Good day and welcome to the Pro Petro Holding Corp. third quarter of 2026 conference call. Please note that this event is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. 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 Weatherl, President and Chief Operating Officer Adam Munoz, the President of ProPower, Travis Simmering. This morning, we released our earnings results for the third quarter of 2026. 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 reliefs. 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. ProPetro delivered a solid third quarter. Higher revenue, net income, and adjusted EBITDA involved our completions and ProPower. ProPower posted a meaningful sequential step-up. continue to advance its commercial and operational execution and activity across scrap, cementing, and wire. While the cost of rebuilding and completion's capacity continue to weigh on margins, our fleet is now essentially sold out, positioned to re-contract into a tighter, better-priced market in 2027.

Let's start with ProPower.

Since our last update, we've made a significant progress across the business. ProPower generated approximately $8 million adjusted even on the third quarter, a meaningful sequential increase. Results and margin performance at the project level continue to meet our already high expectations, which reinforces our confidence in the earnings and return profile without them. We expect to keep scaling deployments through year-end, reaching between approximately 250 and 275 megawatts deployed by the end of 2026, and Stairstepping for more than 500 megawatts by early 2028, we expect this growth to come from two sources. Scaling our currently contracted capacity, deploying or preparing to deploy on the target award, which is scheduled to be fully deployed by early 2028 and beginning to scale one or more additional data center projects over time. Looking further ahead to 2027, Much of our work will be preparing for larger infrastructure-scale projects, including the TARGO Award and potential additional data center awards, which could begin deploying as early as late 2027. As a result, we expect 27 earnings to be weighted towards the latter part of the year, with growth following a stair-step pattern as projects come online rather than a straight line throughout the year. Projects of larger scale require significant lead time. We expect certain costs, including personnel, site preparation, and mobilization, billed ahead of these deployments for the corresponding regular return. By emphasizing this point of execution and actively de-risking these larger deployments, we are building on the strong operational foundation we established in 2026, and we remain confident in our pro-power guidance and the long-term earnings and return profile of the business. On the commercial front, Our recently announced agreement with TARGA for approximately 230 megawatts brings our total capacity committed under contract to approximately 510 megawatts. This award represents meaningful progress in our commercial efforts. It also shows how broad our demand is across end markets, including oil and gas, extreme and industrial, in addition to data centers. Contract terms with defectors are generally shorter than those in the data center room. Pricing and expected annual return are very attractive. That said, given the larger load requirements and longer contract duration in the data center arena, along with the depth of our pipeline there, we continue to expect to deploy the majority of our assets to data center projects over time. Of the approximately 2.6 gigawatt power generation capacity that's secured, more than one gigawatt consists of Caterpillar's highly efficient 10 megawatt units that are part of our strategic framework agreement. With supply chains for power generation equipment remaining very tight, we believe this agreement and our early mover position provide a meaningful advantage. Beyond just securing supply, the 10 megawatt units themselves are highly efficient, stationary natural gas engines purpose-built for permanent high density installation. They maximize efficiency for our customers while lowering our total cost. The vast majority of our fleet will be natural gas reciprocating engines ranging from two to 10 megawatts, which we believe are the ideal fit for every vertical we are currently pursuing. Of note, our smaller units are also proving to be very successful. Our first data center deployment, which is live and operating today in the Midwest United States, is largely built on 2.6 megawatt units. Reciprocating engines offer a number of advantages that we believe make them the right fit for our customers. There are proven technologies that belong practically both mechanical drive and power generation applications. They are continuous duty-rated machines trusted in high availability environments, including data centers, oil and gas, mining and industrial operations, and marine and heavy transport, where uptime and performance are all critical. They provide flexibility, scaling and modular blocks alongside customer demand with built-in redundancy. They deliver high fuel efficiency are cost-effective for both ProPower and our customers and our emissions frame, which supports an efficient permitting. These advantages apply across our entire fleet, with our 10-megawatt units adding even greater scale for our customers' largest power needs. In the data center arena, despite broader volatility and the noise in the AI market, we remain in advanced negotiations on several hundred megawatts and continue to progress a number of additional opportunities behind it. Our pipeline also continues to grow, strengthening our conviction, our strategy, and investments. As we have noted previously, timelines have extended as we worked through diligence with . These agreements involve long-term capital commitments on both sides, so getting the risk-sharing provisions right is critical. Strong demand for our assets can also lengthen rather than shorten the contracting process because we're being deliberate about choosing the right long-term partner. Change in scope for timing on the project can make a previously unworkable opportunity viable, or free up capacity for customers who otherwise could not have supported it. Because we're allocating capacity across multiple customers, individual deal timelines may shift to determine how each opportunity fits within our broader portfolio. Accordingly, we remain very confident in the pipeline. Importantly, we are currently deployed and operating on a hyperscaler project and execution is going exceptionally well. We are one of the