Financial Statements and Supplementary Data.
+Added: FINANCIAL STATEMENTS
+Added: Reports of Independent Registered Public Accounting Firm (PCAOB ID :
+Added: Report of Independent Registered Public Accounting Firm (PCAOB ID :
+Added: Consolidated Balance Sheet s as of December 31, 2024 and 2023
+Added: Consolidated Statement s of Operations for the years ended December 31, 2024, 2023 and 2022
+Added: Consolidated Statement s of Changes in Shareholders’ Equity for th e years ended December 31, 2024, 2023 and 2022
+Added: Consolidated Statement s of Cash Flows for the years ended December 31, 2024, 2023 and 2022
+Added: Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of ProPetro Holding Corp.
−Removed: and Subsidiaries:
Opinion on the Financial Statements
−Removed: We have audited the accompanying consolidated balance sheet of ProPetro Holding Corp.
−Removed: and Subsidiaries (the Company) as of December 31, 2023 , the related consolidated statements of operations, shareholders’ equity and cash flows, for the year then ended, and the related notes (collectively, the financial statements).
−Removed: In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 , and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
−Removed: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated March 13, 2024, expressed an opinion that the Company had not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
−Removed: As discussed in Note 11 to the financial statements, the Company changed the composition of its segment information in 2023.
−Removed: We have audited the adjustments necessary to restate the 2022 and 2021 segment information as provided in Note 11.
+Added: We have audited the accompanying consolidated balance sheets of ProPetro Holding Corp.
+Added: and its subsidiaries (the Company) as of December 31, 2024 and 2023, the related consolidated statements of operations, shareholders' equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes to the consolidated financial statements (collectively, the financial statements).
+Added: In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 20, 2025, expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.
+Added: As discussed in Notes 2 and 11 to the financial statements, the Company adopted ASU 2023-07, Segment Reporting (Topic 280) as of December 31, 2024, and changed the composition of its segment information in 2023.
+Added: We also have audited the adjustments necessary to restate the 2022 segment information and to reflect the adoption of ASU 2023-07, Segment Reporting (Topic 280) to the 2022 segment information, as provided in Note 11.
In our opinion, such adjustments are appropriate and have been properly applied.
−Removed: We were not engaged to audit, review or apply any procedures to the 2022 or 2021 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 and 2021 financial statements taken as a whole.
+Added: We were not engaged to audit, review or apply any procedures to the 2022 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 financial statements taken as a whole.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s financial statements based on our audit.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit in accordance with the standards of the PCAOB.
+Added: We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: Critical Audit Matter
−Removed: The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:
−Removed: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.
−Removed: Acquisition — Par Five Energy Services, LLC — Fair value of assets acquired, and liabilities assumed — Refer to Notes 1 and 4 to the financial statements
−Removed: Critical Audit Matter Description
−Removed: The Company completed the acquisition of Par Five Energy Services, LLC (“Par Five”) for a total purchase consideration of $25.4 million on December 1, 2023 (the “Acquisition”).
−Removed: The Company accounted for the Acquisition using the acquisition method of accounting for business combinations.
−Removed: Accordingly, the purchase price was allocated to the assets acquired and
−Removed: liabilities assumed based on their respective estimated fair values.
−Removed: The largest asset classes acquired include property and equipment consisting mainly of oilfield cementing pumps, vehicles, trailer, tanks, and support equipment.
−Removed: The method for determining fair value varied depending on the type of the asset or liability and involved management making significant estimates related to assumptions such as replacement cost, normal useful life and economic obsolescence.
−Removed: We identified the valuation of property and equipment arising out of the Acquisition as a critical audit matter because of the estimates and assumptions management makes to determine the fair value of these assets.
−Removed: This required a high degree of auditor judgement and an increased extent of effort, including the need to involve our internal valuation specialists, when performing audit procedures to evaluate the reasonableness of management’s assumptions such as replacement cost, normal useful life and economic obsolescence.
−Removed: How the Critical Audit Matter Was Addressed in the Audit
−Removed: Our audit procedures related to the fair value of property and equipment acquired as part of the Acquisition included the following, among others:
−Removed: • We obtained an understanding of the relevant controls related to the recording of assets acquired and liabilities assumed in a business combination and tested such controls for design and operating effectiveness.
−Removed: • With the assistance of our internal valuation specialists, we evaluated the reasonableness of the valuation methodology and significant assumptions including estimates of trend factor calculation, replacement cost, normal useful life, and economic obsolescence by (1) evaluating the source information and assumptions used by management, (2) testing the mathematical accuracy of the calculation, and (3) comparing our estimates to those used by management.
+Added: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audits provide a reasonable basis for our opinion.
+Added: Critical Audit Matters
+Added: The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:
+Added: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: Business Combination—Aqua Prop, LLC
+Added: As discussed in Note 4 of the consolidated financial statements, the Company completed the acquisition of all of the outstanding equity interests in Aqua Prop LLC (AquaProp) on May 31, 2024, for total consideration transferred of $35.8 million, which included contingent consideration with an acquisition date fair value of $10.9 million.
+Added: The Company accounted for this transaction under the acquisition method of accounting for business combinations whereby the fair value of the consideration transferred was allocated to the assets acquired, including a customer relationship intangible asset of $18.6 million, and liabilities assumed based upon their acquisition date fair values.
+Added: Management estimated the fair value of the contingent consideration by applying a probability-weighted expected return method for the different scenarios that may occur based upon the amount of additional equipment delivered by the seller, at the request of the Company, and the amount of wet sand expected to be delivered by such equipment within a 30-month period.
+Added: Management estimated the fair value of the customer relationship intangible asset using a discounted cash flow method whereby forecasted cash flows expected to be derived from the intangible asset over the economic life of the asset, adjusted for expected attrition, are discounted to present value.
+Added: We identified the valuation of the customer relationship intangible asset and the contingent consideration liability at the AquaProp acquisition date as a critical audit matter because of the significant assumptions management used in estimating the fair values, including forecasted cash flows and the selection of a discount rate for the customer relationship intangible asset and forecasted tonnage of wet sand expected to be delivered for the contingent consideration.
+Added: Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of valuation specialists, due to the impact these assumptions could have on the accounting estimates.
+Added: Our audit procedures related to the valuation of the customer relationship intangible asset and the contingent consideration liability included the following, among others:
+Added: • We obtained an understanding of the relevant controls related to management’s business combination fair value estimates and tested such controls for design and operating effectiveness, including controls over management’s review of significant assumptions used in the fair value estimates.
+Added: • We read the purchase and sale agreement to understand and evaluate the terms of the acquisition.
+Added: • We tested the reasonableness of management’s forecasts of cash flows in the valuation of the customer relationship intangible asset by comparing them to historical results and evaluating publicly available industry information.
+Added: • We tested the reasonableness of management’s forecasts of tonnage of wet sand to be delivered by comparing the estimated capacity of each piece of equipment to in-process contracts and considering the impact of the estimated timing of the delivery to the estimate of fair value.
+Added: • We utilized our valuation specialists to assist in the following procedures, among others:
+Added: ◦ Evaluating the appropriateness of the valuation models used by management to estimate the fair values of the customer relationship intangible asset and contingent consideration and testing their mathematical accuracy.
+Added: ◦ Evaluating the appropriateness of the methodology used by management to develop the attrition rate for the customer relationship.
+Added: ◦ Comparing the source information underlying the determination of the discount rates to publicly available market data and verifying the accuracy of the calculations.
+Added: Impairment of Long-lived Assets—Fair Value of Conventional Tier II Diesel-only Hydraulic Fracturing Pumping Units and Associated Conventional Assets
+Added: As discussed in Notes 2 and 5 to the consolidated financial statements, at September 30, 2024, the Company performed a recoverability assessment on the long-lived assets in its conventional Tier II diesel-only hydraulic fracturing pumping units and associated conventional assets asset group (the “Tier II Units”).
+Added: In performing the recoverability assessment, the Company first compared the carrying value of the asset group to the estimated undiscounted cash flows to be generated over the remaining useful life of the asset group’s primary asset.
+Added: Because the carrying value of the asset group exceeded the estimated undiscounted cash flows, the Company then estimated the fair value of the asset group, utilizing both a market approach and a cost approach, and recorded an impairment charge of $188.6 million.
+Added: We identified management’s estimated fair value of the Tier II Units as a critical audit matter because of the significant assumptions management used in estimating the fair value of the assets, including the selection of the valuation methods used to estimate fair value, the determination of the highest and best use of the assets, and consideration of the appropriateness of market data, among others.
+Added: Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of our valuation specialists, due to the impact these assumptions could have on the accounting estimate.
+Added: Our audit procedures related to the Company’s estimate of the fair value of the Tier II Units included the following, among others:
+Added: • We obtained an understanding of the relevant controls related to management’s estimate of fair value of the Tier II Units and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions used in estimating the fair value of the underlying assets.
+Added: • We tested the completeness and accuracy of the Tier II Units by agreeing the carrying values and other relevant information to the underlying support.
+Added: • We utilized our valuation specialists to assist in the following procedures, among others:
+Added: ◦ Evaluating the appropriateness of the valuation models used by management to estimate the fair value of the Tier II Units and testing their mathematical accuracy.
+Added: ◦ Evaluating management’s determination of the highest and best use of the Tier II Units.
+Added: ◦ Corroborating managements estimates of fair value by comparing such estimates to publicly available market data.
+Added: Goodwill Impairment Testing—Wireline Reporting Unit
+Added: As discussed in Notes 2 and 5 to the consolidated financial statements, management tests the Company’s goodwill for impairment, at the reporting unit level, at December 31 of each fiscal year, or more frequently if events or changes in circumstances indicate the goodwill might be impaired.
+Added: To test goodwill for impairment, management compares the estimated fair value of the reporting unit to the carrying amount, including the recorded goodwill.
+Added: An impairment is recorded when the carrying value of the reporting unit exceeds its estimated fair value.
+Added: The Company's estimated reporting unit fair value is based on a combination of income and market approaches.
+Added: The income approach involves the use of a discounted cash flow method with the cash flow projections discounted at an appropriate discount rate.
+Added: The market approach involves the use of comparable public companies’ market multiples in estimating the fair value.
+Added: During the year ended December 31, 2024, the Company recorded a goodwill impairment charge of $23.6 million in its Wireline reporting unit, which represented a full impairment of the goodwill in that reporting unit.
+Added: We identified the valuation of the Wireline reporting unit as a critical audit matter because of the significant assumptions management used in estimating the fair value of the reporting unit, including revenue growth rates and margin percentages used in the projected cash flows, the determination of the discount rate applicable to the reporting unit, and the identification of comparable guideline public companies and market multiples.
+Added: Auditing management’s assumptions involved a high degree of auditor judgment and an increase in audit effort, including the use of valuation specialists, due to the impact these assumptions could have on the estimate of fair value.
+Added: Our audit procedures related to the estimated fair value of the Wireline reporting unit included the following, among others:
+Added: • We obtained an understanding of the relevant controls related to management’s impairment assessment and tested such controls for design and operating effectiveness, including controls over management’s review of the significant assumptions utilized in the fair value measurement.
+Added: • We tested the reasonableness of management’s forecasts of cash flows, including revenue and margins, by comparing them to historical results and evaluating publicly available industry information.
+Added: • We tested the underlying data used by management in the development of the forecasts of cash flows for accuracy and completeness by agreeing it to source data.
+Added: • We utilized our valuation specialists to assist in the following procedures, among others:
+Added: ◦ Evaluating the appropriateness of the Company's valuation methodology and testing the mathematical accuracy.
+Added: ◦ Testing the reasonableness of the discount rate using in the income approach by comparing the inputs used by management to publicly available market data.
+Added: ◦ Evaluating the comparability of the guideline public companies identified by management based upon publicly available market data.
+Added: ◦ Corroborating the market multiples selected by the Company in the market approach by comparing them publicly available market data.
/s/ RSM US LLP
1 unchanged sentence
Houston, Texas
−Removed: March 13, 2024
+Added: February 20, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of ProPetro Holding Corp.
−Removed: and Subsidiaries:
Opinion on Internal Control over Financial Reporting
−Removed: We have audited ProPetro Holding Corp and Subsidiaries (the Company’s) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
−Removed: In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
−Removed: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company as of and for the year ended December 31, 2023 and our report dated March 13, 2024 expressed an unqualified opinion on those consolidated financial statements.
−Removed: A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
−Removed: The following material weakness has been identified and included in management’s assessment.
−Removed: The Company did not maintain adequate segregation of duties or sufficient compensating management review controls to effectively mitigate an inadequate system access control configuration in its accounting system in which manual journal entry approvers can modify the entries before posting.
−Removed: This deficiency is solely related to manual journal entries and has no impact on system-generated journal entries flowing through its accounting system and other feeder systems.
−Removed: This issue impacts all manual journal entries impacting all affected transaction cycles.
−Removed: Due to this control deficiency, other manual-dependent controls were deemed ineffective.
−Removed: This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2023 consolidated financial statements, and this report does not affect our report dated March 13, 2024, on those consolidated financial statements.
+Added: We have audited ProPetro Holding Corp.'s (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
+Added: In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
+Added: We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements of the Company and our report dated February 20, 2025 expressed an unqualified opinion.
+Added: As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Aqua Prop, LLC from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a purchase business combination in the second quarter of 2024.
+Added: We have also excluded Aqua Prop, LLC from our audit of internal control over financial reporting.
+Added: Aqua Prop, LLC is a wholly owned subsidiary whose total assets and revenue represent approximately 4.9% and 3.1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.
Basis for Opinion
10 unchanged sentences
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that:
−Removed: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
−Removed: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the
+Added: A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
+Added: (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
3 unchanged sentences
Houston, Texas
−Removed: March 13, 2024
+Added: February 20, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3 unchanged sentences
Opinion on the Financial Statements
−Removed: We have audited, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments discussed in Note 11 to the consolidated financial statements, the consolidated balance sheet of ProPetro Holding Corp.
−Removed: and Subsidiaries (the "Company") as of December 31, 2022, the related consolidated statements of operations, shareholders' equity, and cash flows, for each of the two years in the period ended December 31, 2022, and the related notes (collectively, referred to as, the "financial statements") (the 2022 and 2021 financial statements before the effects of the retrospective adjustments discussed in Note 11 to the financial statements are not presented herein).
−Removed: In our opinion, the 2022 and 2021 financial statements, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments discussed in Note 11 to the financial statements, present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
−Removed: We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the disclosures for a change in the composition of reportable segments discussed in Note 11 to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.
+Added: We have audited, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU No.
+Added: 2023-07, Segment Reporting , discussed in Note 11 to the consolidated financial statements, the consolidated statements of operations, shareholders' equity, and cash flows of ProPetro Holding Corp.
+Added: and Subsidiaries (the “Company”), for the year ended December 31, 2022, and the related notes (collectively, referred to as, the “financial statements”) (the 2022 financial statements before the effects of the retrospective adjustments discussed in Note 11 to the financial statements are not presented herein).
+Added: In our opinion, the 2022 financial statements, before the effects of the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU No.
+Added: 2023-07, Segment Reporting , discussed in Note 11 to the financial statements, present fairly, in all material respects, the results of the Company’s operations and cash flows for the year ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.
+Added: We were not engaged to audit, review, or apply any procedures to the retrospective adjustments to the disclosures for a change in the composition of reportable segments and the adoption of ASU No.
+Added: 2023-07, Segment Reporting discussed in Note 11 to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.
Those retrospective adjustments were audited by other auditors.
−Removed: Basis of Opinion
+Added: Basis for Opinion
These financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company's financial statements based on our audits.
+Added: Our responsibility is to express an opinion on the Company's financial statements based on our audit.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audits in accordance with the standards of the PCAOB.
+Added: We conducted our audit in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
+Added: Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
−Removed: Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
−Removed: We believe that our audits provide a reasonable basis for our opinion.
+Added: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
+Added: We believe that our audit provided a reasonable basis for our opinion.
/s/ DELOITTE & TOUCHE LLP
8 unchanged sentences
CURRENT ASSETS:
−Removed: Cash, cash equivalents and restricted cash $ 33,354 $ 88,862
+Added: Cash and cash equivalents $ 50,443 $ 33,354
Accounts receivable - net of allowance for credit losses of $ 0 and $ 236 , respectively
195,994 237,012
+Added: Inventories 16,162 17,705
Prepaid expenses 17,719 14,640
17 unchanged sentences
Accounts payable $ 92,963 $ 161,441
−Removed: $ 161,441 $ 234,299
Accrued and other current liabilities 70,923 75,616
−Removed: 75,616 49,027
Operating lease liabilities 39,063 17,029
1 unchanged sentence
Total current liabilities 222,266 271,149
−Removed: 271,149 284,180
DEFERRED INCOME TAXES 59,770 93,105
−Removed: 93,105 65,265
LONG-TERM DEBT 45,000 45,000
−Removed: 45,000 30,000
NONCURRENT OPERATING LEASE LIABILITIES
+Added: 58,849 38,600
NONCURRENT FINANCE LEASE LIABILITIES
+Added: 13,187 30,886
OTHER LONG-TERM LIABILITIES
6 unchanged sentences
Additional paid-in capital 884,995 929,249
−Removed: 929,249 970,519
Retained earnings (accumulated deficit)
14 unchanged sentences
Cost of services (exclusive of depreciation and amortization) 1,065,514 1,131,801 882,820
−Removed: 1,131,801 882,820 662,266
General and administrative expenses (inclusive of stock‑based compensation) 114,323 114,354 111,760
Depreciation and amortization 211,733 180,886 128,108
−Removed: 180,886 128,108 133,377
−Removed: Impairment expense
−Removed: Loss on disposal of assets
+Added: Property and equipment impairment expense 188,601 — 57,454
+Added: Goodwill impairment expense 23,624 — —
+Added: Loss on disposal of assets and businesses, net
7,451 73,015 102,150
1 unchanged sentence
1,611,246 1,500,056 1,282,292
−Removed: OPERATING INCOME (LOSS)
+Added: OPERATING (LOSS) INCOME
( 166,960 ) 130,343 ( 2,591 )
1 unchanged sentence
Interest expense ( 7,815 ) ( 5,308 ) ( 1,605 )
−Removed: ( 5,308 ) ( 1,605 ) ( 614 )
−Removed: Other (expense) income
+Added: Other income (expense), net
5,531 ( 9,533 ) 11,582
−Removed: Total other (expense) income
+Added: Total other income (expense)
( 2,284 ) ( 14,841 ) 9,977
INCOME (LOSS) BEFORE INCOME TAXES ( 169,244 ) 115,502 7,386
−Removed: INCOME TAX (EXPENSE) BENEFIT
+Added: INCOME TAX BENEFIT (EXPENSE)
31,385 ( 29,868 ) ( 5,356 )
−Removed: NET INCOME (LOSS)
+Added: NET (LOSS) INCOME
$ ( 137,859 ) $ 85,634 $ 2,030
−Removed: NET INCOME (LOSS) PER COMMON SHARE:
+Added: NET (LOSS) INCOME PER COMMON SHARE:
$ ( 1.31 ) $ 0.76 $ 0.02
15 unchanged sentences
Tax withholdings paid for net settlement of equity awards — — ( 3,879 ) — ( 3,879 )
−Removed: Net loss — — — ( 54,185 ) ( 54,185 )
+Added: Net income — — — 2,030 2,030
BALANCE - December 31, 2022 114,515 $ 114 $ 970,519 $ ( 16,600 ) $ 954,033
2 unchanged sentences
Tax withholdings paid for net settlement of equity awards — — ( 3,543 ) — ( 3,543 )
+Added: Share repurchases ( 5,795 ) ( 6 ) ( 51,732 ) — ( 51,738 )
+Added: Excise tax on share repurchases — — ( 444 ) — ( 444 )
Net income — — — 85,634 85,634
5 unchanged sentences
Excise tax on share repurchases — — ( 531 ) — ( 531 )
−Removed: Net income — — — 85,634 85,634
+Added: Net loss — — — ( 137,859 ) ( 137,859 )
BALANCE - December 31, 2024 102,995 $ 103 $ 884,995 $ ( 68,825 ) $ 816,273
6 unchanged sentences
CASH FLOWS FROM OPERATING ACTIVITIES:
−Removed: Net income (loss) $ 85,634 $ 2,030 $ ( 54,185 )
−Removed: Adjustments to reconcile net income (loss) to net cash provided by operating activities:
+Added: Net (loss) income $ ( 137,859 ) $ 85,634 $ 2,030
+Added: Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization 211,733 180,886 128,108
−Removed: 180,886 128,108 133,377
−Removed: Impairment expense — 57,454 —
−Removed: Deferred income tax expense (benefit) 27,840 4,213 ( 14,288 )
+Added: Property and equipment impairment expense 188,601 — 57,454
+Added: Goodwill impairment expense 23,624 — —
+Added: Deferred income tax (benefit) expense ( 33,336 ) 27,840 4,213
Amortization of deferred debt issuance costs 438 359 785
Stock‑based compensation 17,288 14,450 21,881
−Removed: 14,450 21,881 11,519
Provision for credit losses — 34 202
−Removed: Loss on disposal of assets
−Removed: 73,015 102,150 64,646
−Removed: Unrealized loss on short-term investment 2,538 1,570 —
−Removed: Non-cash income from settlement with equipment manufacturer — ( 2,668 ) —
+Added: Loss on disposal of assets and businesses, net 7,451 73,015 102,150
+Added: Unrealized (gain) loss on short-term investment ( 105 ) 2,538 1,570
+Added: Business acquisition contingent consideration adjustments ( 2,600 ) — —
+Added: Noncash income from settlement with equipment manufacturer — — ( 2,668 )
Changes in operating assets and liabilities:
Accounts receivable 51,498 ( 12,408 ) ( 66,900 )
−Removed: ( 12,408 ) ( 66,900 ) ( 43,742 )
Other current assets ( 2,301 ) ( 831 ) 354
−Removed: ( 831 ) 354 310
−Removed: ( 6,017 ) 124 ( 1,220 )
+Added: Inventories 1,543 ( 6,017 ) 124
Prepaid expenses 1,327 ( 6,143 ) 743
−Removed: ( 6,143 ) 743 4,463
Accounts payable ( 64,501 ) ( 11,429 ) 27,428
−Removed: ( 11,429 ) 27,428 51,764
Accrued and other current liabilities ( 10,506 ) 26,814 22,955
−Removed: Accrued interest
Net cash provided by operating activities
2 unchanged sentences
Capital expenditures ( 140,297 ) ( 370,869 ) ( 319,683 )
−Removed: ( 370,869 ) ( 319,683 ) ( 143,523 )
Business acquisitions, net of cash acquired ( 21,038 ) ( 22,215 ) ( 38,639 )
5 unchanged sentences
Proceeds from borrowings — 30,000 30,000
−Removed: 30,000 30,000 —
Repayments of borrowings — ( 15,000 ) —
−Removed: ( 15,000 ) — —
Payments of finance lease obligation ( 17,676 ) ( 4,663 ) —
Repayments of insurance financing ( 970 ) — —
−Removed: — — ( 5,473 )
Payment of debt issuance costs — ( 1,179 ) ( 824 )
−Removed: ( 1,179 ) ( 824 ) —
Proceeds from exercise of equity awards — — 963
1 unchanged sentence
Share repurchases ( 59,108 ) ( 51,738 ) —
−Removed: Net cash (used in) provided by financing activities
+Added: Payment of excise taxes on share repurchases ( 444 ) — —
+Added: Net cash used in financing activities
( 80,107 ) ( 46,123 ) 26,260
−Removed: NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 55,508 ) ( 23,056 ) 43,146
+Added: NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 17,089 ( 55,508 ) ( 23,056 )
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of year
18 unchanged sentences
ProPetro Holding Corp.
