Kevin McDonald - EVP, General Counsel James Stewart - Chairman & Chief Executive Officer Gregory Powell - President & Chief Financial Officer

John Daniel - Simmons Company Scott Gruber - Citigroup Sean Meakim - JP Morgan Blake Hutchinson - Howard Weil JB Lowe - Bank of America of Merrill Lynch Jim Shaw - Guggenheim Robert MacKenzie - IBERIA Capital

Thank you. Good morning everyone.

Thank you for joining us. With me today are James Stewart; Chairman and Chief Executive Officer of Keane; Gregory Powell, President and Chief Financial Officer.

Before we provide our prepared remarks, I would like to remind all participants that our comments today will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Regarding future expectations about the company's business, managements plans for future operations or similar matters which are subject to certain risks and uncertainties.

The company's actual results could differ materially due to several important factors including those risks and uncertainties described in the company's S-1 filing with the Securities and Exchange Commission, many of which are beyond the Company's control. Any forward-looking statements we make today are only as of today's date and we undertake no obligation to publicly update or review any forward-looking statements.

Additionally, we may refer to non-GAAP measures including adjusted EBITDA and adjusted gross profit during the call. Please refer to our public filings and disclosures including this earnings press release for definitions of our non-GAAP measures and the reconciliation of these measures to the directly comparable GAAP measures.

With that, I would now like to turn the call over James.

Thank you, Kevin and thanks everyone for joining us on the call this morning. We are extremely excited to be holding our first earnings call as a public company.

We've priced our successful initial public offering on January 19th and began trading on the New York Stock Exchange on January 20th. Achieving this milestone was the result of so many valuable contributions from our employees and business partners.

I'm extremely thankful to the entire Keane team for the years of hard work that it has just taken the company to this point. In addition to our committed employees, our customers, suppliers and investors have shown dedication and loyalty for which I offer my most serious appreciation.

I have been in this industry for more than 30 years, and I can confidently say that I've never been more excited and passionate about the business and the opportunities ahead of us. From our new public company platform as a peer play completions business, we remained focused on running and growing the company.

While this major achievement affords our company significant benefits and broader opportunities it does not change our commitment providing safe, efficient and high-quality service to our valued customers every day. For the executive team, our focus is on identifying and capitalizing on opportunities that we believe will increase shareholder value and on fulfilling our customer's high expectations for a world class service experience.

Greg and I have the opportunities to meet some of you during our road show in January. But for those that we haven’t yet meet, we would like to spend a few minutes telling you about Keane and how we are well positioned in the current market environment.

Keane has a rich history evolving from a family run business with just one frac crew working for a single customer and a single basin in the Northeast. In 2011 Greg and I together with other member of the Keane team embarked on a strategy to build the platform diversified in the key oil and natural gas U.S.

land basins along with adjacent completions services. Over the last six years we were able to execute and grow to become a market leading, independent and integrated provider of completion services in the U.S.

We have expanded from a base of 80 employees in 2011 to more than 1,700 employees today. We currently own approximately 950,000 high quality hydraulic horsepower that is well maintained, making us one of the largest pure-play pressure pumpers in the U.S.

However, our strategic footprint in major U.S. growth basins including the Permian, Marcellus, Utica, Scoop/Stack and the Bakken, we support some of the leading EPMs in the industry.

We have assembled the highly capable management team with seasoned industry veterans who continue to executive on the company's plans to grow and enhance shareholder value. Reflecting on what has been achieved over the past six years makes us proud of our accomplishments and optimistic about our ability to create additional value for our shareholders.

Today, we would like to discuss several differentiating attributes that have been critical to Keane success, and in today's environment a significant component of that is speed-to-market. The first piece of speed-to-market is our equipment, our high quality, fit for purpose and well maintained equipment enables us to quickly response to market demand.

Given our financial strength and discipline through cycles, we have been able to preserve and maintain our assets, enabling timely and low cost recommissioning. In addition, we have invested in component inventories and have strategic agreements in place with key component suppliers to ensure that we keep our fleets well maintained and reliable.

Another key attribute of our speed-to-market advantage comes from our well managed and reliable supply chain organization. We have scale and flexibility across all critical components including sand, chemicals, rail cars, terminals and last mile logistics.