very few behind-the-meter power providers live on a data center site today. We believe this operating track record validates our strategy and will help accelerate our broader purpose. Our pro-power guidance also remains clear and unchanged. We continue to expect capital costs of approximately $1.4 million to $1.5 million per megawatt. That figure includes balance of plans and expected inflation over the life of the Caterpillar Framework Agreement, and it reflects the advantage of our early reward position. We continue to target payback periods for four to six years, with oil and gas and midstream projects closer to four years within their generally shorter contract terms. From a financing perspective, we have raised approximately $1.5 billion to support including our highly successful $690 million convertible notes offering earlier in May, which largely addresses our near-term capital needs. Going forward, we will approach future capital decisions opportunistically as we continue expanding our commercial footprint and executing our strategy. Now turning to completion, I want to address the cost that weighed on margins this quarter. As activity declined during 2024 and 2025, With tariff-related uncertainty and OPEC Plus production increases adding to the pressure, we took decisive action to reduce operating costs and capital spending during those years. That protected the free cash flow through a challenging market, but we've had to rebuild some of that capacity as demand has recovered this year. Improved pricing and better visibility into the duration of work supported the reactivation of two fleets this year. bringing us to 13 active leads today. The latest addition deployed in the third quarter earlier than we originally anticipated. We are now essentially sold out of available product capacity. Supporting the increase in activity has required rehiring field personnel, restocking inventory and spare parts, and preparing additional funds for performance. Higher utilization has also put pressure on our field operations and maintenance. While the cost of ramping back up has been higher than we originally anticipated, We are proud of how responsive our operations team have been in meeting increased customer demand. We expect to maintain approximately 13 active fleets in the fourth quarter. That said, we expect meaningful seasonality in the fourth quarter from typical holiday slowdowns, which will temporarily affect utilization and results, along with continued margin pressure from the rebuilding process we experienced in the second quarter. As activity stabilizes as we move into 2027, We expect to begin optimizing those costs, although the full benefit may take time. We're optimistic that our investments will pay off and create meaningful value for our shareholders as we recontract in time. The way we have managed through this period, flexing capacity up and down the market while keeping our balance sheet strong reflects our discipline, as well as the resiliency of our industrialized market. Now stepping back to the broader market, Conflict in the Middle East continues to influence commodity prices and customer activity, but it's also highlighted something that we've been talking about for service. The amount of frack capacity that has already exited the market through consolidation and attrition. Smaller, less disciplined competitors could not sustain the downturn, and much of the excess capacity has disappeared. As activity stabilizes, customers are increasingly recognizing that tighter supply environment. which is constructive for our business. To put some numbers around that, we estimate the active Permian track fleet in the mid-70s to the years of attrition have drastically reduced the supply of high quality horsepower behind them. On the demand side, even a modest increase in drilling activity, particularly from large public and independent operators, would be enough to fully tighten the market. On the supply side, We believe the industry could only bring back perhaps a handful more groups in the permanent before it would need to make significant new investments to add capacity. Given the capital discipline and focus on free cash flow across the completion space, we do not expect that investment to materialize any time soon. In short, demand is poised to grow and supply is not. It goes well for our long-term setup for our services. That tighter market is already showing up today in pricing. We're seeing early pricing momentum led by next-generation natural gas furnaces, which command a clear premium to today's spread between diesel and natural gas prices. Those fleets are effectively sold out industry-wide, and we expect that premium to hold regardless of how the conflict is limited. As limited supply, global refining constraints keep diesel prices elevated to the foreseeable future. That pricing momentum is also relevant to the timing of repricing our contracted fleets. More than two-thirds of our active horsepower is contracted, with most agreements currently scheduled to renew in the first half of 2017. Much of that equipment is next-generation and natural gas burn, which positions us well for recontracting, particularly for agreements signed in the more challenging pricing environment of the past two years. As that horsepower reprices in a more constructive environment, we believe that the and the completion's business is poised to deliver improved results in return. Before I hand it to Caleb, let me summarize how we were thinking about the outlook as we head into 2027. In completions, the setup is straightforward. Sold out fleet, tightening market and early pricing movement. We still have work to do on the cost side as we absorb elevated expense of ramping the system back up, but as activity stabilizes, our focus shifts from rebuilding to optimizing and we expect to bring those prospects . In ProPower, our primary focus remains commercial operational execution, converting our pipeline to sign long-term contracts and deploying and operating those assets reliably for our customers. We've secured the equipment to support that growth and our performance in the field is strengthening our commercial position as we advance additional data center opportunity. As I noted earlier, We expect 2027 to be a year of building towards larger infrastructure-scale deployments with growth weighted to the second half. Across both businesses, we're doing what we said we'd do. We are excited about the opportunity. Completions market is moving in our favor. ProPower is executing and scaling. And we have the balance sheet, equipment, and the team to capture what is in it.

