Greetings. Welcome to Atlas Energy Solutions Inc. First Quarter 2024 Financial and Operational Results Conference Call. [Operator Instructions]. I will now turn the conference over to Kyle Turlington, Vice President, Investor Relations. Thank you. You may begin.

Hello, and welcome to the Atlas Energy Solutions conference call and webcast for the first quarter of 2024. With us today are Bud Brigham, Executive Chairman; and John Turner, CEO, President and Chief Financial Officer. Bud and John will be sharing their comments on the company's operational and financial performance for the first quarter of 2024, after which we will open the call for Q&A. Before we begin our prepared remarks, I would like to remind everyone that this call will include forward-looking statements as defined under the U.S. Securities laws. Such statements are based on the current information and management's expectations as of this statement and are not guarantees of future performance. Forward-looking statements involve certain risks, uncertainties, and assumptions that are difficult to predict. As such, our actual outcomes and results could differ materially. You can learn more about these risks in the annual report on Form 10-K we filed with the SEC on February 27, 2024, our quarterly reports on Form 10-Q and our other SEC filings. You should not place undue reliance on forward-looking statements, and we undertake no obligation to update these forward-looking statements. We will also make reference to certain non-GAAP financial measures, such as adjusted EBITDA, adjusted free cash flow, and other operating metrics and statistics. You will find the GAAP reconciliation comments and calculations in this morning's press release. With that said, I will turn the call over to Bud Brigham.

Thank you, Kyle, and thanks to everyone for joining us today for our first quarter conference call. In addition to reviewing our first quarter results, we'll spend some time this morning providing an update on the great progress we are making integrating Hi-Crush and Atlas since the closing of that acquisition in early March. Additionally, we also need to discuss the recent fire at the Kermit facility and perhaps more importantly, the impressive response from our team to maintain both safety on site and reliable supply of sand to our customers throughout the disruptive event. I will go ahead and state that no other proppant producer could have possibly continue delivering profit to their customers the way Atlas has. Our differentiated scale recently enhanced our acquisition of Hi-Crush and their great people, our associated production redundancies and our geographically distributed production assets uniquely position Atlas to continue reliably serving our customers even through rare unexpected disruptions and whether it's a fire, severe weather or traffic accidents, disruptions do occur. Atlas makes the Permian supply chain more reliable and sustainable. Briefly reviewing the events around noon on Sunday, April 14, a fire broke out at our Atlas Kermit facility, damaging equipment involved in our feed system, which takes sand from the separation and drying process to our silos. Due to the quick actions of our employees and quick response from the West Odessa, Kermit, Monahans and Andrew's fire departments, the rest of the plant, including all production centers was unscarred. This incident was limited to affecting our ability to load trucks at Kermit and did not impact our ability to produce sand. Thankfully, and most importantly, we quickly ascertained that all of our employees and vendors were safe and accounted for. I want to again thank the first responders and our…

Thank you, Bud, for those kind words, and I echo your comments regarding the addition of Blake. I look forward to working side-by-side with Blake as we navigate the road ahead for Atlas. Blake's expertise and integration and acquisitions, along with his deep understanding of financial markets and the oil service industry will be a welcome addition as we have just started our journey as a public company. The first quarter was an exciting period for Atlas with the closure of the Hi-Crush acquisition, the completion of the Kermit expansion and commissioning of the first of 2 new state-of-the-art dredges. The acquisition of Hi-Crush is already off to a great start. In March, Hi-Crush set a monthly volume record for their permit plants and Pronghorn along with Atlas' last mile, set a monthly record for total loads. We successfully floated our first new dredge in February and recently floated our second in late April. We expect the commissioning process for both drugs to be completed by the end of June, and we are well on our way to a fourth quarter 2024 commercial end service date for the Dune Express. Atlas continues to evolve into a more integrated provider of diverse solutions for our customers, as emphasized by our addition of Pronghorn's logistics footprint, which amplifies Atlas' offerings of the Dune Express and expanded payload capacity logistics assets. It has been a remarkable first year as a public company. Our team has a lot to be proud of, and I'm sure proud of them. Regarding the Hi-Crush acquisition, we are off to the races with our integration, and it is exciting to think about what the combination of these very talented and innovative workforces will be able to accomplish as we share resources and best practices. We are working through…

If you would like to ask a question, indicate your line is in the question queue. [Operator Instructions] Our first question is from Sean Mitchell with Daniel Energy Partners.

