프로프랙(ACDC) 2026년 3분기 실적 발표 콘퍼런스콜: 잉여현금흐름 개선

핵심 요약

• 프로프랙 홀딩스(ProFrac Holding Corp.)는 2026년 3분기 매출이 2분기 4억 9,800만 달러에서 증가한 5억 1,100만 달러를 기록했다고 발표했다. 조정 EBITDA는 6,900만 달러에서 6,500만 달러로 감소했으며, 마진율은 14%에서 13%로 축소됐다.
• 현금 기준 자본적 지출이 약 4,000만 달러로 증가했음에도 불구하고, 잉여현금흐름은 2분기 마이너스 800만 달러에서 플러스 1,400만 달러로 개선됐다.
• 9월에 예상치 못한 일정 공백이 발생해 플릿당 펌핑 시간이 줄어들면서 스티뮬레이션 서비스 매출은 4억 2,100만 달러로 감소했다. 경영진은 10월 가동률이 개선됐으며 4분기에는 플릿 수가 정상화될 것으로 예상한다고 밝혔다.
• 프로판트 생산 부문 매출은 1억 2,100만 달러에서 1억 100만 달러로 감소했고, 조정 EBITDA는 240만 달러로 줄었다. 텍사스 서부 지역의 출하량 감소, 경쟁적인 가격 책정, 영업 레버리지 약화가 실적에 부담으로 작용했다.
• 플로텍은 2분기 각각 1억 200만 달러, 900만 달러에서 증가한 매출 1억 1,700만 달러, 조정 EBITDA 2,200만 달러를 기록했다.
• 경영진은 제한적인 프랙 장비 공급, 최신 계약 가격의 상승세, 고객 문의 증가를 이유로 들며 2027년에 대해 긍정적인 시각을 유지했다. 매슈 윌크스 CEO는 프로프랙이 2027년에 순이익 흑자를 낼 수 있을 것으로 자신한다고 밝혔다.

핵심 재무 데이터

사업 및 영업 실적

스티뮬레이션 서비스

매출은 2분기 4억 3,000만 달러에서 4억 2,100만 달러로 감소했으며, 조정 EBITDA는 3,900만 달러에서 3,700만 달러로 줄었다. 마진율은 약 9% 수준을 유지했다.

추가적인 일정 공백으로 인해 9월 조업 활동은 예상보다 부진했다. 플릿 수는 2분기와 대체로 비슷했으나, 분기 초 연중 최고 수준에 달했던 플릿당 펌핑 시간이 이후 감소했다. 고정비 흡수율 하락과 자재 및 운영 비용 상승이 가격 인상 효과를 상쇄했다.

경영진은 이전 사이클의 고점보다는 낮지만 최신 계약 가격의 상승세가 지속되고 있다고 밝혔다. 계약 갱신이 순차적으로 진행되고 있어 가격 인상에 따른 기여도는 4분기를 거쳐 2027년까지 점진적으로 확대될 것으로 회사는 기대하고 있다.

프로판트 생산

매출은 1억 2,100만 달러에서 1억 100만 달러로 감소했고, 조정 EBITDA는 600만 달러에서 240만 달러로 줄었다. EBITDA 마진율은 5.2%에서 2.4%로 축소됐다.

총 출하량은 약 250만 톤이었다. 외부 고객 비중은 2분기 31%에서 약 45%로 늘었다. 텍사스 서부 지역의 경쟁적인 가격 책정과 처리량 감소가 매출과 마진을 압박했다.

제조

제조 부문 매출은 4,800만 달러에서 5,300만 달러로 증가했다. 조정 EBITDA는 약 600만 달러 수준을 유지했으며, 외부 매출은 부문 매출의 17%를 차지했다.

경영진은 발전용 패키징 수요와 장비 개조(rebuild) 작업을 긍정적인 요인으로 꼽았다. 회사는 연말까지 모든 전동 블렌더(e-blender)가 인도될 것으로 보고 있으며, 대부분은 연말까지 가동에 들어가고 일부는 2027년 초까지 순차 배치될 것으로 예상했다.

