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US WELL SERVICES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed consolidated
financial statements and the related notes in Item 1. "Financial Statements"
contained herein and our audited consolidated financial statements as of
December 31, 2021, included in our Annual Report on Form 10-K for the year ended
December 31, 2021 (our "Annual Report"), as filed with the Securities and
Exchange Commission (the "SEC") on March 30, 2022. The information provided
below supplements, but does not form part of, our unaudited condensed
consolidated financial statements.

                DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains
"forward-looking statements" as defined in Section 27A of the United States
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements usually relate to future events, conditions and
anticipated revenues, earnings, cash flows or other aspects of our operations or
operating results. Forward-looking statements are often identified by words such
as "believes," "expects," "intends," "estimates," "projects," "anticipates,"
"will," "plans," "may," "should," "would," "foresee," or the negative thereof.
The absence of these words, however, does not mean that these statements are not
forward-looking. These statements are based on our current expectations, beliefs
and assumptions concerning future developments and business conditions and their
potential effect on us. While management believes that these forward-looking
statements are reasonable as and when made, there can be no assurance that
future developments affecting us will be those that we anticipate. All of our
forward-looking statements involve risks and uncertainties (some of which are
significant or beyond our control) and assumptions that could cause actual
results to differ materially from our historical experience and our present
expectations or projections. These factors include geological, operating and
economic factors and changes in prices and market conditions, including changes
in expected or realized oil and gas prices and demand for oilfield services and
changes in supply or demand for maintenance, repair and operating products,
equipment and service; the effectiveness of management's strategies and
decisions; our ability to obtain financing, raise capital and continue as a
going concern; our ability to implement our internal growth and acquisition
growth strategies; general economic and business conditions specific to our
primary customers; our ability to collect accounts receivable; compliance with
our debt agreements and equity-related securities; volatility in market prices;
our ability to satisfy the continued listing requirements of Nasdaq with respect
to our Class A common stock and warrants or to cure any continued listing
standard deficiency with respect thereto; changes in government regulations; our
ability to effectively integrate businesses we may acquire; new or modified
statutory or regulatory requirements; availability of materials and labor;
inability to obtain or delay in obtaining government or third-party approvals
and permits; non-performance by third parties of their contractual obligations;
unforeseen hazards such as natural disasters, catastrophes and severe weather
conditions, including floods, hurricanes and earthquakes; public health crises,
such as a pandemic, including the COVID-19 pandemic and new and potentially more
contagious variants of COVID-19; acts of war or terrorist acts and the
governmental or military response thereto; and cyber-attacks adversely affecting
our operation. This Quarterly Report identifies other factors that could cause
such differences. There can be no assurance that these are all of the factors
that could cause actual results to vary materially from the forward-looking
statements. Factors that could cause or contribute to such differences also
include, but are not limited to, those discussed in our filings with the SEC,
including under "Risk Factors" in this Quarterly Report and in our Annual
Report. We caution you not to place undue reliance on any forward-looking
statements, which speak only as of the date hereof. We assume no obligation and
do not intend to update these forward-looking statements. Unless the context
otherwise requires, references in this Quarterly Report to the "Company",
"USWS", "we", or "our" shall mean U.S. Well Services, Inc. and its subsidiaries.

Insight

We provide pressure pumping services in oil and natural gas basins. Our Clean
Fleet® electric fleets are among the most reliable and highest performing fleets
in the industry, with the capability to meet the most demanding pressure and
pump rate requirements. In May 2021, we announced the next generation of our
Clean Fleet® technology with the unveiling of our newly designed Nyx Clean
Fleet®. We anticipate the first Nyx Clean Fleet® to be delivered in the second
quarter of 2022.

We operate in many of the active shale and unconventional oil and natural gas
basins of the United States and our clients benefit from the performance and
reliability of our equipment and personnel. Specifically, all our fleets operate
on a 24-hour basis and have the ability to withstand high utilization rates,
which results in more efficient operations. Our senior management team has
extensive industry experience providing pressure pumping services to exploration
and production companies across North America. Since announcing our commitment
to becoming an all-electric pressure pumping services provider in May 2021, we
have sold most of our legacy, diesel-powered pressure pumping equipment. We have
retained some of our legacy, diesel-powered pressure pumping equipment for use
during our transition to support our electric fleets and bridge the time gap
between our customers' current service needs and the deployment of our newbuild
Nyx Clean Fleets®. Upon delivery, our Nyx Clean Fleets® are intended to replace
any conventional fleet in operation.