With that, I'll turn it over to Clay. Thanks, Sam. And good morning, everyone.

As Sam mentioned, both ProPower and our completions business delivered higher revenue, net income, and adjusted EBITDA this quarter, while completions margins reflected the costs of rebuilding the operational infrastructure needed to support higher activity. During the third quarter, ProPetro generated total revenue of $355 million, an increase of 16% compared to the prior quarter. Net income totaled $13 million, or $0.09 income per diluted share, compared to a net loss of $8 million, or $0.07 loss per diluted share in the prior quarter. Adjusted EBITDA totaled $60 million, representing 17% of revenue and increased 33% sequentially. The increase was primarily driven by higher utilization in the completions business. and Incremental Deployments InfraPower, partially offset by higher costs associated with rebuilding capacity to support increased completions activity. Adjusted EBITDA includes approximately $16 million of lease expense related to our electric lease. Net cash provided by operating activities is $46 million as compared to $66 million in the prior quarter. The decrease is primarily attributable to working capital headwinds in the third quarter, which consumed approximately $15 million of cash, and working capital tailwinds in the prior quarter, which were an approximately $20 million source of cash, partially offset by higher adjusted income. During the third quarter, capital expenditures paid were $123 million, and capital expenditures incurred for $171 million, including approximately $43 million supporting the completion business and approximately $128 million supporting Pro Power equipment orders. Notably, the difference between incurred and paid capital expenditures is primarily comprised of Pro Power-related capital expenditures that have been financed and paid directly by the financing park, and unpaid capital expenditures included in accounts payable and accrued liabilities. Net cash used in investing activities, as shown on the statement of cash flows during the third quarter of 2026, was $122 million, which included capital expenditures paid of $123 million, offset by $1 million in proceeds from certain asset sales. Turning to our outlook, we anticipate full-year 2026 capital expenditures incurred to be between $525 and $575. Thank you for joining us. We anticipate incurring capital expenditures of approximately $400 to $430 million for our pro-power business in 2026, narrowed from prior guidance due to greater year-end visibility and to the timing of additional equipment deliveries. Notably, our previous guidance of approximately $1.4 to $1.5 million per megawatt, inclusive of balanced plant, remains unchanged. While these pro-power capital expenditure estimates reflect the total cost of equipment, they do not reflect the impact of financing arrangements, which have and are expected to continue reducing our near-term actual cash outflows. Looking ahead to 2027, we are aligning equipment delivery schedules under the Caterpillar Framework Agreement and remain in active discussions on data center opportunities, both of which could affect the timing and amount of capital expenditures for the year. In particular, the size, timing, and structure of any new data center agreements could change when equipment is needed and how much balance of plant investment is required next year. However, we expect that any such changes would affect the timing and total amount of capital expenditures rather than the cost per megawatt, which we continue to expect to remain within our guided range. That said, we expect 2027 pro-power capital expenditures to increase from 2026 levels. Driven by the delivery of additional equipment and funding of down payments and milestone payments under the cap pillar framework agreement. One more item on ProPower before I turn to the balance. Certain ProPower contract structures may include reservation fees that are collected in cash up form, but not recognized in revenue or adjusted EBITDA until the assets are deployed and generated power. As a result, ProPower's revenue and adjusted EBITDA In a given period, they trail the level applied by its contracting capacity and guidance. The underlying contract economics remain intact. Importantly, our ballot sheet remains a significant source of credit. As of September 30, 2026, cash and cash equivalents were $729 million, including net proceeds from the issue, plus $690 million aggregate principal amount of convertible senior money. Borrowings under our financing agreement with Caterpillar Financial Services Corporation were $172 million. Total liquidity at the end of the third quarter of 2026 was $934 million, which included cash and cash equivalents, $185 million of available borrowing capacity under the AVL credit facility, and $20 million of availability under our Caterpillar equipment loan agreement. We currently have no outstanding borrowings under the ABL credit facility. Finally, as Sam mentioned, we plan to continue approaching ProPower funding opportunistically, which gives us confidence in our ability to execute on future capital needs as we expand our commercial footprint and drive our strategy forward.

