ProPetro Holding Corp.
10/29/2026 | Press release | Distributed by Public on 10/29/2026 05:48
Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The financial information, discussion and analysis that follow should be read in conjunction with our consolidated financial statements and the related notes included in our Form 10-K as well as the financial and other information included therein.
Unless otherwise indicated, references in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" to the "Company," "we," "our," "us" or like terms refer to ProPetro Holding Corp. and its subsidiaries.
Overview
We are a leading integrated energy services company headquartered in Midland, Texas. We provide innovative hydraulic fracturing, wireline and other complementary services to upstream oil and gas companies engaged in the exploration and production ("E&P") of North American oil and natural gas resources, and we provide power generation services to customers both within and outside the oil and gas industry. Our completions operations are primarily focused in the Permian Basin, where we have cultivated longstanding customer relationships with some of the region's most active and well-capitalized E&P companies. The Permian Basin is widely regarded as one of the most prolific oil-producing areas in the United States, and we believe we are one of the leading providers of completion services in the region. Through our subsidiary, ProPetro Energy Solutions, LLC ("PROPWR"), we provide turnkey power generation services to oil and gas producers and non-oil and gas applications such as general industrial projects and data centers using mobile power generation equipment installed at customers' sites.
Our completion services include our operating segments comprised of hydraulic fracturing, wireline and cementing operations. Our hydraulic fracturing operations account for approximately 66.7% of our total revenue for the nine months ended September 30, 2026. Our total available hydraulic horsepower ("HHP") as of September 30, 2026, was 1,205,500 HHP, which was comprised of 452,500 HHP of our Tier IV DGB dual-fuel equipment, 312,000 HHP of FORCE® electric-powered equipment, 435,000 HHP of conventional Tier II equipment and 6,000 HHP of natural-gas-powered equipment. Our hydraulic fracturing fleets range from approximately 50,000 to 80,000 HHP depending on the job design and customer demand at the wellsite. Our completions equipment has been designed to handle the operating conditions commonly encountered in the Permian Basin and the region's increasingly high-intensity well completions (including simultaneous hydraulic fracturing ("Simul-Frac"), which involves fracturing multiple wellbores at the same time), which are characterized by longer horizontal wellbores, more stages per lateral and increasing amounts of proppant per well. With the industry transition to lower emissions equipment and Simul-Frac, in addition to several other changes to our customers' job designs, we believe that our available fleet capacity could decline if we decide to reconfigure our fleets to increase active HHP and backup HHP at wellsites. In 2021, we began to transition our fleet from traditional equipment to Tier IV DGB dual-fuel equipment. In 2022, we entered into three-year electric fleet leases which commenced in 2023 and 2024 for four FORCE® electric-powered hydraulic fracturing fleets with 60,000 HHP per fleet and in 2024, we entered into an additional three-year lease for a fifth FORCE® electric-powered hydraulic fracturing fleet with 72,000 HHP (collectively the "Electric Fleet Leases"). The equipment under these leases represents all of our FORCE® electric-powered equipment. We currently have 28 wireline units and 31 cementing units.
In December 2024, we formed PROPWR to provide power generation services and represent our Power Generation operating segment. This subsidiary began revenue-generating activities during the third quarter of fiscal year 2025 and has entered into contractual arrangements with equipment manufacturers to purchase mobile natural gas-fueled power generation equipment, including turbine generator sets, reciprocating engines, auxiliary equipment and battery energy storage solution equipment. We have received certain units of this equipment and anticipate all remaining ordered units will be delivered by late fiscal year 2028. Most recently, in September 2026, PROPWR announced contracts to provide approximately 230 megawatts of power generation capacity to support natural gas processing infrastructure in the Permian Basin, with full deployment expected in early 2028. As of September 30, 2026, we had total capacity committed under contracts of approximately 510 megawatts and total delivered or on-order generation capacity of approximately 1.1 gigawatts excluding equipment not yet ordered under the global framework agreement with Caterpillar Inc. described in "Note 13 - Commitments and Contingencies." Our total delivered or on-order power generation equipment is split approximately 80% and 20% between high-efficiency reciprocating engine generators and low emissions modular turbines, respectively. We continue to actively negotiate additional contracts amid increasing demand for power solutions and to explore various financing alternatives for our power equipment.