−Removed: ("Holding"), a Texas corporation was formed on April 14, 2007, and it is a holding company for its wholly owned subsidiaries ProPetro Services, Inc., a Texas corporation ("Services"), and Silvertip Completion Services Operating, LLC, a Delaware limited liability company ("Silvertip").
−Removed: Services and Silvertip together offer hydraulic fracturing, wireline, cementing and other complementary services to oil and gas producers, located primarily in Texas, New Mexico and Utah.
+Added: (“Holding”), a Texas corporation was formed on April 14, 2007, and it is a holding company for its wholly owned subsidiaries ProPetro Services, Inc., a Texas corporation (“Services”), Silvertip Completion Services Operating, LLC, a Delaware limited liability company (“Silvertip”), Aqua Prop, LLC, a Texas limited liability company (“AquaProp”) and ProPetro Energy Solutions, LLC, a Texas limited liability company (“PROPWR”) .
+Added: Services, Silvertip and AquaProp together offer hydraulic fracturing, wireline, cementing, wet sand solutions and other complementary services to oil and gas producers, located primarily in Texas and New Mexico.
+Added: PROPWR has not begun any revenue-generating activities yet and was formed to provide power generation services to oil and gas producers and non-oil and gas applications such as general industrial projects and data centers, located primarily in Texas and New Mexico and will do business as PROPWR.
Holding was converted and incorporated as a Delaware Corporation on March 8, 2017.
−Removed: On December 1, 2023, we consummated the purchase of the assets and operations of Par Five Energy Services LLC (“Par Five”), which provides cementing services in the Delaware Basin in exchange for $ 25.4 million of cash (the “Par Five Acquisition”) .
−Removed: Par Five’s business complements our existing cementing business and enables us to serve both the Midland and Delaware Basins of the Permian Basin.
+Added: Unless otherwise indicated, references in these notes to consolidated financial statements to “ProPetro Holding Corp.,” “the Company,” “we,” “our,” “us,” or like terms refer to Holding, Servi ces, Silvertip, AquaProp, and PROPWR.
+Added: On November 1, 2024, we sold our cementing business located in Vernal, Utah, to Big 4 Services LLC, a Wyoming limited liability company (“Big 4”), solely owned by a former employee as part of a strategic repositioning.
+Added: We received a promissory note for $ 13.0 million as consideration.
+Added: The note receivable is secured by substantially all assets of Big 4 and the former employee’s ownership interests in and distributions from Big 4.
+Added: The note receivable is to be paid to the Company in quarterly installments with interest of 10 % per annum from March 31, 2025 to December 31, 2029.
+Added: We recorded a gain on disposal of $ 8.2 million related to the sale of the business within loss on disposal of assets and business within our consolidated statement of operations for the year ended December 31, 2024.
+Added: The former employee was part of our cementing operations until November 1, 2024 and is no longer affiliated with the Company.
+Added: The Company does not expect to have any significant continuing involvement with Big 4 other than collection of the note receivable.
+Added: On May 31, 2024, we consummated the acquisition of all of the outstanding equity interests in AquaProp, which provides wet sand solutions for hydraulic fracturing sand requirements at oil well sites (the “AquaProp Acquisition”).
+Added: The cash consideration for the AquaProp Acquisition includes $ 13.7 million paid to the seller, $ 7.2 million paid to settle the seller’s outstanding debt, and $ 0.3 million paid for the seller’s transaction expenses .
+Added: As a result of the acquisition, we expanded our operations into the wet sand service business unit.
+Added: On April 22, 2024, we entered into a sub-agreement for hydraulic fracturing services with XTO Energy Inc.
+Added: ("XTO"), a wholly owned subsidiary of ExxonMobil, pursuant to which we will provide hydraulic fracturing, wireline and pumpdown services with two committed FORCE ® electric-powered hydraulic fracturing fleets with the option to add a third FORCE ® fleet (also with wireline and pumpdown services) for a period of three years or for contracted hours, whichever occurs last, with respect to each fleet, subject to certain termination and release rights.
+Added: On December 1, 2023, we consummated the purchase of the assets and operations of Par Five Energy Services LLC (“Par Five”), which provides cementing services in the Delaware Basin in exchange for $ 25.3 million of cash including deferred cash consideration of $ 3.1 million which is payable to Par Five or its beneficiary on June 1, 2025, with interest at 4.0 % per annum (the “Par Five Acquisition”) .
+Added: Par Five’s business complements our existing cementing business and enables us to serve both the Midland and Delaware sub-basins of the Permian Basin.
On November 1, 2022, we consummated the acquisition of all of the outstanding limited liability company interests of Silvertip, which provides wireline perforation and ancillary services solely in the Permian Basin in exchange for 10.1 million shares of our common stock valued at $ 106.7 million, $ 30.0 million of cash, the payoff of $ 7.2 million of assumed debt, and the payment of certain other closing and transaction costs (“the Silvertip Acquisition”).
−Removed: Unless otherwise indicated, references in these notes to consolidated financial statements to "ProPetro Holding Corp.," "the Company," "we," "our," "us" or like terms refer to Holding, Servi ces, and Silvertip.
On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer Natural Resources USA, Inc.
−Removed: (“Pioneer”) and Pioneer Pumping Services, LLC (“Pioneer Pumping Services”) in connection with our purchase of certain pressure pumping assets and real property (the “Pioneer Pressure Pumping Acquisition”) in exchange for 16.6 million shares of our common stock and $ 110.0 million in cash, and concurrently entered into a pressure pumping services agreement (the "Pioneer Services Agreement") with Pioneer.
−Removed: The pressure pumping assets acquired included hydraulic fracturing pumps of 510,000 hydraulic horsepower ("HHP"), four coiled tubing units and the associated equipment maintenance facility.
−Removed: On March 31, 2022, we entered into an amended and restated pressure pumping services agreement (the “A&R Pressure Pumping Services Agreement”) to replace the Pioneer Services Agreement that was entered into in connection with the Pioneer Pressure Pumping Acquisition.
−Removed: This agreement expired at the conclusion of its term and was replaced by the Fleet One Agreement and Fleet Two Agreement described below.
−Removed: On October 31, 2022, we entered into two pressure pumping services agreements (the “Fleet One Agreement” and the “Fleet Two Agreement”) with Pioneer, pursuant to which we provided hydraulic fracturing services with two committed fleets, subject to certain termination and release rights.
−Removed: The Fleet One Agreement was effective as of January 1, 2023 and was terminated on August 31, 2023.
−Removed: The Fleet Two Agreement was effective as of January 1, 2023 and was terminated on May 12, 2023.
−Removed: In October 2023, Pioneer entered into a merger agreement with Exxon Mobil Corporation.
+Added: (“Pioneer”) and Pioneer Pumping Services, LLC (“Pioneer Pumping Services”) (the “Pioneer Pressure Pumping Acquisition”).
+Added: In connection with the Pioneer Pressure Pumping Acquisition, Pioneer received 16.6 million shares of our common stock and $ 110.0 million in cash.
+Added: In May 2024, Pioneer merged with and into a wholly owned subsidiary of Exxon Mobil Corporation (“ExxonMobil”) after which ExxonMobil became the owner of these shares.
+Added: The Company currently provides pressure pumping, wireline and other services to ExxonMobil and previously provided such services to Pioneer.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently applied in the preparation of the accompanying consolidated financial statements are as follows:
−Removed: Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Holding and its wholly owned subsidiaries, Services and Silvertip.
+Added: Principles of Consolidation — The accompanying consolidated financial statements include the accounts of Holding and its wholly owned subsidiaries, Services, Silvertip, AquaProp, and PROPWR.
All intercompany accounts and transactions have been eliminated in consolidation.
1 unchanged sentence
Use of Estimates — Management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the reporting period.
−Removed: Such estimates include, but are not limited to, allowance for credit losses, useful lives for depreciation of property and equipment, estimates of fair value of property and equipment, estimates related to fair value of reporting units for purposes of assessing goodwill, intangible assets, discount rates underlying our lease right-of-use assets and
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SIGNIFICANT ACCOUNTING POLICIES (Continued)
−Removed: liabilities, estimates related to deferred tax assets and liabilities, including any related valuation allowances, and estimates of fair value of stock‑based compensation.
+Added: Such estimates include, but are not limited to, allowance for credit losses, useful lives for depreciation of property and equipment, estimates of fair value of property and equipment, estimates related to fair value of reporting units for purposes of assessing goodwill, intangible assets, discount rates underlying our lease right-of-use assets and liabilities, estimates related to deferred tax assets and liabilities, including any related valuation allowances, and estimates of fair value of stock‑based compensation.
Actual results could differ from those estimates.
7 unchanged sentences
We believe that recognizing revenue based on actual stages completed faithfully depicts how our hydraulic fracturing services are transferred to our customers over time.
−Removed: In addition, certain of our hydraulic fracturing equipment may be entitled to reservation fee charges if a customer were to reserve committed hydraulic fracturing equipment.
−Removed: The Company recognizes revenue related to reservation fee charges on a daily basis as the performance obligations are met.
Acidizing, which is part of our hydraulic fracturing operating segment, involves a well-stimulation technique where acid or similar chemicals are injected under pressure into formations to form or expand fissures.
2 unchanged sentences
We recognize acidizing revenue at a point-in-time, upon completion of the performance obligation.
+Added: Wet sand solutions, which is part of our hydraulic fracturing operating segment, involve providing onsite storage and handling of wet sand used in the completion phase of shale wellbores.
+Added: We recognize revenue from sale of wet sand, location services and transportation services over time using a progress output, unit-of-work performed method, which is based on the agreed fixed transaction price, fixed units per stage and actual stages completed.
Our cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole.
2 unchanged sentences
We recognize cementing revenue at a point-in-time, upon completion of the performance obligation.
−Removed: Wireline services (including pumpdown) are oil well completion techniques, which are part of the well completions services.
+Added: Wireline services (including pumpdown) are oil well completion techniques, which are part of the well completion services.
Our wireline services utilize equipment with a drum of wireline to deploy perforating guns in the well to perforate the casing, cement, and formation.
3 unchanged sentences
We recognize revenue over time using a progress output, unit-of-work performed method, which is based on the agreed fixed transaction price and actual stages completed.
−Removed: We believe that recognizing revenue based on actual stages completed faithfully depicts how our wireline services are transferred to our customers over time.
+Added: We believe that
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Added: recognizing revenue based on actual stages completed faithfully depicts how our wireline services are transferred to our customers over time.
In addition, certain of our wireline equipment is entitled to daily equipment charges while the equipment is on the customer’s locations.
5 unchanged sentences
Effective September 1, 2022, we shut down our coiled tubing operations, and disposed of all of our coiled tubing assets.
+Added: The Company assesses customers’ ability and intention to pay, which is based on a variety of factors including historical payment experience and financial condition.
+Added: Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days.
+Added: Business Combinations — Business combinations are accounted for under the acquisition method of accounting.
+Added: Under this method, the assets acquired and liabilities assumed are recognized at their respective fair values as of the date of acquisition.
+Added: The excess, if any, of the acquisition price over the fair values of the assets acquired and liabilities assumed is recorded as goodwill if the definition of a business is met.
+Added: For significant acquisitions, we utilize third-party appraisal firms to assist us in determining the fair values for certain assets acquired and liabilities assumed using discounted cash flows and other applicable valuation techniques.
+Added: We record any acquisition related costs as expenses when incurred.
+Added: Adjustments to the fair values of assets acquired and liabilities assumed are made until we obtain all relevant information regarding the facts and circumstances that existed as of the acquisition date (the “measurement period”), not to exceed one year from the date of the acquisition.
+Added: We recognize measurement period adjustments in the period in which we determine the amounts, including the effect on earnings of any amounts we would have recorded in previous periods if the accounting had been completed at the acquisition date.
+Added: The estimation of the fair values of assets and liabilities acquired in business combinations requires significant judgment.
+Added: Our fair value estimates require us to use significant observable and unobservable inputs.
+Added: The estimates of fair value are also subject to significant variability, are sensitive to changes in market conditions, and are reasonably likely to change in the future.
+Added: A significant change in the observable and unobservable inputs and determination of fair value of the assets and liabilities acquired could significantly impact our consolidated financial statements.
Cash and Cash Equivalents — All highly liquid investments with an original maturity of three months or less.
−Removed: Restricted Cash and Customer Cash Advances — Our restricted cash relates to cash received from a customer in connection with our contract with the customer to provide FORCE SM electric-powered hydraulic fracturing equipment and services.
−Removed: The restricted cash will be used to pay for contractually agreed upon expenditures.
−Removed: The cash advances from the customer will be credited towards the customer’s invoice as our revenue performance obligations are met over the contract period.
−Removed: Our restricted cash balances at December 31, 2023 and 2022 were $ 0 and $ 10.0 million , respectively.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SIGNIFICANT ACCOUNTING POLICIES (Continued)
−Removed: The cash advances received represent contract liabilities in connection with the performance of certain completion services.
−Removed: The cash advance (contract liability) balances, which are included in accrued and other current liabilities in our consolidated balance sheets, were $ 19.2 million and $ 10.0 million as of December 31, 2023 an d 2022, respectively.
−Removed: During 2023, we recognized revenue of $ 5.7 million from the cash advance amount outstanding at the beginning of the period.
−Removed: We had no cash advance amounts outstanding at the beginning of 2022, and we recognized no associated revenue during 2022.
+Added: Restricted Cash — Our restricted cash related to cash received from a customer in connection with our contract with the customer to provide FORCE ® electric-powered hydraulic fracturing equipment and services.
+Added: The restricted cash was used to pay for contractually agreed upon expenditures.
+Added: Our restricted cash balances at December 31, 2024 and 2023 were $ 0 and $ 0 , respectively.
Accounts Receivable — Accounts receivable are stated at the amount billed and billable to customers.
−Removed: At December 31, 2023 and 2022 accrued revenue (unbilled receivable) included as part of our accounts receivable was $ 55.4 million and $ 51.9 million, respectively.
+Added: At December 31, 2024, December 31, 2023 and January 1, 2023, amounts billed to customers (net of allowance for credit losses) included as part of our accounts receivable was $ 148.8 million , $ 181.6 million, and $ 164.0 million, respectively.
+Added: At December 31, 2024, December 31, 2023, and January 1, 2023, accrued revenue (unbilled receivable) included as part of our accounts receivable was $ 47.2 million, $ 55.4 million and $ 51.9 million, respectively.
At December 31, 2024, the transaction price allocated to the remaining performance obligation for our partially completed hydraulic fracturing and wireline operations was $ 38.7 million, which is expected to be completed and recognized within one month following the current period balance sheet date.
At December 31, 2023, the transaction price allocated to the remaining performance obligation for our then partially completed hydraulic fracturing and wireline operations was $ 33.8 million, which was recorded as part of revenues for the year ended December 31, 2024.
−Removed: As of December 31, 2023, the Company had $ 0.2 million allowance for credit losses.
+Added: As of December 31, 2024, the Company had no allowance for credit losses.
Our allowance for credit losses is based on the evaluation of both our historic collection experience and economic outlook for the oil and gas industry.
We evaluated the historic loss experience on our accounts receivable and also considered separately customers with receivable balances that may be negatively impacted by current or future economic developments and market conditions.
−Removed: While the Company has not experienced significant credit losses in the past and has not yet seen material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the impacts of depressed economic activities, including the potential impact of periodically adjusted borrowing base limits, level of hedged production, or unforeseen well shut-downs may affect the ability of its customers to timely pay receivables when due.
+Added: While the Company has not
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Added: experienced significant credit losses in the past and has not yet seen material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the impacts of depressed economic activities, including the potential impact of periodically adjusted borrowing base limits, level of hedged production, or unforeseen well shut-downs may affect the ability of its customers to timely pay receivables when due.
Accordingly, in future periods, the Company may revise its estimates of expected credit losses.
7 unchanged sentences
Balance - December 31, $ — $ 236 $ 419
+Added: Contract Assets and Liabilities — We do not have any significant contract asset balances other than amounts billed to customers and accrued revenue discussed in the Accounts Receivable section above.
+Added: Contract liabilities include cash advances from a customer in connection with our contract with the customer to provide FORCE ® electric-powered hydraulic fracturing equipment and services.
+Added: These cash advances from the customer will be credited towards the customer’s invoice as our revenue performance obligations are met over the contract period.
+Added: The cash advances received represent contract liabilities in connection with the performance of certain completion services.
+Added: The cash advance (contract liability) balances, which are included in accrued and other current liabilities in our consolidated balance sheets, were $ 11.8 million, $ 19.2 million, and $ 10.0 million at December 31, 2024, December 31, 2023, and January 1, 2023, respectively.
