[PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial information, management's discussion, market risk disclosures, and controls and procedures [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents ProPetro Holding Corp.'s unaudited condensed consolidated financial statements for interim periods, including balance sheets, statements of operations, shareholders' equity, and cash flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets present the company's financial position, detailing assets, liabilities, and shareholders' equity as of September 30, 2022, and December 31, 2021 Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------- | :----------- | :----------- | | Total Assets | $1,143,606 | $1,061,236 | | Total Liabilities | $313,068 | $234,934 | | Total Shareholders' Equity | $830,538 | $826,302 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The condensed consolidated statements of operations detail financial performance, including revenue, costs, and net income (loss) for the three and nine months ended September 30, 2022 and 2021 Three Months Ended September 30 (in thousands, except per share data) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue - Service revenue | $333,014 | $250,099 | $82,915 | 33.2% | | Total costs and expenses | $319,361 | $255,993 | $63,368 | 24.8% | | Operating income (loss) | $13,653 | $(5,894) | $19,547 | -331.6% | | Net income (loss) | $10,032 | $(5,067) | $15,099 | -298.0% | | Basic EPS | $0.10 | $(0.05) | $0.15 | -300.0% | | Diluted EPS | $0.10 | $(0.05) | $0.15 | -300.0% | Nine Months Ended September 30 (in thousands, except per share data) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue - Service revenue | $930,776 | $628,444 | $302,332 | 48.1% | | Total costs and expenses | $951,661 | $674,737 | $276,924 | 41.0% | | Operating income (loss) | $(20,885) | $(46,293) | $25,408 | -54.9% | | Net income (loss) | $(11,012) | $(33,953) | $22,941 | -67.6% | | Basic EPS | $(0.11) | $(0.33) | $0.22 | -66.7% | | Diluted EPS | $(0.11) | $(0.33) | $0.22 | -66.7% | [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This statement outlines changes in shareholders' equity for the nine months ended September 30, 2022 and 2021, reflecting net income/loss, stock-based compensation, and equity award activities Shareholders' Equity Highlights (in thousands) | Metric | Sep 30, 2022 | Jan 1, 2022 | | :-------------------------- | :----------- | :---------- | | Total Shareholders' Equity | $830,538 | $826,302 | | Stock-based compensation cost (9 months) | $18,128 | N/A | | Net income (loss) (9 months) | $(11,012) | N/A | Shareholders' Equity Highlights (in thousands) | Metric | Sep 30, 2021 | Jan 1, 2021 | | :-------------------------- | :----------- | :---------- | | Total Shareholders' Equity | $842,815 | $870,771 | | Stock-based compensation cost (9 months) | $8,405 | N/A | | Net income (loss) (9 months) | $(33,953) | N/A | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows present inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Net cash provided by operating activities | $174,951 | $109,259 | $65,692 | 60.1% | | Net cash used in investing activities | $(239,957) | $(85,549) | $(154,408) | 180.5% | | Net cash used in financing activities | $(3,704) | $(7,881) | $4,177 | -53.0% | | Net increase (decrease) in cash and cash equivalents | $(68,710) | $15,829 | $(84,559) | -534.2% | | Cash and cash equivalents - End of period | $43,208 | $84,601 | $(41,393) | -48.9% | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanatory notes to the financial statements, covering accounting policies, fair value, debt, segments, stock-based compensation, related-party transactions, leases, commitments, and subsequent events [Note 1 - Basis of Presentation](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation) This note clarifies the basis of presentation for interim financial statements, outlining revenue recognition policies for pressure pumping services and the recent shutdown of coiled tubing operations - The Company recognizes revenue for hydraulic fracturing services over time using a progress output, unit-of-work performed method, based on agreed fixed transaction price and actual stages completed[26](index=26&type=chunk) - Acidizing and cementing services revenue is recognized at a point-in-time upon completion of the contracted service[27](index=27&type=chunk)[28](index=28&type=chunk) - Coiled tubing operations were shut down effective September 1, 2022, and all coiled tubing assets were disposed of[30](index=30&type=chunk) Accounts Receivable and Credit Losses (in thousands) | Metric | Sep 30, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Accrued revenue (unbilled receivable) | $37,100 | $19,400 | | Allowance for credit losses | $217 | $217 | | Provision for credit losses (9 months ended Sep 30, 2022) | $0 | N/A | [Note 2 - Recently Issued Accounting Standards](index=10&type=section&id=Note%202%20-%20Recently%20Issued%20Accounting%20Standards) This note details the adoption of ASU No. 2020-04, Reference Rate Reform, effective January 1, 2022, which did not materially affect the financial statements - Adopted ASU No. 2020-04, Reference Rate Reform, effective **January 1, 2022**, to address the transition away from LIBOR[35](index=35&type=chunk) - The adoption of this guidance did not materially affect the Company's condensed consolidated financial statements[35](index=35&type=chunk) [Note 3 - Fair Value Measurement](index=10&type=section&id=Note%203%20-%20Fair%20Value%20Measurement) This note defines fair value, outlines the three-level hierarchy for measurements, and details assets measured at fair value, including an impairment expense for DuraStim® equipment - Fair value measurements are categorized into a three-level hierarchy: **Level 1** (quoted prices in active markets), **Level 2** (significant observable inputs), and **Level 3** (significant unobservable inputs)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) Assets Measured at Fair Value (in thousands) | Asset | Sep 30, 2022 Fair Value | Level | Total Gains (Losses) | | :---------------------- | :---------------------- | :---- | :------------------- | | Short-term investment | $8,503 | 1 | $(3,349) | | Equipment inventory (nonrecurring) | $2,700 | 3 | N/A | - Recorded an impairment expense of approximately **$57.5 million** for the nine months ended September 30, 2022, related to DuraStim® hydraulic fracturing pumps that did not meet specifications[43](index=43&type=chunk) [Note 4 - Long-Term Debt](index=12&type=section&id=Note%204%20-%20Long-Term%20Debt) This note describes the amendment of the ABL Credit Facility, which reduced borrowing capacity, extended maturity, and changed the interest rate benchmark from LIBOR to SOFR - The ABL Credit Facility was amended and restated on **April 13, 2022**[45](index=45&type=chunk) ABL Credit Facility Changes | Feature | Previous (2018 Amendment) | Amended (April 13, 2022) | | :-------------------- | :------------------------ | :----------------------- | | Borrowing Capacity | $300.0 million | $150.0 million | | Maturity Date | December 19, 2023 | April 13, 2027 | | Borrowing Base | 85% of eligible A/R | 85%-90% of eligible A/R | | Interest Rate Basis | LIBOR or base rate | SOFR or base rate | | Borrowing Base (Sep 30, 2022) | N/A | ~$116.4 million | | Borrowings (Sep 30, 2022) | $0 | $0 | [Note 5 - Reportable Segment Information](index=12&type=section&id=Note%205%20-%20Reportable%20Segment%20Information) This note details the company's operating segments, aggregated into one reportable segment (pressure pumping), discusses coiled tubing asset divestiture, and reconciles segment financial information to consolidated statements - The Company has one reportable segment, **'Pressure Pumping,'** comprising hydraulic fracturing (inclusive of acidizing) and cementing operating segments[47](index=47&type=chunk)[50](index=50&type=chunk) - Coiled tubing assets were disposed of on **September 1, 2022**, resulting in a loss of approximately **$13.8 million**[48](index=48&type=chunk) Adjusted EBITDA by Segment (in thousands) | Segment | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :---------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pressure Pumping | $102,550 | $53,975 | $265,835 | $132,673 | | All Other | $(12,550) | $(11,877) | $(33,355) | $(34,866) | | Total | $90,000 | $42,098 | $232,480 | $97,807 | - Hydraulic fracturing revenue approximated **91.7%** and **92.7%** of pressure pumping revenue during the three and nine months ended September 30, 2022, respectively[51](index=51&type=chunk) [Note 6 - Net Income (Loss) Per Share](index=16&type=section&id=Note%206%20-%20Net%20Income%20%28Loss%29%20Per%20Share) This note provides the calculation of basic and diluted net income (loss) per common share and lists anti-dilutive securities excluded from diluted EPS calculations Net Income (Loss) Per Common Share | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Basic EPS | $0.10 | $(0.05) | $(0.11) | $(0.33) | | Diluted EPS | $0.10 | $(0.05) | $(0.11) | $(0.33) | Anti-Dilutive Securities Excluded from Diluted EPS (in thousands) | Type | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Stock options | 488 | 962 | 488 | 962 | | Restricted stock units | 615 | 1,435 | 1,189 | 1,435 | | Performance stock units | — | 1,586 | 1,758 | 1,586 | | Total | 1,103 | 3,983 | 3,435 | 3,983 | [Note 7 - Stock-Based Compensation](index=17&type=section&id=Note%207%20-%20Stock-Based%20Compensation) This note details stock-based compensation plans, including activity for stock options, RSUs, and PSUs during the nine months ended September 30, 2022, and associated expenses - No new stock option grants were made during the nine months ended September 30, 2022. **488 thousand** stock options were outstanding at September 30, 2022, with a weighted average exercise price of **$14.00**[65](index=65&type=chunk)[66](index=66&type=chunk) - **680,946** Restricted Stock Units (RSUs) were granted during the nine months ended September 30, 2022, with total unrecognized compensation expense of approximately **$9.1 million**[68](index=68&type=chunk) - **327,939** Performance Share Units (PSUs) were granted during the nine months ended September 30, 2022, with vesting based on total shareholder return relative to a peer group[70](index=70&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Nine Months Ended Sep 30 | $18,128 | $8,405 | - Total unrecognized stock-based compensation expense