ProPetro Acquires Aqua Prop, an Innovative Wet Sand Solutions Provider

Rhea-AI Summary

ProPetro Holding Corp. (NYSE: PUMP) has announced the acquisition of Aqua Prop for $35.6 million in cash, net of working capital. Aqua Prop is known for providing cost-effective wet sand solutions. This acquisition aligns with ProPetro's strategy to innovate and integrate its operations, enhancing value for stakeholders. ProPetro will manage sand storage and handling onsite and leverage strategic agreements for logistics and preferred access to wet sand supply. The deal includes future earnout incentives and potential growth capital expenditure considerations to support both companies' growth targets.

Positive

• Acquisition of Aqua Prop for $35.6 million enhances ProPetro's integrated industrial solutions.
• ProPetro will benefit from owning and managing onsite sand storage and handling.
• Strategic agreements for logistics and preferred access to wet sand supply bolster operational efficiency.
• Future earnout incentives and potential growth capex considerations support long-term growth targets.

Negative

• The acquisition requires a significant initial cash outlay of $35.6 million.
• Dependence on strategic agreements may introduce risks in logistics and supply chain management.

Insights

Financial Analyst

ProPetro's acquisition of Aqua Prop for $35.6 million in cash marks a strategic effort to enhance its service offerings. This acquisition aligns with ProPetro's goal of integrating operations for cost efficiency. Financially, the deal introduces new assets that provide synergy, notably in sand storage and handling, which can reduce overall operational costs. Potential short-term benefits include improved service integration, while long-term advantages hinge on effective integration and strategic execution. Investors should note that future earnout incentives and growth capex considerations play a important role in realizing the full value of this acquisition. This acquisition follows a trend in the sector where companies aim to consolidate and expand capabilities to remain competitive, which is generally viewed positively by the market.

Market Research Analyst

The acquisition of Aqua Prop positions ProPetro to provide more comprehensive services, especially important in the Permian Basin, a key region for the company. By offering onsite sand storage and handling, the company can attract more clients seeking streamlined operations. Aqua Prop's innovative wet sand solutions could help ProPetro differentiate itself in a crowded market. This move is part of a broader industry trend where companies seek to vertically integrate to offer a full spectrum of services, which can be a significant value proposition for clients. However, successful integration and execution are critical for the anticipated benefits to materialize fully.

MIDLAND, Texas--(BUSINESS WIRE)-- ProPetro Holding Corp. (“ProPetro” or the “Company”) (NYSE: PUMP) today announced the acquisition of Aqua Prop LLC ("Aqua Prop"), an innovative provider of cost-effective wet sand solutions. The all cash acquisition, initially valued at $35.6 million, net of working capital, advances ProPetro's commitment to delivering more integrated and industrial solutions while adding value for all stakeholders.

(Graphic: Business Wire)

Sam Sledge, CEO of ProPetro, stated, "The acquisition of Aqua Prop aligns seamlessly with our strategy of pursuing more innovation and integration for our disciplined operating model and high-grading our capital allocations. This acquisition, while highly complementary to our core business, is also aimed squarely at industrializing our operations with the ultimate goal of bringing more value to our customers and ProPetro. As part of the transaction, ProPetro will own and provide onsite sand storage and handling, while also leveraging strategic agreements for both logistics and preferred access to wet sand supply. ProPetro is continuing to build on our reputation of delivering best-in-class integrated completions services desired by operators in the Permian Basin. We look forward to working closely with the Aqua Prop team to achieve our shared goals and drive further success for our company."

The deal structure includes cash consideration, future earnout incentives, and potential growth capex considerations tailored to support and align with Aqua Prop and ProPetro growth targets and objectives, a construct designed to maximize value creation for ProPetro shareholders.

About Aqua Prop

Aqua Prop LLC is a leading provider of wet sand solutions, catering to the needs of the oil and natural gas industry. With their specialized offering and expertise, Aqua Prop offers cost-effective and efficient solutions that provide a compelling value proposition and contribute to the success of hydraulic fracturing operations.

About ProPetro

ProPetro Holding Corp. is a Midland, Texas-based provider of premium integrated completion services to leading upstream oil and gas companies engaged in the exploration and production of North American unconventional oil and natural gas resources. We help bring reliable energy to the world. For more information visit www.propetroservices.com.

Advisors

PPHB of Houston, Texas, served as financial advisor to ProPetro, and Vinson & Elkins LLP served as legal counsel. Locke Lord LLP served as legal advisor to Aqua Prop.

Forward-Looking Statements

Except for historical information contained herein, the statements and information in this news release are forward-looking statements that are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words “may,” “could,” “plan,” “project,” “budget,” “predict,” “pursue,” “target,” “seek,” “objective,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “will,” “should,” "designed" and other expressions that are predictions of, or indicate, future events and trends or that do not relate to historical matters generally identify forward-looking statements. Our forward-looking statements include, among other matters, statements about the anticipated benefits of the acquisition, our business strategy, projected financial results and future financial performance. A forward-looking statement may include a statement of the assumptions or bases underlying the forward-looking statement. We believe that we have chosen these assumptions or bases in good faith and that they are reasonable.

Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements are subject to a number of risks and uncertainties that may cause actual events and results to differ materially from the forward-looking statements. Such risks and uncertainties include the volatility of oil prices, the global macroeconomic uncertainty related to the conflict in the Israel-Gaza region and continued hostilities in the Middle East, including rising tensions with Iran, and the Russia-Ukraine war, general economic conditions, including the impact of continued inflation, central bank policy actions, bank failures, and the risk of a global recession, and other factors described in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, particularly the “Risk Factors” sections of such filings, and other filings with the Securities and Exchange Commission (the “SEC”). In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse impact on it. Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements and are urged to carefully review and consider the various disclosures made in the Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other filings made with the SEC from time to time that disclose risks and uncertainties that may affect the Company’s business. The forward-looking statements in this news release are made as of the date of this news release. ProPetro does not undertake, and expressly disclaims, any duty to publicly update these statements, whether as a result of new information, new developments or otherwise, except to the extent that disclosure is required by law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240603121051/en/

David Schorlemer

Chief Financial Officer

david.schorlemer@propetroservices.com

432-227-0864

Matt Augustine

Director, Corporate Development and Investor Relations

matt.augustine@propetroservices.com

432-219-7620

Source: ProPetro Holding Corp.

FAQ

What company did ProPetro acquire?

ProPetro acquired Aqua Prop

What is the value of the Aqua Prop acquisition?

The acquisition of Aqua Prop is valued at $35.6 million, net of working capital.

How does the Aqua Prop acquisition align with ProPetro's strategy?

The acquisition aligns with ProPetro's strategy to innovate and integrate its operations, aiming to enhance value for stakeholders.

What are the benefits of ProPetro acquiring Aqua Prop?

The benefits include enhanced integrated solutions, onsite sand storage management, strategic logistics agreements, and preferred access to wet sand supply.

What potential risks are associated with ProPetro's acquisition of Aqua Prop?

Potential risks include the significant initial cash outlay and dependence on strategic agreements for logistics and supply chain management.