+Added: During the years ended December 31, 2024 an d 2023, we recognized revenue of $ 6.7 million, and $ 5.7 million, respectively, from the cash advance amount outstanding at the beginning of the period.
Inventories — Inventories, which consists only of raw materials and fluid ends, are stated at lower of average cost and net realizable value.
+Added: Note Receivable — Note receivable is stated at face value plus accrued interest and represents the consideration received for sale of our cementing business located in Vernal, Utah, to a business owned by a former employee and is secured by substantially all assets of the former employee’s business and the former employee’s ownership interests in and distributions from the business.
+Added: The note receivable is to be paid to the Company in quarterly installments with interest of 10 % per annum from March 31, 2025, to December 31, 2029.
+Added: At December 31, 2024, the note receivable had a carrying amount of $ 13.2 million including accrued interest, which the Company expects to be fully collectible.
+Added: Of the carrying amount at December 31, 2024, the amount collectible within one year was $ 2.1 million and the amount collectible beyond one year was $ 11.1 million, which are included in our consolidated balance sheet under other current assets and other noncurrent assets, respectively.
Property and Equipment — The Company’s property and equipment are recorded at cost, less accumulated depreciation.
3 unchanged sentences
Upon sale or retirement of property and equipment, including certain major components of our completion services equipment that are replaced, the cost and related accumulated depreciation are removed from the balance sheet and the net amount, less proceeds from disposal, is recognized as a gain or loss in the statement of operations.
−Removed: A significant portion of our loss on disposal of assets relates to replacement of major components like fluid and power ends.
−Removed: The Company recorded a loss on disposal of assets of $ 73.0 million , $ 102.1 million and $ 64.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
+Added: A significant portion of our loss on disposal of assets and businesses relates to replacement of major components like fluid and power ends.
+Added: The Company recorded a loss on disposal of assets and businesses of $ 7.5 million , $ 73.0 million, and $ 102.1 million for the years ended December 31, 2024, 2023, and 2022, respectively.
PROPETRO HOLDING CORP.
4 unchanged sentences
In this circumstance, the Company recognizes an impairment loss for the amount by which the carrying amount of the asset group exceeds the fair value of the asset group.
−Removed: No impairment expense was recorded during the year ended December 31, 2023.
−Removed: D uring the year ended December 31, 2022 , w e recorded impairment expense of approximately $ 57.5 million in connection with our DuraStim® electric-powered hydraulic fracturing equipment.
−Removed: No impairment expense was recorded during the year ended December 31, 2021.
+Added: During the year ended December 31, 2024 , we recorded property and equipment impairment expense of approximately $ 188.6 million in connection with our conventional Tier II diesel-only hydraulic fracturing pumping units and associated conventional assets, (the “Tier II Units”) .
+Added: No property and equipment impairment expense were recorded during the year ended December 31, 2023.
+Added: D uring the year ended December 31, 2022 , w e recorded property and equipment impairment expense of approximately $ 57.5 million in connection with our DuraStim® electric-powered hydraulic fracturing equipment.
The Company accounts for long‑lived assets to be disposed of at the lower of their carrying amount or fair value, less cost to sell once management has committed to a plan to dispose of the assets.
−Removed: Goodwill — Goodwill is the excess of the consideration transferred over the fair value of the tangible and identifiable intangible assets and liabilities recognized.
+Added: Goodwill — Goodwill is the excess of the consideration transferred over the fair value of the tangible and identifiable intangible assets and liabilities recognized in a business combination.
Goodwill is not amortized.
3 unchanged sentences
If the fair value of the reporting unit is less than the carrying value, we consider goodwill to be impaired, and the amount of impairment loss is calculated and recorded in the statement of operations.
+Added: On May 31, 2024, we acquired AquaProp for $ 35.8 million.
+Added: We accounted for the AquaProp Acquisition as a business combination using the acquisition method of accounting.
+Added: Goodwill of $ 0.9 million was recorded within our hydraulic fracturing operating segment as of the AquaProp Acquisition Date (as defined below), which represents the excess of the purchase price over the fair value of the assets and liabilities assumed.
On November 1, 2022, we acquired Silvertip for $ 148.1 million.
We accounted for the Silvertip Acquisition as a business combination using the acquisition method of accounting.
−Removed: Goodwill of $ 23.6 million was recorded as of the Silvertip Acquisition Date (as defined below), which represents the excess of the purchase price over the fair value of the assets and liabilities assumed.
−Removed: The acquisition complemented our existing business.
−Removed: As of December 31, 2023 and 2022, our goodwill carrying value was $ 23.6 million and $ 23.6 million, respectively.
−Removed: There were no additions to goodwill during the year ended December 31, 2023.
−Removed: The wireline operating segment is the only segment with goodwill at December 31, 2023 and 2022.
−Removed: We conducted our annual impairment test of goodwill in accordance with ASC 350, Intangibles—Goodwill and Other , as of December 31, 2023 and determined that no impairment to the carrying value of goodwill for our reporting unit (wireline operating segment) was required.
−Removed: There were no goodwill impairment losses during the years ended December 31, 2023 and 2022.
−Removed: Intangible Assets — Intangible assets consist of customer relationships and trademark/trade name purchased in connection with the Silvertip Acquisition.
−Removed: In connection with the Silvertip Acquisition, we added intangible assets consisting of $ 46.5 million of customer relationships and $ 10.8 million of trademark/trade name.
−Removed: Intangible assets are amortized on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized on a straight‑line basis over the asset’s estimated useful life, which is ten years .
+Added: Goodwill of $ 23.6 million was recorded within our wireline operating segment as of the Silvertip Acquisition Date (as defined below), which represents the excess of the purchase price over the fair value of the assets and liabilities assumed.
+Added: We conducted our annual impairment test of goodwill in accordance with ASC 350, Intangibles—Goodwill and Other , as of December 31, 2024, and determined that the goodwill in our wireline operating segment and reporting unit was fully impaired due to the Company updating its outlook for this reporting unit as a result of decreased revenue and profitability experienced during the year ended December 31, 2024.
+Added: Accordingly, we recorded goodwill impairment expense of $ 23.6 million in our wireline reporting unit for the year ended December 31, 2024.
+Added: No impairment to the carrying value of goodwill for our hydraulic fracturing reporting unit was required.
+Added: The following table summarizes goodwill by operating segment as of December 31, 2024, and 2023 and changes for the years then ended:
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Added: (in thousands)
+Added: Hydraulic Fracturing Wireline Total
+Added: Balance as of January 1, 2023
+Added: Goodwill $ — $ 23,624 $ 23,624
+Added: Accumulated impairment losses — — —
+Added: — 23,624 23,624
+Added: Goodwill acquired during year — — —
+Added: Impairment losses — — —
+Added: Balance as of December 31, 2023
+Added: Goodwill — 23,624 23,624
+Added: Accumulated impairment losses — — —
+Added: — 23,624 23,624
+Added: Goodwill acquired during year 3,130 — 3,130
+Added: Measurement period adjustment ( 2,210 ) — ( 2,210 )
+Added: Impairment losses — ( 23,624 ) ( 23,624 )
+Added: Balance as of December 31, 2024
+Added: Goodwill 920 23,624 24,544
+Added: Accumulated impairment losses — ( 23,624 ) ( 23,624 )
+Added: $ 920 $ — $ 920
+Added: Intangible Assets — Intangible assets consist of customer relationships, trademark/trade name, favorable contracts acquired in connection with the acquisition of S ilvertip and AquaProp and internally developed software costs.
+Added: In connection with the acquisition of Silvertip, we added intangible assets consisting of $ 46.5 million of customer relationships and $ 10.8 million of trademark/trade name.
+Added: In connection with the acquisition of AquaProp, we added intangible assets consisting of $ 18.6 million of customer relationships, $ 1.3 million of trademark/trade name and $ 2.2 million of favorable contracts.
+Added: Intangible assets are amortized on a basis that reflects the pattern in which the economic benefits of the intangible assets are realized on a straight‑line basis over the asset’s estimated useful life.
No significant residual value is estimated for intangible assets.
+Added: Leases — In accordance with ASC Topic 842, the Company determines if a contract is a lease at inception and evaluates identified leases for operating and finance lease accounting.
+Added: Operating or finance lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
+Added: The Company uses a discount rate based on its estimated incremental borrowing rate on a collateralized basis with similar terms and economic considerations as its lease payments at the lease commencement in determining the present value of lease payments.
+Added: Lease terms may include options to renew the lease or purchase the underlying assets, however, the Company typically cannot determine its intent to renew the lease or purchase the assets with reasonable certainty at inception.
+Added: The Company elected the short-term lease recognition practical expedient provided by ASC 842 in which leases with a term of twelve months or less will not be recognized on the balance sheet, and the practical expedient to not separate lease and non-lease components for real estate class of assets.
+Added: We elected to analogize to the measurement guidance of ASC 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs.
Income Taxes — Income taxes are accounted for under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.
2 unchanged sentences
We recognize deferred tax assets to the extent that we believe these assets are more likely than not to be realized.
−Removed: In making such a determination, we consider all positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, and the results of recent operations.
+Added: In making such a determination, we consider all positive and negative evidence, including future reversals of existing taxable temporary
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Added: differences, projected future taxable income, and the results of recent operations.
If we determine that we would not be able to fully realize our deferred tax assets in the future, we would record a valuation allowance.
2 unchanged sentences
Unamortized deferred loan costs associated with loans paid off or refinanced with different lenders are expensed in the period in which such an event occurs.
−Removed: Deferred loan costs are classified as a reduction of
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SIGNIFICANT ACCOUNTING POLICIES (Continued)
−Removed: long‑term debt or in certain instances as an asset in the consolidated balance sheet.
+Added: Deferred loan costs are classified as a reduction of long‑term debt or in certain instances as an asset in the consolidated balance sheet.
Amortization of deferred loan costs is recorded as interest expense in the statement of operations, and during the years ended December 31, 2024, 2023, and 2022, the amount of expense recorded was $ 0.4 million, $ 0.4 million, and $ 0.8 million, respectively.
11 unchanged sentences
Thereafter, any excess purchase price will be recorded as a reduction of retained earnings.
+Added: Variable Interest Entities — The Company may enter into strategic investments or other arrangements that are considered variable interests and such entities are considered variable interest entities (“VIE”).
+Added: If the Company is the primary beneficiary of a VIE, it is required to consolidate the entity.
+Added: To determine if the Company is the primary beneficiary of a VIE, the Company evaluates, at the inception of the Company’s involvement with a VIE and on an ongoing basis, whether it has (i) the power to direct the activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.
+Added: The assessment of whether the Company is the primary beneficiary of its VIE investments requires significant assumptions and judgments.
+Added: VIEs that are not consolidated are accounted for under the measurement alternative, equity method, amortized cost, or other appropriate methodology based on the nature of the interest held.
Change in Accounting Estimates — Current trends in hydraulic fracturing equipment operating conditions such as larger pads, changes to job design and increased pumping hours per day have resulted in shorter useful lives for certain critical components that are included in our property and equipment assets.
3 unchanged sentences
This change in accounting estimates was made effective January 1, 2023, and accounted for prospectively.
+Added: The net effect of this change for the year ended December 31, 2024, was a $ 15.6 million increase in net loss, or $ 0.15 per basic and diluted share, respectively.
The net effect of this change for the year ended December 31, 2023, was a $ 19.1 million decrease in net income, or $ 0.17 per basic and diluted share, respectively.
−Removed: Additionally, in connection with the review of our fluid ends and power ends estimated useful life, effective January 1, 2023, we are writing off the remaining book value of power ends that prematurely fail as accelerated depreciation.
−Removed: These write-off amounts were $ 12.5 million, $ 11.8 million, $ 8.4 million and $ 6.0 million for the three months ended March, 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023, respectively.
−Removed: However, to conform to prior year presentation, we have presented these write-off amounts within loss on disposal of assets for the year ended December 31, 2023.
−Removed: In 2022 and 2021, we wrote off the remaining book value of prematurely failed and disposed of power ends to loss on disposal of assets.
+Added: The Company plans to phase out its Tier II Units earlier than the current weighted average remaining useful life of this asset group in response to decreasing customer demand for and related pricing pressures on this asset group.
+Added: Accordingly we shortened the remaining useful lives of those Tier II Units that currently have useful lives beyond 2027 to no longer than the
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Added: end of 2027 to align with management's use and expected economic life.
+Added: This change was made effective October 1, 2024.
+Added: The net effect of this change for the year ended December 31, 2024, was a $ 1.7 million increase in net loss, or $ 0.02 per basic and diluted share, respectively.
Recently Issued Accounting Standards
8 unchanged sentences
2023-07, Segment Reporting (Topic 280):
−Removed: Improvements to Reportable Segment Disclosures , which requires public entities to disclose on an annual and interim basis, 1) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”) and 2) an amount for other segment items
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: SIGNIFICANT ACCOUNTING POLICIES (Continued)
−Removed: representing the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss.
+Added: Improvements to Reportable Segment Disclosures , which requires public business entities to disclose on an annual and interim basis, 1) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”) and 2) an amount for other segment items representing the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss.
This ASU also requires public entities to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss but at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles under GAAP.
1 unchanged sentence
This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
−Removed: Early adoption is permitted.
−Removed: We do not expect ASU 2023-07 to have a material effect on our consolidated financial statements.
+Added: We adopted this ASU 2023-07 for the fiscal year ended December 31, 2024, as required under this standard.
+Added: Reportable Segment Information.
In December 2023, the FASB issued ASU No.
3 unchanged sentences
We are currently assessing the impact of ASU 2023-09 on our consolidated financial statements but do not expect it will have a material impact.
+Added: In November 2024, the FASB issued ASU No.
+Added: 2024-03, Income Statement:
+Added: Reporting Comprehensive Income:
+Added: Expense Disaggregation Disclosures (Subtopic 220-40) , which requires public business entities to disclose, in the notes to financial statements, additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods.
+Added: In January 2025, the FASB issued ASU No.
+Added: 2025-01, Clarifying the Effective Date, which revised the effective date of ASU No.
+Added: 2024-03 for interim periods .
+Added: The guidance is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027.
+Added: We are currently assessing the impact of ASU 2024-03 and ASU 2025-01 on our consolidated financial statements.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUPPLEMENTAL CASH FLOWS INFORMATION
7 unchanged sentences
$ 1,792 $ 1,110 $ 129
−Removed: Supplemental disclosure of non‑cash investing and financing activities
+Added: Supplemental disclosure of noncash investing and financing activities
Capital expenditures included in accounts payable and accrued liabilities
$ 14,695 $ 21,604 $ 82,452
−Removed: Par Five asset purchase consideration included in other long-term liabilities $ 3,180 $ — $ —
−Removed: Common stock issued for Silvertip Acquisition $ — $ 106,736 $ —
−Removed: Non-cash purchases of property and equipment $ — $ 2,668 $ —
+Added: Insurance financing included in other current liabilities $ 5,479 $ — $ —
+Added: Business acquisition deferred cash consideration included in other current liabilities $ 3,664 $ — $ —
+Added: Business acquisition deferred cash consideration included in other long-term liabilities $ — $ 3,180 $ —
+Added: Business acquisition contingent consideration included in other long-term liabilities $ 10,900 $ — $ —
+Added: Common stock issued for business acquisition $ — $ — $ 106,736
+Added: Noncash purchases of property and equipment $ — $ — $ 2,668
+Added: Note receivable from sale of business $ 13,000 $ — $ —
Equity securities received in exchange for sale of assets $ — $ — $ 11,853
BUSINESS ACQUISITIONS
+Added: AquaProp Acquisition
+Added: On May 31, 2024, the Company completed the acquisition of all of the outstanding equity interests in AquaProp, which provides wet sand solutions for hydraulic fracturing sand requirements at oil well sites.
+Added: As a result of the acquisition, the Company expanded its operations into the wet sand service business unit.
+Added: The following table summarizes the consideration transferred to AquaProp at the acquisition date:
+Added: (in thousands)
+Added: Fair value of purchase consideration:
+Added: Cash $ 21,216
+Added: Deferred cash consideration 3,664
+Added: Contingent consideration 10,900
+Added: Total consideration $ 35,780
+Added: Cash consideration includes $ 13.7 million paid to the seller, $ 7.2 million paid to settle the seller’s outstanding debt, and $ 0.3 million paid for the seller’s transaction expenses.
+Added: The deferred cash consideration of $ 3.7 million will be used to cover the amount by which the estimated purchase price exceeds the final purchase price, if any.
+Added: The unused amount is payable to the seller on May 31, 2025.
+Added: This obligation is shown within other current liabilities in our consolidated balance sheets.
+Added: As of December 31, 2024, the outstanding amount for this obligation was $ 3.7 million.
+Added: Included in the deferred cash consideration is a liability incurred to the seller of $ 1.8 million.
+Added: In the purchase agreement as a post-closing transaction, AquaProp's seller agreed to purchase and then sell to the Company, and the Company agreed to purchase from the seller, two additional equipment spreads within 90 days of the closing at a purchase price equal to cost plus a 50 % premium.
+Added: The post-closing transaction was determined to be a transaction separate from the business combination, but the premium was determined to represent consideration transferred in the business combination as the above market terms of the arrangement would not have been agreed upon absent the business combination.
+Added: Accordingly, the liability incurred to the seller was recognized as consideration in the business combination as cash was not paid at closing.
+Added: The post-closing transaction for
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
+Added: the Company’s purchase of the additional equipment occurred in July 2024 and the purchases were accounted for as additions to property and equipment in our consolidated balance sheet and capital expenditures in our consolidated statement of cash flows.
+Added: Also in the purchase agreement as an additional post-closing transaction, the seller agreed to purchase and then deliver to the Company up to five more additional equipment spreads at the request of the Company within a 30-month period following the delivery of the first additional spread at a purchase price equal to the lower of $ 4.8 million or cost.
+Added: The additional post-closing transaction was determined to be a transaction separate from the business combination, but the Company recorded an intangible asset amounting to $ 0.3 million for the estimated fair value of the potential favorable pricing on such spreads as part of the consideration transferred in the business combination.
+Added: This intangible asset is included within favorable contracts in the table below.
+Added: The additional post-closing transaction for the Company’s purchase of the additional equipment will be accounted for as additions to property and equipment in our consolidated balance sheet and capital expenditures in our consolidated statement of cash flows.
+Added: The acquisition of AquaProp also included a contingent consideration arrangement that requires additional consideration to be paid by the Company to the seller based on the amount of wet sand delivered during a 30-month period following the delivery of the first additional spread, attributable to the five additional equipment spreads described above.
+Added: Amounts are payable under the earnout arrangement if the Company reaches certain delivery thresholds (in tons) of wet sand using the specific equipment provided by the seller or by other parties.
+Added: The range of the undiscounted amounts the Company could be obligated to pay under the contingent consideration agreement is between $ 0 and $ 12.5 million.
+Added: The fair value of the contingent consideration for the business combination recognized at the acquisition date of $ 10.9 million was estimated by applying the probability-weighted expected return method for the different scenarios that may occur based on the amount of additional equipment delivered by the seller, at the request of the Company, and the amount of wet sand expected to be delivered by such equipment.
+Added: The fair value measurement of the contingent consideration is based on significant inputs not observable in the market, and thus represent Level 3 measurements.
+Added: The contingent consideration payable will be adjusted to estimated fair value at the end of each subsequent reporting period until the contingencies are resolved and consideration payments are made.
+Added: The estimated fair value of the contingent consideration payable was $ 8.3 million at December 31, 2024, resulting in a $ 2.6 million decrease from May 31, 2024.
+Added: The decrease in the estimated fair value of the contingent consideration payable was primarily driven by updated projections regarding the probability of different scenarios and the amount and timing of additional equipment to be delivered by the seller under those scenarios.
+Added: The decrease in the estimated contingent consideration payable is included in general and administrative expenses in our consolidated statement of operations for the year ended December 31, 2024.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
+Added: The following table summarizes the recognized amounts of identified assets, and liabilities assumed at the acquisition date:
+Added: (in thousands)
+Added: Recognized amounts of assets acquired and liabilities assumed:
+Added: Accounts receivable 10,551
+Added: Property and equipment 13,468
+Added: Intangible assets:
+Added: Trade name 1,300
+Added: Customer relationships 18,600
+Added: Favorable contracts 2,210
+Added: Accounts payable ( 1,423 )
+Added: Factored receivables ( 10,024 )
+Added: Total net assets acquired 34,860
+Added: Total consideration $ 35,780
+Added: The fair value of the assets acquired includes accounts receivable of $ 10.6 million.