as of September 30, 2022, was approximately **$18.7 million**, expected to be recognized over approximately **1.8 years**[74](index=74&type=chunk) [Note 8 - Related-Party Transactions](index=19&type=section&id=Note%208%20-%20Related-Party%20Transactions) This note describes related-party transactions, including lease agreements with a director-affiliated entity and an amended pressure pumping services agreement with Pioneer Natural Resources USA, Inc - The Company rents five operations and maintenance yards from an entity in which a director has an equity interest, with annual rent expenses ranging from **$0.03 million** to **$0.2 million** per yard[75](index=75&type=chunk) - An amended and restated pressure pumping services agreement with Pioneer Natural Resources USA, Inc. (Pioneer) became effective **January 1, 2022**, reducing contracted fleets to **six** from **eight** and replacing idle fees with equipment reservation fees[76](index=76&type=chunk) Revenue from Pioneer (in millions) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $100.2 | $147.3 | | Nine Months Ended Sep 30 | $338.9 | $364.3 | - As of September 30, 2022, total accounts receivable due from Pioneer was approximately **$53.5 million**[78](index=78&type=chunk) [Note 9 - Leases](index=20&type=section&id=Note%209%20-%20Leases) This note details the company's operating leases, including real estate, maintenance facility, and an electric fleet lease, along with a maturity analysis of lease liabilities - The Company has a Real Estate Lease (commenced **April 1, 2013**) with a remaining lease term of approximately **0.5 years** and a weighted average discount rate of **6.7%** as of September 30, 2022[80](index=80&type=chunk)[81](index=81&type=chunk) - A Maintenance Facility Lease (commenced **March 14, 2022**) has a remaining lease term of approximately **1.4 years** and a weighted average discount rate of **3.4%** as of September 30, 2022[82](index=82&type=chunk)[83](index=83&type=chunk) - Entered into a three-year Electric Fleet Lease for two fleets (**60,000 HHP** per fleet) in **August 2022**, with lease payments expected to commence in the **second half of 2023** as assets are still being manufactured[84](index=84&type=chunk) Maturity Analysis of Lease Liabilities (in thousands) as of September 30, 2022 | Year | Totals | | :--- | :----- | | 2022 | $181 | | 2023 | $398 | | 2024 | $50 | | Total undiscounted future lease payments | $629 | | Present value of future lease payments | $614 | Short-Term Lease Expense (in millions) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Nine Months Ended Sep 30 | $0.6 | $0.4 | [Note 10 - Commitments and Contingencies](index=21&type=section&id=Note%2010%20-%20Commitments%20and%20Contingencies) This note outlines commitments for fixed assets, consumables, and services, including investments in DGB and electric fracturing equipment, and legal contingencies such as the Logan Lawsuit settlement - Contractual commitment to purchase and convert additional Tier IV DGB equipment totaling approximately **$43.0 million**[90](index=90&type=chunk) - Estimated contractual commitment for the Electric Fleet Lease is approximately **$49.3 million**, including the option to purchase equipment at the end of the lease[90](index=90&type=chunk) - Agreed to a proposed settlement of the Logan Lawsuit on **August 11, 2022**, with the Company's insurers paying **$30.0 million** into a settlement fund[95](index=95&type=chunk)[98](index=98&type=chunk) - Received a net tax refund of **$10.7 million** in **March 2022** from the Texas Comptroller of Public Accounts for sales, excise, and use tax for the period **July 1, 2015, through December 31, 2018**[103](index=103&type=chunk) [Note 11 - Subsequent Event](index=23&type=section&id=Note%2011%20-%20Subsequent%20Event) This note discloses the subsequent acquisition of Silvertip Completion Services Operating, LLC on November 1, 2022, for common stock and cash consideration - On **November 1, 2022**, the Company entered into a purchase and sale agreement to acquire **100%** of the equity interest of Silvertip Completion Services Operating, LLC[105](index=105&type=chunk) - The total consideration paid for the Silvertip Acquisition consisted of **10.1 million shares** of the Company's common stock and **$30.0 million** in cash, plus other closing and transaction costs[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's discussion and analysis of financial condition and results of operations, covering business overview, industry trends, key performance indicators, and detailed financial analysis [Overview](index=24&type=section&id=Overview) ProPetro Holding Corp. is a Permian Basin oilfield services company specializing in hydraulic fracturing, actively transitioning to lower emissions equipment while navigating industry competition and capital intensity - ProPetro Holding Corp. is an oilfield services company providing hydraulic fracturing and complementary services primarily in the **Permian Basin**[109](index=109&type=chunk) - Total available hydraulic horsepower (HHP) as of September 30, 2022, was **1,315,000 HHP**, comprising **215,000 HHP** of Tier IV Dynamic Gas Blending (DGB) equipment and **1,100,000 HHP** of conventional Tier II equipment[110](index=110&type=chunk) - The company is committed to converting and purchasing an additional **187,500 HHP** of Tier IV DGB equipment and entered a three-year Electric Fleet Lease for two **60,000 HHP** fleets[110](index=110&type=chunk) - A **$57.5 million** impairment expense was recorded in **Q2 2022** for DuraStim® electric powered hydraulic fracturing equipment that did not meet specifications[111](index=111&type=chunk) - The coiled tubing operations were disposed of on **September 1, 2022**, resulting in a **$13.8 million** loss on sale[117](index=117&type=chunk) [Commodity Price and Other Economic Conditions](index=25&type=section&id=Commodity%20Price%20and%20Other%20Economic%20Conditions) This section discusses oil and gas industry volatility driven by geopolitical events and inflation, leading to increased crude oil prices, demand for services, pricing increases, and challenges in transitioning to lower emissions equipment - The Russia-Ukraine war and associated sanctions contributed to significant increases and volatility in oil and natural gas prices[119](index=119&type=chunk) - Global average crude oil prices exceeded **$98 per barrel** in **2022**, the highest in ten years, driven by underinvestment and increased demand[121](index=121&type=chunk) - Permian Basin rig count increased from approximately **179** at the beginning of **2021** to approximately **344** at the end of **September 2022**, leading to increased demand and improved pricing for pressure pumping services[121](index=121&type=chunk) - The industry is transitioning to lower emissions equipment, which is capital intensive and an increasingly important factor in service provider selection[122](index=122&type=chunk)[123](index=123&type=chunk) - The company typically experiences declines in operating and financial results in the **fourth quarter** due to the holiday season, inclement winter weather, and exhaustion of customer annual budgets[125](index=125&type=chunk) [How We Evaluate Our Operations](index=26&type=section&id=How%20We%20Evaluate%20Our%20Operations) Management evaluates operations using Adjusted EBITDA and Adjusted EBITDA margin, non-GAAP measures adjusted for non-recurring items, to consistently assess financial performance across periods - Management uses **Adjusted EBITDA** and **Adjusted EBITDA margin** as important indicators of performance[126](index=126&type=chunk) - Adjusted EBITDA is defined as EBITDA, plus loss/(gain) on disposal of assets, stock-based compensation, and other unusual or nonrecurring (income)/expenses such as impairment charges, severance, and legal settlements[127](index=127&type=chunk) Adjusted EBITDA and Margin (Total Company, in thousands, except percentages) | Metric | 3 Months Ended Sep 30, 2022 | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2021 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Adjusted EBITDA | $90,000 | $42,098 | $232,480 | $97,807 | | Adjusted EBITDA Margin | 27.0% | 16.8% | 25.0% | 15.6% | [Results of Operations](index=29&type=section&id=Results%20of%20Operations) This section provides a detailed comparative analysis of financial results for the three and nine months ended September 30, 2022, versus 2021, covering key income statement components [Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021](index=30&type=section&id=Three%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20September%2030%2C%202021) For the three months ended September 30, 2022, revenues significantly increased due to higher demand and improved pricing, leading to substantial net income and Adjusted EBITDA growth Key Financial Changes (3 Months Ended Sep 30, in thousands, except percentages) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue | $333,014 | $250,099 | $82,915 | 33.2% | | Pressure Pumping Revenue | $330,780 | $245,641 | $85,139 | 34.7% | | Cost of Services | $224,118 | $188,690 | $35,428 | 18.8% | | G&A Expenses | $28,190 | $21,348 | $6,842 | 32.0% | | Depreciation and Amortization | $30,417 | $33,531 | $(3,114) | (9.3)% | | Loss on Disposal of Assets | $36,636 | $12,424 | $24,212 | 194.9% | | Net Income (Loss) | $10,032 | $(5,067) | $15,099 | 298.0% | - The increase in revenue was primarily attributable to significantly increased activity levels and improved pricing for pressure pumping services, with effectively utilized fleet count rising to approximately **14.8 active fleets** in **2022** from **13.8** in **2021**[139](index=139&type=chunk) - Cost of services as a percentage of pressure pumping segment revenues decreased to **66.6%** in **2022** from **75.3%** in **2021**, reflecting increased operational efficiencies and improved pricing[141](index=141&type=chunk) - General and administrative expenses increased due to non-recurring legal fees and settlement expenses (**$5.3 million**), consulting fees (**$2.2 million**), and severance expense (**$1.1 million**)[142](index=142&type=chunk) [Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021](index=32&type=section&id=Nine%20Months%20Ended%20September%2030%2C%202022%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2030%2C%202021) For the nine months ended September 30, 2022, the company saw substantial revenue growth and reduced net loss, despite