John, Bud, congrats on the hire. I think you are very lucky to have Blake McCarthy to join the team, and it's a great hire. But moving on to kind of business. You guys were able to reopen the plant pretty quickly after the fire, which was quite impressive. Can you walk us through the steps taken in the collaboration you talked about required to kind of reopen so quickly?

Yes, sure. I'm going to -- I'll just start and then I'll let Chris kind of walk into the details. But obviously, very, very proud of the team and the way they performed there. I mean it was a collaboration that came across with both Atlas and Hi-Crush employees coming together. Chris Scholla led those efforts out there. And obviously, to get the operation back up. But I'll let them run into it, to go through what exactly we did.

Yes. Thanks, John. So first, we really had to take a step back to understand our post-event process capabilities of the plant. So after that evaluation, we saw, look, our wet plants, dryers, screening tower and load-out equipment were essentially unaffected, so we can produce sand with the challenge with finding a creative way to load sand into the trucks. We were able to modify the conveyors under our screening tower to enable a redundant flow of sand to our new temporary load-out stations; these conveyors are bidirectional, one direction feeding haul trucks to transport sand to our temporary load out and the other direction feeding a ground-level zipper conveyor that transports sand to load out. In the last week, our zipper conveyor has proven capability to handle the main feed with the haul trucks becoming a pure bleed backup solution. It was incredible to watch all the different teams come together across our newly combined organizations. This was an absolute combined effort involving leadership and functions from both companies, including manufacturing, last mile, load-out, OnCore, construction and safety functions. No formal integration process was required here. It just occurred organically. Our teams and leadership naturally came together to develop a creative solution to get our current facility back online and serving our customers. The fact that within 2 weeks, our Kermit facility was loading trucks, it was an accomplishment, nothing short of incredible and hats off to the entire team. I think this highlights our combined company strength, scale and adaptability as well as our deep relationships across the industry that will continue to differentiate Atlas in the future.

Sean, just last thing on that. As I mentioned on the call, I think this validates our view on scale and the culture. The high question obviously had, and we had innovation and collaboration makes us more reliable. No other company could have done on work the way Atlas has through this disruption, and it makes us -- it's making the Permian better.

Got it. That's a great response. Appreciate it.

Our next question is from Jim Rollyson with Raymond James.

And obviously, again, great job on running the fire drill or what you guys had to do. John, maybe for you, just a couple of questions around the dredges. Everything seems to be on time from commissioning. Maybe, A, just a reminder of the cost impact on OpEx once those things are fully set up and running starting in the third quarter. And I noticed in the slides, you mentioned the trial of using one of the older dredges up at the Hi-Crush's Kermit facility. Just how are you guys -- as you've had time to look at that, maybe how are you thinking about that opportunity and odds of success up there.

Yes. As far as the dredges go, we're looking at -- obviously, once we get these 2 dredges commissioned up and running, working together, we're looking at potentially at probably around a $3 decrease in cost per ton out there on a line basis. That would just be at Kermit. So back in 2021, when we were feeding all of our mining feed through our dredges, we were running at, I think, it's around $650 a ton on OpEx basis. But obviously, we have -- you probably won't see that entire number hit our entire OpEx base because, obviously, we have a lot more assets in the system now as it relates to -- you got Monahans got all the -- you've also got all the OnCore mines as well. As far as what's going to happen with the Kermit dredge, Yes, we're going to decommission a dredge or take a dredge out. We're going to run that dredge over to Hi-Crush, -- they have a pond over there that we're going to go out and we're going to put this rental dredge out there and see if it works. That's probably not going to happen until later this year. We just want to make sure that we want the team focused on getting these 2 new dredges up and running and commissioned and running together. The likely, I don't really know when the likelihood of success is. We do know they have a pond that they can flip that dredge in. I think the part of that is I don't think that they were willing to bring -- to sign a long-term contract to bring a dredge down to see if it would work. But given that we still have one on lease, we're going to run over there and see how this works out. If it doesn't work out, is there any other way that we could utilize that dredge feed at the other permit mines if we're not able to dredge mine over there; I still think there's an opportunity to utilize dredge mining across the entire Kermit facility up there, which would be both the Hi-Crush and the Atlas mine. So we're still in the early stages of figuring that out, Jim.

Got it. That's helpful. And maybe one for Bud. Bud, you had -- one of your largest competitors recently get taken out by private equity. Just kind of curious your view on that from both a valuation and strategic perspective and how you think that might impact the market?