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How the business generates revenue

We generate revenue by providing pressure pumping services to our customers. We
own and operate fleets of pressure pumping equipment to perform these services.
We seek to enter into contractual arrangements with our customers or fleet
dedications, which establish pricing terms for a fixed duration. Under the terms
of these agreements, we charge our customers base monthly rates, adjusted for
activity and provision of materials such as proppant and chemicals, or we charge
a variable rate based on the nature of the job including pumping time, well
pressure, proppant and chemical volumes and transportation.

Our costs of doing business

The principal costs involved in conducting our pressure pumping services are
labor, maintenance, equipment rentals, including the rental of power generation
equipment, materials, and transportation costs. A large portion of our costs are
variable, based on the number and requirements of pressure pumping jobs. We
manage our fixed costs, other than depreciation and amortization, based on
factors including industry conditions and the expected demand for our services.

Materials include the cost of proppant delivered to the basin of operations,
chemicals, and other consumables used in our operations. These costs vary based
on the quantity and type of proppant and chemicals utilized when providing
pressure pumping services. Transportation represents the costs to transport
materials and equipment from receipt points to customer locations. Labor costs
include payroll and benefits related to our field crews and other employees.
Most of our employees are paid on an hourly basis. Maintenance costs include
preventative and other repair costs that do not require the replacement of major
components of our fleets. Maintenance and repair costs are expensed as incurred.

The following table presents our cost of services for the periods indicated (in
thousands):

                                       Three Months Ended
                                            March 31,
                                        2022          2021
Labor                                $   13,180     $ 23,686
Maintenance                               5,119       16,595
Power generation equipment rentals        8,492            -
Materials                                 3,459        7,030
Transportation                            1,948        3,039
Other (1)                                 8,525       12,281
Cost of services                     $   40,723     $ 62,631


(1)

Others include fuel, lubricants, rental of other equipment, travel and accommodation costs for our teams, site security costs and other costs incurred in carrying out our operations. .

Significant trends

Since our announcement in May 2021 of our commitment to becoming an all-electric
pressure pumping services provider, we have sold most of our legacy,
diesel-powered pressure pumping equipment. The proceeds received from these
sales were used to reduce the outstanding principal balance of our Term A and
Term B Loan (collectively the "Senior Secured Term Loan"), which resulted in no
cash interest payments for the first quarter of 2022 and an interest rate of (i)
1.0% per annum in cash and (ii) 4.125% per annum PIK interest from April 1, 2022
through December 31, 2022.

Our revenues and operating costs remained lower in the first quarter of 2022
versus the first quarter of 2021, as we continued to experience a lower average
active fleet count resulting from our ongoing exit from the diesel pressure
pumping market. However, we experienced an uptick in our utilization rate as a
greater proportion of our fleets were working under contract as opposed to the
spot market, and thus less exposed to customer "white space." We expect to see
our average active fleet count continue to increase as we begin taking delivery
of our newbuild Nyx Clean Fleets® beginning in the second quarter of 2022.

During the first quarter of 2022, prompt month futures contracts for WTI crude
oil and Henry Hub natural gas averaged $94.92 per Bbl and $4.57 per MMBtu,
respectively, as compared to $77.17 per Bbl and $4.85 per MMBtu, respectively,
in the fourth quarter of 2021. We benefitted from the upward trend in commodity
prices, as higher demand for pressure pumping services combined with increasing
scarcity of available crews and equipment resulted in a favorable environment
for deploying crews and negotiating pricing and other terms with customers.
However, during the period, we continued to experience cost inflation for
certain goods and services as well as non-productive time driven by supply chain
issues such as our customers' inability to source sufficient materials and
transportation for goods. We anticipate that these trends will persist
throughout the remainder of 2022.