플로텍

플로텍 매출은 1억 200만 달러에서 1억 1,700만 달러로 늘었다. 조정 EBITDA는 2분기 900만 달러에서 매출의 19%에 해당하는 2,200만 달러로 증가했다. 외부 매출 비중은 부문 매출의 42%에서 약 49%로 상승했다.

경영진 전망

프로프랙은 플로텍을 포함한 2026년 연간 자본적 지출 가이던스를 기존 1억 5,500만~1억 8,500만 달러에서 1억 6,000만~1억 8,000만 달러로 좁혔다. 플로텍을 제외한 예상 자본적 지출은 1억 4,500만~1억 6,500만 달러다.

4분기에는 주로 전동 블렌더 배치와 엔진 업그레이드로 인해 성장성 자본적 지출은 증가하는 반면 유지보수 자본적 지출은 소폭 감소할 것으로 경영진은 예상했다.

회사는 통상적인 연말 계절성의 영향을 받겠지만 4분기 가동률이 비교적 견조하게 유지될 것으로 전망했다. 또한 경영진은 장비 공급이 제한적인 데다 고객사의 예산 소진 조짐이 거의 보이지 않아 예년보다 계절적 압박이 덜할 것으로 예상했다.

2027년에는 계약이 순차 갱신됨에 따라 가격 인상이 보다 유의미하게 기여할 것으로 경영진은 기대하고 있다. 프로프랙은 교체 또는 신규 제작에 부합하는 경제성과 장기 계약이 보장되는 경우에만 유휴 플릿 가동이나 신규 가스 구동 플릿 배치를 검토할 방침이다. 회사는 투기적으로 플릿을 증설할 계획이 없다.

리스크 및 주요 관전 포인트

• 시뮬프랙(simul-frac) 완결 설계는 고객 생산성이 향상되더라도 작업 간 일정 공백을 더 늘릴 수 있다.
• 자재, 유지보수, 물류 및 인건비는 여전히 높은 수준이다. 경영진은 인플레이션 압력이 2027년까지 이어질 것으로 예상하고 있다.
• 데이터센터 및 발전 프로젝트와의 경쟁으로 숙련 기술자 시장의 수급이 타이트해지고 있다.
• 엔진 및 기타 부품의 리드타임 장기화로 프로프랙의 엔진 업그레이드 및 전동 블렌더 프로그램 일부가 지연됐다.
• 텍사스 서부 지역의 프로판트 가격 경쟁이 심화되면서 판매량, 처리량 및 영업 레버리지가 제한되고 있다.
• 장비 가동률 상승으로 마모가 가속화되고 자산 수명이 단축됨에 따라 자산 교체 비용을 회수할 수 있는 가격 책정의 중요성이 커지고 있다.

애널리스트 질의응답(Q&A) 주요 내용

경영진은 유휴 장비가 부족하고 연비 효율이 높은 플릿에 대한 고객 선호도가 높아 압력 펌핑(pressure-pumping) 시장이 이례적으로 타이트하다고 설명했다. 프로프랙은 단기 스폿 물량을 확보하기 위해 생산능력을 늘리기보다는 가격과 계약의 안정성을 우선시하고 있다.

윌크스 CEO는 2027년에 대해 고객 문의에 추가 플릿 및 전용 플릿 수요가 모두 포함되어 있다고 말했다. 다만 엔진, 트랜스미션, 파워엔드 조달이 여전히 어려워 예비 펌프는 운영상의 예비력 차원에서 유지될 수 있다고 덧붙였다.

경영진은 시간당 단가가 직전 고점에서 저점까지 약 50% 하락했다가 이후 그 하락분의 약 50~60%를 회복한 것으로 추산했다. 윌크스 CEO는 현재 플릿이 2022년의 400시간대 초중반에 비해 월 약 550~600시간 펌핑하고 있어 장비 마모가 심화되고 있다고 강조했다.

경영진에 따르면 가동 중인 업계 플릿의 약 80%가 가스 구동 능력을 갖추고 있으나, 완전 가스 구동 직접 구동 플릿은 한 자릿수 초반 퍼센트에 불과하다. 연비 효율에 따른 경제성은 최소 대체 요건이 포함된 프리미엄 마력 요율이나 별도의 듀얼 퓨얼 할증료를 통해 확보된다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

[Operator Instructions] Please note this conference is being recorded. I'll now turn the conference over to Michael Messina, Senior VP of Finance. Thank you, Michael. You may begin.