Our wide and diversified network of relationships and sand supply contracts with some of the leading sand providers in the industry is critical to ensuring continuity of supply and the ability to optimize lending cost. This is especially true in today's environment as effective navigates in the U.S.

railway system is more critical than ever, frac jobs are getting more complex and volumes of profit using completion designs continue to increase. Our supply chain includes a logistic network of more than 1,200 rail cars, access to a broad network of transload terminals, including uni-train capability and a fleet of sand hauling trucks for the last mile.

This comprehensive and proactive approach to managing our supply chain allows us to provide our customers with the level of dependability, necessary to ensure Keane will complete jobs calmly and efficiently. The third leg of our speed-to-markets stool is our robust balance sheet, as Greg will expand on, we have a strong balance sheet which provides significant flexibility.

Our balance sheet was a key differentiator during the downturn allowing us to maintain investment in our safety and maintenance programs, ensuring the integrity of our fleets. And this investment is already paying dividends, providing the ability to quickly lower cost [ph], reactivate fleets in response to the increasing market demand.

To date, we have recommissioned seven fleets in an average cost of approximately $1.6 million per fleet. The second attribute differentiating Keane is our focus on aligning with customers who share our values and commitment to safety and efficiency.

We have said that not all horsepower is created equal and our partnership approach of aligning with customers is a key part of our value proposition. Safety is a critical factor in winning and retaining relationships for the caliber of customers that we partner with.

Our focus on safe operation is a corner stone of Keane's culture, a responsibility we owe to our employees, customers and the communities in which we operate. We're proud, but not completion, to have an industry leading safety record, with the total recordable instant rate well below the industry average.

We have multiyear relationships with top tier operators who are active across all major basins in the U.S. and have the ability and balance sheet to remain active through cycles.

Just as rigs have become more efficient so too has the ability for frac crews to complete more work with greater efficiencies driven by 24-hour operations and zipper fracing. We partner with customers who focus on how efficiency well completions.

That enables us to maximize the operation on a financial efficiency of our assets resulting in our ability to achieve attractive gross profit margins while providing our customers with great value. And then finally technology is an attribute that further differentiates Keane in the marketplace.

We are a comprehensive provider of completion services including hydraulic fracturing, wire line Plug and Perf and engineer solutions. We offer a suite of engineer solutions and proprietary products, each of which supports our customer's objectives for production, optimization and operating efficiency.

We have exceptionally talented fluid chemist and engineering specialist who engaged directly with customers to develop customized completions solutions. Our customer centric products include divider technology, dust control, produced water, friction reducers and more.

These products will continue to be of growing importance to our customers, particularly with the ongoing increase in service intensity. Before, I turn things over the Greg to discuss our recent results.

I'd like to take this opportunity to give an update on our outlook for the market. We are encouraged by the pace of activity that we saw as we excited 2016 and ongoing acceleration of momentum thus far in 2017.

We continue to receive strong demand signals from our existing customers who are executing on significantly increased 2017 capital programs as compared to 2016. This increase of activity has begun to meaningfully tighten the supply of job ready equipment in the field.

The market has tightened much faster than we anticipated during our half year road show just two months ago leaving us well positioned. As part of that the increase in service intensity that we saw throughout the down turn continues in the current environment.

This expansion and intensity places great stress on frac equipment. We believe that only service providers that have well maintain fleets, strong supply chains and well trained frac crews are able to consistently deliver on today's completion jobs.

With our modern fleet of quality equipment, robust supply chain and rigorous training program we are prepared to win alongside our customers in the current environment. Modern frac jobs also can reduce the lifecycle of equipment components something that we are well prepared for as we continue to warehouse an inventory of spare components, enhancing our ability to maintain our assets quickly and efficiently.

Ultimately leading to better adjusted gross profit per fleet. Given the activity levels we saw during the fourth quarter, we converted additional frac fleets from warm to hot status to meet expected demand from the existing customers.

As a reminder hot fleets referred to fleets on which we have spent capital and are ready for deployment with train personal. Warm fleet refer to idle fleets that we can get to job ready status.

We expect the average commissioning cost in the range of 1.7 million and believe it will take us 45 days or less to deploy warm fleets. Part of the time involved in deploying warm fleets is driven by our unwavering commitment to safety and service quality.

