ProPetro Holding Stock

ProPetro Holding Corp. operates as an integrated oilfield services company. The company hydraulic fracturing, wireline, and other complementary oilfield completion services to leading upstream oil and gas companies engaged in the exploration and production (E&P) of North American oil and natural gas resources. The company’s operations are primarily focused in the Permian Basin, where it has cultivated longstanding customer relationships with some of the region’s most active and well-capitalized E&P companies. The Permian Basin is widely regarded as one of the most prolific oil-producing areas in the United States. The company is the leading provider of completion services in the region.

On November 1, 2022, the company consummated the acquisition of all of the outstanding limited liability company interests of Silvertip Completion Services Operating, LLC (the Silvertip Acquisition), which provides wireline perforation and ancillary services solely in the Permian Basin. The Silvertip Acquisition positions the company as a leading completions-focused oilfield services provider headquartered in the Permian Basin.

The company primarily provides hydraulic fracturing, wireline, and cementing completion services to E&P companies in the Permian Basin. The company’s equipment has been designed to handle the operating conditions commonly encountered in the Permian Basin and the region's increasingly high-intensity well completions (including Simul-Frac, which involves fracturing multiple wellbores at the same time), which are characterized by longer horizontal wellbores, more stages per lateral and increasing amounts of proppant per well.

Effective September 1, 2022, the company disposed of its coiled tubing assets to STEP Energy Services (USA) Ltd. (STEP) and shut down its coiled tubing operations.

Services

The company has historically conducted its business through five operating segments: hydraulic fracturing, cementing, coiled tubing, drilling and flowback. For reporting purposes, the hydraulic fracturing and cementing operating segments were aggregated into one reportable segment—Pressure Pumping while coiled tubing, drilling and flowback operating segments, and corporate administrative expenses were aggregated into the All Other category. In connection with the Silvertip Acquisition, the company has a wireline operating segment which has been aggregated with Pressure Pumping. Additionally, the divestitures of the company’s coiled tubing operations in September 2022 and its drilling and flowback operations in 2020 resulted in the All Other category having no operating segments and therefore in 2022, the company’s corporate administrative expenses were aggregated into Pressure Pumping, and prior periods have been restated accordingly. During the fourth quarter of 2022, the company renamed its Pressure Pumping reportable segment to Completion Services since the company is positioned to provide highly complementary completion services to its customers and has significant cross-selling opportunities across its combined customer base.

Completion Services

Hydraulic Fracturing

The company provides hydraulic fracturing services to E&P companies in the Permian Basin. These services are intended to optimize hydrocarbon flow paths during the completion phase of horizontal shale wellbores. The company has significant expertise in multi-stage fracturing of horizontal oil-producing wells in unconventional geological formations. The company’s total available hydraulic horsepower (HHP) at December 31, 2022 was 1,315,000 HHP, which was consisted of 252,500 HHP of its Tier IV DGB equipment and 1,062,500 HHP of conventional Tier II equipment. An individual fleet could range from approximately 50,000 to 80,000 HHP depending on the job design and customer demand at the wellsite. During the year ended December 31, 2022, the company recorded an impairment with respect to its DuraStim hydraulic fracturing pumps (108,000 HHP) that did not meet the manufacturer’s specifications or its expectations and have remained idled. With the industry transition to lower emissions equipment and simultaneous hydraulic fracturing (Simul-Frac), in addition to several other changes to the company’s customers' job designs, that its available fleet capacity could decline. In addition, in September 2021, August 2022 and December 2022, the company committed to additional conversions of its Tier II equipment to Tier IV DGB, and purchase of new Tier IV DGB equipment. As such, the company entered into conversion and purchase agreements with its equipment manufacturers for a total of 362,500 HHP of Tier IV DGB equipment and as of December 31, 2022, the company has received 192,500 HHP of the converted and new Tier IV DGB equipment and expect to receive the remaining 170,000 HHP by the second quarter of 2023. In August 2022 and December 2022, the company entered into leases for four electric fleets of 60,000 HHP per fleet. The company has entered into a contract with a customer for the use of one of its electric hydraulic fracturing fleets to provide committed services for a period of three years after it takes delivery of the fleet.