Michael Messina

Thank you, Operator. Good morning, everyone. We appreciate you joining us for ProFrac Holding Corp.'s conference call and webcast to review our results for the third quarter ended September 30, 2026. With me today are Matt Wilks, Chief Executive Officer and Executive Chairman, and Austin Harbour, Chief Financial Officer. Following my remarks, management will provide high-level commentary on the operational and financial highlights of the third quarter 2026 before opening up the call to your questions. A replay of today's call will be made available by webcast on the company's website at pfholdingscorp.com. More information on how to access the replay is included in the company's earnings release. Please note that the information reported on this call speaks only as of today, November 5, 2026.

We would advise that any time-sensitive information may no longer be accurate as of the time of transcript reading. Also, comments on this call may contain forward-looking statements within the meaning of the U.S. federal securities laws, including management's expectations of future financial and business performance. These forward-looking statements reflect the current views of ProFrac management and are not guarantees of future performance. Various risks, uncertainties, and contingencies could cause actual results, performance, or achievements to differ materially from those expressed in management's forward-looking statements. A listener or reader is encouraged to read ProFrac's Form 10-K and other filings with the Securities and Exchange Commission, which can be found at sec.gov or on the company's investor relations website section under the SEC Filings tab, to better understand those risks, uncertainties, and contingencies. The comments today also include certain non-GAAP financial measures, as well as other adjusted figures to exclude the contribution of Flotek. Additional details and reconciliations to the most directly comparable consolidated and GAAP financial measures are included in the earnings press release, which can be found on the company's website.

Now over to Mr. Matt Wilks, Chief Executive Officer and Executive Chairman of ProFrac.

Matthew Wilks

Thank you, Michael, and hello, everyone. I'll kick off with some remarks on our overall performance, the broader market environment, and progress on our strategic priorities. I'll then hand it over to Austin, who will take you through the segment results in more detail. The market backdrop heading into 2027 remains one we're genuinely optimistic about. The structural case we've been building around domestic energy security only looks stronger with time. Further, our peer group has remained disciplined, with several dedicating their resources and attention to newer aspects of their business. At the same time, the third quarter was more volatile than we anticipated, with activity in pumping and proppant moving less in a straight line than we would have liked.

Starting with pumping, September brought more calendar white space than we anticipated entering the quarter, which weighed on our activity levels for the month. Part of that reflects more efficient completion designs, including the use of simul-frac completions across multiple wells. Simul-frac can create more open calendar days between jobs, even as productivity improves. We're encouraged that activity improved in October, and we expect to see what we consider a normalized fleet count in the fourth quarter. Our efficiencies, including hours pumped per day, have improved, even with some calendar white space due to customer year-end seasonality built into our fourth quarter plans. Due to market tightness, driven by limited equipment availability and minimal indications of budget exhaustion, we expect less seasonality next quarter than what we have historically experienced. I would note that we also saw some cost pressure earlier in Q3 on the maintenance side, which began to normalize as we exited Q3.

Pricing remains one of the more important levers we have, and the environment for it continues to be favorable. Leading-edge pricing has been rising, but remains well below the highs we saw at the cycle's peak. We're working to carry that through our contracts and RFP structures as deliberately as we can, and we are constructive on the impact we expect to see in 2027. In proppant, lower than anticipated throughput in sales, particularly in West Texas, weighed on the results. We're addressing that directly and are encouraged by the early improvement we're seeing. More broadly, we're taking a disciplined approach across our frac sand footprint. Specifically, we are focused on strategically increasing pricing and throughput.