Each of our new employees undergo intensive training regardless of the years of experience to ensure every team member upholds and contribute to Keane's industry leading safety record. We spend approximately $2.7 million during the fourth quarter converting three frac fleets from warm to hot.

Two are deployed into the field during January and the third in March. Bringing total deployed fleets from 13 to 16, or 70% utilization of our 23 total fleets.

Given the demand, we are seeing from our existing customer base, we expect to continue to accelerating conversion of additional fleets from warm to hot. With the favorable trends that we are seeing on pricing in addition to the significant benefits we accrued from partnering with highly efficient customers, we are prepared to responsibly accelerate the reactivation of our remaining horsepower, subject to hiring and proper training of crews.

As markets dynamic tighten, we continue to see pricing improves. We have reopeners in our agreements for dedicating capacity, providing us the opportunity to recover cost escalations in mark to market every three to six months.

This means, we have the tools necessary to improve our profitability and to efficiently allocate our resources. Additionally, we expect our supply chain efficiencies to offset margin pressures over the long term.

We are in active discussions for additional deployments principally with our existing customers and will continue to allocate resources with efficient customers that enable us to maximize adjusted gross profit per fleet. With that, I would like to turn it over to Greg who will provide review of our fourth quarter financial performance and some additional color on the first quarter.

Greg?

Thanks James. Revenues for the fourth quarter of 2016 totaled $151 million up nearly three times from the $54 million we realized in the fourth quarter of 2015.

Adjusted EBITDA for the fourth quarter totaled $6.1 million, a strong increase compared to the approximately $400,000 we reported for the prior year fourth quarter. During the fourth quarter, we had approximately 6 million of onetime charges including approximately $2.7 million from the recommissioning of three additional frac fleets, two of which were completed by the end of the fourth quarter and approximately $2.3 million associated with the pre-investment and additional workers to support the increase revenue generating activity we are experiencing today and expect to realize over the near term.

We had unique opportunities to bring on a large pool of experienced workers and we're proactive in growing our team. Pre-investing in experienced talent enhances our competitive advantage by maximizing our speed to market while also limiting the impacts of potential labor constrains resulting from the market recovery.

Total adjusted gross profit for the fourth quarter of 2016 was $13.2 million compared to $3.9 million during the fourth quarter of 2015. Selling, General and administrative expenses were $7.9 million versus $6.9 million for the fourth quarter of 2015.

In our completion services segment, we averaged approximately 12 deployed frac fleets during the fourth quarter and exited the year with 13 deployed fleets, up from an average of approximately five fleets in the fourth quarter of 2015, a 160% increase. Fourth quarter revenue totaled $148 million, up from $54 million in the prior year quarter, a 179% increase.

Annualized revenue per deployed fleet was $49.3 million, up from the $43.2 million we realized in the fourth quarter of 2015. We anticipate per deployed fleet revenue to increases available capacity becomes more scares.

Adjusted gross profit for completion services was $13.3 million, an increase compared to $5.4 million in the fourth quarter of 2015 an increase of approximately 146% driven by higher utilization and improvements in both efficiencies and pricing. Annualized adjusted gross profit per deployed fleet was $4.4 million up from $4.3 million in the fourth quarter of 2015.

Of our average of 12 deployed frac fleets 62% were bundle with wireline. Our ongoing emphasis on bundling our completions services provides a value-added efficiency tool creating a win-win for Keane and our customers.

By providing this additional component of the well completion process, we provide greater efficiency for both our customer and Keane. In our other services segment fourth quarter revenue and adjusted gross profit was approximately $3.1 million and negative $100,000 respectively compared to zero revenue and gross profit in fourth quarter of 2015.

Fourth quarter 2015 revenue and gross profit results were zero due to the idling of our drilling business in May of 2015. Turning to our balance sheet.

We excited 2016 with debt of approximately $270 million, cash of $49 million, net debt of approximately $220 million and total liquidity of $89.2 million. Our January IPO raised $254 million net proceeds which we used to repay our existing term loan in full and repay $50 million of our notes.

The balance of the net proceeds were added to our balance sheet. As a result on an as adjusted basis at year-end we had debt of $130 million balance sheet cash of $146 million and total liquidity of $186 million.

