David Schorlemer: Stephen, one of the things we did want to talk a little bit about was just being able to bundle those services and I think the ExxonMobil contract is an opportunity for us to deliver those services in connection with our fracturing fleet. So that’s something that I think is something that we look to do more of. They don’t share a significant overlap as it relates to customers. I think there’s an opportunity there for us to do more of that, but it is happening on the ExxonMobil contract.
Stephen Gengaro: Okay. Thank you. And then as we think about your fleet makeup over time, you talked about the other FORCE fleets going forward, how do you – at this point, I mean, obviously, you got a couple working things are going really well, but how do you think about the buy versus lease decision at this point, and is the provider willing to continue to arrange – make these arrangements with you?
Sam Sledge: Yes. I don’t think you should see the lease mechanism that we’re using. Really, it’s lease to own, we’re buying these things over the span of the lease and have a buyout option at the end of the lease period. This is likely just a transitory mechanism that we’re using here to allow us to multi-task from a capital allocation standpoint. There could be a little bit more leasing, but I would say beyond this year likely not. And these would be assets that we would be buying in the future. I think that’s – I think I could also say that’s probably mutual preference of both us and our supplier.
Stephen Gengaro: Great. Thanks. And just one kind of reclarification of Waqar’s question. Your adjusted EBITDA of $86.1 million in hydraulic fracturing. That is – obviously, it’s before D&A, but it’s after deducting the lease expense.
David Schorlemer: Correct.
Sam Sledge: Yes.
Stephen Gengaro: Okay. Great. So I want to make sure we had that right. Thank you for the color, gentlemen.
Operator: Thank you. The next question comes from Scott Gruber with Citigroup. Please go ahead.
Scott Gruber: Yes. Good morning, and congrats on the results.
Sam Sledge: Thank you.
David Schorlemer: Thanks, Scott.
Scott Gruber: Sam, I want to come back to the new contracts, since it’s a great win for ProPetro. Can you touch on the performance incentives in the new contracts? Was that a new point of focus or kind of more standard fare? And as we think about those in terms of your EBITDA impact, those kind of on the margin or could there be more meaningful?
Sam Sledge: Yes. I would say that the performance incentives are basically standard fare. They might look a little bit different from customer to customer. But that’s something that we’re always after to try and get paid for our performance. So without getting into competitive information, I’ll kind of leave that there. And I’m forgetting your second question. Would you mind repeating your second question?
Scott Gruber: That was – no, you touched on it. You touched on it. I do want to clarify on the CapEx comment. You mentioned lower end towards the $200 million for the year. You also mentioned you could still execute on the fifth fleet. So if you do that and stay towards the lower end we should assume you’re probably going to lease that fifth fleet. Is that the way to think about it?
Sam Sledge: That’d be correct.
Scott Gruber: Okay. Maybe I’ll squeeze one more in. Just thoughts on the Permian in the rest of the year. You guys mentioned kind of a slow growth outlook. I’m just wondering whether the gas egress constraints right now are really limiting the growth in the basin. You guys obviously don’t do a whole lot of work for the privates, but the – watch them from a market tightness perspective. Do you think these gas egress constraints are limiting the response to the privates to higher oil prices or not really.
Sam Sledge: I don’t know if we’re the best people to ask in terms of is a holding privates back from putting more rigs to work? That said, we think it could have many minimal to no effect on the activity that we already have planned into the year. And I think a lot of that is due to our customer base. Look, we’ve got – I’m biased for obvious reasons. But I think we’ve got the best Permian customer base out there. There’s maybe one or two others that we’re not working for that we’re working on. But I think we’ve got the who’s who the Permian basin that are the smartest, most sophisticated, best planners with the best infrastructure. So we don’t have any indication right now that tells us that it should affect our – it will affect our activity. Things like that will affect our activity for the balance of the year.
Scott Gruber: Got it. Thanks, Sam. Appreciate the color.
Operator: Thank you. The next question comes from Jeffrey LeBlanc with TPH. Please go ahead.
Jeffrey LeBlanc: Good morning, Sam and team. Thank you for taking my question. One question I had was, could you provide any color on Simul-Frac operations as you continue to deploy e-fleets? Thank you.
Sam Sledge: Yes, good question. We’ve been heavily involved in Simul-Frac dating back to what was it early 2020 – 2021, yes. So we’ve got a great history at that operation and a really good track record. I think Simul-Frac and e-fleets do pair really well together because of kind of the power and horsepower density you’re able to generate, that said. I mean, as we look at it right now, we have a mix of both just regular zipper operations and Simul-Frac operations in our FORCE fleets. I think, naturally, as E&P space continues to consolidate, it enables more things like Simul-Frac. So maybe there’s a little bit more of it in the future, but it’s not anything, I think, massive swings in the job type across our portfolio or the sector.
Jeffrey LeBlanc: Thank you very much. I’ll hand the call back to the operator.
Operator: Thank you. The next question comes from Blake McLean with Daniel Energy Partners. Please go ahead.
Blake McLean: Hey, good morning, you all.
Sam Sledge: Good morning, Blake.
David Schorlemer: Good morning, Blake.
Blake McLean: Hey, a lot of good questions already asked. I’ve just got one. I was hoping to get maybe a little bit of color on R&M going forward. E-fleets generally characterize as having lower care and maintenance. I was hoping you could maybe provide a little context around kind of Tier 2 versus Tier 4 versus electric on that metric and maybe quantify some of the range of savings you might see between.
David Schorlemer: Yes. Blake, this is David. I think right now our maintenance overhead allocation is about 60% lower for the e-fleets. That gives you a sense of some of the lower capital intensity and operational intensity that exists. I think, as Sam mentioned, we’d like to take a bit more time as we roll these fleets out. We’ve got three of them operating today, one of which is only a week into their operations. We’ve got another one going out in June. So we’ll have more data to share on that, but I think overall, we’re looking at, 40% to 50% lower OpEx and much lower capital intensity for those fleets going forward.
Sam Sledge: Yes. The mechanics are looking for things to do.
Blake McLean: Good stuff. All right. Well, thank you all. Thank you all very much. Great quarter.
Sam Sledge: Thanks, Blake.
Operator: Thank you. This concludes our question-and-answer session. I would now like to hand the call back to Sam Sledge for closing remarks.
Sam Sledge: Thanks, everyone, for joining us today, and we hope to talk to you again soon.
Operator: The conference has now concluded. Thank you for your participation. You may now disconnect your lines.