We primarily provide hydraulic fracturing, wireline and cementing completion services to E&P companies in the Permian Basin and power generation services to oil and gas producers and non-oil and gas applications such as general industrial projects and data centers. We compete against different companies in each service and product line we offer. The markets in which we operate are highly competitive. To be successful, an energy services company must provide services and equipment that meet the specific needs of oil and natural gas E&P companies at competitive prices. Competitive factors impacting sales of our services are price, reputation, technical expertise, emissions profile, service and equipment design quality, and health and safety standards. Although we believe our customers consider all of these factors, we believe price is a key factor in E&P companies' criteria in choosing a service provider. However, we have recently observed the energy industry and our customers shift to lower emissions equipment, which we believe will be an increasingly important factor in an E&P company's selection of a
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service provider. The transition to lower emissions equipment has been challenging for companies in the energy service industry because of the capital requirements, lack of large scale deployment of certain new technology such as electric-powered equipment, and the pricing of our services and expected return on invested capital. While we seek to price our services competitively, we believe many of our customers elect to work with us based on our operational efficiencies, productivity, equipment quality and technology, reliability, ability to manage multifaceted logistics challenges, commitment to safety and the ability of our people to handle the most complex Permian Basin well completions and power generation challenges.
We believe that our substantial market presence in the Permian Basin positions us well to capitalize on drilling and completion activity and power demand in the region. Primarily, our operational focus has been in the Permian Basin's Midland sub-basin, where our customers have operated. However, we have increased our operations in the Delaware sub-basin and are well-positioned to support further increases to our activity in this area in response to demand from our customers. Over time, we expect the Permian Basin's Midland and Delaware sub-basins to continue to command a disproportionate share of future North American E&P spending.
Additionally, we believe the significant natural gas production in the Permian Basin will become a natural market for power-intensive businesses including data centers and other industrial businesses seeking alternative solutions for reliable and available electricity requirements which are not dependent on grid or public utility limitations.
Our Hydraulic Fracturing, Wireline, Cementing and Power Generation operating segments meet the criteria of a reportable segment. Prior to the third quarter of fiscal year 2025, our Power Generation segment did not meet the quantitative thresholds for a reportable segment. Accordingly, it was shown in the "All Other" category. Effective as of the third quarter of fiscal year 2025, Power Generation is shown as a reportable segment since it meets the criteria of a reportable segment. Additionally, our corporate administrative activities do not involve business activities from which they may earn revenues. As a result, corporate administrative expenses and intersegment revenue have been included under "Reconciling Items." Corporate administrative expenses are included in the reconciliation of net (loss) income to Adjusted EBITDA below. Prior period segment information has been revised to conform to our current presentation. For additional financial information on our reportable segments presentation, see "Note 6 - Reportable Segment Information."
Pioneer Pressure Pumping Acquisition
On December 31, 2018, we consummated the purchase of certain pressure pumping assets and real property from Pioneer Natural Resources USA, Inc. ("Pioneer") and Pioneer Pumping Services, LLC (the "Pioneer Pressure Pumping Acquisition") in exchange for 16.6 million shares of our common stock and $110.0 million in cash. 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 until ExxonMobil's sale of these shares in May 2026. The Company currently provides pressure pumping, wireline and other services to ExxonMobil and previously provided such services to Pioneer.
On April 22, 2024, we entered into a sub-agreement for Hydraulic Fracturing Services with XTO Energy Inc., a wholly owned subsidiary of ExxonMobil ("XTO"), pursuant to which we will provide hydraulic fracturing, wireline and pumpdown services with two committed FORCE® electric-powered hydraulic fracturing fleets and the option to add a third FORCE® fleet (also with wireline and pumpdown services) for a certain number of contracted hours with respect to each fleet, subject to certain termination and release rights. We expect this agreement will expire in late 2026. At this time, we do not expect such agreement to be renewed or extended and, if we are not able to procure additional work from XTO, we will be required to redeploy the equipment associated with the affected fleets with other customers. Our inability to redeploy our equipment at similar utilization or pricing levels and such loss could have an adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels. We continue to actively negotiate with other customers and potential customers to redeploy this equipment.