In line with our credit strategy we have successfully entered into a new $150 million asset based lending facility which expands borrowing capacity, extends maturity and overall contains more favorable terms. Additionally, today we successfully entered into a new 5.5 year 150 million senior secured term loan facility and repaid our 12% secured notes.

The facility is backed by Owl Rock Capital, a leading energy lender. The term loan results in meaningfully improved commercial terms including a significantly lower interest rate on our outstanding debt and contains no financial covenants other than minimum liquidity.

The new facility also provides us with the right to request an increase in the term loan by up to $125 million, providing us additional flexibility to act on future growth opportunities including potential acquisitions. We continue to believe that further industry consolidations will take place.

With our leading industry platform and flexible capital position we are committed to pursuing potential transactions that fit our model and are accretive all while maintaining our long-standing commitments to financial discipline. Given the timing of our first post IPO earnings calls we want to provide a window into what we are seeing for the first quarter.

Going forward we expect to report quarterly earnings earlier in the reporting cycle. The strong momentum that we saw during the fourth quarter of 2016 has continued and accelerated in 2017 driving increased demand for our services.

Job ready equipment is quickly getting absorbed by the market which has led the tightened supply for horsepower and improved pricing. The recent increases we are seeing in sand pricing however are resulting in a headwind on profitability.

Because of the success that we had in proactively and materially driving down price on our purchased sand throughout the down turn we are now seeing relatively higher inflation rates as our sand prices approach current market averages. As James noted earlier our portfolio pressure pumping agreement allow us to adjust pricing with periodically reopeners every 3 to 6 months to reflect these changes and input cost and allowing contract pricing to market terms for dedicated capacity.

As far our fleets specifically we currently have 16 fleets to deployed resulting in approximately 70% utilization on our 23 fleets. Pricing has continued to improve during the first quarter with leading edge new dedicated capacity pricing up 25% sequentially as compared to the fourth quarter of 2016.

We expect the combination of these factors together with the activity level were seeing to result in first quarters sequential revenue increases up between 30% and 40%. Before, we open up the lines for Q&A, I would like to hand the call back over to James for some closing remarks.

Thanks Greg. I wanted to again thank you each and every one of our customers and employees.

We are enforcing to have supportive and successful customers as well as a driven team of experience and dedicated employees and we look forward to succeeding together. With that, we thank you again for your time and now I would like to open it up for Q&A.

Operator?

First of all, appreciate the color on revenue outlook in first quarter, I was wondering given some of the cost inflation you are seeing, Greg, could you maybe give us any color and what do you think about margins for the first quarter in terms of maybe incremental margins or how do you think about gross profit per fleet given some of the headwinds you reference on sand?

Yes, thanks Jed. So the price improvements we've seen, we're kind of building momentum through the quarter as the supply and demand of frac capacity continued to tighten and the sand inflation really peaked in February, but continued to be a headwind through the quarter.

I think on the gross profit per fleet, we will see improvements versus the fourth quarter, but we got to kind of add up the sand inflation and the pricing of our fleets and see where that shakes out, we we'll give some more color on that in the first quarter call.

Okay. I guess my follow up is, it sounds like you are seeing a lot of opportunities to deploy additional spreads, James could you talk about what are your thoughts on kind of a line of sight for future deployments, do you -- is it prudent to think about another one to two fleets gong active this quarter or second quarter, how should we think about the cadence on potential reactivation going forward?

Yes, Jed. I mean that’s a good question.

I mean we are seeing continued demand beyond the 16 crew that we have working today. A lot of our existing customers are expanding, in a process of expanding their plans, it's kind of hard to say exactly the timing, because their budgets are pretty much real time today.

So as oil price goes or oil and gas price go up or down, these things can come sooner or later. But we do outline a sight for -- to add additional crews over the rest of the year.

Okay. And just one last one from me.

Greg, I don’t know if you have a number in mind for the first quarter, but I assume you will have some reactivation cost for 1Q, do you have kind of a sense, I assumes it's going to be lower and it wasn’t fourth quarter, but you have sense of how big that could be?

Jed, it will be lower, it depends on the number of fleets. We'll be close to the same number of fleets, because of the demand we are seeing, we're pushing very hard to move fleets from warm to hot and we are probably going to get at least another three fleets from warm to hot given the three deployments in the first quarter.