Sam, back over to you.

Thanks, Caleb.

Before we open the lineup for questions, I want to leave you with a few additional thoughts. ProPetro has been built into a resilient company from the last several years. One that has performed through many of the most challenging months, generated free cash flow when the in-market industry could not, and used that period to reposition itself to what was next. Today, we are entering a market that is turning in our favor, a tighter completions market and a power business that is scaling.

Our conviction in our business remains very strong. Let's start with completions.

Some unexpectedly higher for building costs weighed on our margins in the second quarter. In the third, those costs are the price of sustaining a system backup to the entire activity. We're optimistic that 2027 is where that investment really comes off.

Since the second quarter, never-lining fundamentals have only strengthened.

Free prices remain elevated. The conflict in the Middle East is ongoing. And expectations for incremental rate additions next year should further tighten track markets already None of this is theoretical. Showing up right now in our 2027 activity in pricing conversation. Our fleet is essentially sold out. Demand is very high and we are turning away opportunities today because we do not have the capacity to serve. We are seeing early pricing momentum. Three of our contracted horsepower reprices in the first half of next year. Set up for our completions business is better today than it ever was six months ago. Now profile. We believe the market is waiting on a transformational data center. We recognize this has become a show-me-still. Candidly, test that. Our conviction in landing those agreements has not changed. We're in advanced stages commercially, and we're not going to ask anyone to take that on faith. What we could ask is that you look at our track record. Our message has not changed from one call to the next. We are executing on three fronts, commercially, operationally, and across our supply chain. Merchantly, that means strong contracts against large investment-grade partners, including Parga, that have taken our contracted base to approximately $510 million. Operationally, it means real assets running in the field today, including a data center site and several Permian microgrids for oil and gas customers, each with excellent execution. On supply chain, we're in a premium position relative to most competitors in the space. We moved early and secured our megawatts through the Caterpillar Framework Agreement. The result is 2.6 gigawatts of secured equipment, including over one gigawatt of 10 megawatt CAT reciprocating engines purpose-built for data centers, locked in at advantage costs. The market where access to equipment has become the gating item, that is a real durable advantage. And behind all of this, it's a strong execution support system. The people, the maintenance infrastructure, and the operating discipline we have built over years in the completion space and are now applying to power. We have not over-promised on contract timelines. We've been deliberately disciplined in how we communicate with you. We would much rather under-promise and deliver than the reverse. So simply put, we're doing exactly what we said we would do, and we're building a track record of execution one quarter at a time. We look forward to demonstrating that execution across every one of our service lines in the years ahead. Let me leave you with this. This is a very strong company. We have a strong balance sheet of first-class customers across both completions and power. From leading operators in the Permian Basin to investment-grade midstream partners like Target, the data center customers we are serving today look more expected. And we are led and operated by first-class people. To our employees, Thank you. Your execution in the field, in the maintenance shop, and on the power sites is what gives this management team the confidence to move forward with this strategy. Every fleet we stood back up this year and every megawatt-week commission happened because of you. We're excited about where the business is headed, and we're confident in the setup for 2027. We look forward to sharing more with you again soon. With that, operator, let's open the line for questions.

Thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star 1 again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. Again, to join the queue, it is star 1. Your first question comes from the line of Sorab Pant of Bank of America. Your line is open.

Hi, thank you. Good morning, Sam and Caleb.

Morning, Saurabh.

Sam, so really good update on ProPower, especially the $8 million positive EBITDA. You're turning the corner there, so that's a really good update. And then you also expect to deploy more than 500 megawatts by early 2028, and I noted that includes one or more additional data center contracts. So just on that point, can you talk a little bit about where you are in your conversations with these data center customers on contracts? And then just from a timing standpoint, how should we think about timing of signing a contract relative to ordering the balance of plant equipment and then putting it all together for deployment starting? And I think you're targeting late 27 or early 28. So maybe if you can help us with that a little bit.

Yeah, thanks, Saurabh. Okay. point out a couple of things here real quickly and then let Travis talk about the power contracts. Look, just to reiterate what was at the end of my scripture remarks there, we're doing exactly what we said we would do and we're really hitting our guidance and executing well in the field. So we're just really trying to over-communicate the fact that, and I know you've been paying close attention, Sara, but this has all been in the plan for almost a year now from a guidance standpoint. So we're excited to see it come to fruition.