+Added: The gross amount due under contracts is $ 10.6 million, of which none is expected to be uncollectible.
+Added: The Company did not acquire any other class of receivable as a result of the acquisition of AquaProp.
+Added: The assets acquired include three intangible assets, the trademark/trade name for AquaProp, customer relationships and favorable contracts.
+Added: The trademark was assigned a fair value of $ 1.3 million with zero residual value and will be amortized on a straight‑line basis over fifteen years .
+Added: The customer relationships were assigned a fair value of $ 18.6 million with zero residual value and will be amortized on a straight‑line basis over six years .
+Added: The favorable contracts were assigned a fair value of $ 2.2 million with zero residual value out of which $ 0.3 million will be amortized over thirty months and $ 1.9 million will be amortized over five years .
+Added: The fair value of the trademark was estimated using the relief-from-royalty method, which calculates the hypothetical royalty fees that would be saved by owning an intangible asset rather than licensing it from another owner.
+Added: This method forecasts revenue over the estimated useful life of the asset and then applies the following:
+Added: a royalty rate based on comparable royalty and/or licensing transactions, income tax rate and discount rate, to calculate the discounted cash flows to arrive at the value of the trademark.
+Added: Key assumptions include revenue forecasted at historical trends with a 0 % long-term growth rate, 1.0 % royalty rate, 21.6 % income tax rate and a 40.5 % discount rate.
+Added: The fair value of the customer relationships was estimated using the multi-period excess earnings method.
+Added: This method is a specific application of the discounted cash flow method, in which revenue derived from the intangible asset is estimated using total business revenue as a proxy and subsequently adjusted for attrition.
+Added: Then deductions are made for business expenses and required returns attributable to other assets in the business.
+Added: The excess earnings after these deductions are discounted to present value at an appropriate rate of return to arrive at the intangible asset value.
+Added: Key assumptions include revenue forecasted at historical trends with a 0 % long-term growth rate, 20.0 % attrition rate, 21.6 % income tax rate and a 40.5 % discount rate.
+Added: The fair value of the favorable contracts was estimated using a discounted cash flow analysis.
+Added: Key assumptions include forecasted revenue based on a probability-weighting of the number of spreads that will be active with a 0 % long-term growth rate, 21.6 % income tax rate and a 35.0 % discount rate.
+Added: The goodwill is attributable to the acquired workforce and significant synergies.
+Added: Goodwill is assigned 100 % to the hydraulic fracturing operating segment of the Company.
+Added: The goodwill recognized is deductible for income tax purposes.
+Added: During the period from May 31, 2024, to December 31, 2024, the Company made measurement period adjustments to recognize favorable contracts intangible assets of $ 2.2 million and decrease goodwill by $ 2.2 million and to increase accounts payable acquired as part of the acquisition of AquaProp by $ 0.5 million to reflect facts and circumstances in existence as of the acquisition date.
+Added: The adjustment to accounts payable decreased the deferred cash consideration payable to the seller.
+Added: The acquired business generated revenues of $ 44.1 million and a net loss of $ 2.3 million for the period from May 31, 2024, to December 31, 2024.
+Added: The following combined supplemental unaudited pro forma information presents consolidated information of the Company as if the AquaProp Acquisition had occurred on January 1, 2023.
+Added: The supplemental unaudited pro forma information presented
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
+Added: below is for illustrative purposes only and does not reflect future events that occurred after December 31, 2024, or any operating efficiencies or inefficiencies that may result from the AquaProp Acquisition.
+Added: The information is not necessarily indicative of results that would have been achieved had the Company controlled AquaProp during the periods presented.
+Added: The information presented below does not include the year ended December 31, 2022, as AquaProp was formed in 2023.
+Added: (unaudited, in thousands)
+Added: Year Ended December 31,
+Added: Revenue $ 1,486,776 $ 1,653,010
+Added: Net (loss) income ( 126,736 ) 91,508
+Added: The Company had material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and net (loss) income.
+Added: These adjustments included nonrecurring acquisition costs incurred in 2024 but have been adjusted to be reflected in 2023.
+Added: These pro forma amounts have been calculated after applying the Company’s accounting policies and adjusting the results of AquaProp to reflect the additional depreciation that would have been charged assuming the fair value adjustments to property and equipment had been applied from January 1, 2023, with the consequential tax effects.
+Added: For the year ended December 31, 2024, the Company incurred acquisition-related costs of $ 1.5 million.
+Added: These expenses are included in general and administrative expenses on the Company’s consolidated statement of operations for the year ended December 31, 2024, and are reflected in pro forma net income for the year ended December 31, 2023, in the table above .
+Added: The Company’s consolidated statement of operations for the year ended December 31, 2024, includes 215 days of AquaProp operations as the AquaProp Acquisition closed on May 31, 2024.
Par Five Acquisition
−Removed: On December 1, 2023, the Company completed the acquisition of certain assets and certain liabilities of Par Five.
−Removed: Par Five is an oilfield service company based in Artesia, New Mexico that provides cementing and remediation services across the Permian Basin in Texas and New Mexico.
+Added: On December 1, 2023, the Company completed the acquisition of certain assets and certain liabilities of Par Five which provides cementing and remediation services across the Permian Basin in Texas and New Mexico.
As a result of the acquisition, the Company expanded its operations in the cementing service business unit.
5 unchanged sentences
Total consideration $ 25,324
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: BUSINESS ACQUISITIONS (Continued)
(in thousands)
5 unchanged sentences
Total net assets acquired $ 25,324
−Removed: Preliminary estimates of fair values of the assets acquired and the liabilities assumed are based on information available through the issuance of these consolidated financial statements, and the Company is continuing to evaluate the underlying inputs and assumptions used in the valuations.
−Removed: Accordingly, these preliminary estimates are subject to change during the measurement period, which is up to one year from the acquisition date.
−Removed: The deferred cash consideration of $ 3.2 million will be used to cover the amount by which the estimated purchase price exceeds the final purchase price, if any.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
+Added: The deferred cash consideration of $ 3.1 million will be used to cover (i) the amount by which the estimated purchase price exceeds the final purchase price, if any and (ii) indemnity obligations of the seller.
The unused amount is payable to Par Five or its beneficiary on June 1, 2025, and accrues interest at 4.0 % per annum.
−Removed: This obligation is shown within other long-term liabilities in our consolidated balance sheets.
+Added: This obligation is shown within other current liabilities in our consolidated balance sheet as of December 31, 2024.
As of December 31, 2024, the outstanding amount for this obligation was $ 3.1 million.
2 unchanged sentences
The Company did not acquire any other class of receivable as a result of the acquisition of Par Five.
+Added: The Company previously recognized a preliminary estimate of $ 8.7 million for accounts receivable acquired as part of the Par Five Acquisition.
+Added: During the year ended December 31, 2024, the Company made measurement period adjustments to net decrease accounts receivable by $ 0.1 million.
+Added: These measurement period adjustments reflect facts and circumstances in existence as of the acquisition date.
+Added: The cumulative impact of these adjustments was a decrease in deferred cash consideration payable.
The acquired business contributed revenues of $ 4.9 million and net income of $ 1.2 million to the Company for the period from December 1, 2023, to December 31, 2023.
−Removed: The following unaudited pro forma summary presents consolidated information of the Company as if the business combination had occurred on January 1, 2022.
+Added: The following combined supplemental unaudited pro forma information presents consolidated information of the Company as if the business combination had occurred on January 1, 2022.
+Added: The supplemental pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after December 31, 2023, or any operating efficiencies or inefficiencies that may result from the Par Five Acquisition.
+Added: The information is not necessarily indicative of results that would have been achieved had the Company controlled Par Five during the periods presented.
(unaudited, in thousands)
6 unchanged sentences
For the year ended December 31, 2023, the Company incurred $ 1.3 million of acquisition costs.
−Removed: These expenses are included in general and administrative expenses on the Company’s consolidated income statement for the year ended December 31, 2023 and are reflected in pro forma net income for the year ended December 31, 2022, in the table above.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: BUSINESS ACQUISITIONS (Continued)
+Added: These expenses are included in general and administrative expenses on the Company’s consolidated statement of operations for the year ended December 31, 2023, and are reflected in pro forma net income for the year ended December 31, 2022, in the table above.
The Company’s consolidated statement of operations for the year ended December 31, 2023, includes 31 days of Par Five operations as the Par Five Acquisition closed on December 1, 2023.
Silvertip Acquisition
−Removed: On November 1, 2022 (the "Silvertip Acquisition Date"), the Company entered into a purchase and sale agreement with New Silvertip Holdco, LLC, pursuant to which the Company acquired 100 % of the outstanding limited liability company interests of Silvertip, a wireline services company in the Permian Basin, in exchange for total consideration of $ 148.1 million (the "Silvertip Purchase Price") consisting of 10.1 million shares of our common stock valued at $ 106.7 million, $ 30.0 million of cash, the payoff of $ 7.2 million of assumed debt, and the payment of $ 4.1 million of certain seller closing and transaction costs.
−Removed: The Silvertip Acquisition positions the Company as a more resilient and diversified completions-focused oilfield service provider headquartered in the Permian Basin.
+Added: On November 1, 2022 (the "Silvertip Acquisition Date"), the Company entered into a purchase and sale agreement with New Silvertip Holdco, LLC, pursuant to which the Company acquired 100 % of the outstanding limited liability company interests of Silvertip, a wireline services company in the Permian Basin, in exchange for total consideration of $ 148.1 million (the "Silvertip Purchase Price") consisting of 10.1 million shares of the Company’s common stock valued at $ 106.7 million, $ 30.0 million of cash, the payoff of $ 7.2 million of assumed debt, and the payment of $ 4.1 million of certain seller closing and transaction costs.
The Company accounted for the Silvertip Acquisition using the acquisition method of accounting.
The Silvertip Purchase Price was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair value at the Silvertip Acquisition Date.
−Removed: The estimated fair values of certain assets and liabilities, including accounts receivable, require significant judgments and estimates.
+Added: The estimated fair values of certain assets and liabilities, including accounts receivable, require
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
+Added: significant judgments and estimates.
The measurements of assets acquired and liabilities assumed, are based on inputs that are not observable in the market and thus represent Level 3 inputs.
25 unchanged sentences
(2) Definite lived intangibles with amortization period of 10 years.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: BUSINESS ACQUISITIONS (Continued)
The goodwill arising from the Silvertip Acquisition is attributable to the expected operational synergies resulting from our integrated service offerings.
5 unchanged sentences
The information is not necessarily indicative of results that would have been achieved had the Company controlled Silvertip during the periods presented.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: BUSINESS ACQUISITIONS (Continued)
(unaudited, in thousands)
1 unchanged sentence
Revenue $ 1,428,282
−Removed: Net income (loss) (1)
−Removed: 26,716 ( 43,957 )
−Removed: (1) The nonrecurring acquisition costs of $ 2.2 million were included in our pro forma results for the year ended December 31, 2021.
+Added: Net income 26,716
The Company’s consolidated statement of operations for the year ended December 31, 2022, includes 61 days of Silvertip operations as the Silvertip Acquisition closed on November 1, 2022.
16 unchanged sentences
Assets and Liabilities Measured at Fair Value on a Recurring Basis
−Removed: The fair values of cash, cash equivalents and restricted cash, accounts receivable, accounts payable, accrued and other current liabilities, and long-term debt are estimated to be approximately equivalent to carrying amounts as of December 31, 2023 and 2022 and have been excluded from the table below.
+Added: The fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued and other current liabilities, and long-term debt are estimated to be approximately equivalent to carrying amounts as of December 31, 2024, and 2023 and have been excluded from the table below.
Assets measured at fair value on a recurring basis as of December 31, 2024, are set forth below:
9 unchanged sentences
Short-term investment $ 7,849 $ 7,849 $ — $ — $ 105
+Added: Business acquisition contingent consideration payable $ 8,300 $ — $ — $ 8,300 $ 2,600
December 31, 2023:
4 unchanged sentences
As of December 31, 2024, the fair value of the short-term investment was estimated at $ 7.8 million.
−Removed: The fluctuation in stock price resulted in an unrealized loss of $ 2.5 million and $ 1.6 million for 2023 and 2022 , respectively.
−Removed: Included in the unrealized loss was a gain of $ 0.1 million and a loss of $ 0.3 million resulting from non-cash foreign currency translation for the years ended December 31, 2023 and 2022, respectively .
−Removed: The unrealized losses resulting from stock price fluctuation and non-cash foreign currency translation are included in other income (expense) in our consolidated statements of operations.
+Added: The fluctuation in stock price resulted in an unrealized gain of $ 0.1 million for the year ended December 31, 2024, an unrealized loss of $ 2.5 million for the year ended December 31, 2023, and an unrealized loss of $ 1.6 million for the year ended December 31, 2022 .
+Added: Included in the unrealized gain for the year ended December 31, 2024, was a loss of $ 0.7 million resulting from noncash foreign currency translation.
+Added: Included in the unrealized loss for the year ended December 31, 2023, was a gain of $ 0.1 million resulting from noncash foreign currency translation.
+Added: Included in the unrealized loss for the year ended December 31, 2022, was a loss of $ 0.3 million resulting from noncash foreign currency translation.
+Added: The unrealized gains and losses resulting from stock price fluctuation and noncash foreign currency translation are included in other income (expense) in our consolidated statements of operations.
The Company is restricted from selling, transferring or assigning more than 0.9 million shares in any one calendar month .
+Added: Business acquisition contingent consideration payable — On May 31, 2024, the Company completed the acquisition of all of the outstanding equity interests in AquaProp in exchange for $ 13.7 million of cash, $ 3.7 million of deferred cash consideration payable to AquaProp's seller by May 31, 2025, the payoff of $ 7.2 million of assumed debt, the payment of $ 0.3 million of certain transaction costs and estimated contingent consideration of $ 10.9 million.
+Added: The contingent consideration payable was measured at fair value using Level 3 inputs based on the probability-weighted expected return method and is shown under other long-term liabilities in our condensed consolidated balance sheets.
+Added: The fair value of the contingent consideration payable is remeasured at the end of each reporting period.
+Added: As of December 31, 2024, the estimated fair value of the contingent consideration payable was $ 8.3 million resulting in a $ 2.6 million decrease from May 31, 2024.
+Added: The decrease in the estimated fair value of the contingent consideration payable was primarily driven by updated projections regarding the probability of different scenarios and the amount and timing of additional equipment to be delivered by the seller under those scenarios.
+Added: Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future.
+Added: The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3):
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: FAIR VALUE MEASUREMENTS (Continued)
+Added: (in thousands)
+Added: Year Ended December 31, 2024
+Added: Business acquisition contingent consideration payable - opening balance $ —
+Added: Addition 10,900
+Added: Decrease in estimated fair value (1)
+Added: Business acquisition contingent consideration payable - closing balance $ 8,300
+Added: (1) The decrease in the estimated fair value of the business acquisition contingent consideration payable is included in other income (expense) in our consolidated statement of operations for the year ended December 31, 2024.
Assets Measured at Fair Value on a Nonrecurring Basis
+Added: Assets measured at fair value on a nonrecurring basis are set forth below:
+Added: (in thousands)
+Added: Estimated fair value measurements
+Added: Quoted prices in
+Added: active market
+Added: Significant other
+Added: observable inputs
+Added: Significant other
+Added: unobservable inputs
+Added: December 31, 2024:
+Added: Implied fair value of wireline reporting unit goodwill (1)
+Added: $ — $ — $ — $ — $ ( 23,624 )
+Added: November 1, 2024:
+Added: Note receivable on sale of Vernal, Utah cementing business $ 13,000 $ — $ 13,000 $ — $ —
+Added: September 30, 2024:
+Added: Property and equipment, net $ 63,791 $ — $ — $ 63,791 $ ( 188,601 )
+Added: (1) The implied fair value of our wireline reporting unit was determined using Level 3 inputs and was $ 0 at December 31, 2024 (the measurement date) after full impairment.
Certain assets and liabilities are measured at fair value on a nonrecurring basis.
These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances.
−Removed: These assets and liabilities include those acquired through the Par Five Acquisition, which are required to be measured at fair value on the acquisition date according to ASC Topic 805, Business Combinations (see Note 4.
+Added: These assets and liabilities include those acquired through the business combinations, which are required to be measured at fair value on the acquisition date according to ASC Topic 805, Business Combinations (see Note 4.
Business Acquisitions).
+Added: The Company performed a fair value assessment of the $ 13.0 million promissory note obtained as consideration for the sale of its cementing business located in Vernal, Utah, to Big 4 on November 1, 2024 (the date of the transaction), and concluded that the fair value of the note receivable approximated its carrying value and no discount or premium adjustment was needed.
+Added: The Company utilized market interest rates for business loans which represented inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly (Level 2) to determine the implied fair value of the note receivable.
Whenever events or circumstances indicate that the carrying value of long-lived assets may not be recoverable, the Company reviews the carrying values of long‑lived assets, such as property and equipment and other assets to determine if they are recoverable.
If any long‑lived assets are determined to be unrecoverable, an impairment expense is recorded in the period.
−Removed: No impairment of property and equipment was recorded during the year ended December 31, 2023.
−Removed: We recorded impairment expense of approximately $ 57.5 million during the year ended December 31, 2022, in connection with our DuraStim® electric-powered hydraulic fracturing pumps that did not meet the manufacturer's specifications or our expectations.
−Removed: There was no impairment of assets during the year ended December 31, 2021.
+Added: As part of the quarterly evaluation for the three months ended September 30, 2024, after evaluating the current market conditions and new information available, such as decreasing customer demand for and related pricing pressures on its Tier II Units, among other factors, the Company determined that the marketability of its Tier II Units had declined.
+Added: As a result, the Company plans to strategically phase out its Tier II Units before the end of the original weighted average remaining useful life of this asset group.
+Added: The Company performed an impairment analysis on its Tier II Units as of September 30, 2024, by comparing estimated future cash flows on an undiscounted basis to the carrying value of these assets.
+Added: The Company determined that its
PROPETRO HOLDING CORP.
1 unchanged sentence
FAIR VALUE MEASUREMENTS (Continued)
+Added: Tier II Units were impaired, as their carrying value was greater than their estimated future cash flows on an undiscounted basis.
+Added: Accordingly, we recorded property and equipment impairment expense of approximately $ 188.6 million within our hydraulic fracturing operating segment during the year ended December 31, 2024, in connection with our Tier II Units.
+Added: As of September 30, 2024 (the impairment measurement date), the estimated fair value of our Tier II Units was $ 63.8 million which was determined using the market and cost approaches, which represent Level 3 inputs in the fair value measurement hierarchy.
+Added: Our fair value estimates required us to use significant unobservable inputs, including assumptions related to replacement cost, among others.
+Added: The fair value of approximately 95 % of our Tier II Units was estimated using the market approach and the remaining assets were valued using the cost approach.
+Added: For assets valued using the market approach, we relied upon the direct match and comparable match methods of the market approach to value certain assets such as hydraulic fracturing pumps and their associated engines, transmissions, and power ends where significant market data was available and an active secondary market exists.
+Added: Key assumptions include declining desirability for conventional diesel equipment due to emissions and fuel efficiency challenges based on research gathered from third party auctioneers.
+Added: For assets valued using the cost approach, we estimated the current cost of reproducing a new replica of the asset being appraised using the same, or closely similar, materials for each asset or group of assets by using the indirect (trending) method of the cost approach.
+Added: Allowances were made for physical deterioration as well as functional and economic obsolescence as appropriate.
+Added: Key assumptions include forecasted use of Tier II Units.
+Added: The carrying value of our Tier II Units as of September 30, 2024, prior to the impairment expense was approximately $ 252.4 million.
+Added: No impairment of property and equipment was recorded during the year ended December 31, 2023 .
+Added: We recorded property and equipment impairment expense of approximately $ 57.5 million during the year ended December 31, 2022 , in connection with our DuraStim ® electric-powered hydraulic fracturing pumps that did not meet the manufacturer's specifications or our expectations.