a large impairment expense for DuraStim® assets and increased asset disposal losses Key Financial Changes (9 Months Ended Sep 30, in thousands, except percentages) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Revenue | $930,776 | $628,444 | $302,332 | 48.1% | | Pressure Pumping Revenue | $917,336 | $617,293 | $300,043 | 48.6% | | Cost of Services | $640,202 | $474,905 | $165,297 | 34.8% | | G&A Expenses | $85,031 | $59,079 | $25,952 | 43.9% | | Depreciation and Amortization | $93,734 | $100,253 | $(6,519) | (6.5)% | | Impairment Expense | $57,454 | $0 | $57,454 | 100.0% | | Loss on Disposal of Assets | $75,240 | $40,500 | $34,740 | 85.8% | | Other Income | $(9,749) | $(1,178) | $8,571 | 727.6% | | Net Loss | $(11,012) | $(33,953) | $(22,941) | (67.6)% | - Revenue increase was primarily due to significant increases in customer activity levels, resulting in higher demand for pressure pumping services and improved pricing, with effectively utilized fleet count rising to approximately **14.4 active fleets** in **2022** from **12.4** in **2021**[152](index=152&type=chunk) - General and administrative expenses increased due to higher non-recurring legal expenses (**$12.8 million**), stock-based compensation expense (**$9.7 million**, including acceleration for a former executive), and consulting and professional fees (**$4.5 million**)[155](index=155&type=chunk) - Other income increased significantly due to a **$10.7 million** net tax refund and **$2.7 million** non-cash income from equipment warranty settlement, partially offset by a **$3.3 million** unrealized loss on short-term investment[160](index=160&type=chunk)[161](index=161&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash, operating cash flows, and an amended ABL Credit Facility, with future capital investments and economic slowdowns posing potential risks - Liquidity is provided by existing cash balances, operating cash flows, and borrowings under the ABL Credit Facility[163](index=163&type=chunk) Liquidity Position (in millions) | Metric | Sep 30, 2022 | Oct 31, 2022 | | :-------------------------------- | :----------- | :----------- | | Cash and cash equivalents | $43.2 | $88.3 | | Availability under ABL Credit Facility | $111.3 | $97.3 | | Total Liquidity | $154.5 | $185.6 | | Borrowings under ABL Credit Facility | $0 | $30.0 | - The ABL Credit Facility was amended on **April 13, 2022**, decreasing borrowing capacity to **$150.0 million** and extending the maturity date to **April 13, 2027**[171](index=171&type=chunk) - Future liquidity could decline with additional capital investments, especially for lower emissions equipment, and potential negative impacts from increasing interest rates or economic slowdowns[166](index=166&type=chunk)[167](index=167&type=chunk) [Future Sources and Use of Cash and Contractual Obligations](index=35&type=section&id=Future%20Sources%20and%20Use%20of%20Cash%20and%20Contractual%20Obligations) Future cash use will primarily be for capital expenditures, including DGB conversions and an Electric Fleet Lease, funded by existing cash, operating cash flows, and the ABL Credit Facility Capital Expenditures (in millions) | Period | 2022 | 2021 | | :-------------------------- | :----- | :----- | | Three Months Ended Sep 30 | $115.1 | $53.2 | - Future capital expenditures are projected for maintenance, conversion to lower emissions pressure pumping equipment (Tier IV DGB), strategic purchases, and other ancillary equipment[175](index=175&type=chunk) - Contractual commitment of approximately **$43.0 million** for additional Tier IV DGB equipment and an estimated contractual commitment of **$49.3 million** for the Electric Fleet Lease (including purchase option)[177](index=177&type=chunk) - Capital expenditures are anticipated to be funded by existing cash, cash flows from operations, and borrowings under the ABL Credit Facility[176](index=176&type=chunk) - On **November 1, 2022**, the company acquired Silvertip Completion Services Operating, LLC for **10.1 million shares** and **$30.0 million** cash[178](index=178&type=chunk) [Cash and Cash Flows](index=35&type=section&id=Cash%20and%20Cash%20Flows) This section analyzes cash flow activities, showing increased operating cash but substantially higher investing cash use for lower emissions equipment, resulting in a net decrease in cash Cash Flows (Nine Months Ended Sep 30, in thousands) | Activity | 2022 | 2021 | Change ($) | Change (%) | | :-------------------------------- | :----- | :----- | :--------- | :--------- | | Net cash provided by operating activities | $174,951 | $109,259 | $65,692 | 60.1% | | Net cash used in investing activities | $(239,957) | $(85,549) | $(154,408) | 180.5% | | Net cash used in financing activities | $(3,704) | $(7,881) | $4,177 | -53.0% | | Net increase (decrease) in cash and cash equivalents | $(68,710) | $15,829 | $(84,559) | -534.2% | - The increase in net cash provided by operating activities was primarily due to increased activity levels and improved pricing, driven by higher crude oil prices, and a net sales tax refund[181](index=181&type=chunk) - The increase in net cash used in investing activities was primarily attributable to investments in lower emissions Tier IV DGB equipment and increased costs to rebuild Tier II equipment[182](index=182&type=chunk) [Off-Balance Sheet Arrangements](index=36&type=section&id=Off-Balance%20Sheet%20Arrangements) As of September 30, 2022, the company reported no off-balance sheet arrangements - The Company had no off-balance sheet arrangements as of **September 30, 2022**[184](index=184&type=chunk) [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes occurred in critical accounting policies and estimates during the nine months ended September 30, 2022, as referenced in the previous Form 10-K - There have been no material changes to the methodology applied for critical accounting policies and estimates during the nine months ended **September 30, 2022**[185](index=185&type=chunk) [Recently Issued Accounting Standards](index=36&type=section&id=Recently%20Issued%20Accounting%20Standards) This section incorporates by reference the disclosure on recently issued accounting standards from Note 2 of the Condensed Consolidated Financial Statements - Disclosure concerning recently issued accounting standards is incorporated by reference to **Note 2** of the Condensed Consolidated Financial Statements[186](index=186&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As of September 30, 2022, no material changes in market risk were reported compared to the company's previous Form 10-K disclosures - As of **September 30, 2022**, there have been no material changes in market risk from the information provided in the company's Form 10-K[187](index=187&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter [Evaluation of Disclosure Controls and Procedures](index=37&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The principal executive and financial officers concluded that disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2022 - The principal executive officer and principal financial officer concluded that the disclosure controls and procedures were effective at the reasonable assurance level as of **September 30, 2022**[190](index=190&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes occurred in the company's internal control over financial reporting during the quarter ended September 30, 2022 - There were no changes in the system of internal control over financial reporting during the quarter ended **September 30, 2022**, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[191](index=191&type=chunk) [PART II – OTHER INFORMATION](index=38&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This part provides other information, including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 of the Condensed Consolidated Financial Statements for detailed information on legal proceedings, including the Logan Lawsuit settlement - For further information on legal proceedings, refer to **Note 10 – Commitments and Contingencies** in the Notes to Condensed Consolidated Financial Statements[194](index=194&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section highlights a new risk factor related to the Inflation Reduction Act of 2022, which could accelerate the low-carbon transition and impose methane emissions costs on customers - The **Inflation Reduction Act of 2022 (IRA 2022)** is a new risk factor that could accelerate the transition to a low-carbon economy[196](index=196&type=chunk) - The IRA 2022 imposes a federal fee on methane emissions, starting at **$900 per ton** in **2024**, increasing to **$1,200** in **2025**, and **$1,500** for **2026** and each year after, which could increase customer operating costs and reduce demand for services[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=38&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities and use of proceeds were reported[197](index=197&type=chunk) [Item 3. Defaults Upon Senior Securities](index=38&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities during the period - No defaults upon senior securities were reported[197](index=197&type=chunk) [Item 4. Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable[198](index=198&type=chunk) [Item 5. Other Information](index=38&type=section&id=Item%205.%20Other%20Information) The company reported no other information for the period - No other information was reported[199](index=199&type=chunk) [Item 6. Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed or furnished with the Form 10-Q, including corporate governance documents, certifications, and XBRL data files - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Certificate of Designations, Certifications of Principal Executive and Financial Officers (**31.1, 31.2, 32.1, 32.2**), and XBRL Taxonomy Extension Documents[202](index=202&type=chunk)

