses, was $24 million, or 5.6% of revenue as compared to 6.4% of revenue in the prior quarter. Depreciation and amortization was 51 million in the first quarter, and we expect DNA to be in this range going forward. The increase in depreciation is related to changes in the depreciable lives of certain of our assets. Loss on disposal was 22 million for the quarter, of which 8 million was attributable to the fire and resulting equipment damage we reported earlier in the quarter, along with equipment decommissioning and other normal course disposals. Loss on disposal will not include impact from fluid end costs, which will now be expense and cost of services, as mentioned earlier. The company posted net income of $29 million or $0.25 per diluted share, the company's highest in over three years, compared to net income of $13 million or $0.12 per diluted share in the prior quarter. Adjusted EBITDA performance was also very strong with margins expanding sequentially by approximately 400 basis points with adjusted EBITDA of 119 million or just over 28% of revenue. Again, the company's highest adjusted EBITDA and margin in over three years. Adjusted EBITDA increased 42% sequentially compared to 84 million in the fourth quarter And incremental adjusted EBITDA margins were nearly 50% showing our powerful earnings potential when executing a disciplined asset deployment strategy. To reiterate what Sam talked about earlier, our results this quarter reflect the focus on our strategic pillars, including optimizing our business, our fleet and capital light equipment transition, and the returns from our recent Silver Tip acquisition. Additionally, This strategic focus, coupled with our disciplined repricing efforts, led to enhanced margins driving strong profitability. During the quarter, we incurred $97 million of capital expenditures. Actual cash used in investing activities, as shown in the statement of cash flows for capital expenditures net of proceeds in the first quarter, was $114 million, with free cash flow of negative $41 million. This figure differs from our incurred CapEx number due to the differences in timing of receipts and disbursements. We are reaffirming our previously provided CapEx guidance as we pursue our strategy of developing a more capital light asset profile, coupled with the winding down of our substantial reinvestment cycle and our ongoing fleet conversion program. We continue to anticipate our 2023 cash CapEx to be between 250 and 300 million, weighted towards the front half of this year. In turn, we expect this to contribute to meaningful free cash flow in the second half of 2023. Our capital investment plan, along with continued excellence in the field, are driving the bifurcation Sam discussed earlier and laying the groundwork for years of ongoing leading performance at ProPetro. By making these investments in equipment reliability and next generation fleet technology, our customers value our assets and services more to deliver for their completions programs. Regarding our capital structure, while we experienced some working capital expansion during the quarter, our balance sheet and liquidity position remained strong to support execution of our strategy. As of March 31st, 2023, Total cash was $45 million, and our borrowings under the ABL credit facility were $30 million. Total liquidity at the end of the first quarter of 23 was $149 million, including cash, and $104 million of available capacity under the ABL credit facility. As of May 1, 2023, our cash balance was $82 million, and we had $60 million of borrowings under our ABL and $166 million of total liquidity. We expect our liquidity to continue to improve along with our enhanced profitability and lower capital spend as we move into the second half of this year. Looking ahead, the strength of our balance sheet and our commitment to capital discipline has enabled us to develop and install certain commercial architecture that will benefit the company for years to come. This includes a capital-light long-term lease agreement accelerating our fleet transition strategy to electric and natural gas powered equipment, coupled with long-term customer contracts that share capital costs for these value-enhancing assets. Additionally, we continue to pursue a strategy to identify, evaluate, execute, and integrate accretive transactions and strategic partnerships. The acquisition last year and subsequent successful integration of Silvertip are evidence of this capability. Together, these attributes will strengthen our strategic capabilities and accelerate our free cash flow performance. With that, I'll turn the call back to Sam.

Thank you, David. With a strong first quarter behind us, we remain highly focused on executing our strategy, and I can assure you that we are just getting started. We will continue to transition our fleet, although at a slower pace, to electric and natural gas burning equipment. This allows us to continue to play and compete at the top end of the bifurcated frac market. At the same time, we are evaluating accretive M&A opportunities to strengthen our position as a leading completions-focused oilfield services company. As we've said before, we're continuing to effectively manage the headwinds of potential near-term uncertainty and volatility including weaker natural gas prices and industry-wide challenges brought on by the broader macroeconomic environment. Importantly, at the same time, we remain optimistic that the more disciplined approach of the entire oilfield services sector will allow us to create a more industrialized and predictable space that can better sustain through economic cycles and volatility. We are confident that ProPetro is well positioned to take advantage of this ongoing industry evolution in the Permian Basin, and we continue to take the necessary steps to achieve this industrialization within our own business, especially through moves like our E-Fleet transition. Supported by our bifurcated and disciplined approach that I mentioned earlier, our strategy is what separates us from our peers, and we look forward to executing on the tremendous opportunities we see for ProPetro in the near and the long term. At ProPetro, we also take great pride in our role as a key contributor to the American energy system. Our company and our community in the Permian Basin is dedicated to producing safe and dependable fossil fuels that power the world. As we grow and invest in our communities, we continue to build upon a deep appreciation for the critical role our industry plays in supporting national security and economic growth. We believe it is important for others in the oil and gas value chain to join us in promoting the vital role our industry plays in everyday life. Fossil fuels have been an integral part to human progress and innovation. And thanks to the ongoing advancements in our industry, they will continue to be essential to meeting the world's energy needs for the foreseeable future. As we move forward, we are committed to advocating for our industry and educating others about its critical contributions to society. By working together to promote the importance of our industry, we can ensure a bright and sustainable future for our local communities, our country, and for the world. Lastly, I'd like to once again thank the entire ProPetro team for their continued hard work and commitment to safety and performance, continuing to give our leadership team the confidence to move forward with our strategy. Let's keep pushing. With that, I'd now like to hand it to the operator to open up for questions.