Yes. Thank you. Obviously, it's good to see a very sophisticated investor like Apollo recognize that U.S. Silica was trying to get a really depressed value and pay a premium for a good business with excellent free cash flow. And so I mean, I would encourage investors to look at Slide 17 in our deck. It just -- that's obviously a very objective confirmation of what's shown on that slide that this company, Atlas is really special in terms of our margins and our cash generation and our growth profile. And those attributes certainly are a much higher multiple than what we're seeing, probably more in line with the midstream or production and field services type enterprise. And so there's a lot of opportunity here for -- to see our multiple expand, particularly as our distribution to expand with the growing cash flows and Dune Express in 2025.

Our next question is from Scott Gruber with Citigroup.

Yes, good morning. I want to come back to the OpEx question. You guys have long discussed the benefits of these dredges. Just curious, just in terms of putting it all together with the new Hi-Crush assets as well. As you get these dredges up and running and you kind of move into mid-2025, should we still be thinking around a $9 per ton OpEx figure for next year? Is that the bogey?

Yes. I think at $9, that's what we're kind of shooting for. Obviously, hoping that we get some additional benefits from the integration and from some synergies in there. But I think -- I think the $9 range is probably a good number to look at.

Okay. And... Great. I appreciate it. And then coming back to the Dune Express, just wanted to get some updated color on contracting the associated loads I mean we were just now 6 months out or so from startup. So what are you hearing from customers around the system? And any additional color you can provide on especially longer-term contracts associated with the system.

Yes. We don't necessarily have Dune Express contracts, but what we do have are contracts that will be taken sand off the Dune express, basically stand on logistics contracts with a number of operators that are operating in the Delaware Basin. A lot of our customers that are going to be taking standoff to Dune Express are very excited about it because they're obviously wanting to get shut off the road. -- and make it safer. They also see the efficiencies that are going to come up with the Dune Express. They see the well site efficiencies, the ability to utilize fewer assets to deliver more sand to the well site. So look, I feel very good about where our contracting sits as it relates to the sand supply and logistics contracts for Delaware Basin customers. And we're also right now currently working with some customers getting them signed up some folks that we don't currently work with, get them signed up the contracts take and off the Dune Express. And then one of the thing is right now is we are running 13 Delaware Basin crews right now. And Chris, you may want to talk about that. I mean that's something that we've been working hard on to increase our exposure there. But go ahead.

Yes. From a -- we know that Dune Express is coming on and continuing that build to be able to seamlessly integrate those customers and do in Dune Express. I think Years ago, we approached this as going after peer Dune Express type of contracts. And I think what we've seen through that transition work the best is just leveraging our current customer agreements, right, running those 13 crews and having them naturally come in and take all the mileage off the public road, see the efficiency of the Dune Express and the multi-trailer operations. We expect our current customers in the Delaware that customer set continue to grow with current customers flowing seamlessly right into the Dune Express on commissioning.

Great. I appreciate the color. I'll turn it back

Our next question is from Derek Podhaizer with Barclays.

I was wondering if you could provide us an update on how you're looking at pricing moving through this year? I know it's come down quite a bit. So pricing, volumes obviously had an impact on the current mine the volumes are on the sideline. And then just the amount of your volumes at our contract. Just an update around those 3 items would be helpful for the rest of the year.

Yes. So first off, as I'll talk about pricing on some contracting that we are recently been -- we're still signing a contract. We're signing contracts probably somewhere in the mid-20s. And those are obviously -- a lot of that also includes logistics, which is different. So that's just the price of sand. Right now, we have around 80% of our contract, our volumes for this year contracted. We are still -- there are still a number of contracts that we're currently working on the contracting season really runs from probably let's say the fourth quarter all the way into the end of the -- probably middle to the end of the third quarter, I mean, probably, say, August time frame. That's kind of our -- that's kind of the time that we are contracted. That's when we're really contracting volumes. We do have -- we did lose the spot volumes with the events that happened to Kermit. The spot volumes, we let those go. Obviously, those -- we think those volumes will be coming back. And then there's also opportunity as some of our OnCore mines to increase with, say, one of our OnCore mines just coming on. We'll be able to -- there's going to be a lot of demand out there for taking additional launch -- we got some spare capacity and so in that mine that's coming on out there. So look, I think that going through the year, I mean, there's still a number of contracts out there to be had. And obviously, we're looking at both sand and logistics contracts here, not just sand contracts. So I don't know if anybody... Chris...