We expect that completions activity and demand for pressure pumping services
will remain elevated throughout the year. We also anticipate that the rising
price of diesel fuel will continue to improve the economic benefit of switching
from conventional to electric pressure pumping, further increasing demand for
next-generation, all-electric fleets such as our Clean Fleets® and Nyx Clean
Fleets®.

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Operating results

Three months ended March 31, 2022, compared to the three months ended March 31,
2021
(in thousands, except percentages)

                                       Three Months Ended March 31,
                                2022          % (1)       2021          % (1)    Variance      % Variance
Revenue                      $    41,150     100.0%    $    76,258     100.0%    $ (35,108 )    (46.0)%
Costs and expenses:
Cost of services
(excluding depreciation
and amortization)                 40,723      99.0%         62,631      82.1%      (21,908 )    (35.0)%
Depreciation and
amortization                       5,700      13.9%         11,106      14.6%       (5,406 )    (48.7)%
Selling, general and
administrative expenses            8,372      20.3%          7,390      9.7%           982       13.3%
Loss on disposal of assets         3,056      7.4%           2,436      3.2%           620       25.5%
Loss from operations             (16,701 )   (40.6)%        (7,305 )   (9.6)%       (9,396 )     *  (2)
Interest expense, net             (7,968 )   (19.4)%        (6,183 )   (8.1)%       (1,785 )     28.9%
Change in fair value of
warrant liabilities                 (746 )   (1.8)%         (7,151 )   (9.4)%        6,405        *(2)
Loss on extinguishment of
debt                              (1,651 )   (4.0)%              -      0.0%        (1,651 )     100.0%
Other income                       1,321      3.2%              29      0.0%         1,292       *  (2)
Income tax expense
(benefit)                              -      0.0%               -      0.0%             -       *  (2)
Net loss                     $   (25,745 )   (62.6)%   $   (20,610 )   (27.0)%   $  (5,135 )     *  (2)



(1)
As a percentage of revenues. Percentage totals or differences in the above table
may not equal the sum or difference of the components due to rounding.
(2)
Not meaningful.

Revenue. The decrease in revenue was primarily attributable to a lower active
fleet count in the first quarter of 2022 compared to the prior comparable period
as we began to transition to an all-electric pressure pumping service provider
in May 2021. For the three months ended March 31, 2022, our average active fleet
count decreased to 4.7 fleets compared to 10.0 fleets in the prior comparable
period.

Cost of services, excluding depreciation and amortization. The decrease in cost
of services, excluding depreciation and amortization, was attributable to the
decrease in variable costs as activity was reduced with a lower number of active
fleets in the first quarter of 2022 compared to the prior period. This was
offset by costs associated with procuring third-party power generation services
as we transitioned away from owning power generation assets starting in October
2021.

Depreciation and amortization. The decrease in depreciation is mainly due to the sale of most of our diesel-powered pressure pumping equipment in the second half of 2021.

Selling, general and administrative expenses. The increase in selling, general,
and administrative expenses was primarily attributable to an increase in
consulting fees, information technology costs and reinstatement of salary levels
after the first quarter of 2021.

Loss on disposal of assets. The amount of gain or loss on disposal of assets
fluctuates period over period due to differences in the operating conditions of
our pressure pumping equipment, such as wellbore pressure and rate of barrels
pumped per minute, which impacts the timing of disposals of our pump components.
Additionally, during the three months ended March 31, 2022, we recognized $2.9
million of losses associated with the sale of property and equipment.

Interest expense, net. The increase was primarily attributable to the interest
expense associated with the Convertible Senior Notes issued during the second
quarter of 2021.

Loss on extinguishment of debt. During the three months ended March 31, 2022, we
recognized a loss on extinguishment of debt for the unamortized debt discount
and issuance costs and prepayment fees associated with the early repayment of
our Senior Secured Term Loan.

Cash and capital resources

Insight

Our primary sources of liquidity and capital resources have historically been
cash, cash flow generated from operating activities, proceeds from the issuance
of debt or equity and borrowings under our ABL Credit Facility. As of March 31,
2022, our total liquidity was $49.6 million, consisting of $41.1 million of cash
and restricted cash and $8.5 million of availability under our ABL Credit
Facility.