Financial Data and Key Metrics Changes - The company generated $333 million in revenue for Q3 2022, a 6% increase from $315 million in Q2 2022, driven by net pricing gains and strong cementing performance [25][30] - Adjusted EBITDA for the quarter was $90 million, representing an 18% sequential increase from $76 million in Q2 2022, with adjusted EBITDA margins expanding by almost 300 basis points to over 27% of revenue [30][32] - The company reported a net income of $10 million or $0.10 per diluted share, compared to a net loss of $33 million in the previous quarter [28] Business Line Data and Key Metrics Changes - The cementing business achieved its highest revenue quarter ever, with 100% sequential adjusted EBITDA growth [7] - The company maintained effective fleet utilization at 14.8 fleets, which was flat compared to the previous quarter [26] - Incremental adjusted EBITDA margins were nearly 80% for the total company, reflecting disciplined returns-based strategy [7][30] Market Data and Key Metrics Changes - The crude oil market is structurally undersupplied, a trend expected to continue for the next few years due to lagging global investment in new production [10] - The company anticipates steady to flat activity levels through the end of 2022 and into early 2023, influenced by E&Ps maintaining disciplined capital spending [10][11] - The market for efficient hydraulic fracturing fleets remains tight due to ongoing equipment attrition, with evidence of medium and smaller players struggling to maintain service quality [31] Company Strategy and Development Direction - The company is focused on optimizing operations, transitioning to next-generation equipment, and pursuing strategic transactions to enhance competitiveness and shareholder value [13][17] - The acquisition of Silvertip Completion Services is aimed at creating a leading completions-focused oilfield services company, expected to increase adjusted EBITDA by approximately $65 million to $75 million in 2023 [19][21] - The company plans to reduce capital spending through enhanced operational efficiencies and innovative technologies while maintaining a strong liquidity position [20][36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term upcycle of the energy industry, driven by severe undersupply of crude oil and natural gas [16] - The company is optimistic about pricing momentum in the market and has secured contracts with major customers for 2023 [12][39] - Management highlighted the importance of maintaining a disciplined approach to capital allocation and operational efficiency to enhance free cash flow generation [20][39] Other Important Information - The company completed the acquisition of Silvertip for a total consideration of $150 million, which included cash, stock, and the payoff of assumed debt [21][24] - Total liquidity at the end of Q3 2022 was $155 million, which is expected to exceed $200 million post-acquisition [36] Q&A Session Summary Question: Potential for price uplift on Pioneer assets - Management indicated that a significant portion of incremental margins in Q3 was due to pricing progression, with expectations for continued pricing increases into 2023 [45][46] Question: Insights into overall market supply - Management noted that over 80% of the market's capacity is concentrated in a few major players, which are better positioned to sustain activity compared to smaller competitors [48] Question: Synergies from the Silvertip acquisition - Management clarified that the expected EBITDA from Silvertip is standalone and not modeled for synergies, although there is potential for collaboration and cross-selling [54][56] Question: CapEx for next year - Management confirmed that capital expenditures are expected to decrease in 2023, with a favorable lease agreement for electric frac fleets minimizing capital investment [62][63] Question: Demand for electric wireline - Management indicated that while demand for electric wireline is lower than for frac equipment, there is still a significant focus on transitioning to electrified offerings [89]

PROPETRO® Client to confirm use of this image again Q3 2022 Investor Presentation November 1, 2022 Forward-Looking Statements Except for historical information contained herein, the statements and information in this presentation, including the oral statements made in connection herewith, are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future eve ...

Cautionary Note Regarding Forward-Looking Statements [Forward-Looking Statements Disclosure](index=3&type=section&id=Forward-Looking%20Statements%20Disclosure) This section outlines the company's forward-looking statements, which involve risks and uncertainties that could cause actual results to differ materially - All statements in this Form 10-Q that are not historical facts are considered **forward-looking statements**, indicating expectations or forecasts of future events[9](index=9&type=chunk) - Key factors that could cause actual results to differ materially include the severity and duration of current world health events and armed conflicts, actions by **OPEC+**, and actions by the **Biden Administration** impacting oil and natural gas production[10](index=10&type=chunk) - Other significant risks include changes in general economic and geopolitical conditions, laws/regulations, cost increases and **supply chain constraints**, and technological changes[10](index=10&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, and the company disclaims any duty to update or revise them, except as required by applicable securities laws[12](index=12&type=chunk) PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and detailed notes for the periods ended June 30, 2022, and December 31, 2021 [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets and liabilities slightly increased from December 31, 2021, to June 30, 2022, while shareholders' equity experienced a minor decrease | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,067,623 | $1,061,236 | | Total Liabilities | $250,587 | $234,934 | | Total Shareholders' Equity | $817,036 | $826,302 | - **Cash and cash equivalents decreased** from $111.9 million at December 31, 2021, to **$69.8 million** at June 30, 2022[16](index=16&type=chunk) - **Accounts receivable (net) increased** from $128.1 million to **$182.0 million**, indicating higher sales or slower collections[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company's net loss widened significantly for the three and six months ended June 30, 2022, compared to the prior year, due to a large impairment expense | Metric (in thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $315,083 | $216,887 | $597,763 | $378,345 | | Net Income (Loss) | $(32,860) | $(8,511) | $(21,043) | $(28,886) | | Basic EPS | $(0.32) | $(0.08) | $(0.20) | $(0.28) | - Revenue increased significantly, with a **45.3% increase** for the three months and a **58.0% increase** for the six months ended June 30, 2022, compared to 2021[18](index=18&type=chunk) - An **impairment expense of $57.5 million** was recorded for the three and six months ended June 30, 2022, contributing to the increased net loss[18](index=18&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders'%20Equity) Shareholders' equity decreased from $826.3 million to $817.0 million during the first six months of 2022, driven by the net loss incurred | Metric (in thousands) | January 1, 2022 | June 30, 2022 | | :--- | :--- | :--- | | Total Shareholders' Equity | $826,302 | $817,036 | | Accumulated Deficit | $(18,630) | $(39,673) | - **Stock-based compensation cost** contributed **$14.8 million** to additional paid-in capital during the six months ended June 30, 2022[20](index=20&type=chunk) - The **accumulated deficit increased** significantly from $(18.6) million at January 1, 2022, to **$(39.7) million** at June 30, 2022, reflecting the net losses[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated substantially more cash in the first half of 2022, while investing activities saw a significant increase in cash used for capital expenditures | Metric (in thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $103,308 | $61,480 | | Net cash used in investing activities | $(141,568) | $(50,920) | | Net cash used in financing activities | $(3,869) | $(6,631) | | Cash and cash equivalents - End of period | $69,789 | $72,701 | - The increase in cash from operating activities was driven by **higher activity levels** and a net tax refund, partially offset by timing of receivables and vendor payments[22](index=22&type=chunk) - **Capital expenditures significantly increased** to **$144.5 million** in 2022 from $52.2 million in 2021, leading to higher cash used in investing activities[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide essential details on accounting policies, financial instruments, debt, and other items, offering context to the financial statements [Note 1 - Basis of Presentation](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation) The financial statements are prepared per SEC and GAAP requirements, with revenue recognized from pressure pumping and coiled tubing operations - The company's primary revenue-generating activities are aggregated into one reportable segment, **'Pressure Pumping'**, which includes hydraulic fracturing and cementing services[25](index=25&type=chunk)[26](index=26&type=chunk) - Hydraulic fracturing revenue is recognized over time, while acidizing and cementing revenues are recognized at a point-in-time upon service completion[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - **Accrued revenue** within accounts receivable increased from **$19.4 million** at December 31, 2021, to **$43.2 million** at June 30, 2022[32](index=32&type=chunk) Allowance for Credit Losses (in thousands) | Metric | January 1, 2022 | June 30, 2022 | | :--- | :--- | :--- | | Balance - Allowance for Credit Losses | $217 | $217 | [Note 2 - Recently Issued Accounting Standards](index=10&type=section&id=Note%202%20-%20Recently%20Issued%20Accounting%20Standards) The company adopted ASU No 2020-04 for Reference Rate Reform, which did not materially affect the condensed consolidated financial statements - The company adopted **ASU No 2020-04, Reference Rate Reform**, effective January 1, 2022, providing guidance for the transition away from LIBOR[36](index=36&type=chunk) - The adoption of this guidance **did not materially affect** the Company's condensed consolidated financial statements[36](index=36&type=chunk) [Note 3 - Fair Value Measurement](index=10&type=section&id=Note%203%20-%20Fair%20Value%20Measurement) A significant nonrecurring impairment expense of $57.5 million was recorded for DuraStim® hydraulic fracturing pumps due to commercialization uncertainty - Fair value is defined as the exit price in an orderly transaction, with a hierarchy (Level 1, 2, 3) based on the observability of inputs[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - The estimated fair value of the company's financial instruments **approximated their carrying values** at June 30, 2022, and December 