As we've said before, the operating leverage in this business becomes increasingly evident as we drive higher utilization across our strongest operations, and we continue to believe Proppant is capable of improved free cash flow as those efficiencies show up. Cash flows in the segment are also moving into a more sustainable position, supported by the term loan amendment that Austin will cover. Picking up on the broader market, as I mentioned in my opening remarks, WTI came in [ to the ] plenty of movement in between rather than a steady climb. Since quarter end, prices have pushed even higher, touching $110. The underlying drivers haven't changed. Tensions in the Middle East have continued with renewed attacks on shipping through the Strait of Hormuz in recent weeks and knock-on effects such as elevated tanker and insurance costs. The political outlook on both sides of the conflict makes near-term de-escalation far from certain. The bottom line is that we continue to see a sustained disruption to global supply capacity rather than a short-term shock, with recent market activity reinforcing that view.

As we've said before, periods like this strengthen the case for reliable domestic production. For our business, that remains a meaningful advantage. After several choppy years in our industry, some of our larger, more diversified peers have shifted capital and attention toward power generation and other opportunities where higher returns are expected. We think this is exactly why the pumping market is poised for a period of tightness. Fewer dollars chasing frac equipment, combined with the lead time required to stand up a fleet, makes it harder for opportunistic entrants to replicate the capacity additions that have put pressure on pricing in past cycles. At the same time, older equipment across the industry continues to retire and much of it isn't being replaced, and the equipment that is being replaced is facing some of the longest lead times we have ever experienced, further tightening the market. To that end, higher commodity prices are supporting customer cash flow and their ability to keep programs moving through what's typically a seasonally lower period and has accelerated RFP discussions for 2027 work.

Our approach through that process remains constructive. Our preference is to capture value durably through contracts and RFPs rather than chase the spot market with additional equipment. And that includes focusing on pass-throughs for inflation-sensitive items such as logistics, consumables, materials, and labor so that we're not locked into a status quo margin over current costs. We're also seeing operators begin to look at contracting new-build fleets. And that lead time I just mentioned is part of why those conversations involve meaningful upfront commitments. We're getting close to the point where pricing begins to support new-build economics. So to be clear, we think we have more room to go before we are squarely in that zone.

Consistent with what we said last quarter, we will not build speculatively. We have active dialogue with customers on new builds, and we look to contract on multi-year terms. Our internal manufacturing capability gives us an advantage on timing, but customers are cognizant that they will need to act fast if they want to take an incremental fleet in the next calendar year. On the cost side, we've achieved the targets we set under our cost program introduced late last year, and we're proud of that progress. At the same time, inflation across logistics, consumables, materials, and labor remains a real challenge, and we expect that pressure to continue into the next year. Labor is particularly tight, with data center and power generation build-outs creating meaningful competition for skilled technicians in our markets. We view these pressures as an ongoing cost of doing business, not something we can fully eliminate through efficiency gains.

That makes passing through cost increases as they occur, rather than waiting for periodic resets, all the more important. As I mentioned previously, lead times are and will remain challenging. We're seeing longer lead times on new equipment broadly across our industry, particularly engines, as capacity has shifted to support power generation demand. This has affected the pace of our engine upgrade program somewhat, though it remains underway, as well as the development of our e-blender transition. Thankfully, our internal manufacturing capability continues to give us more control over timing. Speaking of our manufacturing business, it is benefiting from the broader build-out of power infrastructure across the industry.

We're seeing this translate into tangible demand, including power generation packaging work for other operators expanding their own capabilities and rebuild work for another industry participant. These relationships are deepening and creating a source of sustainable demand. It's a genuine strength for our business, and we're proud of the work our manufacturing team continues to deliver. On e-blenders, we expect all units to be delivered by year end and most units to be working by year end, with some deployments carrying into early 2027. The efficiency benefits we outlined when we introduced this program, including lower blender CapEx and operating costs, continue to show up as more of these units come online. Through all of this, our vertically integrated model and asset management platform remains central to how we think about our competitive position, not just this quarter, but across the cycle. With that, over to Austin to walk through the financial impact of the quarter in more detail.

Austin Harbour

Thanks, Matt. In the third quarter, revenues were $511 million, up modestly from $498 million in the second quarter of 2026. We generated $65 million of Adjusted EBITDA with an Adjusted EBITDA margin of 13% compared to $69 million or 14% of revenue in Q2 2026. The change is driven by softer results in Proppant Production and to a lesser extent in Stimulation Services, partially offset by a stronger contribution from Flotek. Free cash flow was positive $14 million in the third quarter, an improvement from negative $8 million in Q2.