I really talk a little bit about the efficiencies. I mean, we certainly have a tailwind with the continued improvement in efficiencies or the fact crews out there with more some effects and try fracs, et cetera. So that's a tailwind for us. And we'll see I personally am optimistic about the fundamentals of oil prices and the sense is, nobody knows, but the sense is that the private operators are probably going to pick it up a little bit in the second half of the year, and that should be constructive.

And I think we're -- internally, I mean, I think we're seeing sand demand up probably 10% to 15% year-over-year. I mean, that's -- there are some other forecasts that we've seen out there that are higher than that. But obviously, I think the frac efficiencies haven't seen a significant increase in the number of crews running, but you are seeing with the simul-frac and simul-frac you're starting to see more sand pumps per say, per well, I mean, per crew for a monthly. So...

And Derek, one more thing to add real quick. The increased adoption of electric fleet is certainly helpful for that rise in completion efficiency. So those are a lot more efficient than dual fuel and we're a diesel fleet. So that's certainly helping drive that demand.

Right. That's all very helpful. I appreciate the color. I just wanted to think about 2025 CapEx. I know you mentioned in the opening comments about $60 million being towards that maintenance book. Could you help us with what potential growth projects that you'll see in '25, obviously, small versus 24, but thinking about additional OnCore units or additional logistics pronghorn units. Obviously, we're going to have a big step down in CapEx, free cash flow increases, you're not raising the dividend. I'm sure you will have a more structured capital allocation return program in '25. But just to help us think about 2025 CapEx? Any other moving pieces aside from that $60 million of maintenance would be helpful.

We haven't laid that out. I mean, obviously, there's going to be some runover from the Dune Express. I mean, the Dune Express will be commissioned by the end of the fourth quarter, but there's still going to be some CapEx next year, probably, I don't know how much that's going to be. But we can -- but the other things we'll be looking at is we are looking at potentially deploying some additional OnCore units. The autonomous trucking, obviously, is -- we'll be hearing more about that this year soon, as we proceed down the path of delivering sand autonomously. There's going to be some probably some CapEx related with probably some mobile load outs and things like that of the Dune Express. There's going to be -- I don't -- we don't have any big projects, but I would say and it's currently in -- like in our plans, that could change. But...

Yes. In general, as you know, we've been through a period of very heavy CapEx when you look at the expansion that we had in the Dune Express, and we're ramping down on that. And so it's -- we're pretty remarkable in my view the fact that we've had these healthy distributions even through that high level of investment in our CapEx, but it does -- it's ramping down here in the second half of the year, and particularly, as you point out, in 2025. So we're going to be in a very, I think, a relatively luxurious position given our margins and our cash generation to be able to ramp up the distributions, but also to invest in some CapEx, some more high rate of return projects to drive efficiencies for the industry and drive up reliability. And of course, Dune Express is a big part of that, the high capacity trucking and eventually autonomous delivery. So 2025 is looking really exciting in that regard.

Great. Good stuff. Thank you, guys. I'll turn it back.

Our next question is from Keith MacKey with RBC Capital Markets.

First to start with, I wanted to ask about your appetite for acquisitions from here. I know you certainly just closed on a sizable one, and there's lots of organic growth opportunities within the company, but also the experience you've added to your C-suite today might suggest that inorganic opportunities are still a potential priority for you. Can you just sort of lay out how you think about acquisitions going forward?

You want to go? No, Okay. Sorry. As far as acquisitions, obviously, the Hi-Crush acquisition has been a big one. The integration has really kicked off and we're at full -- we're working on that integration. Obviously, things are going very well there, bringing these 2 teams together. We don't have anything identified future as the future goes as far as acquisitions go. But I will tell you that, that is something that we will continue to evaluate. We've got -- we kind of look at acquisitions from the same way as we look at any sort of project here, any sort of large project, we've got return goals. We've got wanted to do to help us enhance our story with our cash flow return story, and so we're looking for high-margin businesses. Does it meet our internal rate of return project, hurdles. There's obviously a number of things that we look at when we're making these investments. But we do -- like I said, as we just -- like I said, we just picked this Hi-Crush acquisition down, we're going to get that integrated. But yes, we are going to continue looking at opportunities to grow our -- and create value for our investors through acquisition. Yes.