31, 2021[42](index=42&type=chunk) Assets Measured at Fair Value on a Nonrecurring Basis (in thousands) | Asset | Balance (June 30, 2022) | Total Gains (Losses) | | :--- | :--- | :--- | | Property and equipment, net | $11,341 | $(57,454) | - An **impairment expense of approximately $57.5 million** was recorded for DuraStim® hydraulic fracturing pumps in Q2 2022 due to performance issues and market conditions[43](index=43&type=chunk) [Note 4 - Long-Term Debt](index=13&type=section&id=Note%204%20-%20Long-Term%20Debt) The company amended its ABL Credit Facility, reducing borrowing capacity to $150.0 million and extending maturity to April 2027, with no outstanding borrowings - Effective April 13, 2022, the ABL Credit Facility's borrowing capacity was **decreased to $150.0 million** and the maturity date extended to April 13, 2027[46](index=46&type=chunk) - The **Borrowing Base** as of June 30, 2022, was approximately **$120.5 million**, based on eligible accounts receivable[46](index=46&type=chunk) - Interest accrues based on **SOFR or the base rate**, plus an applicable margin ranging from 1.50% to 2.00% for SOFR loans and 0.50% to 1.00% for base rate loans[46](index=46&type=chunk) - There were **no borrowings outstanding** under the revolving credit facility as of June 30, 2022, and December 31, 2021[47](index=47&type=chunk) [Note 5 - Reportable Segment Information](index=13&type=section&id=Note%205%20-%20Reportable%20Segment%20Information) The company operates through one primary reportable segment, 'Pressure Pumping,' which saw a significant increase in Adjusted EBITDA - The company has one reportable segment, **'Pressure Pumping,'** comprising hydraulic fracturing and cementing operations[50](index=50&type=chunk) - Hydraulic fracturing revenue approximated **92.9% and 93.2%** of pressure pumping revenue for the three and six months ended June 30, 2022, respectively[51](index=51&type=chunk) Adjusted EBITDA by Segment (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Pressure Pumping Adjusted EBITDA | $86,291 | $46,826 | $163,285 | $78,697 | | All Other Adjusted EBITDA | $(10,344) | $(11,133) | $(20,805) | $(22,988) | | Total Adjusted EBITDA | $75,947 | $35,693 | $142,480 | $55,709 | - Total corporate administrative expense for the three and six months ended June 30, 2022, was **$7.7 million and $25.0 million**, respectively, up from the prior year[50](index=50&type=chunk) [Note 6 - Net Income (Loss) Per Share](index=18&type=section&id=Note%206%20-%20Net%20Income%20(Loss)%20Per%20Share) Basic and diluted net loss per share increased for the three-month period but decreased for the six-month period, with certain equity awards being anti-dilutive Net Income (Loss) Per Common Share | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Basic EPS | $(0.32) | $(0.08) | $(0.20) | $(0.28) | | Diluted EPS | $(0.32) | $(0.08) | $(0.20) | $(0.28) | - **Weighted average common shares outstanding** for basic and diluted calculations were approximately **104.2 million** for the three months and **104.0 million** for the six months ended June 30, 2022[66](index=66&type=chunk) Anti-Dilutive Equity Awards (in thousands) | Award Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Stock options | 587 | 995 | 587 | 995 | | Restricted stock units | 1,207 | 1,380 | 1,207 | 1,380 | | Performance stock units | 1,788 | 1,489 | 1,788 | 1,489 | | Total | 3,582 | 3,864 | 3,582 | 3,864 | [Note 7 - Stock-Based Compensation](index=19&type=section&id=Note%207%20-%20Stock-Based%20Compensation) Total stock-based compensation expense increased significantly to $14.8 million for the first half of 2022, partly due to accelerated vesting for a former officer - **No new stock option grants** were made during the six months ended June 30, 2022[69](index=69&type=chunk) - **631,233 RSUs were granted**, with unrecognized compensation expense of **$10.6 million** to be recognized over approximately 2.0 years[71](index=71&type=chunk)[72](index=72&type=chunk) - **327,939 PSUs were granted**, and an incremental stock expense of **$3.7 million** was recorded due to PSU modifications for a former officer[74](index=74&type=chunk)[75](index=75&type=chunk) Total Stock-Based Compensation Expense (in thousands) | Period | Total Stock-Based Compensation Expense | | :--- | :--- | | Six Months Ended June 30, 2022 | $14,800 | [Note 8 - Related-Party Transactions](index=22&type=section&id=Note%208%20-%20Related-Party%20Transactions) Revenue from Pioneer, a significant customer, totaled $238.7 million for the first six months of 2022 under an amended services agreement - The company rents five operations and maintenance yards from an entity in which a director has an equity interest[81](index=81&type=chunk) - An amended agreement with Pioneer effective January 1, 2022, **reduced contracted fleets from eight to six** and replaced idle fees with equipment reservation fees[82](index=82&type=chunk) Revenue from Pioneer (in millions) | Period | Revenue from Pioneer | | :--- | :--- | | Three Months Ended June 30, 2022 | $115.2 | | Three Months Ended June 30, 2021 | $130.7 | | Six Months Ended June 30, 2022 | $238.7 | | Six Months Ended June 30, 2021 | $217.0 | - **Accounts receivable due from Pioneer** increased from $62.1 million at December 31, 2021, to **$69.0 million** at June 30, 2022[84](index=84&type=chunk) [Note 9 - Leases](index=23&type=section&id=Note%209%20-%20Leases) The company has operating leases for real estate, with total undiscounted future lease payments of $0.8 million - The company has a ten-year Real Estate Lease and a two-year Maintenance Facility Lease, both classified as **operating leases**[87](index=87&type=chunk)[89](index=89&type=chunk) - Total operating lease right-of-use asset cost was approximately **$1.9 million** at June 30, 2022, with accumulated amortization of $1.1 million[91](index=91&type=chunk) Maturity Analysis of Lease Liabilities (in thousands) | Year | Totals | | :--- | :--- | | 2022 | $360 | | 2023 | $398 | | 2024 | $50 | | Total undiscounted future lease payments | $808 | | Present value of future lease payments | $785 | - **Short-term lease expense** for the six months ended June 30, 2022, was approximately **$0.4 million**[94](index=94&type=chunk) [Note 10 - Commitments and Contingencies](index=24&type=section&id=Note%2010%20-%20Commitments%20and%20Contingencies) The company has a $43.0 million commitment for new equipment and is involved in ongoing litigation, with outcomes currently not estimable - Total remaining lease commitments for short-term leases and lodging were approximately **$2.5 million** at June 30, 2022[95](index=95&type=chunk) - In August 2022, the company entered into a contractual arrangement to purchase and convert additional Tier IV DGB equipment for approximately **$43.0 million**[95](index=95&type=chunk) - The company is a defendant in the **Logan Lawsuit**, a class action alleging violations of the Exchange Act and Securities Act, with the outcome not yet estimable[98](index=98&type=chunk)[99](index=99&type=chunk)[103](index=103&type=chunk) - A **$10.7 million net tax refund** was received in March 2022 from the Texas Comptroller for sales, excise, and use tax[107](index=107&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes financial performance, highlighting significant revenue growth offset by increased costs and a substantial impairment charge [Overview](index=27&type=section&id=Overview) ProPetro is a Permian Basin-focused oilfield services company transitioning to lower emissions equipment but recorded a $57.5 million impairment on its DuraStim® assets - ProPetro is a Midland, Texas-based oilfield services company providing **hydraulic fracturing** and other complementary services, primarily in the **Permian Basin**[112](index=112&type=chunk) - Total available HHP as of June 30, 2022, was **1,315,000 HHP**, including 197,500 HHP of Tier IV Dynamic Gas Blending (DGB) equipment[113](index=113&type=chunk) - The company recorded approximately **$57.5 million of impairment expense** on DuraStim® electric powered hydraulic fracturing equipment in Q2 2022[114](index=114&type=chunk) - An amended agreement with Pioneer **reduced contracted fleets from eight to six** and introduced equipment reservation fees, contributing to revenue[115](index=115&type=chunk) [Commodity Price and Other Economic Conditions](index=28&type=section&id=Commodity%20Price%20and%20Other%20Economic%20Conditions) Industry volatility, driven by global events, has increased crude oil prices and service demand but also brought cost inflation and supply chain tightness - The Russia-Ukraine war and COVID-19 pandemic have contributed to significant increases and volatility in oil and natural gas prices, with global average crude oil prices **exceeding $100 per barrel** in 2022[122](index=122&type=chunk)[124](index=124&type=chunk) - Increased crude oil prices led to a rise in Permian Basin rig count from approximately 179 to **349** at the end of June 2022, driving demand for oilfield services[124](index=124&type=chunk) - The company negotiated **pricing increases** with customers due to growing demand and significant cost inflation[124](index=124&type=chunk) - The industry is transitioning to **lower emissions operating environments**, requiring significant capital investment in new technologies[125](index=125&type=chunk) [How We Evaluate Our Operations](index=29&type=section&id=How%20We%20Evaluate%20Our%20Operations) Management evaluates performance using non-GAAP measures Adjusted EBITDA and Adjusted EBITDA margin to provide a consistent basis for comparison - Management uses **Adjusted EBITDA** and **Adjusted EBITDA margin** as key performance indicators[128](index=128&type=chunk) - Adjusted EBITDA is defined as EBITDA adjusted for items like loss/(gain) on asset disposals, stock-based compensation, and other **unusual or nonrecurring expenses**[129](index=129&type=chunk) - Adjusted EBITDA and Adjusted EBITDA margin are **non-GAAP measures** used to assess financial performance by removing the effects of capital structure and nonrecurring items[130](index=130&type=chunk)[131](index=131&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) Revenue grew significantly, but this was offset by rising costs and a $57.5 million impairment expense, leading to a widened net loss for the quarter [Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021](index=33&type=section&id=Three%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20June%2030%2C%202021) Revenue