Turning to our segments, Stimulation Services revenues were $421 million in the third quarter versus $430 million in the second quarter of 2026. Adjusted EBITDA in Q3 was $37 million versus $39 million in Q2. Margins of 9% were comparable to Q2. Results reflected the September white space Matt described. While our fleet count for the quarter overall remained broadly consistent with Q2, pump hours per fleet softened in September after running near some of our best levels of the year earlier in the quarter. Lower cost absorption due to a less efficient calendar, coupled with increased costs on materials and certain operating expenses, offset price increases realized in the quarter.

Looking ahead, utilization improved in October, and we expect the calendar to remain relatively strong in the fourth quarter with customary year-end seasonality. Pricing, meanwhile, contributed modestly to the quarter, though the benefit from this year's increases is still working its way through on a staggered basis as individual contracts reset. We expect that contribution to build through the fourth quarter, and pricing remains a key driver behind the sequential improvement we're expecting as we go into 2027. On the cost side, we saw elevated materials, maintenance, and labor costs, and are closely monitoring labor, logistics, and equipment as we move forward.

Q3 Proppant Production generated $101 million of revenue versus $121 million in the second quarter of 2026. Approximately 45% of volumes were sold to third-party customers during the third quarter versus 31% in Q2. Adjusted EBITDA for the Proppant Production segment was $2.4 million for the third quarter, compared to Q2's $6 million. On a margin basis, EBITDA margins were 2.4% in the third quarter versus 5.2% in the second quarter. Total volumes were approximately 2.5 million tons. West Texas remains highly competitive on pricing, resulting in lower sales volumes and throughput. Operating leverage and increased costs negatively impacted margins in the quarter.

Our Manufacturing segment generated third quarter revenues of $53 million, up from $48 million in the second quarter. Approximately 17% of segment revenues were generated from third-party sales, consistent with the second quarter. Adjusted EBITDA for the Manufacturing segment was $6 million, roughly in line with Q2's results. The segment is benefiting from the power-related activity Matt described, and we're pleased with the trajectory there.

Flotek generated third quarter revenues of $117 million, up from $102 million reported in Q2. Approximately 49% of segment revenues were generated from third-party sales, compared to approximately 42% in Q2. Adjusted EBITDA for Flotek was $22 million, or 19% of revenue, up from $9 million in the second quarter. Third quarter selling, general, and administrative expenses were $45 million compared to $44 million in Q2.

Cash capital expenditures of approximately $40 million in the third quarter were up from $32 million in the second quarter of 2026. In Q4, maintenance capital could decrease slightly while growth capital moves higher, driven largely by the e-blender and engine upgrades we discussed earlier in the year. With three quarters of spending now behind us in 2026, we are tightening our full-year capital expenditure guidance to a range of $160 million to $180 million, including Flotek, versus our prior range of $155 million to $185 million. Excluding Flotek, we expect CapEx to be in the range of $145 million to $165 million for the year.

Turning to the balance sheet, total cash and cash equivalents as of September 30, 2026 were approximately $44 million, including approximately $25 million attributable to Flotek. Total liquidity at quarter end was approximately $97 million, including $79 million available under the ABL. The availability under the ABL credit facility ended the quarter at $148 million, a decrease from $162 million at second quarter end.

On the balance sheet, we have continued to take a disciplined and proactive approach to managing our liquidity and debt maturities. As we discussed in August, early in Q3, we closed a new $300 million asset-based revolving credit facility with Eclipse Business Capital, increasing our commitments, improving advance rates, and extending the maturity profile of our revolving facility. In September, we amended our Alpine Term Loan Credit Agreement, extending the maturity to February 2030 and eliminating scheduled amortization payments through the first quarter of 2028. Scheduled payments then resume at $10 million per quarter. The amendment also allows us at our election to pay approximately 675 basis points of interest expense in kind at current rates for the next 12 months, adding that amount to principal while requiring quarterly payments of excess free cash flow.