Commodity Price and Other Economic Conditions
The oil and gas industry has traditionally been volatile and is characterized by a combination of long-term, short-term and cyclical trends, including domestic and international supply and demand for oil and gas, current and expected future prices for oil and gas and the perceived stability and sustainability of those prices, and capital investments of E&P companies toward their development and production of oil and gas reserves. The oil and gas industry is also impacted by general domestic and international economic conditions such as supply chain disruptions and inflation, war and political instability in oil producing countries, government regulations (both in the United States and internationally), levels of consumer demand, adverse weather conditions, and other factors that are beyond our control.
The geopolitical and macroeconomic consequences of the war between Israel, Iran and the United States have contributed to significant volatility in crude oil prices, with the spot price per barrel of the West Texas Intermediate ("WTI") crude oil price increasing to approximately $91 per barrel on average in March 2026, before intermittently decreasing in subsequent months,
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and increasing to approximately $97 per barrel on average in September 2026 compared to approximately $58 per barrel on average in December 2025 as a result of disruptions to crude oil production in the Middle East and global shipping constraints. In addition, the war between Russia and Ukraine, including the associated sanctions, events in Venezuela and actions by OPEC+ have contributed to volatility in supply and demand dynamics for crude oil and associated volatility in crude oil pricing in recent years. Additionally, we have recently experienced an increase in the Permian Basin rig count to 270 at the end of September 2026, according to the Baker Hughes Company, after experiencing several months of rig count decreases from 2023 onwards, which has increased the demand for completion services in the near term although demand remains less predictable and the pressure on pricing of our services continues to persist.
Sustained levels of high inflation likewise caused the U.S. Federal Reserve and other central banks to increase benchmark interest rates, and to the extent elevated inflation remains, we may experience further cost increases for our operations, including interest rates, labor costs and equipment. We cannot predict any future trends in the rate of inflation and crude oil prices. A significant increase in or continued high levels of inflation, to the extent we are unable to timely pass-through the cost increases to our customers, further volatility in crude oil prices, or potential changes in the United States' trade policy, including the imposition of tariffs and the resulting consequences, would negatively impact our business, financial condition and results of operations.
Government regulations and investors are demanding the oil and gas industry transition to a lower emissions operating environment, including upstream and energy service companies. As a result, we are working with our customers and equipment manufacturers to transition our equipment to a lower emissions profile. Currently, a number of lower emission solutions for pumping equipment, including Tier IV DGB dual-fuel, FORCE® electric, direct drive gas turbine and other technologies have been developed, and we expect additional lower emission solutions will be developed in the future. We are continually evaluating these technologies and other investment and acquisition opportunities that would support our existing and new customer relationships. The transition to lower emissions equipment is quickly evolving and will be capital intensive. Over time, we may be required to convert substantially all of our conventional Tier II equipment to lower emissions equipment. To the extent any of our customers have certain expectations or requirements with respect to emissions reductions from their contractors, if we are unable to continue to quickly transition to lower emissions equipment, the demand for our services could be adversely impacted.
If the Permian Basin rig count and market conditions improve, including improved pricing for our services and labor availability, and we are able to meet our customers' lower emissions equipment demands, we believe our operational and financial results will also improve. If the rig count or market conditions decline or do not improve in the future, and we are unable to increase our pricing or pass-through future cost increases to our customers, there could be a material adverse impact on our business, results of operations, and cash flows.
Related to our PROPWR® business line, U.S. power demand estimates continue to accelerate. This is due to a number of factors including, but not limited to, the growth in data center construction, aging transmission and distribution networks, extreme weather, unavailability of electricity in remote locations and long lead times for various electric infrastructure equipment. This increase in demand has been met by a fundamental shift in the commercial landscape whereby data centers and other large power customers have begun to increasingly rely on distributed power service providers like PROPWR. The sustainability of this favorable supply-demand dynamic in the power sector will depend on multiple factors, including continued demand growth for generative AI computing applications, supply chain availability for electrical equipment, potential regulatory changes, local opposition to data center development and the response by state and local governments, overall economic activity levels, the level and pace at which the power industry can invest in power infrastructure, and the pace of continued electrification-driven demand growth.
