Service & Supply | Quarterly / Earnings Reports | Oilfield Services | First Quarter (1Q) Update | Financial Results | Capital Markets

ProPetro Holding Corp. First Quarter 2020 Results

Share Print Bookmark    |    Monday,June 01,2020

ProPetro Holding Corp. announced preliminary unaudited financial and operational results for the first quarter of 2020 and provided other updates.

Preliminary First Quarter 2020 and Recent Highlights

• Total revenue for the quarter was $395.1 million compared to $434.8 million for the fourth quarter of 2019.
• Net loss for the quarter was $7.8 million, or $0.08 per diluted share, versus net income of $22.7 million, or $0.22 per diluted share, for the fourth quarter of 2019.
• Adjusted EBITDA⁽¹⁾ for the quarter was $74.9 million compared to $110.3 million for the fourth quarter of 2019.
• Effective utilization for the first quarter was 18.6 fleets compared to 19.2 fleets for the fourth quarter of 2019.

Phillip Gobe, Chief Executive Officer, commented, “Our proven through-cycle business model and performance on location by our best-in-class operating team drove strong financial results for the first ten weeks of the first quarter. The unprecedented drop in crude oil prices during the second week of March resulted in an extremely swift curtailment of well completions activity in all U.S. basins. As activity declined, we acted quickly to reduce our costs while continuing to provide safe and efficient service to our customers. We believe our early year success is a positive indicator of our ability to execute in the face of these uncertain times.

“Unfortunately, deteriorating market conditions resulted in necessary reductions to our workforce, and we are grateful to all of our impacted team members for their hard work and dedication in serving our customers over the years. While we found it prudent to make these reductions, we have retained the capability to deliver efficient and safe services while protecting our ability to respond to a market that we expect to eventually improve.

“I would also like to thank our essential workers, medical professionals, and first responders for their tireless efforts in keeping us safe across the Permian Basin during these unprecedented times as our community bands together to navigate a global pandemic.”

Preliminary First Quarter 2020 Financial Summary

Revenue for the first quarter of 2020 was $395.1 million compared to revenue of $434.8 million for the fourth quarter of 2019. The decrease was primarily attributable to a changing job mix as well as decreased pricing for our services. At the end of the quarter there was also a negative effect to revenue due to the steep decline in well completions activity beginning in mid-March as a result of the collapse of global oil prices.

Cost of services, excluding depreciation and amortization of approximately $40.2 million, for the first quarter of 2020 decreased slightly to $300.8 million from $305.7 million during the fourth quarter of 2019. Contributing to the decrease was the reduction in frac activity as described above, partially offset by the delay in achieving cost savings from the Company’s reduction in workforce initiatives previously announced and implemented beginning in late March.

General and administrative expense was $24.9 million for the first quarter of 2020 compared to $31.1 million during the fourth quarter of 2019. General and administrative expense, exclusive of (a) $5.1 million of non-recurring items and (b) $4.3 million of provision for credit losses, was $15.5 million, or 3.9% of revenue, for the first quarter of 2020 compared to $18.8 million in the fourth quarter of 2019, or 4.3% of revenue.

Net loss for the first quarter of 2020 totaled $7.8 million, or $0.08 per diluted share, versus net income of $22.7 million, or $0.22 per diluted share, for the fourth quarter of 2019. Net income was negatively affected during the first quarter by goodwill and asset impairment expenses of $16.7 million.

Adjusted EBITDA decreased to $74.9 million for the first quarter of 2020 from $110.3 million for the fourth quarter of 2019.

Liquidity and Capital Spending

As of March 31, 2020, total cash was $143.7 million and total debt was $110.0 million. Total liquidity at the end of the first quarter of 2020 was $194.1 million including cash and $50.4 million of available capacity under the Company’s revolving credit facility.

As of May 29, 2020 total cash was $135.9 million and total debt was $70.0 million. Total liquidity as of May 29, 2020 was $159.7 including cash and $23.8 million of available capacity under ProPetro’s revolving credit facility. The Company’s borrowing capacity under its revolving credit facility (which is determined monthly based on 85% of eligible accounts receivables, less customary reserves) will be adversely impacted by the expected decline in the Company’s customers’ activity given current market conditions. ProPetro will continue to proactively manage its capital and liquidity needs.

Capital expenditures incurred during the first quarter of 2020 were $40.1 million, substantially all of which was maintenance spending (other than approximately $3.7 million related to DuraStim growth initiatives). The Company has minimal commitments for growth capital expenditures for the remainder of 2020 and expects to significantly reduce maintenance capital expenditures and field level consumable costs throughout the rest of the year. Based on current activity forecasts, full year 2020 capital expenditures are expected to be below $85 million and mostly comprised of maintenance spending.

The Company expects a significant portion of its second quarter revenue to consist of idle fees that are payable by Pioneer Natural Resources (“Pioneer”) as contemplated by the parties’ service agreement. These fees are designed to partially protect ProPetro in the event that fleets dedicated to Pioneer are idled.

DuraStim® Update

As oilfield activity rapidly contracted, management modified the deployment of the first DuraStim® fleet. Moving forward, the individual units will continue to be tested and developed by working alongside conventional equipment. This will allow the Company ample time to collect data in various operating conditions, both controlled environments and field trials, for the purpose of optimizing its DuraStim® technology initiative.

Outlook

Mr. Gobe concluded, “We were once again impressed by the performance and execution of our team throughout the first quarter despite the adversity brought on by the deteriorating commodity price environment. Consistent with other oilfield service providers, we have experienced further decreases in activity levels during the second quarter. Our current view is that onshore completion activity will remain at a reduced level in the second half of the year as the over-supply of crude oil is absorbed by increasing demand as economic activity recovers.

“We remain committed to our premier service quality and execution, which we believe positions us favorably in the Permian Basin, the premier resource play in North America. We believe our deep customer relationships will prove critical as we navigate through this challenging period, and we look forward to serving them for many years to come. In addition, I would like to thank our employees, supply chain partners and shareholders for their ongoing support.”