In connection with that transaction, $60 million of term loans held by affiliated lenders was repaid and canceled in exchange for Flotek shares held by a company subsidiary, eliminating $60 million of principal balance on the term loan. Taken together, these actions extend our debt maturity profile, reduce near-term scheduled principal and cash interest payments, and provide additional financial flexibility. At quarter end, we had approximately $1.05 billion of principal debt outstanding. Of this amount, only $113 million comes due over the next 12 months, with the majority of our maturities remaining concentrated in 2029 and beyond. With that, I will now turn the call back over to Matt for closing remarks.

Matthew Wilks

Thanks, Austin. Before we open the call for questions, let me close with a few key takeaways. We experienced some volatility in the third quarter despite an improving market backdrop, but are encouraged by the trends we've seen so far in Q4. The actions we took on the balance sheet this quarter from the Eclipse facility to the Flotek term loan and the Alpine term loan amendment and the $60 million affiliate loan exchange extend our maturity profile and give us added flexibility. We continue to invest in what differentiates us, including our manufacturing business and our equipment. Our vertically integrated model remains central to our competitive position, not just this quarter, but across the cycle. Looking ahead, our focus remains on execution, advancing our upgrade program, strengthening our financial position, and positioning ProFrac to capture the opportunity as the market tightens.

We remain genuinely excited about the setup heading into 2027 with what we see as a tight market and a disciplined peer group set against a structural case for domestic energy security that continues to strengthen. With that, I will now turn the call over to the operator for Q&A.

Operator

[Operator Instructions] Our first question is from John Daniel with Daniel Energy. Please proceed with your question.

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John Daniel

Matt, just want to focus on next year, if you will, in terms of the tight market. At this point, do you prefer to reactivate fleets or would you rather sort of play the price game? And man, how are you, just the price versus volume, if you could tell us what you're thinking for next year.

Matthew Wilks

It's pretty tight. I think attrition across the industry is pretty aggressive. There's just no equipment left in the market. And then there's a high preference for fuel-efficient fleets. And so everything that's working, that's available is working, but and so we're in a really good spot. We've been able to push pricing, continue to push pricing. And at this point, if there's customers that are willing to sign long-term agreements, then we can look at activating fleets and building gas fleets. With that being said, we're, you know, keeping status quo. You know, there are situations where we may see simul-frac fleets split into zippers.

And so from that standpoint, you might see a fleet count increase per minute, but there's not expected to be additions of additional equipment without replacement pricing or new build pricing.

John Daniel

Okay. And a follow-on, Matt, is a lot of the land drillers the last week or so talked about more inquiries from public operators for incremental rigs next year. I'm curious, are you getting calls from existing public operators looking for incremental fleets for next year?

Matthew Wilks

Without a doubt. And it's not just spot work, it's dedicated work as well. There's just not enough horsepower to go around, and so it's creating a great environment for the service side. And we're already seeing it in Q4, I'm pretty confident that 2027 we'll see positive net income, and we're seeing signs of it in Q4 already.

John Daniel

Okay. That's all I got. Thanks for including me.

Matthew Wilks

Definitely. Thank you.

Operator

[Operator Instructions] Our next question is from Saurabh Pant with Bank of America. Please proceed with your question.

Saurabh Pant

Matt, I was intrigued by your comments on pricing, not getting squarely there, but kind of getting there a little closer to new build economics, which is very interesting. Maybe Matt, if you don't mind, just give us a little context on how much pricing came down from the peak of call it early 2023 to the trough, have we recovered? And then what kind of returns would you be looking at if you were to pull the trigger on a new build fleet? I'm guessing it's on the gas side of things, right? There's a lot of demand on that, but maybe walk us through that dynamic a little bit.

Matthew Wilks

Yes, so from a per hour rate standpoint, you know, from prior peak to the trough was about a 50% reduction in hourly rates to the customer. But you've got to put it in context. In 2022, the average pump time per fleet was running in the low to mid 400 hours per month. Now you're seeing everything in the 550 to 600 range from a pump time standpoint. So the dollar per hour and the costs and the revenue aren't the same. It's accelerated the wear and tear on your equipment. And so, you know, even though it's diluted a lot of your costs to run the fleet, what it's done is it's shortened the life of the equipment as well.