But they will be in the range of closer to 1.8 per fleet. In the fourth quarter you'll noticed we had an anomaly of large pre-investment in headcounts because of unique opportunity we had in the market that won't reoccur in the first quarter, so we'll be lower.

Great. I’ll turn it back thank you.

Greg just on the last question, I think you mentioned three fleets going from warm to hot? Does that mean we are going from 16 working fleets to 19 or is that three included from that 13 and 16?

In the first quarter, in March here we got 16 working and then were getting three from warm to hot ready to go to work and then we'll look at customer opportunities and economics before we kind of go from hot to active.

Okay, and then just as we think about, coming back to margins here, the adjusted gross profit per fleet was 4.4 million, assuming I heard that correctly, and recognizing the tailwind of higher pricing being offset by the headwind of rising cost. Do you actually -- do you see that number being higher in Q1 and then again kind of look out to Q2 once you get all these fleets out there and the lag effect if you will from when you can recoup pricing what's the trajectory on margins in Q2 versus Q1?

Yes, in the first quarter we will see net pricing lift versus the fourth quarter, so that number will be higher and then we've got a portfolio of dedicated agreements and some of them can price or traditional MSAs and can price, reprise faster, so we're actively working on those and then we'll have a portion that are three months and those will reprice in the second quarter and then a portion of that, our six months, and they'll reprice in the third quarter. So there should be a steady trajectory of margin improvement as long as the backdrop holds up.

Okay, thank you. And then last one from me, James, you mentioned the willing us to pursue acquisitions aside from targeting accretive deals can you speak to specific product lines that you are targeting and just the likelihood of deals potentially being consummated this year?

Yes, John. Thank you, a good question.

Yes, I mean I think we're going to stick to the same playbook that we've had made focus on our completion services loan [ph]. That's going to be pressure pumping equipment potentially more wire line plug and perf, those kinds of things.

We do believe at the moment cause of the cyclicality and the volatility we're a big believer and a consolidator versus adding equipment to the market at the moment. So we are looking and we do have a pipeline of M&A opportunities that we are looking that and if they are accretive to the value than we might be able to do some of those.

Okay, and the probability of doing something?

That's hard to say.

Fair enough. I hope you guys get some spring break time.

Thank you.

So you guys highlighted the pressure you are starting to see from sand which is fairly well known in the market. But you guys also appear ahead of the curve in terms of hiring incremental crews, overall what levels cost inflation are you seeing on the labor side?

So I mean the sand is much more material in our income statement as far as cost of goods sold, on the labor we're probably seeing around 10%. But it's on a much lower base, so materiality it's lower, but the sand has been much.

Got it, are you seeing much on the equipment refurb cost? I know it's smaller as well, but just curious?

No, we've not seen much on inflation. I mean there has been a little bit on forgings which drives the input cost to kind of fluid ends and power ends, a small amount, but we've not seen either a tightening in the supply chain or much price pressure on components yet.

Got it. You mentioned a little bit of a cost creep here on restarting, as you look further into the restart effort, are you confident you can still keep the restart cost below that 2 million mark?

Yes, I mean we feel pretty good about that. The cost creep we've seen hasn’t been due to any change in the state of the equipment, it's been because we are going faster, we are leveraging some third-party services to help us commission.

So there has been a little of inflation on that. But we feel pretty good about the average number, when we get to the back of the fences, we will see a little bit higher end on the average, but we will be still be in that same -- we updated the number to 1.8 and we are still confident with that.

Okay, but nothing stretching into the kind of five or six range, as you get towards the back of the fences?

Absolutely no.

Got it, I’ll turn it back. Thanks.

So on pricing is the uplift that you're seeing, would you say has been better than you've expected? I think about variation by basins and we've heard about more competition in the Permian, I don’t know if that's having an impact on pricing, just curious if there is some difference in what you see in the Permian versus some of peer competitors?

Yes, Sean it's James. Yes, I mean we are seeing the pricing -- I mean the pricing is moving faster than we had expected due to the acceleration of the demand, a lot of this driven by the increase in demand in the Permian, but we are seeing incremental demand pretty much across our footprint.