And I'll just add just a general comment. Obviously, given the rate of return on our projects such as the Dune Express and the high-capacity trucking and our margins and our cash generation, it is a high bar. But as you can see from the Hi-Crush acquisition, that was an extremely accretive acquisition and I'm optimistic that we will have more acquisitions in the future. It's just we don't have anything we can point to right now...

Okay. Appreciate that. And maybe if we just think about it a little bit from the customer standpoint, lots of customer consolidation happening in the Permian right now. Can you just talk about what that means for oilfield services in general and your position within the market as well?

Yes. Thank you. I'll start, and these guys may want to add to it. Scale matters. And as a former operator, we've appreciated that and recognize that. And you're seeing that execution by operators to grow their scale that and that we then to drive down cost and drive up their margins. And there's a lot of leverage associated with that. And the same thing is true on the oilfield service side. And particularly for Atlas is the largest proppant producer, the largest logistic provider. We saw it through this recent disruption that our scale and our culture, our innovative, collaborative culture and our great people enable us despite disruptions to be able to perform and deliver for our customers. So I think we're benefiting from that, and it's important that we continue to operate as efficiently as we can to reliably service our customers. So I think Atlas is in a unique position. Nobody could have performed the way that we have through that disruption, and we're going to continue to perform that way. I don't know if you want to add to that?

Yes. I mean I think it's -- a lot of customers are looking for diversification strategy. And I mean Atlas is a diversification strategy. I mean we have 4 dry mine locations. We've got 8 [ Indiscernible ] going obviously, with the large logistics offering. I mean there's no other company out there that could provide that, and we're going to continue to build on that to be -- to continue to serve our great customers.

Yes we do, let's say nobody can match that.

Perfect. That's it for me.

Our next question is from David Smith with Pickering Energy Partners.

Good morning, and thank you. I just I want to reiterate the congratulations on the incredible response to the fire as well as the hiring of Blake McCarthy. I thought it was really impressive that over half of your Q1 volumes were delivered with your own logistics. And sorry if I missed this detail. Have you talked about what you're seeing for your average delivery volumes in the areas to be served by Dune Express? And if you're seeing a greater mix of double and triple trailer deliveries. But really, how do average volumes per delivery compared to where you would expect them to be once Dune Express is fully online?

Yes. I think from a total volume perspective, the Dune Express capacity with current average monthly volumes per crew today, we'll need to be up around that 20 to 21 crews is what we're looking at. As you've seen us, right, our business, looking at the last mile side of things, specifically in the Delaware, I mean, we've grown somewhere in that 8 to 10x range in the last 24 months. So our ability to achieve an additional 7 crews, 7, 8 crews out there, we see as highly probable as we continue down that pathway.

Yes, absolutely. I appreciate it. And maybe I asked the question the wrong way, but when thinking about -- you've got the 120 trucks, right, and total delivery capability is really going to be a function of turns per day and average volumes per trip to the well site. So I was more thinking about that average volumes per trip to the well site. If customers are taking a real advantage of the ability to deliver 2 or 3 trailers at a time.

So I guess you're asking the multi-trailer success? So from a multi-trailer side of this, we've recently opened up our -- an additional depot up in Polygon 6, which will the end or the end of the Dune Express lives, opening up pretty significant volume for us there. We've now run double and triple trailers with 5 customers out there, and we continue to see our average payloads go up. I believe with our first triple trailers starting out April 5 of last year to where we are today with now 2 depots, looking to open a third one here shortly. I think our customers that are utilizing them. We've even had customers look and modify their completions program to optimize the use of double triple trailers. So while 2 years ago, people thought this was a very creative but would never have an idea. It was the same thing with the Dune Express, right? And once our customers see the efficiencies that they gain on location, minimizing the trucks and also getting those trucks off the public road. We've had nothing but success in there and also in recent conversations with folks to even optimize the pad layout and sizing around double trailers. So I think those type of actions and conversations for our customers really show where this is heading with the multi-trailer operations.

Our next question is from Neil Mehta with Goldman Sachs.

Yes. Thanks for your comments, John, congrats on your promotion in Blake, you as well. My first question is just around the Dune Express. As we think about construction, we're getting really close to coming into service. So what are the last kind of gating items? And can you give us a sense of your confidence interval around executing some of the last bottlenecks that might exist?