Yeah, just to be clear on the capacity also, a data center contract would be incremental to that 500. That 500 reflects the 510 that we have contracted and have guided will be deployed in early 2018. But as far as the conversations in the data center space, despite kind of the broader turmoil in the data center market, our specific conversation is we're dealing with headed in the right direction towards execution. And as you mentioned, you know, that includes balance of plant equipment that needs to be ordered for these large infrastructure projects. We're in the middle of ordering some of that already, have line of sight to anything that might be on a project specific timeline, and just continue to make really good progress on those projects to deploy, you know, potentially late 27, but for sure into 28 at scale.

Got it, got it. No, thanks, Sam and Travis. That's a good point, good clarification on the 500-plus data center number. And then for a quick follow-up, maybe, Caleb, this one is more for you. On the balance sheet financing side of things, look, the good thing is that you have Apple liquidity, like you noted, north of $900 million over there, which I think should be enough for all of 2027. But as you sign these bigger data center contracts that Travis was talking about, What do you think makes the most sense for future potential sources of financing as you get these contracts and get deeper into the execution phase? And then related to that, I think you mentioned this a little bit, Sam, but you were talking about some customers willing to give prepayment, some upfront cash reservation fees right now. Just maybe a little more color on that, especially I'm thinking about the bigger 10 megawatt CAT units, which would be much more desirable, I'm thinking, for these customers.

Yeah, thanks, Zahrab. So like you said, we feel really good from a liquidity standpoint, over $900 million of liquidity, over $700 million of cash. That doesn't count the $350 million undrawn stonebriar. Thank you, Caleb. I'll turn it back.

Your next question comes from the line of Alexa Breno of Goldman Sachs. Your line is open.

Good morning, team, and thanks for taking our questions. On the power side, it sounds like you're seeing attractive returns across all different end markets. Can you just talk about the varying economics of some of the shorter duration contracts you mentioned versus maybe some of the potential data center contracts? And then how do you evaluate the opportunities from a return and capital requirement perspective?

Yeah, thanks. So on the oil and gas, and I would say more of an extreme space, we're certainly seeing closer to that four-year or better payback. And then on the larger long-term deals in the data center space with this larger infrastructure capital requirement, that's certainly probably towards the higher end of the four to six-year payback. But ultimately, we're really continue to be excited about these two markets and broader power markets in general starting to levelize in terms of the contract requirements, the pricing structure. We think that's going to continue into oil and gas midstream space where we've got longer tenors that will hopefully be coming in the future because that's the expectation on these highly efficient, larger infrastructure projects.

Okay, that's helpful. And then maybe just switching gears a little bit to the frac business. Can you just talk about what you're seeing in the market, maybe more so from equipment bifurcation? How should we think about pricing for some of these more electric feats, maybe some of the older age ones? And then how are you thinking about it as we go into maybe back half of 27 even?

Yeah, I mean, I think if you just kind of play off my comments in the opening remarks, it's really starting to set up really well. you know on the outset of the Iran conflict earlier this year we might have originally thought that that tightness would have come sooner than it has but it is it is really starting to gradually tighten the natural gas burning equipment for us is you know in the in the way of dual fuel a little bit of direct drive gas and electric has been sold out and has held its pricing a lot better than everything in our portfolio So it starts from a little bit of a higher basis. That said, this whole dynamic with diesel right now and the high price of diesel with a continued lower price of natural gas continues to keep that equipment in very, very high demand. And frankly, some customers that have been more of a dual fuel or a diesel focus in the past are now much more curious about things like direct drive and electric which really plays into our hands and kind of our re-contracting timelines going into next year. So the overall market is tightening. I would say the leading edge on the spot market is already very tight. We're turning down a ton of work in that arena. All the meanwhile, we're still trying to manage all of our relationships and the market that we still play in into next year to create more consistency and stickiness with what we think are the top tier customers. to move forward with. As you can tell in our scripture remarks and my answer to your question here, we're pretty excited about the setup for 27.

That sounds great. Thank you. We'll turn it back.

Your next question comes from the line of Derek Podhazer of Piper Sandler. Your line is open.

Hey, good morning. I wanted to ask about your comments, negotiation, the timelines extending when negotiating with these big power projects. If you just could expand on those different drivers that's lengthening this process, is it community pushback, moratoriums, or just maybe more on the commercial terms? I have to imagine that your current 60 megawatt data center project helps de-risk some of the contracting structure and terms because it's something you can point to. So maybe help us understand more about the drivers behind these timelines being extended.