How We Evaluate Our Operations
Our management uses Adjusted EBITDA or Adjusted EBITDA margin to evaluate and analyze the performance of our various operating segments.
Adjusted EBITDA and Adjusted EBITDA Margin
We view Adjusted EBITDA and Adjusted EBITDA margin as important indicators of performance. We define EBITDA as our earnings, before (i) interest expense, (ii) income taxes and (iii) depreciation and amortization. We define Adjusted EBITDA as EBITDA, plus (i) loss/(gain) on disposal of assets and businesses, (ii) stock-based compensation, (iii) business acquisition contingent consideration adjustments, (iv) other expense/(income), (v) other unusual or nonrecurring (income)/expenses, such as impairment expenses, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements and (vi) retention bonuses and severance expense. Adjusted EBITDA margin reflects our Adjusted EBITDA as a percentage of our revenues.
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Adjusted EBITDA and Adjusted EBITDA margin are supplemental measures utilized by our management and other users of our financial statements such as investors, commercial banks, and research analysts, to assess our financial performance because it allows us and other users to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation and amortization), nonrecurring (income)/expenses and items outside the control of our management team (such as income taxes). Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools and should not be considered as an alternative to net income/(loss), operating income/(loss), cash flow from operating activities or any other measure of financial performance presented in accordance with accounting principles generally accepted in the United States of America ("GAAP").
Note Regarding Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA margin are not financial measures presented in accordance with GAAP ("non-GAAP"), except when specifically required to be disclosed by GAAP in the financial statements. We believe that the presentation of Adjusted EBITDA and Adjusted EBITDA margin provides useful information to investors in assessing our financial condition and results of operations because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure, asset base, nonrecurring expenses (income) and items outside the control of the Company. Net income (loss) is the GAAP measure most directly comparable to Adjusted EBITDA. Adjusted EBITDA and Adjusted EBITDA margin should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as analytical tools because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. You should not consider Adjusted EBITDA or Adjusted EBITDA margin in isolation or as a substitute for an analysis of our results as reported under GAAP. Because Adjusted EBITDA and Adjusted EBITDA margin may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following tables set forth certain financial information with respect to the Company's reportable segments; intersegment revenues are shown under "Reconciling Items" (in thousands):
| Three Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Hydraulic Fracturing | Wireline | Cementing | Power Generation | Reconciling Items | Total | |||||||||||||||||||||||||||||||||
| Service revenue | $ | 235,155 | $ | 60,652 | $ | 37,422 | $ | 22,287 | $ | (132) | $ | 355,384 | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 45,434 | $ | 13,292 | $ | 7,053 | $ | 7,578 | $ | (13,745) | $ | 59,612 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 33,868 | $ | 4,845 | $ | 2,106 | $ | 3,558 | $ | 14 | $ | 44,391 | ||||||||||||||||||||||||||
|
Operating lease expense on FORCE® fleets (1)
|
$ | 15,758 | $ | - | $ | - | $ | - | $ | - | $ | 15,758 | ||||||||||||||||||||||||||