We generally apply fair value techniques to our reporting units on a nonrecurring basis associated with valuing potential impairment loss related to goodwill, if any.
−Removed: Our estimate of the reporting unit fair value is based on a combination of income and market approaches, Level 1 and 3, respectively, in the fair value hierarchy.
+Added: Our estimate of the reporting unit fair value is based on a combination of income and market approaches, Level 3 in the fair value hierarchy.
The income approach involves the use of a discounted cash flow method, with the cash flow projections discounted at an appropriate discount rate.
The market approach involves the use of comparable public companies’ market multiples in estimating the fair value.
−Removed: Significant assumptions include projected revenue growth, capital expenditures, utilization, gross margins, discount rates, terminal growth rates, and weight allocation between income and market approaches.
+Added: We used both the guideline public company method and the guideline transaction method under the market approach.
+Added: Significant assumptions include projected revenue growth, capital expenditures, gross margins, discount rates, terminal growth rates, and weight allocation between income and market approaches.
If the reporting unit’s carrying amount exceeds its fair value, we consider goodwill impaired, and the impairment loss is calculated and recorded in the period.
−Removed: There were no additions to goodwill during the year ended December 31, 2023.
−Removed: We added $ 23.6 million of goodwill during the year ended December 31, 2022 (see Note 4.
−Removed: Business Acquisitions).
−Removed: There were no additions to goodwill during the year ended December 31, 2021.
−Removed: We conducted our annual impairment test of goodwill as of December 31, 2023 and determined that no impairment to the carrying value of goodwill for our reporting unit (wireline operating segment) was required.
+Added: We conducted our annual impairment test of goodwill as of December 31, 2024, and determined that the goodwill in our wireline operating segment and reporting unit with a carrying value of $ 23.6 million was fully impaired due to the Company updating its outlook for this reporting unit as a result of decreased revenue and profitability experienced during the year ended December 31, 2024.
+Added: Accordingly, we recorded goodwill impairment expense of $ 23.6 million in our wireline reporting unit for the year ended December 31, 2024.
+Added: We applied weightings of 75 %, 25 %, and 0 % to the fair values derived from the income approach, the guideline public company method and the guideline transaction method, respectively, to assess fair value.
+Added: We used the Gordon Growth Model to determine the terminal value and applied a terminal growth rate of 3.0 %, a 23.0 % income tax rate and a 24.9 % discount rate for the wireline reporting unit .
+Added: No impairment to the carrying value of goodwill for our hydraulic fracturing reporting unit was required .
There were no goodwill impairment losses during the years ended December 31, 2023, and 2022 .
−Removed: The wireline operating segment is the only segment which has goodwill at December 31, 2023 and 2022.
−Removed: The table below sets forth the changes in the carrying amount of goodwill.
−Removed: (in thousands)
−Removed: Goodwill as of January 1, 2022 — net $ —
−Removed: Goodwill addition during the year 23,624
−Removed: Less impairment losses —
−Removed: Goodwill as of December 31, 2022 — net 23,624
−Removed: Goodwill addition during the year —
−Removed: Less impairment losses —
−Removed: Goodwill as of December 31, 2023 — net $ 23,624
+Added: Significant Accounting Policies for a summary of goodwill by operating segment.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PROPERTY AND EQUIPMENT
18 unchanged sentences
Total depreciation $ 184,886 $ 169,993 $ 127,153
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: The Company incurred amortization expense of $ 5.2 million on its finance lease right-of-use asset, which is related to cost of services for the year ended December 31, 2023 .
−Removed: There was no amortization expense related to finance leases for the years ended December 31, 2022 and 2021.
+Added: The Company incurred amortization expense of $ 19.0 million and $ 5.2 million on its finance lease right-of-use asset, which is related to cost of services for the years ended December 31, 2024, and 2023, respectively .
+Added: There was no amortization expense related to finance leases for the year ended December 31, 2022.
The Company also incurred amortization expense on its intangible assets (see Note 7.
Intangible Assets).
−Removed: In December 2021, the Company disposed of two turbine generators, which were included in o ur Hydraulic Fracturing reportable segment, for total cash proceeds of approximately $ 36.0 million.
−Removed: The net book value of the two turbines prior to the disposal was approximately $ 39.5 million, resulting in loss on disposal of approximately $ 3.5 million.
INTANGIBLE ASSETS
−Removed: Intangible assets consist of customer relationships and trademark/trade name.
−Removed: Intangible assets are amortized on a straight‑line basis with a useful life of ten years .
−Removed: Amortization expense, all of which was related to general and administrative expenses, was $ 5.7 million, $ 1.0 million and $ 0 for the years ended December 31, 2023, 2022 and 2021, respectively.
+Added: Intangible assets consist of trade mark/trade name, customer relationships and favorable contracts.
+Added: Trademark/trade names are amortized on a straight‑line basis over useful l ives of ten and fifteen years .
+Added: Customer relationships are amortized on a straight‑line basis over useful lives of six and ten years .
+Added: Favorable contracts are amortized on a straight‑line basis over useful lives of thirty months and five years .
+Added: Internally developed software will be amortized on a straight‑line basis over a useful life of twenty-nine months .
+Added: Amortization expense, all of which was related to general and administrative expenses, was $ 7.9 million, $ 5.7 million and $ 1.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
The Company’s intangible assets subject to amortization consisted of the following:
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: INTANGIBLE ASSETS (Continued)
(in thousands)
2 unchanged sentences
Customer relationships 65,100 46,500
−Removed: Total intangible assets acquired 57,300 57,300
+Added: Favorable contracts 2,210 —
+Added: Internally developed software 60 —
+Added: Total intangible assets 79,470 57,300
Accumulated amortization:
1 unchanged sentence
Customer relationships ( 11,883 ) ( 5,425 )
+Added: Favorable contracts ( 292 ) —
Total accumulated amortization ( 14,565 ) ( 6,685 )
1 unchanged sentence
$ 64,905 $ 50,615
−Removed: Estimated remaining amortization expense subsequent fiscal years is expected to be as follows:
+Added: Estimated remaining amortization expense for each of the subsequent fiscal years is expected to be as follows:
(in thousands)
7 unchanged sentences
The revolving credit facility had a borrowing base of 85 % to 90 %, depending on the credit ratings of our accounts receivable counterparties, of monthly eligible accounts receivable less customary reserves.
−Removed: The revolving credit facility, included a springing fixed charge coverage ratio to apply when
+Added: The revolving credit facility included a springing fixed charge coverage ratio to apply when excess availability was less than the greater of (i) 10 % of the lesser of the facility size or the borrowing base or (ii) $ 10.0 million.
+Added: Under the revolving credit facility, we were required to comply, subject to certain exceptions and materiality qualifiers, with certain customary affirmative and negative covenants, including, but not limited to, covenants pertaining to our ability to incur liens, indebtedness, changes in the nature of our business, mergers and other fundamental changes, disposal of assets, investments and restricted payments, amendments to our organizational documents or accounting policies, prepayments of certain debt, dividends, transactions with affiliates, and certain other activities.
PROPETRO HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: excess availability was less than the greater of (i) 10 % of the lesser of the facility size or the borrowing base or (ii) $ 10.0 million.
−Removed: Under the revolving credit facility, we were required to comply, subject to certain exceptions and materiality qualifiers, with certain customary affirmative and negative covenants, including, but not limited to, covenants pertaining to our ability to incur liens, indebtedness, changes in the nature of our business, mergers and other fundamental changes, disposal of assets, investments and restricted payments, amendments to our organizational documents or accounting policies, prepayments of certain debt, dividends, transactions with affiliates, and certain other activities.
−Removed: Effective June 2, 2023, the Company entered into an amendment to its amended and restated revolving credit facility the revolving credit facility (as amended and restated in April 2022, as amended in June 2023 and as may be amended further, "ABL Credit Facility").
−Removed: The amendment increased the borrowing capacity under the ABL Credit Facility to $ 225.0 million (subject to the Borrowing Base (as defined below) limit), and extended the maturity date to June 2, 2028.
−Removed: The ABL Credit Facility has a borrowing base of the sum of 85 % to 90 % of monthly eligible accounts receivable and 80 % of eligible unbilled accounts (up to a maximum of 25 % of the borrowing base), in each case, depending on the credit ratings of our accounts receivable counterparties, less customary reserves (the "Borrowing Base"), in each case, depending on the credit ratings of our accounts receivable counterparties, as redetermined monthly.
+Added: Effective June 2, 2023, the Company entered into an amendment to its amended and restated revolving credit facility.
+Added: The amendment increased the borrowing capacity under the revolving credit facility to $ 225.0 million (subject to the Borrowing Base (as defined below) limit), and extended the maturity date to June 2, 2028.
+Added: Effective June 26, 2024, the Company entered into an amendment to its amended and restated revolving credit facility (the revolving credit facility, as amended and restated in April 2022, as amended in June 2023, as amended in June 2024, and as may be amended further, "AB L Credit Facility").
+Added: The amendment increased the amount of noncash consideration that may be considered cash pursuant to certain permitted dispositions.
+Added: The ABL Credit Facility has a borrowing base of the sum of 85 % to 90 % of monthly eligible accounts receivable and 80 % of eligible unbilled accounts (up to a maximum of 25 % of the borrowing base), in each case, depending on the credit ratings of our accounts receivable counterparties, less customary reserves (the "Borrowing Base"), as redetermined monthly.
The Borrowing Base as of December 31, 2024, was approximately $ 164.1 million.
3 unchanged sentences
Borrowings under the ABL Credit Facility accrue interest based on a three-tier pricing grid tied to availability, and we may elect for loans to be based on either the Secured Overnight Financing Rate (“SOFR”) or the base rate, plus the applicable margin, which ranges from 1.75 % to 2.25 % for SOFR loans and 0.75 % to 1.25 % for base rate loans.
−Removed: The weighted average interest rate for our ABL Credit Facility for the year ended December 31, 2023, was 6.69 % .
+Added: The weighted average annual interest rate for our ABL Credit Facility for the year ended December 31, 2024, was 7.12 % .
The loan origination costs relating to the ABL Credit Facility are classified as an asset in our balance sheet.
As of December 31, 2024, and 2023 , we had outstanding borrowings under our ABL Credit Facility of $ 45.0 million and $ 45.0 million, respectively.
+Added: After borrowings outstanding and letters of credit of appro ximately $ 8.6 million under the ABL Credit Facility , we had approximately $ 110.5 million available for borrowing under our ABL Credit Facility as of December 31, 2024.
ACCRUED AND OTHER CURRENT LIABILITIES
1 unchanged sentence
(in thousands)
−Removed: Accrued insurance
−Removed: $ 1,222 $ 517
+Added: Financed and accrued insurance $ 5,140 $ 1,222
Accrued payroll and related expenses
1 unchanged sentence
Deferred revenue (advance from customer) 11,823 19,190
−Removed: Capital expenditure, taxes and others accruals
+Added: Capital expenditure, taxes and other accruals
34,398 40,920
7 unchanged sentences
During the years ended December 31, 2024, 2023, and 2022, the recorded expense under the plan was $ 6.8 million, $ 5.9 million, and $ 4.6 million, respectively.
+Added: REPORTABLE SEGMENT INFORMATION
+Added: The Company currently has four operating segments for which discrete financial information is readily available:
+Added: hydraulic fracturing (inclusive of acidizing and wet sand solutions), wireline, ce menting and our newly formed power generation services
PROPETRO HOLDING CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: REPORTABLE SEGMENT INFORMATION
−Removed: The Company currently has three operating segments for which discrete financial information is readily available:
−Removed: hydraulic fracturing (inclusive of acidizing), wireline and cementing.
+Added: REPORTABLE SEGMENT INFORMATION (Continued)
+Added: which has not begun any revenue-generating activities yet .
T hese operating segments represent how the CODM evaluates performance and allocates resources.
+Added: Our CODM is a group comprised of our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Chief Commercial Officer.
+Added: On November 1, 2024, the Company sold its cementing business located in Vernal, Utah, to a business owned by a former employee as part of a strategic repositioning.
+Added: We recorded a gain on disposal of $ 8.2 million related to the sale of the business within loss on disposal of assets and business within our consolidated statement of operations for the year ended December 31, 2024.
+Added: The sale of these assets did not qualify for presentation and disclosure as a discontinued operation, and accordingly, we have recorded the resulting gain from the sale as part of our loss on disposal of assets and business in our consolidated statement of operations.
+Added: The former employee was part of the Company’s cementing operations until November 1, 2024 and is no longer affiliated with the Company.
On September 1, 2022, the Company shut down its coiled tubing operations and disposed of its coiled tubing assets to STEP as part of a strategic repositioning, and recorded a loss on disposal of $ 13.8 million.
−Removed: The divestiture of our coiled tubing assets did not qualify for presentation and disclosure as a discontinued operation, and accordingly, we have recorded the resulting loss from the disposal as part of our loss on disposal of assets in our consolidated statement of operations.
+Added: The divestiture of our coiled tubing assets did not qualify for presentation and disclosure as a discontinued operation, and accordingly, we have recorded the resulting loss from the disposal as part of our loss (gain) on disposal of assets in our consolidated statement of operations.
We have historically conducted our business through four operating segments:
1 unchanged sentence
Prior to the fourth quarter of fiscal year 2023, our operating segments met the aggregation criteria and were aggregated into the “Completion Services” reportable segment and our coiled tubing operations (which were divested in September 2022) were shown in the “All Other” category.
−Removed: Effective as of the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our three operating segments no longer met the criteria to be aggregated.
−Removed: Our Hydraulic Fracturing and Wireline operating segments meet the criteria of a reportable segment.
−Removed: Our cementing and our divested coiled tubing segments do not meet the reportable segment criteria and are included within the “All Other” category.
+Added: Effective in the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our operating segments no longer met the criteria to be aggregated.
+Added: In the fourth quarter of fiscal year 2024, we formed a new subsidiary to provide power generation services.
+Added: This new subsidiary has not begun any revenue-generating activities yet.
+Added: Our hydraulic fracturing, wireline and cementing operating segments meet the criteria of a reportable segment.
+Added: Our divested coiled tubing and our newly formed power generation services segments do not meet the reportable segment criteria and are included within the “All Other” category.
Additionally, our corporate administrative activities do not involve business activities from which it may earn revenues and its results are not regularly reviewed by the Company’s CODM when making key operating and resource decisions.
−Removed: As a result, corporate administrative expenses have been included under “Reconciling Items.” Prior period segment information has been revised to conform to our current presentation.
+Added: As a result, corporate administrative expenses have been included under “Reconciling Items.”
Our hydraulic fracturing operating segment revenue approximated 75.6 %, 78.5 % and 89.3 % of our revenue for the years ended December 31, 2024, 2023, and 2022, respectively.
1 unchanged sentence
Our cementing operating segment revenue approximated 10.3 %, 7.4 % and 7.2 % of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
−Removed: Our coiled tubing revenue approximated 1.1 % and 1.9 % of our revenue for the years ended December 31, 2022 and 2021, respectively.
+Added: Our newly formed power generation services operating segment has not begun any revenue-generating activities yet.
+Added: Revenue from our coiled tubing operating segment which was divested in 2022 approximated 1.1 % of our revenue for the year ended December 31, 2022.
Our operating segments are subject to inherent uncertainties which may influence our prospective activities.
Inter-segment revenues are not material and are not shown separately in the tables below.
−Removed: The Company manages and assesses the performance of the reportable segment by its adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation expense, other income or expense, gain or loss on disposal of assets and other unusual or nonrecurring expenses or income such as impairment charges, retention bonuses, severance, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements).
+Added: The Company manages and assesses the performance of its reportable segments by their adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation expense, other income or expense, gain or loss on disposal of assets and businesses and other unusual or nonrecurring expenses or income such as impairment charges, retention bonuses, severance, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements).
+Added: As part of the CODM’s review of segment-level performance, each member of the CODM group reviews the adjusted EBITDA of the Company’s reportable segments and provides expertise and analyses from their respective areas which drive the evaluation of the performance of the Company’s reportable segments and allocation of resources to those segments.
+Added: Even though the CEO has the authority to override the other members for strategic or other reasons, key decisions are made jointly by the CODM group.
+Added: The following tables set forth certain financial information with respect to the Company’s reportable segments;
+Added: intersegment revenues and cost of services are shown under “Reconciling Items” (in thousands):
PROPETRO HOLDING CORP.
1 unchanged sentence
REPORTABLE SEGMENT INFORMATION (Continued)
−Removed: The following tables set forth certain financial information with respect to the Company’s reportable segments (in thousands):
−Removed: Hydraulic Fracturing
−Removed: Wireline All Other Reconciling Items
−Removed: Year ended and as of December 31, 2023
+Added: Hydraulic Fracturing Wireline Cementing All Other Reconciling Items Total
+Added: Year ended December 31, 2024
Service revenue (1)
$ 1,092,000 $ 203,182 $ 149,411 $ — $ ( 307 ) $ 1,444,286
−Removed: Adjusted EBITDA
+Added: Cost of service - labor $ 233,156 $ 53,609 $ 35,353 $ ( 6 ) $ — $ 322,112
+Added: Cost of service - expendables $ 149,809 $ 56,533 $ 67,986 $ — $ ( 307 ) $ 274,021
+Added: Cost of service - other direct costs $ 417,237 $ 37,983 $ 14,151 $ 10 $ — $ 469,381
+Added: General and administrative expenses excluding nonrecurring and non cash items for reportable segments $ 21,294 $ 11,200 $ 5,381 $ 366 $ — $ 38,241
+Added: Adjusted EBITDA for reportable segments $ 270,505 $ 43,857 $ 26,539 $ ( 370 ) $ — $ 340,531
+Added: Depreciation and amortization $ 182,188 $ 20,633 $ 8,812 $ — $ 100 $ 211,733
+Added: Property and equipment impairment expense (2)
$ 188,601 $ — $ — $ — $ — $ 188,601
−Removed: Capital expenditures
+Added: Goodwill impairment expense (3)
$ — $ 23,624 $ — $ — $ — $ 23,624
+Added: Capital expenditures $ 116,257 $ 7,713 $ 9,376 $ — $ 42 $ 133,388
Goodwill $ 920 $ — $ — $ — $ — $ 920
−Removed: $ 1,189,526 $ 198,957 $ 78,475 $ 13,354 $ 1,480,312
−Removed: Hydraulic Fracturing
−Removed: Wireline All Other Reconciling Items
−Removed: Year ended and as of December 31, 2022
+Added: Total assets $ 961,485 $ 156,349 $ 73,935 $ — $ 31,876 $ 1,223,645
+Added: Hydraulic Fracturing Wireline Cementing All Other Reconciling Items Total
+Added: Year ended December 31, 2023
Service revenue (1)
$ 1,280,523 $ 229,599 $ 120,277 $ — $ — $ 1,630,399
−Removed: Adjusted EBITDA
−Removed: $ 339,186 $ 7,926 $ 13,434 $ — $ 360,546
+Added: Cost of service - labor $ 239,037 $ 58,212 $ 27,871 $ — $ — $ 325,120
+Added: Cost of service - expendables $ 258,004 $ 61,883 $ 52,008 $ — $ — $ 371,895
+Added: Cost of service - other direct costs $ 389,115 $ 35,262 $ 10,409 $ — $ — $ 434,786
+Added: General and administrative expenses excluding nonrecurring and non cash items for reportable segments $ 27,559 $ 12,311 $ 5,324 $ — $ — $ 45,194
+Added: Adjusted EBITDA for reportable segments $ 366,809 $ 61,930 $ 24,665 $ — $ — $ 453,404
+Added: Depreciation and amortization $ 156,057 $ 18,762 $ 5,845 $ — $ 222 $ 180,886
Capital expenditures $ 294,377 $ 12,203 $ 3,440 $ — $ — $ 310,020
−Removed: $ 347,757 $ 2,265 $ 9,645 $ 5,649 $ 365,316
Goodwill $ — $ 23,624 $ — $ — $ — $ 23,624
Total assets $ 1,189,526 $ 198,957 $ 78,475 $ — $ 13,354 $ 1,480,312
−Removed: Hydraulic Fracturing
−Removed: Wireline All Other Reconciling Items
−Removed: Year ended and as of December 31, 2021
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: REPORTABLE SEGMENT INFORMATION (Continued)
+Added: Hydraulic Fracturing Wireline Cementing All Other Reconciling Items Total
+Added: Year ended December 31, 2022
Service revenue (1)
$ 1,143,216 $ 31,188 $ 91,857 $ 13,440 $ — $ 1,279,701
−Removed: Adjusted EBITDA
+Added: Cost of service - labor $ 208,011 $ 8,046 $ 22,450 $ 6,007 $ — $ 244,514
+Added: Cost of service - expendables $ 246,558 $ 8,514 $ 41,427 $ 265 $ — $ 296,764
+Added: Cost of service - other direct costs $ 321,452 $ 4,582 $ 8,011 $ 7,497 $ — $ 341,542
+Added: General and administrative expenses excluding nonrecurring and non cash items for reportable segments $ 28,009 $ 2,120 $ 5,071 $ 1,135 $ — $ 36,335
+Added: Adjusted EBITDA for reportable segments $ 339,186 $ 7,926 $ 14,897 $ ( 1,463 ) $ — $ 360,546
+Added: Depreciation and amortization $ 117,753 $ 2,619 $ 5,089 $ 2,240 $ 407 $ 128,108
+Added: Property and equipment impairment expense (2)
$ 57,454 $ — $ — $ — $ — $ 57,454
Capital expenditures $ 347,757 $ 2,265 $ 7,769 $ 1,876 $ 5,649 $ 365,316
−Removed: $ 161,537 $ — $ 3,569 $ 52 $ 165,158
+Added: Goodwill $ — $ 23,624 $ — $ — $ — $ 23,624
+Added: Total assets $ 1,092,658 $ 173,489 $ 46,944 $ — $ 22,695 $ 1,335,786
____________________
+Added: (1) Revenue recognized over time under our Hydraulic Fracturing reportable segment was $ 1,077.2 million, $ 1,263.7 million and $ 1,133.2 million for the years ended December 31, 2024, 2023, and 2022, respectively.
