ProPetro Holding Corp.

Good day and welcome to the ProPetro Holdings Corp fourth quarter and full year 2025 conference call. Please note that this event is being recorded. I would now like to turn the call over to Matt Augustine, ProPetro's Vice President of Finance and Investor Relations. Please go ahead.

Thank you and good morning. We appreciate your participation in today's call. With me are Chief Executive Officer Sam Sledge, Chief Financial Officer Caleb Weatherall, President and Chief Operating Officer Adam Munoz, and President of Pro Power, Travis Emery. This morning, we released our earnings results for the fourth quarter of 2025. Please note that any comments we make on today's call regarding projections or our expectations for future events are forward-looking statements covered by the private securities litigation format. 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. 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. Good morning, everyone, and thanks for joining us today. 2025 was a year that was defined by uncertainty across the broader energy markets. There was a significant slowdown in completions activity, as illustrated by our estimates that the Permian is operating with approximately 70 full-ton frac fleets, down meaningfully from 90 to 100 fleets just a year ago. This headwind was compounded by tariff impacts and OPEC Plus production increases that added pressure to commodity prices throughout the year, affecting budgets, and creating a more cautious operator mindset. Despite these dynamics, ProPetra continued to deliver both operationally and financially and generated strong free cash flow, particularly in the fourth quarter. Our legacy completions business continues to generate sustainable free cash flow, even in this tough market environment, which gives us confidence as this business helps fuel investments we are making in ProPower, our future growth engine. Our solid fourth quarter performance underscores the industrialized nature of our completions business and the benefits of the technology and next generation equipment investments we have made over the last several years. While we expect market challenges to persist into 2026, we continue to control what we can and move quickly by streamlining costs across the business, performing a granular analysis and taking decisive action. I'm proud of our team's ability to adapt quickly rationalize costs, and protect our asset base, thereby supporting our margins and competitiveness in the market. This will remain a key focus in 2026. Profetro is a fundamentally strong company. We have low-debt, first-class customers operating in the Permian Basin, a refreshed next-generation fleet, and a team that continues to execute at a very high level. Even if challenging market conditions persist, Our company's unique attributes position us to continue performing. As we've said before, market cycles create opportunities. And with that, we expect attrition among smaller and less disciplined competitors that cannot sustain prolonged market weakness. We believe this dynamic will provide structural benefits for well-capitalized next-generation operators like ProPetro. I also want to discuss the strategic actions we're taking to support resilient financials. As a reminder, we currently have the majority of our active frack paper under contract, providing us with ongoing stability in our operations. Over time, we plan to continue to allocate capital to our force electric equipment, given its strong demand and commercial leverage. However, prior to committing to additional force equipment orders, we require greater visibility into customer demand and growth, especially in the challenging market environment, to ensure these investments are both strategically justified and aligned with expected return. Additionally, in 2026, as a part of our Completions CapEx program, which Caleb will discuss in greater detail, we plan to allocate targeted capital to refurbish a portion of our existing 2.4 DGB fleet, make investments in fleet automation technology, as well as measured investments in direct drive gas FRAC units. These direct drive gas units are highly complementary to our current FRAC asset base, and their integration is anticipated to partially offset future capital requirements for investment and refurbishment in our conventional FRAC. These new investments, specifically in fleet automation technology and direct drive We'll reinforce our position as a premier completions provider in the Permubasin and support our broader goal of further industrializing our business. Importantly, given the current challenging market dynamics, we remain disciplined in our capital deployment, investing only when there's clear visibility to high returns and strong customer endorsement, principles that are embedded in our way of doing business. Additionally, 2025 was an exciting year for ProPower, where we made significant progress as we capitalized on robust customer demand to not only launch the business, but to bring our total committed capacity to now approximately 240 megawatts and to also deploy our first assets into the field. This total includes recent contract wins supporting production operations for Permian EMP customers, secured since our last update in December. Additionally, as announced in December, we placed orders for an