ProPetro’s Perspective in Q1: KEY Takeaways

ProPetro can further lower its frac spread count in 2025, although the share of electric frac deployment will rise. Its foray into the natural gas-fueled power generation equipment market will likely pay rich dividends for the company. In Q1, revenues from hydraulic fracturing improved, but the company’s cash flows fell.

[ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19,20,21,22,23,24,25" ihc_mb_template="1"]

Frac'ing Update

In our short article , we discussed our initial thoughts about ProPetro Holding's (PUMP) Q1 2025 performance a few days ago. This article will dive deeper into the industry and its current outlook. In Q1, PUMP kept its fracturing frac spreads at 14-15 and plans to reduce them to 13-14 frac spreads in Q2 2025. The fall in crude oil prices, higher tariffs, increased OPEC production, and operators’ reduced capex can trigger a decline in active frac spreads in 2025.

Currently, it operates four electric fracs (FORCE) under long-term contracts. ProPetro plans to deploy the fifth e-frac spread in 2025 and may add a few more in the following years. Approximately 75% of its frac spreads are Tier IV DGB dual-fuel and electric. This marks the company’s transition to electric equipment, which is experiencing increasing demand despite overall pressure on demand.

While the e-frac market is growing fast, PUMP’s management sees a trend towards maturity. This implies that the electric frac market may grow at a decelerated rate. So, its transition to e-spreads may grow at a rate of “one to two a year” in the long run.

PROPWR Prospect

Earlier in the year, PUMP received an initial order of 140 megawatts of natural gas-fueled power generation equipment. Later, it placed another order of 80 MW of power. The equipment type is split between turbines and natural gas reciprocating generators. So, the full delivery of all PROPWR equipment totals 220 megawatts by mid-year 2026. It has already secured a letter of intent for 75 megawatts of capacity. Although PROPWR is focused on Permian operations, it may span across different geographies and industries and serve other areas and industries.

Q1 Results And Financial Metrics

As we discussed in the Q1 earnings article, quarter-over-quarter, PUMP's revenues from the Hydraulic Fracturing segment increased by 14% in Q1 2025. Its revenues from the Wireline segment increased by 18%. However, it recorded a $10 million loss related to Tier II hydraulic fracturing equipment sales.

PUMP's cash flow from operations decreased (by 27%) in Q1 2025 compared to FY2024. The company's debt-to-equity ratio improved marginally. It lowered its FY2025 capex guidance by 9% as it lowered the completion capex target following cost optimization initiatives.

Relative Valuation

PUMP is currently trading at an EV/EBITDA multiple of 3.1x. Based on sell-side analysts' EBITDA estimates, the forward EV/EBITDA multiple is 3.2x. The current multiple is below its five-year average EV/EBITDA of 4.8x.

PUMP's forward EV/EBITDA multiple expansion versus the current EV/EBITDA is steeper than its because its EBITDA is expected to decrease more sharply than its peers over the next year. This typically results in a higher EV/EBITDA multiple than its peers. The stock's EV/EBITDA multiple is lower than its peers' (PTEN, LBRT, and NBR) average. So, the stock is undervalued compared to its peers.

Final Commentary

After Q2, PUMP’s management expects adverse developments in the industry to weigh in on its frac operations, forcing it to reduce the frac count. Nonetheless, the demand for electric frac will go unabated as it will likely deploy the fifth FORCE electric spread in the next few months. PROPWR – its mobile power solutions subsidiary can end up supplying a total of 220 megawatts by mid-year 2026. It can also diversify beyond Permian and into other industries following an increased demand from the data centers.

PUMP's cash flow from operations decreased in Q1. Its FY2025 capex guidance is lower than FY2024 due to the cost optimization initiatives. The stock is undervalued compared to its peers.

Premium/Monthly ------------------------------------------------------------------------------------------------------------- [ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19,20,21,22,23,24,25" ihc_mb_template="1"] [/ihc-hide-content] [ump-visitor ] To unlock the content you need a Premium or Enterprise Account! [/ump-visitor]