+Added: Revenue recognized at a point in time under our Hydraulic Fracturing reportable segment was $ 14.8 million, $ 16.8 million and $ 10.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
+Added: All revenue under our Wireline reportable segment is recognized over time.
+Added: All revenue under our All Other category is recognized at a point in time.
+Added: (2) Represents noncash property and equipment impairment expense on our Tier II Units for the year ended December 31, 2024 and noncash property and equipment impairment expense on our DuraStim ® electric-powered hydraulic fracturing equipment for the year ended December 31, 2022.
+Added: There was no impairment expense for the year ended December 31, 2023.
+Added: (3) Represents noncash impairment of goodwill in our wireline operating segment.
+Added: A reconciliation from reportable segment level financial information to the consolidated statements of operations is provided in the table below (in thousands):
PROPETRO HOLDING CORP.
1 unchanged sentence
REPORTABLE SEGMENT INFORMATION (Continued)
−Removed: A reconciliation from reportable segment level financial information to the consolidated statement of operations is provided in the table below (in thousands):
Year Ended December 31,
3 unchanged sentences
Wireline 203,182 229,599 31,188
+Added: Cementing 149,411 120,277 91,857
All Other — — 13,440
2 unchanged sentences
Total consolidated service revenue $ 1,444,286 $ 1,630,399 $ 1,279,701
+Added: Cost of Services
+Added: Hydraulic Fracturing - labor $ 233,156 $ 239,037 $ 208,011
+Added: Hydraulic Fracturing - expendables 149,809 258,004 246,558
+Added: Hydraulic Fracturing - other direct costs 417,237 389,115 321,452
+Added: Wireline - labor 53,609 58,212 8,046
+Added: Wireline - expendables 56,533 61,883 8,514
+Added: Wireline - other direct costs 37,983 35,262 4,582
+Added: Cementing - labor 35,353 27,871 22,450
+Added: Cementing - expendables 67,986 52,008 41,427
+Added: Cementing - other direct costs 14,151 10,409 8,011
+Added: All Other - labor ( 6 ) — 6,007
+Added: All Other - expendables — — 265
+Added: All Other - other direct costs 10 — 7,497
+Added: Total cost of services for reportable segments 1,065,821 1,131,801 882,820
+Added: Elimination of intersegment cost of services ( 307 ) — —
+Added: Total consolidated cost of services $ 1,065,514 $ 1,131,801 $ 882,820
+Added: General and Administrative Expenses
+Added: Hydraulic Fracturing $ 21,294 $ 27,559 $ 28,009
+Added: Wireline 11,200 12,311 2,120
+Added: Cementing 5,381 5,324 5,071
+Added: All Other 366 — 1,135
+Added: Total general and administrative expenses excluding nonrecurring and noncash items for reportable segments 38,241 45,194 36,335
+Added: Unallocated corporate administrative expenses 57,288 49,444 43,956
+Added: Stock-based compensation 17,288 14,450 21,881
+Added: Business acquisition contingent consideration adjustments ( 2,600 ) — —
+Added: Other general and administrative expense 1,782 2,969 8,460
+Added: Retention bonus and severance expense 2,324 2,297 1,128
+Added: Total consolidated general and administrative expenses $ 114,323 $ 114,354 $ 111,760
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: REPORTABLE SEGMENT INFORMATION (Continued)
+Added: Year Ended December 31,
+Added: 2024 2023 2022
Adjusted EBITDA
1 unchanged sentence
Wireline 43,857 61,930 7,926
+Added: Cementing 26,539 24,665 14,897
All Other ( 370 ) — ( 1,463 )
2 unchanged sentences
Depreciation and amortization ( 211,733 ) ( 180,886 ) ( 128,108 )
−Removed: Impairment expense (1)
+Added: Property and equipment impairment expense (1)
( 188,601 ) — ( 57,454 )
+Added: Goodwill impairment expense (2)
+Added: ( 23,624 ) — —
Interest expense ( 7,815 ) ( 5,308 ) ( 1,605 )
−Removed: Income tax (expense) benefit ( 29,868 ) ( 5,356 ) 14,252
−Removed: Loss on disposal of assets ( 73,015 ) ( 102,150 ) ( 64,646 )
+Added: Income tax benefit (expense) 31,385 ( 29,868 ) ( 5,356 )
+Added: Loss on disposal of assets and businesses, net ( 7,451 ) ( 73,015 ) ( 102,150 )
Stock-based compensation ( 17,288 ) ( 14,450 ) ( 21,881 )
−Removed: Other (expense) income (2)
+Added: Business acquisition contingent consideration adjustments 2,600 — —
+Added: Other income (expense), net (3)
5,531 ( 9,533 ) 11,582
2 unchanged sentences
Retention bonus and severance expense ( 2,324 ) ( 2,297 ) ( 1,128 )
−Removed: Net income (loss) $ 85,634 $ 2,030 $ ( 54,185 )
+Added: Net (loss) income $ ( 137,859 ) $ 85,634 $ 2,030
Hydraulic Fracturing $ 961,485 $ 1,189,526 $ 1,092,658
Wireline 156,349 198,957 173,489
+Added: Cementing 73,935 78,475 46,944
All Other — — —
2 unchanged sentences
Total assets $ 1,223,645 $ 1,480,312 $ 1,335,786
−Removed: (1) Represents expense in connection with the impairment of our DuraStim® electric-powered hydraulic fracturing equipment.
−Removed: (2) Other expense for the year ended December 31, 2023 includes settlement expenses resulting from routine audits and one-time health insurance costs totaling approximately $ 7.4 million, and a $ 2.5 million unrealized loss on short-term investment.
−Removed: Other income for the year ended December 31, 2022 includes a $ 10.7 million net tax refund (net of advisory fees) received in March 2022 from the Texas Comptroller of Public Accounts in connection with limited sales, excise and use tax audit of the period from July 1, 2015 through December 31, 2018, a $ 2.7 million non-cash income from fixed asset inventory received as part of a settlement of warranty claims with an equipment manufacturer, and a $ 1.6 million unrealized loss on short-term investment.
+Added: (1) Represents the noncash property and equipment impairment expense of our Tier II Units for the year ended December 31, 2024, and the noncash property and equipment impairment expense of our DuraStim® electric-powered hydraulic fracturing equipment for the year ended December 31, 2022 .
+Added: (2) Represents noncash impairment of goodwill in our wireline operating segment.
+Added: (3) Other income for the year ended December 31, 2024, is primarily comprised of tax refunds totaling (net of advisory fees) totaling $ 5.0 million and insurance reimbursements of $ 2.0 million, partially offset by a $ 2.0 million loss to a customer related to an accidental cementing job failure.
+Added: Other expense for the year ended December 31, 2023, is primarily comprised of settlement expenses resulting from routine audits and one-time health insurance costs totaling approximately $ 7.4 million, and a $ 2.5 million unrealized loss on short-term investment.
+Added: Other income for the year ended December 31, 2022 is primarily comprised of a $ 10.7 million net tax refund (net of advisory fees) received in March 2022 from the Texas Comptroller of Public Accounts in connection with limited sales, excise and use tax audit of the period from July 1, 2015, through December 31, 2018, $ 2.7 million of noncash income from fixed asset inventory received as part of a settlement of warranty claims with an equipment manufacturer, partially offset by and a $ 1.6 million unrealized loss on short-term investment.
+Added: (4) Other general and administrative expense for the year ended December 31, 2024, primarily relates to nonrecurring professional fees paid to external consultants in connection with our business acquisitions and legal settlements, net of reimbursement from insurance carriers.
+Added: Other general and administrative expense for the year ended December 31, 2023, primarily relates to nonrecurring professional fees paid to external consultants in connection with our business acquisitions and legal settlements, net of reimbursement from insurance carriers.
+Added: Other general and administrative expense for the year ended December 31, 2022, primarily relates to nonrecurring professional fees paid to external consultants in connection with our audit committee review, SEC investigation, shareholder litigation, legal settlement to a vendor and other legal matters, net of reimbursement from insurance carriers.
+Added: During the years ended December 31, 2024, 2023, and 2022, we received reimbursement of approxim ately $ 0.2 million , $ 0.4 million, and $ 10.4 million, respectively, from our insurance carriers in connection with the SEC investigation and shareholder litigation.
PROPETRO HOLDING CORP.
1 unchanged sentence
REPORTABLE SEGMENT INFORMATION (Continued)
−Removed: (3) Other general and administrative expense for the year ended December 31, 2023 primarily relates to nonrecurring professional fees paid to external consultants in connection with our business acquisitions and legal settlements, net of reimbursement from insurance carriers.
−Removed: Other general and administrative expense for the years ended December 31, 2022 and 2021 primarily relates to nonrecurring professional fees paid to external consultants in connection with our audit committee review, SEC investigation, shareholder litigation, legal settlement to a vendor and other legal matters, net of reimbursement from insurance carriers.
−Removed: During the years ended December 31, 2023, 2022 and 2021, we received reimbursement of approxim ately $ 0.4 million, $ 10.4 million and $ 9.8 million, respectively, from our insurance carriers in connection with the SEC investigation and shareholder litigation.
Major Customers
2 unchanged sentences
2024 2023 2022
−Removed: 19.7 % 28.3 % 14.6 %
−Removed: 18.2 % 15.0 % 8.8 %
−Removed: 9.6 % 2.9 % 0.1 %
−Removed: 8.0 % — % — %
−Removed: 7.7 % 33.1 % 54.2 %
+Added: Customer A 19.7 % 18.2 % 15.0 %
+Added: Customer B 14.9 % 6.2 % 0.0 %
+Added: Customer C 10.6 % 9.6 % 2.9 %
+Added: Customer D 6.9 % 4.8 % 0.8 %
+Added: Customer E 6.6 % 19.7 % 28.3 %
Customer F 2.6 % 0.5 % 1.4 %
1 unchanged sentence
Customer H 0.0 % 2.3 % 4.7 %
−Removed: NET INCOME (LOSS) PER SHARE
−Removed: Basic net income (loss) per common share is computed by dividing the net income (loss) relevant to the common stockholders by the weighted-average number of shares outstanding during the year.
−Removed: Diluted net income (loss) per common share uses the same net income (loss) divided by the sum of the weighted-average number of shares of common stock outstanding during the period, plus dilutive effects of options, performance stock units (“PSUs”) and restricted stock units (“RSUs”) outstanding during the period calculated using the treasury method and the potential dilutive effects of preferred stocks (if any) calculated using the if-converted method.
+Added: The above customers are third-party customers.
+Added: Revenue from these customers was derived our Hydraulic Fracturing, Wireline and Cementing segments and our All Other category.
+Added: NET (LOSS) INCOME PER SHARE
+Added: Basic net (loss) income per common share is computed by dividing the net (loss) income relevant to the common stockholders by the weighted-average number of shares outstanding during the year.
+Added: Diluted net (loss) income per common share uses the same net (loss) income divided by the sum of the weighted-average number of shares of common stock outstanding during the period, plus dilutive effects of options, performance stock units (“PSUs”) and restricted stock units (“RSUs”) outstanding during the period calculated using the treasury method and the potential dilutive effects of preferred stocks (if any) calculated using the if-converted method.
(In thousands, except for per share data)
2 unchanged sentences
Numerator (both basic and diluted)
−Removed: Net income (loss) relevant to common stockholders $ 85,634 $ 2,030 $ ( 54,185 )
−Removed: Denominator for basic net income (loss) per share 113,004 105,868 102,655
+Added: Net (loss) income relevant to common stockholders $ ( 137,859 ) $ 85,634 $ 2,030
+Added: Denominator for basic net (loss) income per share 105,469 113,004 105,868
Dilutive effect of stock options — — 80
1 unchanged sentence
Dilutive effect of restricted stock units — 370 485
−Removed: Denominator for diluted net income (loss) per share 113,416 106,939 102,655
−Removed: Basic net income (loss) per common share $ 0.76 $ 0.02 $ ( 0.53 )
−Removed: Diluted net income (loss) per common share $ 0.76 $ 0.02 $ ( 0.53 )
+Added: Denominator for diluted net (loss) income per share 105,469 113,416 106,939
+Added: Basic net (loss) income per common share ( 1.31 ) 0.76 0.02
+Added: Diluted net (loss) income per common share ( 1.31 ) 0.76 0.02
PROPETRO HOLDING CORP.
1 unchanged sentence
NET INCOME (LOSS) PER SHARE (Continued)
−Removed: As shown in the table below, the following stock options, RSUs and PSUs outstanding as of December 31, 2023, 2022 and 2021 have not been included in the calculation of diluted income (loss) per common share for the years ended December 31, 2023, 2022 and 2021 because they would be anti-dilutive to the calculation of diluted net income (loss) per common share:
+Added: As shown in the table below, the following stock options, RSUs and PSUs outstanding as of December 31, 2024, 2023, and 2022 have not been included in the calculation of diluted (loss) income per common share for the years ended December 31, 2024, 2023, and 2022 because they would be anti-dilutive to the calculation of diluted net (loss) income per common share:
(In thousands)
5 unchanged sentences
SHARE REPURCHASE PROGRAM
−Removed: On May 17, 2023, the Company's board of directors (the "Board") authorized and the Company announced a share repurchase program that allows the Company to repurchase up to $ 100 million of the Company's common stock beginning immediately and continuing through and including May 31, 2024.
+Added: On April 24, 2024, the Company's board of directors (the "Board") approved an increase and extension to the share repurchase program previously authorized on May 17, 2023.
+Added: The program permits the repurchase of up to an additional $ 100 million of the Company's common stock for a total of $ 200 million and extends the expiration date by one year to May 31, 2025.
The shares may be repurchased from time to time in open market transactions, block trades, accelerated share repurchases, privately negotiated transactions, derivative transactions or otherwise, certain of which may be made pursuant to a trading plan meeting the requirements of Rule 10b5-1 under the Exchange Act, in compliance with applicable state and federal securities laws.
The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management's assessment of the intrinsic value of the Company's common stock, the market price of the Company's common stock, general market and economic conditions, available liquidity, compliance with the Company's debt and other agreements, applicable legal requirements, and other considerations.
−Removed: The Company is not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.
+Added: The Company is not obligated to purchase any shares under the share repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.
The Company expects to fund the repurchases using cash on hand and expected free cash flow to be generated through May 2025.
−Removed: The Inflation Reduction Act of 2022 ("IRA 2022") provides for, among other things, the imposition of a new 1% U.S.
federal excise tax on certain repurchases of stock by publicly traded U.S.
−Removed: corporations such as us after December 31, 2022.
−Removed: Accordingly, the excise tax will apply to our share repurchase program in 2023 and in subsequent taxable years.
−Removed: The current government has proposed increasing the amount of the excise tax from 1% to 4%;
−Removed: however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect.
+Added: corporations applies to our share repurchase program.
All shares of common stock repurchased under the share repurchase program are canceled and retired upon repurchase.
3 unchanged sentences
The Company has accrued $ 0.5 million in respect of the IRA 2022 repurchase excise tax as of December 31, 2024.
−Removed: As of December 31, 2023, $ 48.3 million remained authorized for future repurchases of common stock under the repurchase program.
+Added: As of December 31, 2024, $ 89.2 million remained authorized for future repurchases of common stock under the share repurchase program.
STOCK‑BASED COMPENSATION
2 unchanged sentences
(the "Stock Option Plan") pursuant to which our Board may grant stock options to our consultants, directors, executives and employees.
−Removed: No awards have been granted under the Stock Option Plan following our Initial Public Offering ("IPO"), and no further awards will be granted under the Stock Option Plan.
+Added: No awards have been granted under the Stock Option Plan following our Initial Public Offering, and no further awards will be granted under the Stock Option Plan.
+Added: As of December 31, 2024, there were no awards outstanding under the Stock Option Plan.
2017 Incentive Award Plan
2 unchanged sentences
The 2017 Incentive Plan originally authorized up to 5,800,000 shares of common stock to be issued with respect to awards granted pursuant to the plan.
−Removed: No awards have been granted under the 2017
+Added: No awards have been granted under the 2017 Incentive Plan following approval of the 2020 Incentive Plan (as defined below), and no further awards will be granted under the 2017 Incentive Plan.
+Added: 2020 Long Term Incentive Plan
PROPETRO HOLDING CORP.
1 unchanged sentence
STOCK‑BASED COMPENSATION (Continued)
−Removed: Incentive Plan following approval of the 2020 Incentive Plan (as defined below), and no further awards will be granted under the 2017 Incentive Plan.
−Removed: 2020 Long Term Incentive Plan
In October 2020, our shareholders approved the ProPetro Holding Corp.
8 unchanged sentences
Stock Options
−Removed: On March 16, 2017, we granted 793,738 stock option awards to certain key employees, officers and directors pursuant to the 2017 Incentive Plan which are scheduled to vest in four substantially equal annual installments, subject to a continuing service requirement.
+Added: On March 16, 2017, we granted 793,738 stock option awards to certain key employees, officers and directors pursuant to the 2017 Incentive Plan which were scheduled to vest in four substantially equal annual installments, subject to a continuing service requirement.
The contractual term for the options awarded is 10 years.
6 unchanged sentences
Outstanding at January 1, 2024 180 $ 14.00
+Added: Granted — $ —
+Added: Exercised — $ —
+Added: Forfeited — $ —
( 1 ) $ 14.00
2 unchanged sentences
Restricted Stock Units
−Removed: In 2023, we granted 1,704,189 RSUs to employees, officers and directors pursuant to the 2020 Incentive Plan, which generally vest ratably over a three-year vesting period, in the case of awards to employees and officers, and generally vest in full after one year , in the case of awards to directors.
+Added: In 2024, we granted 1,806,956 RSUs to employees, officers and directors pursuant to the A&R 2020 Incentive Plan, which generally vest ratably over a three-year vesting period or a two-year period at one-third after first year anniversary and two-thirds after the second year anniversary, in the case of awards to employees and officers, and generally vest in full after one year , in the case of awards to directors.
RSUs are subject to restrictions on transfer and are generally subject to a risk of forfeiture if the award recipient ceases to be an employee or director of the Company prior to vesting of the award.