increased 45.3% to $315.1 million, but a $57.5 million impairment expense contributed to a widened net loss of $(32.9) million Key Financials (Three Months Ended June 30, in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $315,083 | $216,887 | $98,196 | 45.3% | | Cost of services | $218,813 | $162,837 | $55,976 | 34.4% | | General and administrative | $25,135 | $17,529 | $7,606 | 43.4% | | Impairment expense | $57,454 | $0 | $57,454 | 100.0% | | Loss on disposal of assets | $22,485 | $15,025 | $7,460 | 49.7% | | Net loss | $(32,860) | $(8,511) | $24,349 | 286.1% | | Adjusted EBITDA | $75,947 | $35,693 | $40,254 | 112.8% | | Adjusted EBITDA Margin | 24.1% | 16.5% | 7.6% | 46.1% | - Effectively utilized fleet count increased to approximately **14.8 active fleets** in Q2 2022 from 13.1 in Q2 2021[142](index=142&type=chunk) - Pressure pumping cost of services as a percentage of revenue **decreased to 69.0%** in Q2 2022 from 74.7% in Q2 2021, reflecting improved operational efficiencies[144](index=144&type=chunk) - General and administrative expenses increased primarily due to **$5.1 million in non-recurring legal fees** and $0.5 million in stock-based compensation[145](index=145&type=chunk) [Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021](index=34&type=section&id=Six%20Months%20Ended%20June%2030%2C%202022%20Compared%20to%20the%20Six%20Months%20Ended%20June%2030%2C%202021) Revenue surged 58.0% to $597.8 million, and a $10.7 million tax refund helped reduce the net loss to $(21.0) million despite a large impairment charge Key Financials (Six Months Ended June 30, in thousands) | Metric | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $597,763 | $378,345 | $219,418 | 58.0% | | Cost of services | $416,083 | $286,215 | $129,868 | 45.4% | | General and administrative | $56,842 | $37,731 | $19,111 | 50.7% | | Impairment expense | $57,454 | $0 | $57,454 | 100.0% | | Loss on disposal of assets | $38,603 | $28,076 | $10,527 | 37.5% | | Other income | $(10,364) | $(1,487) | $8,877 | 597.0% | | Net loss | $(21,043) | $(28,886) | $(7,843) | (27.2)% | | Adjusted EBITDA | $142,480 | $55,709 | $86,771 | 155.8% | | Adjusted EBITDA Margin | 23.8% | 14.7% | 9.1% | 61.9% | - Effectively utilized fleet count increased to approximately **14.3 active fleets** in H1 2022 from 11.7 in H1 2021[154](index=154&type=chunk) - General and administrative expenses increased due to a **$9.4 million rise in stock-based compensation** and **$7.5 million in non-recurring legal fees**[158](index=158&type=chunk) - Other income increased significantly due to a **$10.7 million net tax refund** from the Texas Comptroller[163](index=163&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) Total liquidity was $185.3 million as of June 30, 2022, comprising cash and availability under its amended ABL Credit Facility - Liquidity is provided by existing cash balances, operating cash flows, and borrowings under the **ABL Credit Facility**[167](index=167&type=chunk) Liquidity Position (as of June 30, 2022, in millions) | Metric | Amount | | :--- | :--- | | Cash and cash equivalents | $69.8 | | ABL Credit Facility availability | $115.5 | | Total Liquidity | $185.3 | - The ABL Credit Facility was amended on April 13, 2022, **decreasing borrowing capacity to $150.0 million** and extending maturity to April 13, 2027[173](index=173&type=chunk) - The **Borrowing Base** as of June 30, 2022, was approximately **$120.5 million**, and there were no borrowings under the facility[173](index=173&type=chunk)[174](index=174&type=chunk) [Future Sources and Use of Cash and Contractual Obligations](index=38&type=section&id=Future%20Sources%20and%20Use%20of%20Cash%20and%20Contractual%20Obligations) Future cash will primarily fund capital expenditures for maintenance and DGB conversions, with a $43.0 million commitment for new equipment in August 2022 - **Capital expenditures incurred were $89.1 million** during the three months ended June 30, 2022, compared to $30.8 million in the prior year[175](index=175&type=chunk) - Future capital expenditures are projected for maintenance, costs to convert existing equipment to **lower emissions (Tier IV DGB)**, and strategic purchases[176](index=176&type=chunk) - The company expects to fund capital expenditures through existing cash, cash flows from operations, and, if needed, borrowings under its **ABL Credit Facility**[177](index=177&type=chunk) - In August 2022, the company committed to purchase and convert additional Tier IV DGB equipment with a total cost of approximately **$43.0 million**[178](index=178&type=chunk) [Cash and Cash Flows](index=38&type=section&id=Cash%20and%20Cash%20Flows) Operating cash flow increased to $103.3 million, while cash used in investing rose significantly due to investments in lower emissions equipment Historical Cash Flows (Six Months Ended June 30, in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $103,308 | $61,480 | | Net cash used in investing activities | $(141,568) | $(50,920) | | Net cash used in financing activities | $(3,869) | $(6,631) | - The **$41.8 million increase in net cash from operating activities** was primarily due to increased activity levels, higher crude oil prices, and a net tax refund[180](index=180&type=chunk) - The increase in net cash used in investing activities was primarily attributable to investment in **lower emissions Tier IV DGB equipment**[181](index=181&type=chunk) - The decrease in net cash used in financing activities was mainly due to a reduction in net settlement of equity awards and no repayments of insurance financing in 2022[182](index=182&type=chunk) [Off-Balance Sheet Arrangements](index=39&type=section&id=Off-Balance%20Sheet%20Arrangements) As of June 30, 2022, the company had no off-balance sheet arrangements - The company had **no off-balance sheet arrangements** as of June 30, 2022[183](index=183&type=chunk) [Critical Accounting Policies and Estimates](index=39&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) There have been no material changes to the company's critical accounting policies and estimates during the first half of 2022 - **No material changes** occurred in the methodology for critical accounting policies and estimates during the six months ended June 30, 2022[184](index=184&type=chunk) [Recently Issued Accounting Standards](index=39&type=section&id=Recently%20Issued%20Accounting%20Standards) Disclosure concerning recently issued accounting standards is incorporated by reference to Note 2 of the financial statements - Information on recently issued accounting standards is incorporated by reference to **Note 2** of the Condensed Consolidated Financial Statements[185](index=185&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been no material changes in market risk from the information previously provided in the company's Form 10-K - **No material changes in market risk** have occurred as of June 30, 2022, compared to the disclosures in the Form 10-K[186](index=186&type=chunk) [Item 4. Controls and Procedures](index=40&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective, with no material changes in internal control over financial reporting - The company's disclosure controls and procedures were evaluated and deemed **effective** at the reasonable assurance level as of June 30, 2022[189](index=189&type=chunk) - **No material changes** in internal control over financial reporting occurred during the quarter ended June 30, 2022[190](index=190&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=41&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 10 in the financial statements for detailed information on legal proceedings - Details regarding legal proceedings are provided in **Note 10 – Commitments and Contingencies** of the Condensed Consolidated Financial Statements[193](index=193&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Form 10-K - **No material changes** to the risk factors disclosed in the company's Form 10-K have occurred[194](index=194&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=41&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report - **No unregistered sales** of equity securities or use of proceeds to report[195](index=195&type=chunk) [Item 3. Defaults Upon Senior Securities](index=41&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report - **No defaults** upon senior securities to report[196](index=196&type=chunk) [Item 4. Mine Safety Disclosures](index=41&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are **not applicable** to the company[197](index=197&type=chunk) [Item 5. Other Information](index=41&type=section&id=Item%205.%20Other%20Information) There is no other information to report under this item - **No other information** to report[198](index=198&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, credit agreements, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Certificate of Designations of Series B Preferred Stock, and the Restatement Agreement for the **ABL Credit Facility**[201](index=201&type=chunk) - **Certifications** from the Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350 are filed/furnished[201](index=201&type=chunk) - **XBRL Instance Document** and Taxonomy Extension Schema, Calculation, Label, Presentation, and Definition Linkbase Documents are included[201](index=201&type=chunk) Signatures [Report Signatures](index=43&type=section&id=Report%20Signatures) The report was duly signed on behalf of the registrant by its principal officers on August 4, 2022 - The report was signed on **August 4, 2022**[205](index=205&type=chunk) - Signatories include **Samuel D. Sledge** (Chief Executive Officer and Director), **David S. Schorlemer** (Chief Financial Officer), and **Elo Omavuezi** (Chief Accounting Officer)[205](index=205&type=chunk)

ProPetro Holding Corp. (NYSE:PUMP) Q2 2022 Earnings Conference Call August 3, 2022 9:00 AM ET Company Participants Matt Augustine - Investor Relations Sam Sledge - Chief Executive Officer David Schorlemer - Chief Financial Officer Adam Munoz - President & Chief Operating Officer Conference Call Participants Scott Gruber - Citigroup Arun Jayaram - JPMorgan Waqar Syed - ATB Capital Markets Stephen Gengaro - Stifel Derek Podhaizer - Barclays Operator Good morning, and welcome to the ProPetro Holding Corporatio ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38035 ______________________________ ProPetro Holding Corp. (432) 688-0012 (Registrant's telephone number, including area code) Securities ...