The hydraulic fracturing process consists of pumping fracturing fluid into a well at sufficient pressure to fracture the formation. Materials known as proppants, which in the company’s business are consisted primarily of sand, is suspended in the fracturing fluid and are pumped into the fracture to prop it open.

The company owns and operates a fleet of mobile hydraulic fracturing units and other auxiliary equipment to perform fracturing services. The company also refers to all of its fracturing units, other equipment and vehicles necessary to perform a fracturing job as a fleet and the personnel assigned to each fleet as a crew. The company’s hydraulic fracturing units consist primarily of a high pressure hydraulic pumps, diesel or dual gas engines, transmissions and various hoses, valves, tanks and other supporting equipment like blenders, irons, hoses and datavans.

The company provides dedicated equipment, personnel and services that are tailored to meet each of its customer’s needs. Each fleet has a designated team of personnel, which allows the company to provide responsive and customized services, such as project design, proppant and other consumables procurement, real-time data provision and post-completion analysis for each of its jobs. Many of the company’s hydraulic fracturing fleets and associated personnel have worked continuously with the same customer for the past several years promoting deep relationships and a high degree of coordination and visibility into future customer activity levels. Furthermore, in light of the company’s substantial market presence and historically high fleet utilization levels, it has established a variety of trusted relationships with key equipment, sand and other downhole consumable suppliers.

The company provides cementing services for the completion of new wells and remedial work on existing wells. Cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole. Cementing provides isolation between fluid zones behind the casing to minimize potential damage to hydrocarbon bearing formations or the integrity of freshwater aquifers, and provides structural integrity for the casing by securing it to the earth. Cementing is also done when re-completing wells, where one zone is plugged and another is opened.

Wireline

The company provides wireline and ancillary services, such as pumpdown on new oil well completions in the Permian Basin. Wireline utilizes equipment with a drum of wireline to deploy perforating guns in the well to perforate the casing, cement, and formation. Once the well is perforated, it is ready to be fractured. Pumpdown utilizes pressure pumping equipment to pump water into the well to deploy or push the perforating guns attached to wireline through the lateral section of a well.

The company owns and operates a fleet of mobile wireline units and other auxiliary equipment to perform well completion services. The company also refers to its wireline units, pressure control equipment, other equipment and vehicles necessary to perform a job as a spread and the personnel assigned to the spread as a crew. On average, one wireline spread consists of a wireline tractor truck with a large cab functioning as mobile office where the engineer controls the wireline spooled drum along with associated pressure control iron and equipment, trailers and vehicles. The company has 23 wireline units.

Other Services

Coiled Tubing

Coiled tubing services involve injecting coiled tubing into wells to perform various completion well intervention operations. Coiled tubing is a flexible steel pipe with a diameter of typically less than three inches and manufactured in continuous lengths of thousands of feet. It is wound or coiled on a truck-mounted reel for onshore applications.

Customers

The company’s customers consist primarily of oil and natural gas producers in North America. The company’s top five customers accounted for approximately 84.0% of its revenue, for the years ended December 31, 2022. For the year ended December 31, 2022, Pioneer Natural Resources USA Inc. (Pioneer), Endeavor Energy Resources and XTO Energy accounted for 33.1%, 28.3% and 15.0%, respectively, of total revenue.

Competition

The company’s competitors include many large and small oilfield services companies, including Halliburton Company; Liberty Energy Inc.; ProFrac Holding Corp.; Nextier Oilfield Solutions Inc.; Patterson UTI Energy Inc.; and RPC, Inc.

Seasonality

The company’s results of operations have historically reflected seasonal tendencies, generally in the fourth quarter (year ended December 31, 2022), relating to the conclusion of its customers’ annual capital expenditure budgets, the holidays and inclement winter weather.

Environmental and Occupational Health and Safety Regulations

The company handles, transports, stores and disposes of wastes that are subject to the Resource Conservation and Recovery Act (RCRA) and comparable state laws and regulations, which affect its activities by imposing requirements regarding the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes.

History

ProPetro Holding Corp. was founded in 2007. The company was incorporated in 2007.