Yeah, thanks, Taryn. It's really not anything pushback type thing to talk about. It's more the real contract risk exposure on both sides, liability and damages. When you're talking about this large of an installation for this long a period of time and really kind of getting the scope right between the parties on these types of projects, The initial 60 megawatt contract certainly gives us a great starting point in these discussions, given that there's very few of us that have done this, right? But as they get a lot larger and longer in term, there's just a lot more scrutiny on both sides to get to the right answer.

Yeah, and Derek, I'll just add on to that. Watching Travis and his team work through all these commercial opportunities, the demand remains super strong. We're very confident that The majority of our capacity is going to be placed in the data center market over time. They juggle a lot in this commercial pipeline and at any one time are running several opportunities in parallel that could affect one another. And as some of those opportunities that are running parallel to each other might speed up or slow down, sometimes it changes your focus a little bit and then can change your timeline. All the meanwhile, We're trying to make what is the next best decision for our company, our teammates, and our shareholders to create as much value in the future. A few weeks or a month on the front end to get the right long-term deal just makes sense to us to make sure that, one, we get the right deal, and two, we do it with the right amount of risk sharing like Travis said.

Right now, that makes sense. I appreciate the comments. Maybe just sticking on the equipment side of things. I'm just curious now that you mentioned the 10 megawatt receipts from CAT, the bigger ones, just the interplay between the 10 megawatts and maybe the smaller, I don't know, two to four megawatt units of receipts. I know those are on your current data center project, but you're clearly leaning into the higher density 10 megawatt receipts. So how do we think about the different applications that fit the 10 megawatt versus the smaller receipts? Or maybe are the smaller receipts used to initially scale a project where the larger units take over for the longer term? Maybe just some education on why leaning hard into the 10 megawatts and the interplay of the smaller units and how this is going to really fit inside your portfolio as we look in the future of Pro Power. Yeah, it's a great question.

I mean, as the sites get larger, obviously power density matters. 10 megawatt is helpful, but the efficiency matters. I think these markets are getting more efficient. aware of how that efficiency can play into the overall cost structure. So when we look at high efficiency engines, they're anywhere from 20% to 40% more efficient than a simple cycle turbine type solution, which we think is extremely attractive. Bolting on smaller modular units does help with the variability of load. It also helps with your redundancy story when you start thinking about providing significant redundancy on these sites. And so the 10 megawatt units interplay with the 2.6 megawatt engines, as well as battery systems, we think is an extremely attractive power system to be able to deliver the most reliable, efficient solution while always making sure that the emissions are high enough to have those capacity.

Great. Appreciate all the comments, guys. I'll turn it back.

Your next question comes from the line of Josh Jane of Daniel Energy Partners. Your line is open.

First question is a quick one just on completions CapEx in 27. Could you just comment directionally if you hold a 13 fleet program steady, what that ultimately might look like in the next year?

Yeah, it's probably a little early right now, Josh. We're heavy in kind of budget and forecasting season right now, so we'll probably punt that question the next quarter.

Okay, that's fine. So you highlighted the possibility of the market tightening from larger publics and independents. Can you just describe those conversations today, how they've evolved over the last couple of months? As it seems, obviously, most of the uptick has been driven by the privates.

Yeah, I was going to start my comments with what you just said right there at the end. That is a fact that most of the rig increases earlier this year have been with the privates, but in conversations with the larger independents and the publics, I think every day these commodity prices remain higher is another piece of confidence that they gain going into next year and potentially increasing activity. That said, they're all They're all pretty savvy. I think they understand what's going on in the supply chains. And they'd like to be as least disruptive as possible. But judging off of our conversations and some other public commentary, we fully expect another batch of rigs to come into the system towards the end of this year going into next year. And we have seen all of those larger independents and privates to run operations that are extremely capital efficient. They're not going to drill wells to just let them sit around. They're going to want to complete those wells and take advantage of the spot oil price as much as they can. So it's kind of a combination of customer conversations and boots on the ground intel out here that bolster that confidence that we have about the overall 27 market tightening. And I guess the other piece of it that maybe sometimes we take for granted, but it's still important, we've already mentioned in our opening remarks here, This morning, the equipment market just doesn't have anything left to give. I mean, it's tapped out. We're tapped out. We've got no extra equipment. As we sit here today, we've heard several of our larger competitors say the exact same thing. There's no slack in the system in our larger private competitors. And there's not really anybody that's willing to underwrite any meaningful investments to fix that right now in our sector. So we think it's a good supply-demand equation, I think, in our favor going into next year.