Part I [Business](index=7&type=section&id=Item%201.%20Business) ProPetro is a Permian Basin-focused oilfield services company specializing in hydraulic fracturing and complementary services Hydraulic Horsepower (HHP) Fleet Composition as of Dec 31, 2021 | Equipment Type | HHP | | :--- | :--- | | Tier IV Dynamic Gas Blending (DGB) | 90,000 | | Conventional Tier II | 1,225,000 | | DuraStim® Electric | 108,000 | | **Total Available HHP** | **1,423,000** | - The company's operations are geographically concentrated in the Permian Basin, which accounted for approximately **98.7% of revenues in 2021**[93](index=93&type=chunk) Customer Concentration by Revenue | Customer Group | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Top 5 Customers | 85.7% | 86.5% | 77.1% | - In 2021, **Pioneer Natural Resources USA Inc. and Endeavor Energy Resources accounted for 54.2% and 14.6% of total revenue**, respectively[48](index=48&type=chunk) - As of December 31, 2021, the company employed approximately **1,500 people**, with none of the employees being unionized[79](index=79&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from industry cyclicality, customer concentration, competition, and regulatory changes - The business is highly dependent on the cyclical oil and natural gas industry, with demand for services tied to E&P capital expenditures in the Permian Basin[85](index=85&type=chunk)[86](index=86&type=chunk) - A significant risk is the ongoing **Logan Lawsuit**, a class action complaint alleging violations of securities laws, for which the outcome cannot be predicted[115](index=115&type=chunk)[116](index=116&type=chunk)[120](index=120&type=chunk) - The company has a high customer concentration; for the year ended December 31, 2021, one customer, **Pioneer, accounted for 54.2% of revenue**[125](index=125&type=chunk) - The company's ability to use its net operating loss (NOL) carryforwards may be limited; as of December 31, 2021, the company had approximately **$408.0 million of federal NOLs**[159](index=159&type=chunk) - The transition to lower-emissions equipment is capital intensive and presents a risk, as failure to adopt new technologies could adversely impact service demand[95](index=95&type=chunk) [Unresolved Staff Comments](index=35&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[173](index=173&type=chunk) [Properties](index=35&type=section&id=Item%202.%20Properties) The company's corporate headquarters is in Midland, Texas, with other owned and leased properties in the Permian Basin - Corporate headquarters is located at 1706 S. Midkiff, Midland, Texas 79701[174](index=174&type=chunk) [Legal Proceedings](index=35&type=section&id=Item%203.%20Legal%20Proceedings) Information regarding legal proceedings is incorporated by reference to Note 15 of the Consolidated Financial Statements - Details on legal proceedings are provided in Note 15 of the financial statements, which discusses the Logan Lawsuit and other contingencies[175](index=175&type=chunk) [Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20and%20Safety%20Disclosures) The company reports no mine and safety disclosures - None[176](index=176&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=36&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on the NYSE under "PUMP" and it does not currently pay dividends - The company's common stock trades on the New York Stock Exchange under the symbol **"PUMP"**[179](index=179&type=chunk) - As of December 31, 2021, there were **103,437,177 shares of common stock outstanding**[180](index=180&type=chunk) - The company does not anticipate declaring or paying any cash dividends in the foreseeable future, intending to retain earnings to finance business growth[181](index=181&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Revenue increased 10.8% in 2021, but Adjusted EBITDA declined due to inflationary pressures and supply chain issues Financial Highlights: 2021 vs. 2020 | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Revenue | $874.5M | $789.2M | +10.8% | | Cost of Services | $662.3M | $584.3M | +13.3% | | Net Loss | ($54.2M) | ($107.0M) | +49.4% | | Adjusted EBITDA | $135.0M | $141.5M | -4.6% | | Adjusted EBITDA Margin | 15.4% | 17.9% | -2.5% | - The average effectively utilized fleet count **increased by 20%** from approximately 10 active fleets in 2020 to 12 in 2021[204](index=204&type=chunk)[229](index=229&type=chunk) - Capital expenditures for 2022 are projected to be between **$250.0 million and $300.0 million**, primarily for maintenance and conversion to lower-emissions equipment[256](index=256&type=chunk) - As of December 31, 2021, total liquidity was **$169.3 million**, consisting of $111.9 million in cash and $57.4 million available under the ABL Credit Facility, with no outstanding debt[242](index=242&type=chunk) Cash Flow Summary (in millions) | Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash from operating activities | $154.7 | $139.1 | | Net cash used in investing activities | ($104.3) | ($94.2) | | Net cash used in financing activities | ($7.3) | ($125.2) | [Quantitative and Qualitative Disclosures About Market Risk](index=56&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to commodity price, interest rate, and customer credit risks but does not currently use derivatives - The company is exposed to commodity price risk for materials and fuel, and has historically passed a significant portion of this risk to customers[280](index=280&type=chunk) - The company is subject to interest rate risk on its ABL Credit Facility; a hypothetical **1% increase in interest rates would have had no impact** on interest expense in 2021[281](index=281&type=chunk) [Financial Statements and Supplementary Data](index=57&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements, which received an unqualified opinion from the auditor - The independent auditor, Deloitte & Touche LLP, issued an **unqualified opinion** on the financial statements and internal controls as of December 31, 2021[284](index=284&type=chunk)[295](index=295&type=chunk) - The auditor identified **related-party transactions as a critical audit matter** due to the judgment required to ensure proper identification and disclosure[289](index=289&type=chunk)[290](index=290&type=chunk) Consolidated Balance Sheet Highlights (As of Dec 31, in thousands) | Account | 2021 | 2020 | | :--- | :--- | :--- | | Total Current Assets | $251,064 | $167,720 | | Property and Equipment, Net | $808,494 | $880,479 | | **Total Assets** | **$1,061,236** | **$1,050,739** | | Total Current Liabilities | $173,785 | $104,168 | | **Total Liabilities** | **$234,934** | **$179,963** | | **Total Shareholders' Equity** | **$826,302** | **$870,771** | Consolidated Statement of Operations Highlights (Year Ended Dec 31, in thousands) | Account | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Revenue | $874,514 | $789,232 | $2,052,314 | | Operating (Loss) Income | ($68,696) | ($131,243) | $221,360 | | Net (Loss) Income | ($54,185) | ($107,020) | $163,010 | | Diluted (Loss) Income Per Share | ($0.53) | ($1.06) | $1.57 | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=85&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants - None[446](index=446&type=chunk) [Controls and Procedures](index=86&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective - Management concluded that **disclosure controls and procedures were effective** as of December 31, 2021[448](index=448&type=chunk) - Management concluded that **internal control over financial reporting was effective** as of December 31, 2021[451](index=451&type=chunk) [Other Information](index=87&type=section&id=Item%209B.%20Other%20Information) The company reports no other information - None[454](index=454&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=87&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[455](index=455&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=88&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Required information is incorporated by reference from the 2022 Annual Meeting Proxy Statement - Information is incorporated by reference to the Company's Proxy Statement for its 2022 Annual Meeting of Stockholders[458](index=458&type=chunk) [Executive Compensation](index=89&type=section&id=Item%2011.%20Executive%20Compensation) Required information regarding executive compensation is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the Company's Proxy Statement for its 2022 Annual Meeting of Stockholders[460](index=460&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=90&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Required information on security ownership is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the Company's Proxy Statement for its 2022 Annual Meeting of Stockholders[461](index=461&type=chunk) [Certain Relationships and Related Party Transactions, and Director Independence](index=91&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Party%20Transactions%2C%20and%20Director%20Independence) Required information on related party transactions is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the Company's Proxy Statement for its 2022 Annual Meeting of Stockholders[462](index=462&type=chunk) [Principal Accounting Fees and Services](index=92&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Required information on accounting fees is incorporated by reference from the 2022 Proxy Statement - Information is incorporated by reference to the Company's Proxy Statement for its 2022 Annual Meeting of Stockholders[463](index=463&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements and exhibits filed with the report, with no financial statement schedules included - The financial statements from Item 8 are filed as part of this report[464](index=464&type=chunk) - No financial statement schedules were filed[465](index=465&type=chunk) [Form 10-K Summary](index=96&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None[473](index=473&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38035 ______________________________ ProPetro Holding Corp. (Exact name of registrant as specified in its charter) ___________________ ...