additional 190 megawatts of equipment, increasing total delivered or on-order capacity to approximately 550 megawatts. With this order, Pro Power's equipment portfolio is split approximately 70% and 30% between high-efficiency natural gas reciprocating and generators and low-emission modular turbines, respectively. ProPower anticipates all units will be delivered by year-end 2027, with contracts expected to be secured ahead of delivery. ProPower's expected total cost per megawatt for the 550 megawatts ordered today averages approximately $1.1 million, including battle for plant. We are confident in the business's future growth capabilities and expect to secure additional contracts throughout 2026 due to our flexible asset base, ability to rapidly respond to evolving customer demand, and quality execution. Furthermore, we would like to reaffirm our five-year growth outlook for ProPower as communicated last quarter. We are positioned to deliver at least 750 megawatts by year-end 2028 and one gigawatt or more by year-end 2030. Our standing in the supply chain not only enables us to meet these milestones, but also provides us the ability to scale beyond these targets its right opportunities present themselves. Moreover, we are seeing a growing number of inquiries from potential data center and industrial clients. Over time, we anticipate these opportunities occupy a higher share of our overall capacity, driven by both their larger load needs and longer-term strategic commitment. These evolving market dynamics, coupled with our strategic partnerships and operational excellence, uniquely position us to capitalize on large-scale, long-term demand, and drives sustained value for our clients and stakeholders. These growth targets reflect the significant opportunity we see in the market for reliable, low-emission power generation solutions. ProPower's momentum is tangible, and we're excited to continue our effort to expand our reach and drive long-term growth. In terms of capital to fund our ProPower strategy, our approach remains deliberate and balanced. Resilient free cash flow generated from our completions business continues to serve as the company's preferred capital source. This strong foundation will be further enhanced by contributions from our power business, especially as we exit 2026 and have deployed on multiple projects. Moreover, our recent equity offering provided approximately $163 million in cash net of fees, strengthening the company's ballot sheet and reducing ProPetro's near-term reliance on debt. In addition to the equity offering, our strong balance sheet is bolstered by our refreshed capital structure, which includes our recently expanded $157 million financing facility at favorable cost of capital and on flexible terms with Caterpillar Financial Services Corporation, along with a $350 million leasing financing facility secured in December with Stonebriar Commercial Finance that we will utilize on an as needed basis. These sources of capital are key to ensuring we have the financial flexibility to take advantage of the exciting opportunities ahead of Pro Power and across our entire business. Caleb will discuss our financial results in more detail, but as we previewed in our December update, we expected a very strong finish to 2025, and that is exactly what we delivered in the fall. Revenue remained resilient, holiday impacts were less pronounced than in prior years, and the decisive cost structure actions we took during the third and fourth quarter helped support margin performance. Pricing remains stable through the quarter, and we continue to stay disciplined on that front. As we've said before, we will not run fleets at sub-economic level, as preserving fleet quality remains essential to ensuring readiness for rapid deployment when market conditions do in fact improve. Importantly, But Petro's hallmarks of operational excellence and efficiency continue to prevail as evidenced by our ongoing cost control acts. As we look ahead, the near-term outlook remains uncertain and headwinds appear likely to persist into 2026. That said, we like what we are seeing currently in our active fleet, and we expect approximately 11 active frack fleets in the first quarter. although winter weather in late January did have a significant impact on our activity, which we expect will meaningfully affect first quarter profitability. Furthermore, as I mentioned, we are reaffirming our five-year growth power and we expect the first half of 2026 to focus on e-risking deployment and establishing a strong operational foundation, positioning our company for sustainable long-term growth. By the second half of 2026, we expect ProPower to begin contributing meaningful earnings. Before I turn the call over to Caleb, I want to reiterate the fundamental strength of ProPetro. Our differentiators are clear. We have a strong balance sheet, first-class customers, a refreshed next-generation asset base, strong free cash flow generation in our completions business, and ProPower as a key growth agent that will drive our earnings profile. Most importantly, we have a first-class team that continues to execute at a very high level, ensuring that we continue operating safely, efficiently, and productively, while enhancing our ability to capitalize on the opportunities ahead. With that, I'll turn it over to Caleb.