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ProPetro (PUMP) Down 7.4% on Wider-Than-Expected Q3 Loss

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Shares of ProPetro Holding Corp. (PUMP - Free Report) have lost 7.4% since third-quarter 2020 earnings announcement on November 2. Apart from lower-than-expected results on the top and the bottom line, investors were unnerved by the company’s assertion of sequentially flat fleet utilization in the fourth quarter.

ProPetro reported third-quarter adjusted net loss of 29 cents per share, wider than the Zacks Consensus Estimate of 25 cents per share. The bottom line also compared unfavorably with the year-ago quarter’s earnings of 33 cents. The underperformance reflects lower year-over-year activity levels and pricing.

Meanwhile, quarterly revenues of $133.71 million missed the Zacks Consensus Estimate of $137 and declined more than 75% from the year-ago quarter’s levels.

The oilfield service provider’s pressure pumping revenues of $131.3 million missed the Zacks Consensus mark of $135 million and declined 80% year over year. Adjusted EBITDA in the third quarter amounted to $17.4 million, down from $131.9 million in the year-ago quarter.

On a positive note, ProPetro’s adjusted EBITDA of $26.7 million for its Pressure Pumping unit in the September-end quarter beat the Zacks Consensus Estimate of $17.6 million. Investors should know that pressure pumping is the main contributor to the company’s earnings. The upside was the outcome of the company’s effective performance and productive cost management.

Pressure Pumping Division

The Midland, TX-based company provides hydraulic fracturing, cementing and acidizing functions through the Pressure Pumping segment. The business contributed 98.2% to the company's total revenues in the quarter under review. Service revenues plunged 75.3% from the prior-year quarter’s levels to $133.7 million due to significant fall in the number of hydraulic fracturing fleets.

ProPetro Holding Corp. Price, Consensus and EPS Surprise

Costs & Expenses

ProPetro reported service cost of $99.6 million in the third quarter, down 74.9% from the year-ago quarter’s levels. General and administrative expenses came in at $21.8 million, down 20.8% from $27.6 million in the prior-year quarter.

Balance Sheet & Capital Expenditures

As of Sep 30, ProPetro had cash and cash equivalents worth $54.3 million and did not incur any long-term debt. ProPetro also has $31.6 million under its revolving credit facility. Capital expenditures for the September-end quarter summed $7.9 million, down 90.9% from the level in third-quarter 2019.

Guidance

ProPetro’s outlook continues to remain ambiguous for the remaining year as the North American oil field is yet to revitalize its activities to produce a competitive return.

However, the company is optimistic about sustaining strong customer relationships, a debt-free balance sheet and deep bench of committed talent.

Zacks Rank & Performance of Other Energy Players

ProPetro currently carries a Zacks Rank #4 (Sell).

Some better-ranked players in the energy space include DCP Midstream Partners LP (DCP - Free Report) , sporting a Zacks Rank #1 (Strong Buy), Matador Resources Company (MTDR - Free Report) and Equinor ASA (EQNR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

DCP Midstream is expected to see stellar earnings growth of 169.1% in 2021, while Equinor will likely register bottom-line improvement of 103.8% during the same period.

In the past six months, the Zacks Consensus Estimate for Matador Resources’2020 earnings has been raised by 400%.

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