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Unaudited financial statements for June 30, 2021, report **total assets** of **\$1.067 billion**, a **\$28.9 million** **net loss**, and **\$61.5 million** in **operating cash flow** [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) - **Total assets** **increased** slightly to **\$1,066.8 million** as of **June 30, 2021**, from **\$1,050.7 million** at December 31, 2020[16](index=16&type=chunk) - **Cash and cash equivalents** **increased** to **\$72.7 million** from **\$68.8 million**, while **accounts receivable** **grew significantly** to **\$138.3 million** from **\$84.2 million**[16](index=16&type=chunk) - **Total liabilities** **increased** to **\$222.0 million** from **\$180.0 million**, primarily driven by a **rise** in **accounts payable** from **\$79.2 million** to **\$136.4 million**[16](index=16&type=chunk) - **Total shareholders' equity** **decreased** to **\$844.7 million** from **\$870.8 million**, mainly due to a **reduction** in **retained earnings**[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Service Revenue** | \$216,887 | \$106,109 | \$378,345 | \$501,178 | | **Operating Loss** | \$(11,747) | \$(31,322) | \$(40,398) | \$(38,751) | | **Net Loss** | \$(8,511) | \$(25,920) | \$(28,886) | \$(33,724) | | **Net Loss Per Share (Basic & Diluted)** | \$(0.08) | \$(0.26) | \$(0.28) | \$(0.33) | - **Revenue** for **Q2 2021** more than doubled year-over-year, **increasing** to **\$216.9 million** from **\$106.1 million** in **Q2 2020**[19](index=19&type=chunk) - For the six-month period, **revenue** **decreased** to **\$378.3 million** in 2021 from **\$501.2 million** in 2020[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | \$61,480 | \$96,910 | | **Net cash used in investing activities** | \$(50,920) | \$(78,025) | | **Net cash used in financing activities** | \$(6,631) | \$(130,615) | | **Net increase (decrease) in cash** | \$3,929 | \$(111,730) | | **Cash and cash equivalents - End of period** | \$72,701 | \$37,306 | - **Net cash provided by operating activities** **decreased** to **\$61.5 million** in the first half of 2021 from **\$96.9 million** in the same period of 2020, primarily due to changes in operating assets and liabilities, including a **significant increase** in **accounts receivable**[23](index=23&type=chunk) - **Cash used in investing activities** **decreased**, with **capital expenditures** **falling** to **\$52.2 million** from **\$80.7 million** year-over-year[23](index=23&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company's single reportable segment is "**Pressure Pumping**," which includes hydraulic fracturing and cementing **Hydraulic fracturing revenue** constituted approximately **93.5%** of the pressure pumping segment's **revenue** for the first six months of 2021[26](index=26&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - **Pioneer Natural Resources** is a **significant customer**, accounting for approximately **\$217.0 million** of total **revenue** in the first six months of 2021, up from **\$191.6 million** in the same period of 2020[81](index=81&type=chunk) - The company is involved in **pending legal matters**, including the **Logan Lawsuit** (a shareholder class action), the **Shareholder Derivative Lawsuit**, and an **SEC investigation** No provision has been made for these contingencies as the final outcome cannot be reasonably estimated[97](index=97&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk) - As of **June 30, 2021**, the company had **no borrowings** under its **\$300 million** **ABL Credit Facility** The **borrowing base** was approximately **\$71.8 million**[50](index=50&type=chunk)[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes **Q2 2021** **revenue** growth to rebounding demand, while six-month **revenue** **decreased** due to pricing, maintaining **solid liquidity** and focusing on lower-emissions equipment [Overview](index=24&type=section&id=Overview) - **ProPetro** is an **oilfield services company** focused on **hydraulic fracturing** in the **Permian Basin**[108](index=108&type=chunk) - As of **June 30, 2021**, the company had **1,423,000 available HHP**, including conventional Tier II, Tier IV DGB, and new **DuraStim® electric hydraulic fracturing equipment**[109](index=109&type=chunk) - The company is field-testing its **DuraStim® electric powered hydraulic fracturing equipment**, with a goal to commercialize its **first fleet**, though **supply chain disruptions** may extend the timeline[110](index=110&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Q2 2021 vs Q2 2020 Performance (in thousands) | Metric | Q2 2021 | Q2 2020 | Change (\$) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | \$216,887 | \$106,109 | \$110,778 | 104.4% | | **Cost of Services** | \$162,837 | \$68,193 | \$94,644 | 138.8% | | **Net Loss** | \$(8,511) | \$(25,920) | \$(17,409) | (67.2)% | | **Adjusted EBITDA** | \$35,693 | \$25,410 | \$10,283 | 40.5% | - The **Q2 revenue increase** was driven by a **significant rise** in **average effectively utilized fleet count** to approximately **13.1 active fleets** from 4.0 in **Q2 2020**, following the **rebound from the COVID-19 pandemic's impact**[132](index=132&type=chunk) Six Months 2021 vs Six Months 2020 Performance (in thousands) | Metric | H1 2021 | H1 2020 | Change (\$) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | \$378,345 | \$501,178 | \$(122,833) | (24.5)% | | **Cost of Services** | \$286,215 | \$369,041 | \$(82,826) | (22.4)% | | **Net Loss** | \$(28,886) | \$(33,724) | \$(4,838) | (14.3)% | | **Adjusted EBITDA** | \$55,709 | \$100,334 | \$(44,625) | (44.5)% | - The **revenue decrease** in the first six months of 2021 was primarily due to **significant pricing discounts** provided to customers starting in April 2020 and customers directly sourcing consumables like sand and chemicals[144](index=144&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - As of **June 30, 2021**, **total liquidity** was approximately **\$140.8 million**, comprising **\$72.7 million** in cash and **\$68.1 million** available under the **ABL Credit Facility**[155](index=155&type=chunk) - The company had **no borrowings** under its **\$300 million** **ABL Credit Facility** as of **June 30, 2021** The facility has a total capacity of **\$300 million**, subject to a **borrowing base** of **85%** of eligible **accounts receivable**[155](index=155&type=chunk)[158](index=158&type=chunk) - **Primary uses of cash** will be funding operations and **maintenance capital expenditures**, including costs to convert existing conventional equipment to **lower-emissions Tier IV DGB equipment**[161](index=161&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | \$61,480 | \$96,910 | | **Net cash used in investing activities** | \$(50,920) | \$(78,025) | | **Net cash used in financing activities** | \$(6,631) | \$(130,615) | [165](index=165&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) There have been **no material changes** in **market risk** exposure since the prior **Form 10-K** filing - There have been **no material changes** in **market risk** since the last annual report (**Form 10-K**)[172](index=172&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded **disclosure controls and procedures** were **effective** as of **June 30, 2021**, with **no material changes** to **internal control over financial reporting** during the quarter - The **Principal Executive Officer** and **Principal Financial Officer** concluded that the company's **disclosure controls and procedures** were **effective** as of **June 30, 2021**[174](index=174&type=chunk) - **No material changes** were made to the **internal control over financial reporting** during the quarter ended **June 30, 2021**[175](index=175&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) Information on **legal proceedings** is detailed in **Note 10** of the **Condensed Consolidated Financial Statements** - Information on **legal proceedings** is detailed in "**Note 10 – Commitments and Contingencies**" in the financial statements[178](index=178&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) There have been **no material changes** to the **risk factors** previously disclosed in the company's **Form 10-K** - There have been **no material changes** to the **risk factors** disclosed in the company's **Form 10-K**[179](index=179&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported **no unregistered sales of equity securities** during the period - **None**[180](index=180&type=chunk) [Item 3. Defaults Upon Senior Securities](index=37&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported **no defaults upon senior securities** - **None**[181](index=181&type=chunk) [Item 4. Mine Safety Disclosures](index=37&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is **not applicable** to the company - **Not applicable**[182](index=182&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) The company reported **no other information** for this item - **None**[183](index=183&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists **exhibits** filed with the **Form 10-Q**, including **CEO** and **CFO certifications** and **XBRL data files** - **Exhibits** filed include **certifications** from the **Principal Executive Officer** and **Principal Financial Officer** pursuant to **Sarbanes-Oxley Act Sections 302 and 906**[185](index=185&type=chunk) - **Interactive Data Files (XBRL)** are also included as **exhibits**[185](index=185&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 (Registrant's telephone number, including area code) or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38035 ______________________________ ProPetro Holding Corp. (Exact name of registrant ...