2 unchanged sentences
For the years ended December 31, 2024, 2023, and 2022, the Company recognized stock compensation expense for RSUs of approximately $ 11.9 million, $ 7.8 million and $ 11.1 million, respectively.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: STOCK‑BASED COMPENSATION (Continued)
On March 31, 2022, the Company modified the RSUs previously granted to a former officer in 2019, 2020, and 2021 to accelerate the vesting of such RSUs in connection with his separation agreement.
1 unchanged sentence
As a result of these modifications, we recorded a net incremental stock expense of $ 1.2 million during the year ended December 31, 2022.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: STOCK‑BASED COMPENSATION (Continued)
As of December 31, 2024, the total unrecognized compensation expense for all RSUs was approxima tely $ 15.9 million, and is expected to be recognized over a weighted-average period of approximately 1.6 years.
9 unchanged sentences
Performance Stock Units
−Removed: In 2023, we granted 454,788 P SUs to certain key employees and officers as new awards under the 2020 Incentive Plan.
+Added: In 2024, we granted 637,266 P SUs to certain key employees and officers as new awards under the A&R 2020 Incentive Plan.
Each PSU earned represents the right to receive either one share of common stock or, as determined by the administrator in its sole discretion, a cash amount equal to the fair market value of one share of common stock or amount of cash on the day immediately preceding the settlement date.
2 unchanged sentences
Compensation expense is recorded ratably over the corresponding requisite service period.
−Removed: The grant date fair value of PSUs is determined using a Monte Carlo probability model.
+Added: The grant date fair value of PSUs is determined using a Monte Carlo simulation.
Grant recipients do not have any shareholder rights until performance relative to the Peer Group has been determined following the completion of the performance period and shares have been issued.
28 unchanged sentences
1,535 1,759 1,199
−Removed: Total income tax expense (benefit)
+Added: Total income tax (benefit) expense
$ ( 31,385 ) $ 29,868 $ 5,356
4 unchanged sentences
(in thousands)
−Removed: Year Ended December 31,
2024 2023 2022
2 unchanged sentences
State taxes, net of federal benefit
+Added: 1,194 2,092 709
Section 162(m) limitation 534 2,089 3,423
3 unchanged sentences
— ( 780 ) ( 336 )
−Removed: 493 776 1,167
−Removed: Total income tax expense (benefit)
+Added: Total income tax (benefit) expense
$ ( 31,385 ) $ 29,868 $ 5,356
11 unchanged sentences
Lease liabilities
+Added: 20,940 11,736
Total deferred tax assets
14 unchanged sentences
$ ( 59,770 ) $ ( 93,105 )
−Removed: The Tax Cuts and Jobs Act included a reduction to the maxi mum deduction allo wed for net o perating losses generated in tax years after December 31, 2017, and the elimination of carrybacks of net operating losses.
+Added: The Tax Cuts and Jobs Act included a reduction to the maximum deduction allowed for net operating losses generated after December 31, 2017, and the elimination of carryback of net operating losses.
As of December 31, 2024, the Company had approximately $ 186.1 million of U.S.
−Removed: federal NOLs, some of which will begin to expire in 2035.
−Removed: Approximately $ 87.7 million of the Company’s U.S.
−Removed: federal NOLs relate to pre-2018 periods.
+Added: federal NOLs, all of which will have an unlimited carryforward.
As of December 31, 2024, the Company’s state NOLs were approximately $ 42.8 million and will begin to expire in 2030.
−Removed: Utilization of NOLs carryforwards may be limited due to past or future ownership changes.
+Added: Utilization of NOLs may be limited under Section 382 of the Code due to future ownership changes.
As of December 31, 2024, we determined that $ 0.6 million valuation allowance was necessary against our state deferred tax assets.
The Company’s U.S.
−Removed: federal income tax returns for the y ear ended December 31, 2020, and through the most recent filing remain open to examination by the Internal Revenue Service under the applicable U.S.
+Added: federal income tax returns for the y ear end ed December 31, 2021, an d through the most recent filing remain open to examination by the Internal Revenue Service under the applicable U.S.
federal statute of limitations provisions.
The various states in which the Company is subject to income tax are generally open to examination for the tax years ended December 31, 2020, and through the most recent filing.
−Removed: The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical
+Added: The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the
PROPETRO HOLDING CORP.
1 unchanged sentence
INCOME TAXES (Continued)
−Removed: merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
+Added: largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
As of December 31, 2024, 2023 and 2022, no uncertain tax positions were recorded.
6 unchanged sentences
The Company previously rented two additional yards from this entity and incurred rent expense of $ 0.02 million and $ 0.1 million, respectively during the year ended December 31, 2023.
−Removed: On December 31, 2018, we consummated the Pioneer Pressure Pumping Acquisition with Pioneer and Pioneer Pumping Services.
+Added: ExxonMobil and Pioneer
+Added: On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from the Pioneer Pressure Pumping Acquisition.
In connection with the Pioneer Pressure Pumping Acquisition, Pioneer received 16.6 million shares of our common stock and approximately $ 110.0 million in cash.
−Removed: In October 2023, Pioneer entered into a merger agreement with Exxon Mobil Corporation.
−Removed: On March 31, 2022, we entered into the A&R Pressure Pumping Services Agreement, which was initially entered into in connection with the Pioneer Pressure Pumping Acquisition.
−Removed: The A&R Pressure Pumping Services Agreement expired at the conclusion of its term and was replaced by the Fleet One Agreement and Fleet Two Agreement described below.
−Removed: On October 31, 2022, we entered into two pressure pumping services agreements (the "Fleet One Agreement" and "Fleet Two Agreement") with Pioneer, pursuant to which we provided hydraulic fracturing services with two committed fleets, subject to certain termination and release rights.
−Removed: The Fleet One Agreement was effective as of January 1, 2023 and was terminated on August 31, 2023.
−Removed: The Fleet Two Agreement was effective as of January 1, 2023 and was terminated on May 12, 2023.
−Removed: In October 2023, Pioneer entered into a merger agreement with Exxon Mobil Corporation.
−Removed: Revenue from services provided to Pioneer (including reservation fees) accounted for approximately $ 125.1 million, $ 423.7 million and $ 473.8 million of our total revenue during the years ended December 31, 2023, 2022 and 2021, respectively.
−Removed: As of December 31, 2023, the total accounts receivable due from Pioneer, including estimated unbilled receivable for services we provided, amounted to $ 2.4 million a nd the amount due to Pioneer was $ 0 .
−Removed: As of December 31, 2022, the balance due from Pioneer for services (including reservation fees) we provided amo unted to approximately $ 46.2 million and the amount due to Pioneer was $ 0 .
−Removed: On January 1, 2019, we implemented ASC 842, using the modified retrospective transition method and elected not to restate prior years.
−Removed: Accordingly, the effects of adopting ASC 842 were adjusted in the beginning of 2019 while prior periods are accounted for under the legacy GAAP, ASC 840.
−Removed: There was no cumulative effect adjustment on beginning retained earnings.
−Removed: We also elected other practical expedients provided by the new lease standard, the short-term lease recognition practical expedient in which leases with a term of twelve months or less will not be recognized on the balance sheet, and the practical expedient to not separate lease and non-lease components for real estate class of assets.
−Removed: Our discount rate was based on our estimated incremental borrowing rate on a collateralized basis with similar terms and economic considerations as our lease payments at the lease commencement.
−Removed: Below is a description of our operating and finance leases.
+Added: In May 2024, Pioneer merged with and into a wholly owned subsidiary of Exxon Mobil Corporation (”ExxonMobil”) after which ExxonMobil became the owner of these shares.
+Added: The Company currently provides pressure pumping, wireline and other services to ExxonMobil and previously provided such services to Pioneer.
+Added: On April 22, 2024, we entered into a s ub-agreement for Hydraulic Fracturing Services with XTO Energy Inc.
+Added: (“XTO), a wholly owned subsidiary of ExxonMobil, pursuant to which we will provide hydraulic fracturing, wireline and pumpdown services with two committed FORCE ® electric-powered hydraulic fracturing fleets with the option to add a third FORCE ® fleet (also with wireline and pumpdown services) for a period of three years or for contracted hours, whichever occurs last, with respect to each fleet, subject to certain termination and release rights.
+Added: Revenue from services provided to ExxonMobil (including Pioneer and XTO) subsequent to Pioneer's merger with ExxonMobil accounted for $ 187.7 million of our total revenue during the year ended December 31, 2024.
+Added: Revenue from services provided to Pioneer (including equipment reservation fees) prior to its merger with ExxonMobil accounted f or approximately $ 6.8 million of our total revenue during the year ended December 31, 2024 .
+Added: R evenue from services provided to Pioneer (including equipment reservation fees) prior to its merger with ExxonMobil accounted for approximate ly $ 125.1 million and $ 423.7 million of our total revenue durin g the years ended December 31, 2023 and 2022, respectively.
+Added: As of December 31, 2024, the total accounts receivable due from ExxonMobil (including Pioneer and XTO), including estimated unbilled receivable for services we provided, amounted to $ 70.8 million and the amount due to ExxonMobil (including Pioneer and XTO) was $ 0 .
+Added: As of December 31, 2023, the balance due from Pioneer for services we provided amounted to approximately $ 2.4 million and the amount due to Pioneer was $ 0 .
+Added: Big 4 and Former Employee
+Added: On November 1, 2024, we sold our cementing business located in Vernal, Utah, to Big 4 which is solely owned by a former employee as part of a strategic repositioning.
+Added: We received a promissory note for $ 13.0 million as consideration.
+Added: The note receivable is secured by substantially all assets of Big 4 and the former employee’s ownership interests in and distributions from Big 4.
+Added: The note receivable is to be paid to the Company in quarterly installments with interest of 10 % per annum from March 31, 2025 to December 31, 2029.
+Added: The note receivable is considered subordinated financial support to Big 4 and represents a variable interest to the Company in Big 4.
+Added: Variable Interest Entity for the carrying value of the note receivable as of December 31, 2024 .
+Added: We recorded interest income of $ 0.2 million for the year ended December 31, 2024 which is included in our consolidated statement of operations under other income (expense).
+Added: Cash inflows from collections on the note receivable will be included in our consolidated statement of cash flows under cash flows from investing activities.
+Added: The fo rmer employee was part of our cementing operations until November 1, 2024, and is no longer affiliated with the Company.
PROPETRO HOLDING CORP.
2 unchanged sentences
Operating Leases
−Removed: Description of Lease
−Removed: In March 2013, we entered into a ten-year real estate lease contract (the " Real Estate One Lease " ) with a commencement date of April 1, 2013, as part of the expansion of our equipment yard.
−Removed: For the years ended December 31, 2023, 2022 and 2021, the Company made lease payments of approximately $ 0.1 million , $ 0.4 million and $ 0.4 million, respectively.
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
−Removed: In addition to the contractual lease period, the contract includes an optional renewal of up to ten years .
−Removed: However, the Company terminated the Real Estate One Lease at the end of the term, March 1, 2023.
−Removed: We accounted for our Real Estate One Lease as an operating lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: We did not account for the land separately from the building of the Real Estate One Lease because we concluded that the accounting effect was insignificant.
−Removed: As part of our expansion of our hydraulic fracturing equipment maintenance program, we entered into a two-year maintenance facility real estate lease contract (the "Maintenance Facility Lease") with a commencement date of March 14, 2022.
−Removed: During the year ended December 31, 2023 the Company made lease payments of approximately $ 0.3 million.
−Removed: In addition to the contractual lease period, the contract includes an optional renewal for three additional periods of one year each, however, the Company plans to terminate the Maintenance Facility Lease at the end of the term, February 29, 2024.
−Removed: The contract does not include a residual value guarantee, covenants or financial restrictions.
−Removed: Further, the Maintenance Facility Lease does not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for our Maintenance Facility Lease as an operating lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: We did not account for the land separately from the building of the Maintenance Facility Lease because we concluded that the accounting effect was insignificant.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was approximately 3.4 % and 0.2 years, respectively.
−Removed: In August 2022 and December 2022, we entered into equipment lease contracts (the "Electric Fleet Leases") for a duration of approximately three years each for a total of four FORCE SM electric-powered hydraulic fracturing fleets with 60,000 HHP per fleet.
−Removed: The Electric Fleet Leases contain options to either extend each lease for up to three additional periods of one year each or purchase the equipment at the end of their initial term of approximately 3.0 years or at the end of each subsequent renewal period.
−Removed: The first of the Electric Fleet Leases (the "Electric Fleet One Lease") commenced on August 23, 2023 when we received some of the equipment associated with the first FORCE SM electric-powered hydraulic fracturing fleet.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 2.2 million, including variable lease payments of approximately $ 0.1 million.
−Removed: During the year ended December 31, 2023, the Company incurred initial direct costs of approximately $ 14.3 million to place the leased equipment into its intended use, which are included in the right-of-use asset cost related to the Electric Fleet One Lease.
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
−Removed: In management's judgment the exercise of neither the renewal option nor the purchase option is reasonably assured.
−Removed: In addition to fixed rent payments, the Electric Fleet One Lease contains variable payments based on equipment usage.
−Removed: The Electric Fleet One Lease does not include a residual value guarantee, covenants or financial restrictions.
−Removed: We accounted for the Electric Fleet One Lease as an operating lease.
−Removed: Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was appro ximately 7.3 % and 3.0 years , respectively.
−Removed: The second of the Electric Fleet Leases (the "Electric Fleet Two Lease") commenced on November 1, 2023 when we received some of the equipment associated with the second FORCE SM electric-powered hydraulic fracturing fleet.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approxi mately $ 1.0 million, including variable lease payments of approximately $ 0.03 million.
−Removed: During the year ended December 31, 2023, the Company incurred initial direct costs of approximately $ 9.4 million to place the leased equipment into its intended use, which are included in the right-of-use asset cost related to the Electric Fleet Two Lease .
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
−Removed: In management's judgment the exercise of neither the renewal option nor the purchase option is reasonably assured.
−Removed: In addition to fixed rent payments, the Electric Fleet Two Lease contains variable payments based on equipment usage.
−Removed: The Electric Fleet Two Lease does not include a residual value guarantee, covenants or financial restrictions.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: LEASES (Continued)
−Removed: We accounted for the Electric Fleet Two Lease as an operating lease.
−Removed: Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was appro ximately 7.3 % and three years , respectively.
−Removed: As of December 31, 2023, we have not received some of the equipment contracted under the Electric Fleet Two Lease.
−Removed: Since we have not taken possession of these assets and do not control them, we have not accounted for the associated right-of-use asset and lease obligation on our balance sheet as of December 31, 2023.
−Removed: The third of the Electric Fleet Leases (the "Electric Fleet Three Lease", and collectively with the Electric Fleet One Lease and the Electric Fleet Two Lease, the “Electric Fleet Leases”) commenced on December 19, 2023, when we received some of the equipment associated with the third FORCE SM electric-powered hydraulic fracturing fleet.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 0.1 million and no variable lease payments.
−Removed: During the year ended December 31, 2023, the Company incurred initial direct costs of approximately $ 1.4 million to place the leased equipment into its intended use, which are included in the right-of-use asset cost related to the Electric Fleet Three Lease .
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
−Removed: In management's judgment the exercise of neither the renewal option nor the purchase option is reasonably assured.
−Removed: In addition to fixed rent payments, the Electric Fleet Three Lease contains variable payments based on equipment usage.
−Removed: The Electric Fleet Three Lease does not include a residual value guarantee, covenants or financial restrictions.
−Removed: We accounted for the Electric Fleet Three Lease as an operating lease.
−Removed: Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was appro ximately 7.3 % and 3.0 years , respectively.
−Removed: As of December 31, 2023, we have not received some of the equipment contracted under the Electric Fleet Three Lease.
−Removed: Since we have not taken possession of these assets and do not control them, we have not accounted for the associated right-of-use asset and lease obligation on our balance sheet as of December 31, 2023.
−Removed: The Electric Fleet Lease on the fourth FORCE SM electric-powered hydraulic fracturing fleet has not yet commenced.
−Removed: We currently do not control the assets under this lease because they are currently being manufactured by the vendor and we have not taken possession of the assets.
−Removed: The delivery of the FORCE SM electric-powered hydraulic fracturing fleets is as each fleet is manufactured .
−Removed: We currently expect to receive the remaining equipment associated with the second and third fleets and all equipment associated with the fourth fleet in the first half of 2024.
−Removed: Giv en that the Company has not yet taken possession of the assets under these leases, the Company has not accounted for the associated right-of-use asset and lease obligation on its balance sheet as of December 31, 2023.
−Removed: In October 2022, we entered into a real estate lease contract for 5.3 years (the "Real Estate Two Lease") with a commencement date of March 1, 2023.
−Removed: During the year ended December 31, 2023 , the Company made lease payments of approxim ately $ 0.3 million.
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
−Removed: In addition to the contractual lease period, the contract includ es two optional renewals of one year each, and in management's judgment the exercise of the renewal option is not reasonably assured.
−Removed: The contract does not include a residual value guarantee, covenants or financial restrictions.
−Removed: Further, the Real Estate Two Lease does not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for our Real Estate Two Lease as an operating lease.
−Removed: Our assumptions resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: We did not account for the land separately from the building of the Real Estate Two Lease because we concluded that the accounting effect was insignificant.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was approximately 6.3 % and 4.3 years, respectively.
−Removed: As part of the Silvertip Acquisition, we assumed two real estate lease contracts (the "Silvertip One Lease" and "Silvertip Two Lease," and collectively the "Silvertip Leases") with remaining terms of 4.8 years and 6.1 years, respectively, from the Silvertip Acquisition Date.
−Removed: During the year ended December 31, 2023, we extended the Silvertip One Lease for an additional 1.3 years.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 0.2 million and $ 0.3 million on the Silvertip One Lease and the Silvertip Two Lease, respectively.
−Removed: The assets and liabilities under these contracts are recorded in our wireline operating segment within our Wireline reportable segment.
−Removed: Th e Silvertip Leases do not have any renewal options, residual value guarantees, covenants or financial restrictions.
−Removed: Further, the Silvertip Leases do not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for the Silvertip One Lease and the Silvertip Two Lease as operating leases.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: We did not account for the land separately from the building of the real estate leases because we concluded that the accounting effect was insignificant.
−Removed: As of December 31,
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: LEASES (Continued)
−Removed: 2023, the weighted average discount rate and remaining lease term on the Silvertip One Lease was approximately 6.3 % and 4.9 years, respectively.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term for the Silvertip Two Lease was approximately 2.1 % and 4.9 years, re spectively.
−Removed: In March 2023, we entered into a real estate lease contract for 5.7 years (the "Silvertip Three Lease"), with a commencement date of April 1, 20 23.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approxim ately $ 0.1 million on the Silvertip Three Lease.
−Removed: The assets and liabilities under this contract are recorded in our wireline operating segment within our Wireline reportable segment.
−Removed: The cont ract does not include a residual value guarantee, covenants or financial restrictions.
−Removed: Further, the Silvertip Three Lease does not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for the Silvertip Three Lease as an operating lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: We did not account for the land separately from the building of the Silvertip Three Lease because we concluded that the accounting effect wa s insignificant.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term on the Silvertip Three Lease was approximately 6.3 % and 4.9 years, respectively.
−Removed: On June 1, 2023, we commenced an office space lease contract for 5.0 years (the "Silvertip Office Lease").
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 0.1 million on the Silvertip Office Lease.
−Removed: The assets and liabilities under this contract are recorded in our wireline operating segment within our Wireline reportable segment.
−Removed: The contract does not include a residual value guarantee, covenants or financial restrictions.
−Removed: Further, the Silv ertip Office Lease does not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for the Silvertip Office Lease as an operating lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was approximately 6.5 % and 4.4 years, respectively.
−Removed: In August 2023, in connection with the relocation of our corporate office, we entered into an office space lease contract for 2.1 years (the "Corporate Office Lease"), with a commencement date of September 8, 2023.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 0.02 million on the Corporate Office Lease.
−Removed: The assets and liabilities under this contract are recorded in our corporate administrative function.
−Removed: I n addition to the contractual lease period, the contract includes an optional renewal for 0.8 years, and in management's judgment the exercise of the renewal option is not reasonably assured.
−Removed: The cont ract does not include a residual value guarantee, covenants or financial restrictions.
−Removed: Further, the Corporate Office Lease does not contain variability in payments resulting from either an index change or rate change.
