ProPetro Closes in on IPO

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ProPetro Holding has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering (IPO). The company expects to price its 20 million shares in the range of $16 to $19 per share, with an overallotment option for an additional 3 million shares. At the maximum price, the entire offering is valued up to $437 million. The company intends to list its shares on the New York Stock Exchange under the symbol PUMP.

The underwriters for the offering are Goldman Sachs, Barclays, Credit Suisse, JPMorgan, Evercore ISI, RBC Capital Markets, Simmons, Raymond James, Tudor Pickering Holt, Deutsche Bank and Johnson Rice.

This is a growth-oriented, Midland, Texas-based oilfield services company providing hydraulic fracturing and other complementary services to leading upstream oil and gas companies engaged in the exploration and production (E&P) of North American unconventional oil and natural gas resources. Its 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, including Callon Petroleum, Diamondback Energy, Parsley Energy, Pioneer Natural Resources, Surge Energy and XTO Energy.

For the year ended December 2016, no single customer represented greater than 20% of revenue. The Permian Basin is widely regarded as the most prolific oil-producing area in the United States, and ProPetro believes it is currently the largest private provider of hydraulic fracturing services in the region by hydraulic horsepower (HHP), with an aggregate deployed capacity of 420,000 HHP.

ProPetro’s fleet, which consists of 10 hydraulic fracturing units, has been designed to handle the highest intensity, most complex hydraulic fracturing jobs, and has been 100% utilized since September 2016. The firm has purchased two additional hydraulic fracturing units, which are scheduled for delivery and deployment to dedicated customers in April and June 2017, respectively. These units will provide it with an additional 90,000 HHP, bringing the total capacity to 510,000 HHP. Additionally, it expects to use the proceeds from this offering to purchase two additional units that will be deployed in 2017 to meet specific customer requests, giving it an additional 90,000 HHP, or 600,000 HHP in the aggregate, once all units have been received.

The company described its finances in the filing as:

For the years ended December 31, 2016 and 2015, we generated net losses of approximately $(53.1) million and $(45.9) million, respectively, and Adjusted EBITDA of approximately $7.8 million and $60.1 million, respectively. Over these same years, approximately 94% and 90% of our revenues, respectively, were generated from our pressure pumping segment, which includes our hydraulic fracturing, cementing and acidizing services.

ProPetro plans to use the net proceeds from this offering to repay debt and fund the purchase of additional hydraulic fracturing units, and the remainder will be used for general corporate purposes. The company will not receive any proceeds from the sale of stock by selling shareholders.