That’s not just isolated to the Permian, I mean things have tightened considerably in all the basins that we work in.

Okay, so you wouldn’t say significant deviation from the Permian versus some of the others?

No, no.

Okay, got it. And then just in terms of the expanded capacity from your peers, I think you have been surprised that the rate of reactivation from some of your competition and just thinking about how that could have an influence on your actions with respect to reactivating or eventually thinking about new build capacity?

Yes, I mean Sean, on the current supply and demand, it feels like it's incredibly tight right now, which has given us the pricing power. So the reactivations, I don’t think have been surprising or burdensome to this point.

As far as new orders, from our perspective the economics at this point don’t justify building capacity. So our belief is a lot of this capacity that's being ordered is either replacement or to supplement fleets that are kind of going from vertical frac crews to horizontal.

Got it. Okay great thanks guys.

I was hoping, you maybe just give us a little color on how things have maybe changed or evolved here regardless -- with regard to kind of your effective utilization and the pace at which your customers have been proceeding, I guess on average or however you want to couch it, is there still room to capture more on the efficiencies curve on average for what we see posted as kind of your utilized fleet?

Yes, I mean we have the customers today I mean the market is going into a little different mode than it's been before as all of our customers are more focused on cash flow and having their projects beat self-funding much faster than before because they have raised a lot of public equity versus debt. So we have -- depending on the customer and when we try to continue to focus and upgrade to the highest efficiency customer that can deliver the volume of wells, have a backlog of wells and deliver all of that necessary infrastructures, so you can be most efficient.

So we're continuingly working with our customers to be more and more efficient. I mean that shows up in our results, we will have more about that when we talked about Q1 later.

Okay, thank you for that. And then just Greg just to perfectly clear with regard to how leading edge pricing commentary filters through the income statement, I think you did lay it out in kind of buckets, but just so we all come across with the same understanding.

The 25% leading edge commentary you would expect to be fully effective for Keane sometime perhaps 3Q?

Yes, it's correct Blake.

Okay, just want to make sure that's understood. Alright, thanks I'll turn it back.

Kind of the similar question to Shaun's just given the line of side that the industry has on capacity reactivations. And in conjunction with the recent pull back we've seen in oil prices have conversations with customers over the past couple of weeks got any more difficult on the pricing side in terms of pushing pricing beyond just the 25% that you've seen since Jan 1?

Yes, I mean that's a good question. I mean the answer to that question is no.

I mean we have - we're a week or two into a cycle and I think everybody expects there to be cycles in the market, but as of today we haven’t had any push back from any customers on cutting their budgets or chaining any plans and we still have the same opportunities in the hopper that we had two weeks ago.

Okay, fair enough. And then my other question was just, how many of your fleets that are currently active right now are still on that pre-Jan 1 pricing and then kind of an idea of how that's going to roll over the next couple of quarter?

Yes, I mean the bulk of fleet is kind of on fourth quarter pricing, I mean we have quarterly and then we have six months' kind of reopeners and then there is a handful that are on traditional MSAs that we can reopen. I mean it's -- as you can appreciate it's a little commercially sensitive to talk about when all of our contracts reopen, but we do have a portfolio of contract some are traditional MSAs all the way to a three year commitment take or pay and, as soon as we can reopen those contracts we're actively working to do so.

I agree. And then last one from me just any line of sight on reactivating any of your or putting to work any of your cementing or coil tubing assets I know it's small but?

The cementing, no. On the coil tubing assets, like we've mentioned before we continue to evaluate strategic alternatives either for organic investment adding some of the bigger units or through M&A.

So coil potentially cement no.

Okay, thanks.

This is Jim Shaw on for Michael. Given the tightens in wire mesh fracs and braids [ph], I was wondering, if you are seeing any shift in completion technique, perhaps towards gel and away from slick water fracs?

Yes, it's a good question, I mean the fine meshes are under pressure and they are seeing inflation and continuity of supply issues. I don’t know that we've seeing shifts to gel, I think the next step is to maybe look at our 30-50 over the next course [ph] grade and continue to do with the slick water, but we are having discussions with our customers and I think the industry as a whole about having kind of a plan B and plan C design should some of these meshes continue to be tight in supply or the inflation gets to a point where you're better off move into in our alternative grade.