That's helpful. Thanks. And then if I could just squeeze one more. You alluded in an earlier question that you were turning away work for 2027, but I assume you're not completely spoken for for the entire year. So for those opportunities that you are turning down,

is it just more pricing you're holding out for is it a more comprehensive program potentially with a larger operator just maybe just talk us through that a little bit and then i'll turn it back thanks yeah i'd say a lot of it's just spot market work that we just can't get to and and don't really prioritize in our dedicated fleet model um but there there is definitely a demand for it i think that that's what's what's helping push pricing along across the entire sector uh 27 look i mean we we We historically, as I've already mentioned, like and prefer the dedicated fleet model. We don't like to jump around from customer to customer with an individual fleet. So we already feel pretty good about the 27 calendar. I think it's not going to be an effort to fill in gaps as we sit here today. It's going to be more of a portfolio optimization to make sure that we have our teams and assets sitting with the best opportunities. And that's really what the task is from a 27 standpoint today. Calendar's basically full. We just aren't convinced that it's full with the right work quite yet.

Understood. Thanks. I'll turn it back.

Your next question comes from the line of Jason Kim of JP Morgan. Your line is open.

Good morning, team. Thanks for taking my question. Just sticking on the frack side, You mentioned that more than two-thirds of force powers contracted. How much of the electric force fleet is up for renewal in 27? And how does the pricing on those E-fleets compare to currently contracted rates? And just to confirm, has any re-contracting not yet occurred? Just trying to think about how much upside might be remaining. Thanks.

Yeah, we've already re-contracted a little bit of that with a customer that wanted to keep what they had. and was commercial with pricing. So it's just kind of like a click and drag. Maybe half the fleet going into next year is going to re-contract a little bit with the same customers in a little bit. We expect some same customers to stay and we expect to have some new electric customers going into next year as well. It's interesting timing, maybe a little bit of his luck, but almost a year ago we had a chance to recontract almost 100%. That electric equipment, we chose not to do so because we didn't like the pricing opportunities in the market. And we sit here today with that capacity that is, you know, we're in negotiations with new customers under new terms for the remainder of that capacity right now. But everything's going to work in 27. We've got high confidence, almost zero doubt, that any of that equipment is going to be stranded for even one second. And a lot of that has to do with how our team has performed with this electric equipment. I'd like to think we might not be the biggest electric track provider in the Permian Basin, but I'd put our operating stats really up against anybody in that arena. and that's been a huge help to our commercial efforts and we expect that performance to continue and to garner a very attractive price.

Understood. And just as a very quick follow-up, directionally is the force premium overdose tier 4 DGB widening as diesel stays elevated? Sorry, ask that question again? Is the force premium over some of the dual fuel fleets widening as diesel stays elevated?

It definitely helps, but the dual fuel, given its flexibility, modularity, has been a very, very attractive tool and application for us and our customers. It's a little bit apples and oranges, but the high diesel prices are definitely helping anything that burns natural gas.

Got it. I'll turn it back.

Your next question comes from the line of Eddie Kim of Barclays. Your line is open.

Good morning. So you said the data center pipeline includes several hundred megawatts in advanced negotiations. Can you frame for us how many distinct projects that represents? Just trying to get a sense that that's one to two projects or maybe closer to four, four to five maybe. And in these conversations with data center operators. Are you finding that these operators would prefer that BTM providers like yourselves also provide the balance of plant equipment, or are they happy to just lease the power gen from you guys?

Yeah, so it's definitely more than one opportunity. I would say there's two that are really active that we're excited about. in that several hundred megawatt range. We can't do everything in the pipeline right now, so we've had to narrow our focus on the most realistic, executable deals in the timelines that we have available. As far as the balance of plant, we get the question a lot. We see that as a necessity. We can't build a power plant without the balance of plant equipment, whether it's electrical transformers, upfront gas conditioning, and Distribution, as well as all of the emissions control. And then whether the hyperscaler or your assets take on the battery system, that's a discussion on a project-by-project basis. But we're providing a full-time service. We're not interested in just dry leasing assets. Our business model is built on operating 24-7 and maintaining our assets and the reliability of that with Powerpoint.

Understood. Thanks for that color.

And just shifting gears to the frack side of the business, you mentioned kind of the tightening market and that you guys are completely sold out. Just to confirm, I think that implies that you guys don't have a 14th fleet to reactivate, even if you wanted to. And if that's the case, I mean, do you think that pricing and economics could increase to a level next year that might? Justify New Build Horsepower, or are we still far away from those levels?