So we can't forget about that piece. We gotta make sure that that's recovered as well. But as far as from the trough to where we are now, it's bounced back from the trough probably about 50 to 60% from there. There's still room to go to reach prior peaks. And, you know, from a timing standpoint, I don't know if it gets back to the peak or what timeframe it would. But what I can say is the prior peak had spare capacity on the market. And what we see going forward is there's no doubt there's no spare capacity.

There's long lead times on equipment. In '22, you could rebuild engines that were on the sidelines. You could rebuild transmissions, rebuild power ends. None of that is available and just the options available to you are pretty limited going forward. So you've got to work with what you've got. And I think that we'll continue to see, even if fleet count stayed where it's at now, it would continue to tighten because of the limited availability in the supply chain. And so we're very encouraged by what this means for the path forward. It also creates a scenario where if you do have spare pumps, you're more likely to reserve those for redundancy on your existing customer relationships rather than trying to deploy another fleet.

And just because you gotta take care of the customers you've got. And so trying to add a fleet and stress and get spread too thin, just because you can and you have a few extra pumps, you would rather make sure that you've got the depth in your replacement cycle with your maintenance teams to make sure that if you've got an engine issue and have to replace an engine, you may not have that engine. Transmissions, power ends, it's a really, really tight market on the component side. So when you look at building into redundancy for your business, your likelihood of adding a fleet isn't as appealing as keeping the redundancy that you need to keep your footprint that you already have. This is a different kind of tightness than what we've seen in prior cycles.

Saurabh Pant

Right, okay, Matt, I got it. That makes sense, that makes sense. And then my next one is just to understand a little bit on the whole fuel cost arbitrage, because if you do the math at current diesel price, I think 100% gas fleet maybe save like $50 million, maybe even more versus 100% diesel fleet. That's massive fuel cost arbitrage, right? But from a pressure pumper's, from your standpoint, how do you capture that? Does it work indirectly through supply demand? Is there a direct way to recover some of that through some kind of a bonus model tied to how much diesel you can displace? How does that flow through? And if you don't mind hazarding a guess, how much of the active fleet out there in the fleet why do you think it's still 100% diesel?

Matthew Wilks

So the majority, I'd say about 80% of the fleets in the market right now have gas capabilities and probably a small single digit percentage of the overall fleet is all gas for direct drive gas engines. Of course, there's electric fleets, gas fleets, dual fuel. The majority of the industry is dual fuel. And then depending on what your substitution rate and whether you get paid for that or not, sometimes operators will just pay you for the horsepower. And so you get a material premium for that type of equipment. If you have a, typically if they just pay you all at once and say, hey, here's your horsepower rate, there will be a minimum requirement for substitution and penalties if you don't hit that. But if it's not fully absorbed in the cost of the horsepower, the alternative to that is that you charge for substitution, for DGEs, so that your incentives are aligned and you get a base horsepower rate plus a dual fuel surcharge.

It changes from customer to customer. But in any event, the substitution is paid for. It's just whether it's built in from day one in the full horsepower rate with a minimum threshold or paid for improved substitution. But one of the things we look at is benchmarking against what a diesel fleet would cost, including the diesel, to establish what a fair rate is for a fuel-efficient fleet. How much is the diesel worth that we're saving? And that's the value proposition. You know, we'd like to get 100% of it, but these are partnerships, love our customers, and there's not too many ways for anybody in the industry to really get a good fuel hedge. You can hedge diesel, but then you've got to figure out, well, how efficient is my fleet going to be? How much diesel am I going to consume? And so you're always going to be exposed even if you do hedge it.

And who wants to hedge it at $5 or $6? Right. And so I don't think it's lost on us or our peers exactly what these fleets are worth. And it's just coming to a fair agreement with your customer that recognizes the overall fuel savings.

Saurabh Pant

Right. No, that makes sense. That's helpful. Thank you. I'll turn it back.

Matthew Wilks

Thank you.

Operator

We have reached the end of the question and answer session. I would like to turn the floor back over to Matthew D. Wilks for closing comments.

Matthew Wilks

We appreciate everybody for joining our call. Very excited about the outlook. We're seeing everything materialize very quickly right now. I cannot wait to get on our next call and tell you exactly why we're excited. So thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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