| Capital expenditures incurred | $ | 39,120 | $ | 2,214 | $ | 2,117 | $ | 128,020 | $ | - | $ | 171,471 | ||||||||||||||||||||||||||
|
Total assets September 30, 2026 (2)
|
$ | 950,088 | $ | 188,784 | $ | 77,160 | $ | 505,072 | $ | 467,306 | $ | 2,188,410 | ||||||||||||||||||||||||||
| Three Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Hydraulic Fracturing | Wireline | Cementing | Power Generation | Reconciling Items | Total | |||||||||||||||||||||||||||||||||
| Service revenue | $ | 210,190 | $ | 52,172 | $ | 31,637 | $ | 157 | $ | (240) | $ | 293,916 | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 35,393 | $ | 10,892 | $ | 5,591 | $ | (4,147) | $ | (12,565) | $ | 35,164 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 33,640 | $ | 5,774 | $ | 2,064 | $ | 167 | $ | 15 | $ | 41,660 | ||||||||||||||||||||||||||
|
Operating lease expense on FORCE® fleets (1)
|
$ | 14,863 | $ | - | $ | - | $ | - | $ | - | $ | 14,863 | ||||||||||||||||||||||||||
| Capital expenditures incurred | $ | 17,608 | $ | 1,763 | $ | 231 | $ | 78,751 | $ | - | $ | 98,353 | ||||||||||||||||||||||||||
|
Total assets December 31, 2025 (2)
|
$ | 841,180 | $ | 162,225 | $ | 69,396 | $ | 201,481 | $ | 16,608 | $ | 1,290,890 | ||||||||||||||||||||||||||
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| Nine Months Ended September 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| Hydraulic Fracturing | Wireline | Cementing | Power Generation | Reconciling Items | Total | |||||||||||||||||||||||||||||||||
| Service revenue | $ | 621,734 | $ | 179,994 | $ | 97,249 | $ | 33,817 | $ | (914) | $ | 931,880 | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 126,677 | $ | 38,384 | $ | 14,646 | $ | 1,531 | $ | (40,468) | $ | 140,770 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 100,341 | $ | 14,737 | $ | 6,287 | $ | 7,061 | $ | 42 | $ | 128,468 | ||||||||||||||||||||||||||
|
Operating lease expense on FORCE® fleets (1)
|
$ | 47,275 | $ | - | $ | - | $ | - | $ | - | $ | 47,275 | ||||||||||||||||||||||||||
| Capital expenditures incurred | $ | 66,661 | $ | 8,416 | $ | 5,598 | $ | 246,459 | $ | 9 | $ | 327,143 | ||||||||||||||||||||||||||
|
Total assets September 30, 2026 (2)
|
$ | 950,088 | $ | 188,784 | $ | 77,160 | $ | 505,072 | $ | 467,306 | $ | 2,188,410 | ||||||||||||||||||||||||||
| Nine Months Ended September 30, 2025 | ||||||||||||||||||||||||||||||||||||||
| Hydraulic Fracturing | Wireline | Cementing | Power Generation | Reconciling Items | Total | |||||||||||||||||||||||||||||||||
| Service revenue | $ | 725,330 | $ | 153,609 | $ | 100,713 | $ | 157 | $ | (326) | $ | 979,483 | ||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 155,717 | $ | 29,220 | $ | 18,307 | $ | (7,088) | $ | (38,699) | $ | 157,457 | ||||||||||||||||||||||||||
| Depreciation and amortization | $ | 110,575 | $ | 16,809 | $ | 6,024 | $ | 184 | $ | 58 | $ | 133,650 | ||||||||||||||||||||||||||
|
Operating lease expense on FORCE® fleets (1)
|
$ | 44,664 | $ | - | $ | - | $ | - | $ | - | $ | 44,664 | ||||||||||||||||||||||||||
| Capital expenditures incurred | $ | 59,010 | $ | 6,278 | $ | 5,145 | $ | 139,665 | $ | - | $ | 210,098 | ||||||||||||||||||||||||||
|
Total assets December 31, 2025 (2)
|
$ | 841,180 | $ | 162,225 | $ | 69,396 | $ | 201,481 | $ | 16,608 | $ | 1,290,890 | ||||||||||||||||||||||||||
(1)Represents amortization of right-of-use assets and interest expense on lease liabilities related to operating leases on our FORCE® electric-powered hydraulic fracturing fleets. This cost is recorded within cost of services in our condensed consolidated statements of operations and is included in Adjusted EBITDA.
(2)Total assets under "Reconciling Items" comprise cash on hand unallocated to segments, certain property, equipment and operating lease right-of-use assets pertaining to our corporate administrative activities.