Okay, so you are seeing some slick water fracs with 30-50 fan?

Correct.

Okay. And then are you seeing any potential constrains to the business as activity and efficiencies ramp up.

So specifically, are you seeing any bottom next to last mile trucking or accessing water or is it too early to talk about that?

The trucking so far has held up, I mean it's starting to see some inflation. We have a fleet of our own trucks that we use to supplement the third parties.

And as you know there is a whole suite of new last mile solutions that are out there, we are evaluating those and the more of those that get adopted, it takes some pressure of the pneumatics. So we are going to continue to evaluate the solutions that are out there and in main time we are using our pneumatics fleet as an insurance policy to help us ensure continuity supply and also optimize the cost.

Okay, great. And any issues on the water front?

The water is taken care by our customers. It's something we focus on when we kind of select the customers that we are working with to make sure like James said, they can meet their requirements on their efficiency side of the ledger.

So it's something we pay attention to, but most the customers we work for have ready access to water.

Okay great thanks guys.

I guess my question is on the opportunity you mentioned with regard to picking up a big chunk of workers in frac business. I presume that from Company W [ph], and if so it would seem like you could already have more than enough crews to not just crew up 19 fleets, but perhaps more.

Is that accurate and how many fleets would you say you have the ability to crew up today if you wanted to?

Yes, we picked up the bulk of the employees in the fourth quarter and we've since deployed three fleets. So a lot of that population has been consumed.

We do keep a bench of employees and try to proactively hire for the next fleet. So we probably have one extra fleet of people in the system as we sit here today.

But most of the fourth quarter hires have been consumed in our increasing utilization in the first quarter.

So that one extra fleet that mean 20 correct, the -- you included the three hot stack fleets plus one more?

No, it would just mean one 24-hour crew for us is around 60 people. So we have extra 60 people in the system.

Okay, but my question then was, are the hot stack fleets -- the hot fleets are crewed or not?

They are not all crewed, they are just ready to go from an equipment perspective.

Got you. Thank you and then how much do you think -- I know it's hard to separate, but how much you think the removal or call it that 0.5 million horsepower for the market affected the pace with this market tighten?

And then kind of building on an earlier question, how do you gage the risk that incremental capacity adds and/or reactivations help loosen that up here particular in the context of weakening oil prices?

Well, I mean our opinion is that whatever that number is that's dispatch able horsepower and there is a lot of difference thoughts on that, but let's just say it's plus or minus 10 million horsepower, we believe that horsepower has been dispatched and then there is probably I think we got up to about 17 million or so in the peak in '14 and we believe maybe half of that can come back at some cost once the margins continue to improve. So I think we will see some of that come back as margins improve, but I don’t think margins are not at and the demand is not at adding incremental horsepower yet.

Okay, Thank you for your time.

Greg, can you just given the debt on refinancing, there is a new term loan, can you tell us where cash is post all of this as well as what the outstanding debt balance as of today? Just to make sure I get that right.

Yes, so the debt balance as of today, thanks for bringing that up. We're excited, we just signed the new term loan today, it extended the maturity out 5.5 years, it's 150 million to replace our legacy note which was 12%, whereas the new ones is about 7.25%.

Very covenant light, just the $35 million minimum liquidity and one thing one feature we're excited about is the ability to upsize the 125 million which gives us good stretch for growth. So the debt today is sitting at a 150 million, as adjusted for the IPO, we had cash at yearend at a $146 million, so we'll roll that through the first quarter and we got CapEx and the working capital growth and then we'll kind of update on the cash numbers, John, here when we get first quarter out.

Fair enough. And then just wanted just one last one from me just kind of looking ahead to Q2 Given that the bulk of your fleets are still on Q4 pricing some of which will be reprising in the coming months, as well as the fact that you have the full quarter benefit in Q2 of the three reactivated fleets and potentially additional fleets.

Is it reasonable to assume that Q2 revenue could be up at a similar clip as to Q1 improvement?

I think based on the carryover you describe, yes. As far as incremental fleets at this point, it is too early to tell we'll kind of continue to monitor the market to move another fleet from active, but as just far as rolling forward what you mentioned that's a fair assumption.

Okay, thanks guys.

So, thank you everyone for joining on our Q1 quarterly call.