−Removed: We accounted for the Corporate Office Lease as an operating lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term.
−Removed: As of December 31, 2023, the weighted average discount rate and remaining lease term was approximately 7.1 % and 1.8 years, respectively.
−Removed: As of December 31, 2023, our total operating lease right-of-use asset cost wa s $ 85.8 million, and accumulated amortization was $ 7.2 million.
−Removed: As of December 31, 2022, our total operating lease right-of-use ass et cost was $ 4.6 million, and accumulated amortization was $ 1.5 million.
+Added: Description of Leases
+Added: We have operating leases for five FORCE ® electric-powered hydraulic fracturing equipment fleets (the “Electric Fleet Leases”), facilities and office space.
+Added: The terms and conditions of these leases vary by the type of the underlying asset.
+Added: We did not account for land separately from buildings under our leases of facilities because we concluded that the accounting effect was insignificant.
+Added: Our operating leases do not include residual value guarantees, covenants or financial restrictions.
+Added: Further, our operating leases do not contain variability in payments resulting from either an index change or rate change.
+Added: We assumed two leases for facilities as part of our acquisition of Silvertip Completion Services Operating, LLC on November 1, 2022.
+Added: Our operating leases have remaining lease terms of approximately 0.8 years to 3.9 years as of December 31, 2024.
+Added: Our operating leases have renewal options ranging from none to three renewal options of up to one year each at the end of their current contractual lease periods.
+Added: Further, our Electric Fleet Leases have options to purchase the underlying equipment at the end of their initial term of approximately three years or at the end of each renewal period.
+Added: However, in management's judgment the exercise of neither the renewal options nor the purchase options are reasonably assured for any lease.
+Added: In addition to fixed rent payments, the Electric Fleet Leases contain variable payments based on equipment usage.
+Added: The right-of-use assets and liabilities related to the Electric Fleet Leases are included in our Hydraulic Fracturing reportable segment, related to leases for facilities are included in our Hydraulic Fracturing and Wireline reportable segments, and related to office space are included in our Wireline reportable segment and our corporate administrative function.
+Added: Year Ended December 31,
+Added: (in thousands) 2024 2023
+Added: Operating lease right of use cost $ 182,130 $ 85,775
+Added: Operating lease amortization of right-of-use assets 49,836 7,192
+Added: Net Book Value of Operating Leases $ 132,294 $ 78,583
Finance Leases
Description of Lease
−Removed: In January 2023, we entered into a three-year equipment lease contract (the "Power Equipment Lease") for certain power generation equipmen t with a commencement date of August 23, 2023.
−Removed: During the year ended December 31, 2023, the Company made lease payments of approximately $ 5.7 million o n the Power Equipment Lease.
−Removed: The assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
+Added: We have a three-year equipment lease contract (the "Power Equipment Lease") for certain power generation equipmen t.
In addition t o the contractual lease period, the contract includes an optional renewal for one year , and in management's judgment the exercise of the renewal option is not reasonably assured.
1 unchanged sentence
Further, the Power Equipment Lease does not contain variability in payments resulting from either an index change or rate change.
+Added: The right-of-use assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
We accounted for the Power Equipment Lease as a finance lease.
−Removed: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term, the present value of lease payments being equal to or in excess of substantially all of the fair value of the underlying assets and the lease term being the major part of the remaining economic life
+Added: This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term, the present value of lease payments being equal to or in excess of substantially all of the fair value of the underlying assets and the lease term being the major part of the remaining economic life of the underlying assets.
+Added: Year Ended December 31,
+Added: (in thousands) 2024 2023
+Added: Finance lease right of use cost $ 54,842 $ 52,612
+Added: Finance lease amortization of right-of-use assets 24,129 5,163
+Added: Net Book Value of Finance Leases $ 30,713 $ 47,449
+Added: The components of lease costs are as follows:
PROPETRO HOLDING CORP.
1 unchanged sentence
LEASES (Continued)
−Removed: of the underlying assets.
−Removed: As of December 31, 2023 , the weighted average discount rate and remaining lease term was approximately 7.3 % and 2.6 years , respectively.
−Removed: As of December 31, 2023, the total finance lease right-of-use asset cost was approximat ely $ 52.6 million , and accumulated amortization was approximately $ 5.2 million .
−Removed: As of December 31, 2022, we had no finance lease right-of-use assets .
+Added: Year Ended December 31,
+Added: (in thousands) 2024 2023 2022
+Added: Operating lease cost $ 48,759 $ 6,636 $ 682
+Added: Finance lease cost:
+Added: Amortization of right-of-use assets 24,129 5,163 —
+Added: Interest on lease liabilities 2,892 1,014 —
+Added: Total finance lease cost 27,021 6,177 —
+Added: Variable lease cost 3,950 144 —
+Added: Short-term lease cost 833 830 825
+Added: Short-Term Leases
+Added: We elected the practical expedient option, consistent with ASC 842, to exclude leases with a term of twelve months or less ("short-term lease") from our balance sheet and continue to record short-term leases as a period expense.
+Added: Initial Direct Costs
+Added: We elected to analogize to the measurement guidance of ASC 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs.
+Added: The Company incurred initial direct costs of approximately $ 25.5 million , $ 25.0 million during the years ended December 31, 2024 and 2023, respectively , to place the leased equipment into its intended use, which are included in the right-of-use assets cost related to our Electric Fleet Leases.
+Added: No initial direct costs were incurred during the year ended December 31, 2022.
+Added: Supplemental Cash Flow Information
+Added: Supplemental cash flow information related to leases are as follows:
+Added: Year Ended December 31,
+Added: (in thousands) 2024 2023 2022
+Added: Cash paid for amounts included in the measurements of lease liabilities:
+Added: Operating cash flows from operating leases $ 34,688 $ 4,573 $ 748
+Added: Operating cash flows from finance lease 2,892 1,014 —
+Added: Financing cash flows from finance lease 17,676 4,663 —
+Added: Noncash lease obligations arising from obtaining right-of-use assets related to:
+Added: Operating leases (1)
+Added: 70,856 56,108 605
+Added: Finance lease (2)
+Added: 2,230 52,612 —
+Added: (1) D uring the year ended December 31, 2024, we recorded noncash operating lease obligations a rising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases.
+Added: During the year ended December 31, 2023, we recorded noncash operating lease obligations a rising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases, our execution of facilities and office leases and our extension of a facilities lease .
+Added: (2) During the year ended December 31, 2024, we recorded noncash finance lease obligations related to additional rent on the Power Equipment Lease.
+Added: During the year ended December 31, 2023 , we recorded noncash finance lease obligations arising from obtaining right-of-use assets related to the commencement of the Power Equipment Lease.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: LEASES (Continued)
+Added: Lease Terms and Discount Rates
+Added: Lease terms and discount rates are as follows:
+Added: Weighted average remaining lease term:
+Added: Operating leases 2.4 years 3.1 years
+Added: Finance leases 1.6 years 2.6 years
+Added: Weighted average discount rate:
+Added: Operating leases 7.0 % 7.1 %
+Added: Finance leases 7.3 % 7.3 %
+Added: The discount rates used for our operating and finance leases are determined based on the weighted average annual interest rate on our ABL Credit Facility effective at the time of inception or modification of each lease.
Maturity Analysis of Lease Liabilities
7 unchanged sentences
Present value of future lease payments (lease obligation) 97,912 32,504
−Removed: The total cash paid for amounts included in the measurement of our operating lease liability during the year ended December 31, 2023, was approximately $ 4.6 million.
−Removed: The total cash paid for amounts included in the measurement of our finance lease liabilities during the year ended December 31, 2023, was approximate ly $ 4.7 million.
−Removed: During the year ended December 31, 2023 , we recorded non-cash operating lease obligations totaling approximately $ 56.1 million arising from obtaining right-of-use assets related to our execution of the Real Estate Two Lease, the Silvertip Three Lease, the Silvertip Office Lease, the Electric Fleet One Lease, the Electric Fleet Two Lease, the Electric Fleet Three Lease and the Corporate Office Lease, and our extension of the Silvertip One Lease.
−Removed: During the year ended December 31, 2023 , we recorded non-cash finance lease obligations totaling approximately $ 52.6 million arising from obtaining right-of-use assets related to the commencement of the Power Equipment Lease.
−Removed: During the year ended December 31, 2022, total cash paid for amounts included in the measurement of our operating lease liabilities was approximately $ 0.7 million .
−Removed: During the year ended December 31, 2022, we recorded a non-cash operating lease obligation of approximately $ 0.6 million as a result of our execution of the Maintenance Facility Lease .
−Removed: Short-Term Leases
−Removed: We elected the practical expedient option, consistent with ASC 842, to exclude leases with a term of twelve months or less ("short-term lease") from our balance sheet and continue to record short-term leases as a period expense.
−Removed: Initial Direct Costs
−Removed: We elected to analogize to the measurement guidance of ASC 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs.
−Removed: For the years ended December 31, 2023, 2022 and 2021 , we recorded operating lease cost of approximatel y $ 6.6 million, $ 0.7 million and $ 0.3 million, respectively, in our consolidated statements of operations.
−Removed: For the year ended December 31, 2023, we recorded finance lease cost of approximately $ 6.2 million in our consolidated statements of operations comprising of amortization of finance right-of-use asset of approximately $ 5.2 million and interest on finance lease liabilities of approximately $ 1.0 million.
−Removed: For the years ended December 31, 2022 and 2021 , we had no finance lease costs.
−Removed: For the years ended December 31, 2023, 2022 and 2021 , we recorded variable lease cost of approximatel y $ 0.1 million , $ 0 and $ 0 , respectively, in our consolidated statements of operations.
−Removed: For the years ended December 31, 2023, 2022 and 2021 , we recorded short-term lease cost of approximatel y $ 0.8 million , $ 0.8 million and $ 0.6 million, respectively, in our consolidated statements of operations.
−Removed: PROPETRO HOLDING CORP.
−Removed: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
COMMITMENTS AND CONTINGENCIES
1 unchanged sentence
These commitments are designed to assure sources of supply and are not expected to be in excess of normal requirements.
+Added: We entered into a contractual arrangement with an equipment manufacturer to purchase mobile natural gas-fueled power generation equipment for our PROPWR business line, with a total cost of $ 122.0 million, of which approximately $ 103.7 million, representing progress payments beyond the initial down payment on this equipment, will be financed.
+Added: We currently expect to start receiving this equipment from the end of the second quarter of 2025 through early 2026.
+Added: We entered into a contractual arrangement with another related equipment manufacturer to purchase additional natural gas-fueled power generation equipment for our PROPWR business line, with a total cost of $ 25.0 million.
+Added: We currently expect to receive these generators in the first half of 2025.
+Added: The power generation equipment from these contractual arrangements represent total capacity of 140 megawatts.
+Added: PROPETRO HOLDING CORP.
+Added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
+Added: COMMITMENTS AND CONTINGENCIES (Continued)
We entered into the Electric Fleet Leases, which contain options to extend the leases or purchase the equipment at the end of each lease or at the end of each subsequent renewal period.
−Removed: As of December 31, 2023, three of the Electric Fleet Leases commenced when the Company took possession of all equipment associated with the first FORCE SM electric-powered hydraulic fracturing fleet and some of the equipment associated with the second and third fleets.
−Removed: Lease payments pertaining to the remaining equipment under the second, third and fourth Electric Fleet Leases are expected to commence when the Company takes possession of the associated equipment .
−Removed: We currently expect to receive the remaining equipment associated with the second and third fleets and all equipment associated with the fourth fleet in the first half of 2024.
+Added: As of December 31, 2024, all five of the Electric Fleet Leases commenced when the Company took possession of all equipment associated with the first four FORCE ® electric-powered hydraulic fractu ring fleets and some of the equipment associated with the fifth fleet under these leases.
+Added: Lease payments pertaining to the remaining equipment under the fifth Electric Fleet Lease is expected to commence when the Company takes possession of the remaining associated equipment .
+Added: We currently expect to receive the remaining equipment associated with the fifth fleet in the first half of 2025.
The total estimated contractual commitment in connection with the Electric Fleet Leases excluding the cost associated with the option to purchase the equipment at the end of each lease is approximately $ 121.8 million .
4 unchanged sentences
The shortfall fee represents liquidated damages and is either a fixed percentage of the purchase price for the mi nimum volumes or a fixed price per ton of unpurchased volumes.
−Removed: Our agreements with the Sand Suppliers expire at different times prior to December 31, 2025.
+Added: Our agreements with the Sand Suppliers expire a t December 31, 2025.
Our sand agreement with one of our Sand Suppliers that will expire on December 31, 2025, has a take-or-pay commitment o f $ 1.5 million.
3 unchanged sentences
Legal Matters
−Removed: In September 2019, a complaint, captioned Richard Logan, Individually and On Behalf of All Others Similarly Situated, Plaintiff, v.
−Removed: ProPetro Holding Corp., et al., (the "Logan Lawsuit"), was filed against the Company and certain of its then current and former officers and directors in the U.S.
−Removed: District Court for the Western District of Texas.
−Removed: As amended by later complaints, the Logan Lawsuit asserted claims on behalf of a putative class of shareholders who purchased the Company’s common stock between March 17, 2017 and March 13, 2020 or purchased the Company's common stock pursuant to the Company's IPO in March 2017.
−Removed: Plaintiffs alleged violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder, and Sections 11 and 15 of the Securities Act against the Company, certain former officers and current and former directors, alleging that the defendants made allegedly inaccurate or misleading statements or omissions about the Company's business, operations and prospects.
−Removed: On August 11, 2022, the Company entered into a settlement of the Logan Lawsuit, pursuant to which the Company's insurers have paid a cash sum into a settlement fund to be distributed to members of the putative class.
−Removed: On May 11, 2023, the settlement was granted final court approval.
+Added: We have been named in various claims, lawsuits or threatened actions in the ordinary course of our business.
+Added: We intend to defend these matters vigorously;
+Added: however, litigation is inherently unpredictable, and the ultimate outcome or effect of any claim, lawsuit or action cannot be predicted with certainty.
+Added: As a result, there can be no assurance as to the ultimate outcome of any litigation matter.
+Added: Any claims against us, whether meritorious or not, could cause us to incur significant costs and expenses and require significant amounts of management and operational time and resources.
+Added: With respect to each matter or exposure, we have made an assessment, in accordance with GAAP, of the probability that the resolution of the matter would ultimately result in a loss.
+Added: When we determine that an unfavorable resolution of a matter is probable and such amount of loss can be estimated, we record a liability at the time that both of these criteria are met.
+Added: Our management believes that we have recorded adequate accruals for any liabilities that may reasonably be expected to result from these matters.
+Added: In the opinion of our management, no pending or known threatened claims, actions or proceedings against us are expected to have a material adverse effect on our consolidated financial position, results of operations or cash flows.
Environmental and Equipment Insurance
5 unchanged sentences
The amount of such future expenditures is not determinable due to several factors, including the unknown magnitude of possible regulation or liabilities, the unknown timing and extent of the corrective actions which may be required, the determination of the Company's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or indemnification.
+Added: The Company is self-insured up to $ 10 million per occurrence for certain losses arising from or attributable to fire and/or explosion at the wellsites that do not have qualified fire suppression measures.
+Added: No accrual was recorded in our financial statements in connection with this self-insurance strategy because the occurrence of fire and/or explosion cannot be reasonably estimated.
PROPETRO HOLDING CORP.
1 unchanged sentence
COMMITMENTS AND CONTINGENCIES (Continued)
−Removed: The Company is self-insured up to $ 10 million per occurrence for certain losses arising from or attributable to fire and/or explosion at the wellsites that do not have qualified fire suppression measures.
−Removed: No accrual was recorded in our financial statements in connection with this self-insurance strategy because the occurrence of fire and/or explosion cannot be reasonably estimated.
Regulatory Audits
In 2020, the Texas Comptroller of Public Accounts (the “Comptroller”) commenced a routine audit of the Company's motor vehicle and other related fuel taxes for the periods of July 2015 through December 2020.
−Removed: As of December 31, 2023, the audit was substantially compete and the Company accrued for an estimated settlement expense of $ 6.0 million .
−Removed: In January 2022, we entered into a settlement agreement with the Comptroller for a $ 10.7 million tax refund, net of consulting fees, in connection with certain limited sales and use tax for the audit period July 1, 2015 through December 31, 2018.
−Removed: The net refund to the company of $ 10.7 million was recorded as part of other income in our statement of operations during the year December 31, 2022.
−Removed: During the year ended December 31, 2021, we recorded a net refund of approximately $ 2.1 million.
+Added: As of December 31, 2024, the audit was substantially complete and the Company accrued for an estimated settlement expense of $ 6.0 million .
In May 2022, the Company received a notification from the Comptroller that it will commence a routine audit of the Company’s gross receipt taxes, which will routinely cover up to a four-year period.
−Removed: As of December 31, 2023, the audit is still ongoing and the final outcome cannot be reasonably estimated.
−Removed: In June 2023, the Company received confirmation from the Comptroller that it will commence a routine audit of the Company's direct payment sales tax in August 2023 for the period February 1, 2020 to December 31, 2022.
−Removed: As of December 31, 2023, the audit is still ongoing and the final outcome cannot be reasonably estimated.
−Removed: SUBSEQUENT EVENTS
−Removed: Subsequent to year-end, we received some of the remaining equipment associated with our second, third and fourth FORCE SM electric-powered hydraulic fracturing fleets under the Electric Fleet Leases, resulting in the addition of non-cash operating lease obligations totaling approximately $ 16.3 million arising from obtaining right-of-use assets related to this equipment.
−Removed: Subsequent to year-end, we repurchased an additional 2.6 million shares under our share repurchase program amounting to $ 19.5 million, bringing the total repurchases since the inception of the program to 8.4 million shares.
+Added: As of December 31, 2024, the audit was nearing completion and the Company accrued for an estimated settlement expense of $ 0.8 million .
+Added: VARIABLE INTEREST ENTITY
+Added: A VIE is an entity with any of the following characteristics:
+Added: (i) the entity does not have enough equity to finance its activities without additional financial support, (ii) the equity holders, as a group, lack the characteristics of a controlling financial interest or (iii) the entity is structured with non-substantive voting rights.
+Added: Consolidation of a VIE is required for the party deemed to be the primary beneficiary, if any.
+Added: The primary beneficiary is the party who has both (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
+Added: On November 1, 2024, we sold our cementing business located in Vernal, Utah, to a Big 4, which is solely owned by a former employee as part of a strategic repositioning.
+Added: We received a promissory note for $ 13.0 million as consideration.
+Added: The note receivable is secured by substantially all assets of Big 4 and the former employee’s ownership interests in and distributions from the entity.
+Added: The note receivable is to be paid to the Company in quarterly installments with interest of 10 % per annum from March 31, 2025 to December 31, 2029.
+Added: We evaluated our note receivable from Big 4 for VIEs in accordance with ASC 810, Consolidation .
+Added: The Company holds a variable interest in Big 4 and Big 4 is a VIE due to its lack of sufficient equity to finance its operations without additional subordinated financial support from the Company.
+Added: The note receivable from Big 4 is considered subordinated financial support and represents a variable interest to the Company in Big 4.
+Added: Assets and liabilities related to the Company’s variable interest in Big 4 included in the Company’s consolidated balance sheets are limited to the unpaid balance of the note receivable and any accrued interest.
+Added: The Company’s maximum exposure to loss as a result of its involvement with Big 4 is also limited to the unpaid balance of the note receivable and any accrued interest.
+Added: The consolidation of Big 4 is not required as the Company is not the primary beneficiary of this VIE as we do not have the power to direct the activities that most significantly impact Big 4’s economic performance.
+Added: We consider such activities to include performing customer contract obligations, maintaining and establishing customer relationships, and managing costs, among other operational activities.
+Added: We do not have any control over such activities.
+Added: Such power is held by Big 4’s sole owner.
+Added: We account for the note receivable (our variable interest) at amortized cost.
+Added: As of December 31, 2024, the carrying value of the note receivable including interest was $ 13.2 million.
+Added: Of the carrying value at December 31, 2024 the amount collectible within one year was $ 2.1 million and the amount collectible beyond one year was $ 11.1 million , which are included in our consolidated balance sheet under other current assets and other non current assets, respectively.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.