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Our short-term and long-term cash requirements consist primarily of capital expenditures, payments of contractual obligations, including debt service obligations, and working capital.

We believe that our current cash position, current and expected working capital
balances, favorable cash interest payment terms under our Senior Secured Term
Loan Agreement, availability under our ABL Credit Facility, proceeds received
from issuance of debt or equity, as well as amounts raised from the issuance of
Class A common stock under our 2022 ATM Agreement, and other anticipated sources
of credit will be sufficient to satisfy cash requirements associated with our
existing operations, capital expenditures and contractual obligations for the
next twelve months. Although there is no assurance, we plan to satisfy our
long-term financial obligations through operating cash flows that we could
generate as we increase our number of working fleets with our planned additions
of Nyx Clean Fleets® and additional financing as our long-term financial
obligations mature.

Sources of cash

During the first quarter of 2022, we raised approximately $68.4 million of gross
proceeds from the issuance of approximately $46.9 million common equity through
a registered direct offering and under our ATM Agreement and borrowings of $21.5
million under the last-out senior secured term loan (the "Term C Loan"). We
intend to use the proceeds for general working capital, including the funding of
capital expenditures related to our newbuild Nyx Clean Fleets®.

Registered Direct Offering. On March 11, 2022, we completed a registered direct
offering of 14,180,375 shares of Class A common stock and 14,180,375 RDO
Investor Warrants for gross proceeds of approximately $25.0 million, before
deducting placement agent fees and other offering expenses. We intend to use the
net proceeds for working capital purposes, including the funding of certain
capital expenditures.

ATM Agreement. During the three months ended March 31, 2022, we sold 9,767,941
shares of Class A common stock for total net proceeds of $21.3 million and paid
$0.6 million in commissions under the ATM Agreement. Since inception on June 26,
2020 through March 31, 2022, we sold a total of 15,086,100 shares of Class A
common stock under the ATM Agreement for total net proceeds of $36.4 million and
paid $1.1 million in commissions.

2022 ATM Agreement. On April 26, 2022, we entered into a new Equity Distribution
Agreement (the "2022 ATM Agreement") with Piper Sandler & Co. relating to our
shares of Class A common stock to replace the former ATM Agreement, which
expired on April 26, 2022. We may offer and sell up to a total of $50.0 million
in shares of our Class A common stock in an "at-the-market" offering program
over a period of time pursuant to the 2022 ATM Agreement. No shares may be sold
under the 2022 ATM Agreement until the registration statement filed on April 26,
2022 has been declared effective by the SEC.

Cash Flows
(in thousands)
                                  Three Months Ended
                                       March 31,
                                  2022          2021
Net cash provided by (used in):
Operating activities            $  (7,445 )   $ (11,016 )
Investing activities                6,158        (7,825 )
Financing activities               33,310        31,824


Operating Activities. Net cash used in operating activities primarily represents
the results of operations exclusive of non-cash expenses, including
depreciation, amortization, provision for losses on accounts receivable and
inventory, interest, impairment losses, (gains) losses on disposal of assets,
changes in fair value of warrant liabilities, loss on extinguishment of debt and
share-based compensation and the impact of changes in operating assets and
liabilities. Net cash used in operating activities was $7.4 million for the
three months ended March 31, 2022 primarily due to the working capital build
associated with the deployment of additional fleets during the quarter.

Net cash used in operating activities was $11.0 million for the three months
ended March 31, 2021, primarily attributable to the redeployment of pressure
pumping fleets. While we experienced an increase in customer activity during the
second half of the quarter, the related collection of receivables is not
expected until the second quarter of 2021. Additionally, we made working capital
payments of $3.0 million using proceeds from our USDA Loan.

