ProPetro returns to profit as power spending reaches US$128M

For the quarter ended Sept. 30, US$13 million in net income marked a return to profit for ProPetro Holding Corp. NYSEPUMP in results released on Wednesday. Its PROPWR power business incurred US$128 million in capital spending during the quarter, out of US$171 million companywide.

The Midland, Texas, completions and power-services provider reported about 510 megawatts committed under contract as of its Oct. 28 update. That includes long-term contracts with a subsidiary of Targa Resources Corp. NYSETRGP, a midstream services provider.

ProPetro's Sept. 22 contract announcement committed about 230 megawatts to support Targa's Permian Basin natural gas processing infrastructure, with full deployment expected in early 2028. It disclosed neither a duration in years nor a price per megawatt-hour.

ProPetro shares rose to US$7.65 on the NYSE as of 10:54 a.m. EDT on Oct. 28, according to the NYSEPUMP quote on Google Finance. Management's next deployment target is approximately 250 to 275 megawatts by the end of 2026.

For the quarter ended Sept. 30, revenue increased to US$355 million from US$306 million in the second quarter, driven by higher completions utilization and incremental power deployments. Net income of US$0.09 per diluted share compared with a second-quarter loss of US$8 million, or US$0.07 per diluted share.

In its Oct. 28 release, ProPetro reported that adjusted EBITDA, a non-GAAP measure, increased to US$60 million from US$45 million in the second quarter. PROPWR's contribution remained smaller than its share of capital spending.

"PROPWR generated approximately $8 million of Adjusted EBITDA in the third quarter, a meaningful sequential increase," ProPetro chief executive Sam Sledge said in the Oct. 28 release.

Operating cash flow for the quarter ended Sept. 30 fell to US$46 million in the third quarter from US$66 million in the preceding quarter. ProPetro attributed the decline primarily to working capital changes, partly offset by higher adjusted EBITDA.

At Sept. 30, cash totalled US$729 million and total liquidity was US$934 million, according to the earnings release's financial summary. Cash included proceeds from a US$690 million convertible note issuance. Equipment financing borrowings stood at US$172 million.

Capital spending paid for the quarter ended Sept. 30 was US$123 million. The gap against incurred spending primarily reflected equipment financed and paid directly by a financing partner, together with unpaid capital expenditures.

Equipment Deliveries Extend Through 2031

Caterpillar Inc. NYSECAT said in its April 29 framework announcement that PROPWR agreed to purchase at least 1.5 gigawatts of incremental generation assets. An option could increase that amount to about 2.1 gigawatts.

Including previously ordered equipment, the agreement positions PROPWR for approximately 2.6 gigawatts delivered by year-end 2031 and fully deployed in 2032. That equipment schedule extends beyond the capacity currently committed to customers.

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ProPetro said on Oct. 28 that discussions cover several hundred megawatts of additional data centre opportunities. Those negotiations remain separate from contracted capacity.

The next operating milestone is the year-end 2026 deployment target. Management expects more than 500 megawatts deployed by early 2028, drawing on existing contracts and the anticipated scaling of one or more additional data centre customers.