We don't have any interest in working any more equipment than we're working today, nor do we have any interest in making any CapEx investments above replacement, refurbishment of our existing fleet. I can't sit here and speculate about what if and would we invest differently. We're just not today. That's just not in the conversation. So it's not something that we're really thinking about.

Got it. Got it. And just to confirm, you guys don't have a 14 fleet to be able to reactivate at this point, correct?

I mean, we have old worn out equipment that we don't plan to ever work again, if that's what you're referring to. And look, all this is fungible too, like 13, 14, like we could have a fleet go from simulfrac to zipper back to simulfrac. We're just trying to provide you clean guidance that's not confusing here.

This is Adam.

I'll just ask this. There's a happy medium to around the equipment flex, the amount that you have to, you know, the maintenance rotation that reduces and keeps your NPT low, your maintenance costs low.

So we're measuring all those options on the table right now as well. Appreciate the color. I'll turn it back.

Your next question comes from the line of Jeff LeBlanc of TPH. Your line is open.

Good morning, Sam and team. Thank you for taking my question. I wanted to see if you could talk more about the cadence of forced E-Fleet buyouts over 2027 and how quickly it will flow through the financial results.

Yeah, we're still expecting three next year. And as you know, right now that E-Fleet lease expense is impacting our EBITDA. So as we execute those buyouts, that will, you know, begin to, that will be, the expense will begin to roll off when we do each buyout.

Okay. And then separately on Pro Power, I was flipping through the presentation and for the power plants, You're targeting a 10 to 15-year term. I guess two questions there are, A, does that include an optional period? And then, B, where do you expect the average term in that range to be? Thank you.

Yeah, for larger installations that you're seeing in the presentation, several hundred megawatts, we are only looking at 10-plus years. Options and extensions are all negotiable on the table. It makes sense for us, but

ultimately we want to get a long-term partner on those types of projects and 10 plus is really kind of where we're where we plan okay thank you very much I'll hand the call back to the operator thank you and again if you have a question it is star one on your telephone keypad your next question comes from the line of Don Christ of Johnson Rice your line is open

Hey guys, hopefully all are doing well. Sam, I wanted to ask about labor. You know, we've been hearing some, some antidotes about people leaving to go build data centers and drive trucks for data centers and just any comments around labor and upward momentum and what you're paying for people?

Yeah, that's a good question, Don. Maybe we take some of that for granted sometimes because it's just such a normal, everyday thing that our team is focused on and working through, trying to make sure that we're acquiring and maintaining first-class people. It's hard. When the broader economy pulls on a workforce, on a Blue Collar Workforce. You know, I think we definitely feel it. It causes inflation. We've not been without. So our team's been able to acquire what we needed to do what we've done this year and standing up some more equipment across all of our oil field service lines. But it's something that we're having to keep a close eye on and likely over time creates more and more labor inflation, not less. You know, we also have, just as a reminder, I know Don, you probably know this, but you have a fairly transient workforce too. So we have a lot of people traveling in and out to work their shifts. And it's just as easy for them to commute from maybe a West Texas frac site as it might be a data center in the area as well. So the work kind of attracts a lot of the same people. so it's you know it's just to summarize it's it's something we're keeping our eye on but it hasn't totally inhibited us yet.

Okay I appreciate that color and I don't know if you want to answer this or not maybe you want to punt this question but I'll ask anyway the the 10 megawatt deliveries is any way you could give us a schedule is it is it pretty even throughout you know all of of the equipment that's on order or is it kind of more back weighted to to 28 and beyond versus earlier than that.

Yeah, no, it's pretty even, but starts in the back half of 28 and then continues on a distributed capacity through the end of the frame agreement.

Okay, so the smaller units are earlier in the delivery cycle.

yeah that's certainly what we have what we have now that we're building obviously these power nodes today that are working on on a data center and other microgrid applications um while in parallel able to stand up some larger uh 10 megawatt units for these infrastructure type projects we mentioned I appreciate the color I'll turn it back uh see you in a couple weeks thank you that concludes our Q&A session

I'll now turn the conference back over to Sam Sledge, Chief Executive Officer, for closing remarks.

Yeah, thanks everybody for your interest in the company. Thanks for joining us today. Thanks again to all my ProPetro teammates that are making things happen. We hope to talk to you all soon.

This concludes today's conference call. You may now disconnect.