Investing Activities. Net cash provided by investing activities increased by
$14.0 million from the prior corresponding period, primarily related to
insurance proceeds related to damaged property and equipment. Net cash provided
by investing activities was $6.2 million for the three months ended March 31,
2022, primarily due to $5.2 million in proceeds from the sale of property and
equipment and $12.0 million of insurance proceeds related to damaged property
and equipment. This was offset by $11.1 million in purchases of property and
equipment, consisting of $10.3 million related to growth capital expenditures
and the remainder related to maintaining and supporting our existing pressure
pumping equipment.

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Net cash used in investing activities was $7.8 million for the three months
ended March 31, 2021, primarily due to $14.2 million in purchases of property
and equipment, related to maintaining and supporting our existing pressure
pumping equipment and payments made to replace damaged property and equipment.
This was offset by $6.4 million of insurance proceeds related to damaged
property and equipment.

Financing Activities. Net cash provided by financing activities was $33.3
million for the three months ended March 31, 2022, primarily attributable to
gross proceeds of $68.4 million from the issuance of long-term debt, common
stock and warrants, offset in part by $17.8 million of payments on our Senior
Secured Term Loan, $14.2 million of net payments on our ABL Credit Facility and
debt issuance costs of $1.1 million.

Net cash provided by financing activities was $31.8 million for the three months
ended March 31, 2021, primarily attributable to net borrowings of $12.2 million
on our ABL Credit Facility, $8.1 million of net proceeds from notes payable and
net proceeds of $10.7 million from the issuance of common stock.

Cash contractual obligations and other commitments

Our significant cash commitments arising from known contractual and other obligations consist primarily of debt service obligations, including interest, operating and finance leases and purchase commitments.

Senior Secured Term Loan. As of March 31, 2022, the outstanding principal
balance of our Term A and Term B Loan (collectively the "Senior Secured Term
Loan") was $103.0 million, of which $5.0 million is due within one year. The
Senior Secured Term Loan matures on December 5, 2025. As of March 31, 2022, we
were in compliance with all of the covenants under our Senior Secured Term Loan.

The Senior Secured Term Loan interest rate is 0.0% for the first quarter of 2022
and an interest rate of (i) 1.0% per annum in cash and (ii) 4.125% per annum PIK
interest from April 1, 2022 through December 31, 2022. The Senior Secured Term
Loan requires quarterly principal payments of $1.25 million until March 31, 2023
and $5.0 million from June 30, 2023 through September 30, 2025, with final
payment due at maturity.

Term C Loan. As of March 31, 2022, the outstanding principal balance of our Term
C Loan was $21.8 million and matures on December 5, 2025. Our Term C Loan has a
PIK interest rate of 14.0% and contains provisions with up to a 100% premium
payable upon any repayment, prepayment or acceleration. As of March 31, 2022, we
were in compliance with all of the covenants under our Term C Loan.

ABL Credit Facility. All borrowings under our ABL Credit Facility are subject to
the satisfaction of customary conditions, including the absence of a default and
the accuracy of representations and warranties and certifications regarding
sales of certain inventory, and to a borrowing base. As of March 31, 2022, we
had no outstanding balance on our ABL Credit Facility. The ABL Credit Facility
matures on April 1, 2025. As of March 31, 2022, we were in compliance with all
of the covenants under our ABL Credit Facility.

Capital Expenditures. Our business requires continual investments to upgrade or
enhance existing property and equipment and to ensure compliance with safety and
environmental regulations. Capital expenditures primarily relate to maintenance
capital expenditures, growth capital expenditures and fleet enhancement capital
expenditures. Maintenance capital expenditures include expenditures needed to
maintain and to support our current operations. Growth capital expenditures
include expenditures to add additional fleets and generate incremental
distributable cash flow. Fleet enhancement capital expenditures include
expenditures on new equipment related to technology enhancements to existing
fleets that increase the productivity of the fleet.

During the three months ended March 31, 2022, our capital expenditures was $11.1
million. We currently expect that growth capital expenditures, on an accrual
basis, will be approximately $95 million to $115 million for the remainder of
2022, primarily related to the buildout of our four new Nyx Clean Fleets® and
associated equipment. Capital expenditures for growth and fleet enhancement
initiatives are discretionary. We continuously evaluate our capital expenditures
and the amount we ultimately spend will depend on several factors, including
expected industry activity levels and company initiatives.



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