I mean, obviously, the Dune Express construction has been moving along. We have 200 -- over 200 people out there working on the construction of that. The fire itself is not going to impact the Dune Express construction at all. In fact, I think it's going to enable our crews to install the tie-in to the plant more quickly. As far as the next bottleneck, I mean, I think the next milestone for us is going to be starting to commission to start commissioning the commissioning process, which is supposed to start at the end of the third quarter, early fourth quarter. And then we'll be -- obviously, won't be selling any sand off the Dune Express for a while, but the commissioning of that process is going to take another 3 up until the end of the fourth quarter to...

John, about who a commissioning gas that will be running...

Yes. I mean it's just -- with the commissioning process is just getting up to say, you're not really running a sand down the belts, but what you're doing is you're running those belts to make sure that the belt are tracking to make sure that they're working in order, making sure that you've got all the bugs worked out. But as far -- I mean, as far as the kind of the gating items, we've ordered all the equipment. We've got all the folks out there working on the construction. We've already done our 2 major overhead road crossings, some major overhead crossings. We still got some -- we still have some cattle in wildlife processing to go and some lease road pricings to go. But everything is moving along as expected on the Dune Express...

And then you alluded to this free cash flow inflection, which we see in 2025 as well and the potential to return more capital to shareholders. Do you have a preference in terms of doing it through the dividend versus buybacks? Or is it price dependent? Just talk about the framework of how the Board is thinking about the return of capital.

Right now, we're really focused on returning cash to our investors. We think that paying that dividend is obviously something that we're really focused on as an organization. I would say stock buybacks is not something that we've really discussed. That's something that we will likely be putting into a formal plan here in the next -- before we get to the end of this year. But right now, what we're focused is really returning cash to our shareholders.

Our next question is from Saurabh Pant with Bank of America.

If I can just go back to the Hi-Crush integration. I know there were a couple of questions early on. But if we come back to that and as you move through the integration process as you're going out and talking to the customers, looking at the assets, not just Kermit, but the OnCore assets. Can you share some feedback you have heard from the customers from the ops teams out there, both positive, negative, just that you have owned those assets for, I think, just around 2 months right now.

Maybe I'll just make a real quick general comment, and then you guys may want to add to it. This is Bud. I mean, obviously, Atlas prior to the Hi-Crush acquisition, we have a really strong customer base in the Delaware Basin and John opened on our high-capacity trucking and our logistical business has been serving and the excitement over to Dune Express attracted a really strong customer base for Atlas in the Delaware Basin. -- as the largest proppant producer in the basin even prior to Hi-Crush. And clearly, Hi-Crush did a great job with the OnCore mines proximity of those mines to the operators in the Midland Basin, which gave them a very strong customer base in the Midland Basin. So it's obvious that the customers are really excited about that now we provide -- we're logistically advantaged in both the Midland and the Delaware Basin to make it the benefit of Atlas's scale and reliability and quality. And so it's been very positive. I don't know if you want to add to that.

Yes. No, I mean, I think if I just boil it down. I mean it's about locating our mines, our sand proxable to every well site out there. and a lot of concerns that customers had about going with a single sand provider that can -- if they were in the Delaware Basin, then they need to stand in the Midland Basin that you weren't going to be able to provide that. But today, we're delivering sand, obviously, to the back of the blender to all of our customers across whether they're -- whether a Midland Basin player or a Delaware Basin player both and just adding to that scale to be a better partner for our customers.

Okay. Awesome. Awesome. Just one more for me. Maybe just talk a little bit about your pricing strategy. I'm thinking pricing strategy more broadly from a Kermit versus OnCore perspective, right? Because OnCore is a very different kind of asset. I'm assuming you would continue to have slightly lower price but longer duration contracts on those assets. But maybe you can talk to that a little bit and just maybe remind us that if the $26 to $28 per ton pricing guidance that you gave for the full year, is that still the right place to be?

We're not really talking about what our pricing strategy is out there. Obviously, that's something that we obviously internally for one here. We -- what I will say is we have a low cost to produce and we're going to bring those costs down. And so we are very competitive when it comes to obviously, sand delivery. It's obviously both sand price and delivery costs. I mean it's really -- it's about lowest cost to the well site. And so that's really kind of where we focus there, Sand.

Okay. Perfect. Okay, John. I'll turn it back.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing remarks.

All right. We'd like to thank everybody for joining us for our first quarter call, and we look forward to reporting our second quarter results on our next call.

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.