Strategic Performance and Market Dynamics

• Performance in Q1 was impacted by working capital headwinds and lower adjusted EBITDA, yet the completions business remained resilient due to rigorous cost discipline and a strategic focus on next-generation natural gas-powered fleets.

• Management attributes a constructive supply-demand environment to structural tightening in the completions market, driven by ongoing equipment attrition and limited spare capacity among smaller competitors.

• The company is capitalizing on a significant diesel-to-natural gas price discount in the Permian Basin, which has resulted in approximately 75% of the fleet being next-generation natural gas burning units.

• Strategic positioning is shifting toward an 'industrialized' model where completions generate the free cash flow necessary to fund the rapid scaling of the PROPWER segment.

• The Iran war has introduced volatility and uncertainty, but management believes it has raised the floor for crude prices and accelerated demand for domestic frac activity.

• Operational excellence and disciplined asset deployment are being prioritized over capacity expansion, with new units added only to capture specific high-return demand.

Strategic Outlook and Growth Initiatives

• The new framework agreement with Caterpillar enables PROPWER to acquire up to 2.1 gigawatts of additional capacity over 5 years, positioning the company to have 2.6 gigawatts of capacity delivered by year-end 2031 and fully deployed in 2032.

• Management expects to run approximately 12 fleets in Q2, up from 11 in Q1, as all Tier 4 DGB and FORCE electric fleets are currently sold out.

• Future PROPWER contracts are expected to be concentrated in the data center and industrial sectors due to their larger load requirements and long-term strategic commitments.

• Capital expenditure guidance for 2026 is $540 million to $610 million, consisting of $140 million to $160 million for the completions business and $400 million to $450 million for PROPWER, with the latter primarily driven by down payments associated with the Caterpillar framework agreement.

• The company intends to exercise lease buyouts for all five FORCE electric fleets between late 2026 and 2028 to reduce operating expenses and increase commercial flexibility.

Risk Factors and Structural Adjustments

• Working capital headwinds consumed $32 million in cash during Q1, a sharp reversal from the $35 million tailwind in the prior quarter.

• The company reported a net loss of $4 million for the quarter, primarily driven by reduced utilization in the completions business due to weather disruptions.

• Management flagged the availability of labor as a critical operational variable that could constrain industry growth even if pricing and demand continue to improve.

• Financing for the massive PROPWER expansion will rely on a mix of free cash flow, existing debt facilities, and potential new low-cost capital sources currently being evaluated.