ProPetro Q3 Earnings Call Highlights

Key Points

• Q3 financial results improved: Revenue rose 16% sequentially to $355 million, while net income reached $13 million and adjusted EBITDA increased 33% to $60 million. Higher completions utilization and PROPWR growth offset elevated costs from rebuilding frac capacity.
• PROPWR is expanding rapidly: The Targa agreement lifted contracted power capacity to roughly 510 megawatts, with deployments expected to reach 250–275 megawatts by year-end 2026 and more than 500 megawatts by early 2028. ProPetro is also pursuing several hundred megawatts of data-center opportunities.
• Frac capacity is effectively sold out, but spending remains heavy: ProPetro is operating 13 active fleets, with more than two-thirds of horsepower contracted, while seasonal weakness and rebuilding expenses may pressure near-term margins. Third-quarter capital expenditures were $171 million, and the company ended the period with $729 million in cash and $934 million in total liquidity.

ProPetro NYSE: PUMP reported higher third-quarter revenue, net income and adjusted EBITDA as increased completions activity and growth at its PROPWR power-generation business offset elevated costs tied to rebuilding frac capacity.

Total revenue rose 16% sequentially to $355 million in the third quarter of 2026. Net income was $13 million, or $0.09 per diluted share, compared with a net loss of $8 million, or $0.07 per diluted share, in the prior quarter. Adjusted EBITDA increased 33% sequentially to $60 million, equal to 17% of revenue.

Chief Financial Officer Caleb Weatherl said the improved results were driven primarily by higher utilization in the completions segment and incremental PROPWR deployments. Those gains were partly offset by costs associated with reactivating and supporting additional completions capacity. Adjusted EBITDA included about $16 million of lease expense related to the company’s electric fleets.

PROPWR expands contracted power base

PROPWR generated about $8 million in adjusted EBITDA during the third quarter, representing a meaningful sequential increase, Chief Executive Officer Sam Sledge said. The company expects to have approximately 250 megawatts to 275 megawatts deployed by the end of 2026 and more than 500 megawatts deployed by early 2028.

ProPetro said its recently announced agreement with Targa for about 230 megawatts raised its total contracted capacity to roughly 510 megawatts. Sledge said the award demonstrates demand for power across upstream oil and gas, industrial and midstream markets, in addition to data centers.

The company expects the majority of its assets to be deployed to data center projects over time. It said it is in advanced negotiations involving several hundred megawatts of potential data center capacity, though contract timelines have extended as counterparties negotiate long-term risk-sharing provisions, project scope and commercial terms.

Travis Simmering, president of PROPWR, said two data center opportunities are particularly active and represent several hundred megawatts. He said the company is pursuing a full turnkey operating model that includes generation assets and balance-of-plant equipment, rather than dry leasing equipment.

ProPetro said it is already operating at a hyperscaler data center site in the Midwest, largely using 2.6-megawatt reciprocating engine units. The company has secured 2.6 gigawatts of generation equipment, including more than 1 gigawatt of Caterpillar 10-megawatt units under its strategic framework agreement.

Management expects 2027 PROPWR growth to be weighted toward the second half of the year as larger infrastructure-scale projects are prepared and brought online. The company said its 10-megawatt equipment deliveries are expected to begin in the second half of 2028 and continue at an even pace through the framework agreement period.

Capital spending and liquidity

Capital expenditures incurred during the third quarter were $171 million, including about $43 million for completions and $128 million for PROPWR equipment orders. Capital expenditures paid were $123 million. Net cash provided by operating activities was $46 million, down from $66 million in the prior quarter, primarily because of working-capital headwinds.

ProPetro narrowed its 2026 capital-expenditure outlook for PROPWR to approximately $400 million to $430 million, while maintaining its estimate for total company capital expenditures of $525 million to $575 million. The completions business is expected to account for approximately $125 million to $145 million of that total.

The company maintained its estimated PROPWR capital cost of approximately $1.4 million to $1.5 million per megawatt, including balance-of-plant costs. Management continues to target payback periods of four to six years, with upstream and midstream projects generally expected to be closer to four years and larger data center projects closer to the higher end of the range.

As of Sept. 30, ProPetro had $729 million in cash and cash equivalents, including proceeds from its $690 million convertible senior notes offering. Total liquidity was $934 million, including $185 million of available capacity under its asset-backed lending facility and $20 million available under its Caterpillar equipment loan agreement. The company had $172 million of borrowings under its Caterpillar Financial Services financing agreement and no outstanding borrowings under its ABL facility.

Completions fleet effectively sold out

ProPetro ended the quarter with 13 active frac fleets after reactivating two fleets during 2026. Sledge said the newest fleet entered service earlier than anticipated in the third quarter and that the company is now essentially sold out of available frac capacity.

The ramp-up required the company to rehire field personnel, replenish inventories and spare parts, and prepare more pumps for deployment. Management said those rebuilding costs were higher than expected and pressured margins during the second and third quarters.

ProPetro expects to maintain about 13 active fleets in the fourth quarter. However, it expects a typical holiday-related seasonal slowdown to reduce utilization temporarily, while rebuilding expenses continue to weigh on margins. The company expects to begin optimizing those costs in 2027 as activity stabilizes, though management said the full benefit may take time.

Sledge said the company estimates that active Permian frac fleet count is currently in the mid-70s and believes years of attrition have reduced the available supply of high-quality horsepower. He said even a modest rise in drilling activity could fully tighten the market, while only a handful of additional fleets could potentially return without significant new capital investment.

More than two-thirds of ProPetro’s active horsepower is contracted, with most agreements scheduled to renew during the first half of 2027. Management said much of that equipment consists of next-generation, natural-gas-burning fleets, including dual-fuel, direct-drive gas and electric equipment, which has maintained stronger pricing than other fleet types.

The company said it has begun recontracting some electric FORCE fleet capacity and expects roughly half of that fleet to recontract during 2027. ProPetro expects three additional electric fleet buyouts in 2027, following an estimated $15 million to $20 million buyout cost for its first FORCE electric fleet. Weatherl said lease expense associated with those fleets should begin to roll off as buyouts are completed.

Management said it does not intend to add working fleet capacity beyond its current program or make capital investments other than replacement and refurbishment spending for its existing fleet.

About ProPetro (NYSE:PUMP)

ProPetro Holding Corp. is an oilfield services company that provides completion and production services to oil and natural gas exploration and production companies. Its primary offerings include hydraulic fracturing, well stimulation and wireline services used to prepare newly drilled wells for production and support ongoing well operations.

The company operates primarily in the Permian Basin, serving customers in the West Texas and southeastern New Mexico region. ProPetro's services are focused on unconventional shale and tight-rock wells, where specialized pumping, pressure-control and downhole technologies are used to improve hydrocarbon recovery.

ProPetro was founded in 2007 and is headquartered in Midland, Texas.

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