A reconciliation of net income (loss) to Adjusted EBITDA is provided in the table below (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income (loss) | $ | 13,018 | $ | (2,365) | $ | 1,262 | $ | 82 | |||||||||||||||
| Depreciation and amortization | 44,391 | 41,660 | 128,468 | 133,650 | |||||||||||||||||||
| Interest expense | 4,263 | 2,110 | 9,934 | 5,651 | |||||||||||||||||||
| Income tax (benefit) expense | (1,446) | (704) | (1,187) | 2,780 | |||||||||||||||||||
| Loss (gain) on disposal of assets | (611) | (674) | (2,941) | 13,418 | |||||||||||||||||||
| Stock-based compensation | 6,021 | 4,625 | 16,642 | 12,695 | |||||||||||||||||||
| Business acquisition contingent consideration adjustments | (1,700) | (4,600) | (2,200) | (5,000) | |||||||||||||||||||
|
Other income, net (1)
|
(4,818) | (5,107) | (10,213) | (8,245) | |||||||||||||||||||
| Other general and administrative expense, net | - | 19 | - | 184 | |||||||||||||||||||
| Retention bonus and severance expense | 494 | 200 | 1,005 | 2,242 | |||||||||||||||||||
| Adjusted EBITDA | $ | 59,612 | $ | 35,164 | $ | 140,770 | $ | 157,457 | |||||||||||||||
(1)Other income for the three months ended September 30, 2026 is primarily comprised of interest income of $5.8 million, partially offset by a $0.8 million loss incurred due to a cementing job failure and approximately $0.2 million of other expenses. Other income for the nine months ended September 30, 2026 is primarily comprised of interest income of $10.7 million, and approximately $0.3 million of other income, partially offset by a $0.8 million loss incurred due to a cementing job failure. Other income for the three months ended September 30, 2025 is primarily comprised of a $2.0 million unrealized gain on short-term investment, tax refunds (net of advisory fees) totaling $1.9 million, insurance reimbursements of $0.8 million and other income of $0.4 million. Other income for the nine months ended September 30, 2025 is primarily comprised of a $2.3 million unrealized gain on short-term investment, tax refunds (net of advisory fees) totaling $2.3 million, adjustments to workers' compensation and general liability insurance premiums of $1.0 million, interest income from note receivable from sale of business of $0.9 million, insurance reimbursements of $0.8 million and $0.9 million of other income.
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Results of Operations
As of September 30, 2026, we conducted our business through four operating segments: Hydraulic Fracturing, Wireline, Cementing, and Power Generation.
The following table sets forth the results of operations for the periods presented:
| (in thousands, except for percentages) | Three Months Ended September 30, |
Change Increase (Decrease) |
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| 2026 | 2025 | $ | % | |||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Hydraulic Fracturing | $ | 235,155 | $ | 210,190 | $ | 24,965 | 11.9 | % | ||||||||||||||||||
| Wireline | 60,652 | 52,172 | 8,480 | 16.3 | % | |||||||||||||||||||||
| Cementing | 37,422 | 31,637 | 5,785 | 18.3 | % | |||||||||||||||||||||
| Power Generation | 22,287 | 157 | 22,130 | 14,095.5 | % | |||||||||||||||||||||
| Elimination of intersegment service revenue | (132) | (240) | (108) | (45.0) | % | |||||||||||||||||||||
| Total revenue | 355,384 | 293,916 | 61,468 | 20.9 | % | |||||||||||||||||||||
|
Cost of services (1)
|
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| Hydraulic Fracturing | 185,575 | 170,790 | 14,785 | 8.7 | % | |||||||||||||||||||||
| Wireline | 44,400 | 38,546 | 5,854 | 15.2 | % | |||||||||||||||||||||
| Cementing | 28,914 | 24,877 | 4,037 | 16.2 | % | |||||||||||||||||||||
| Power Generation | 10,988 | 2,527 | 8,461 | 334.8 | % | |||||||||||||||||||||
| Elimination of intersegment cost of services | (132) | (240) | (108) | (45.0) | % | |||||||||||||||||||||
| Total cost of services | 269,745 | 236,500 | 33,245 | 14.1 | % | |||||||||||||||||||||
|
General and administrative expense (2)
|
30,842 | 22,496 | 8,346 | 37.1 | % | |||||||||||||||||||||
| Depreciation and amortization | 44,391 | 41,660 | 2,731 | 6.6 | % | |||||||||||||||||||||
| Gain on disposal of assets | (611) | (674) | (63) | (9.3) | % | |||||||||||||||||||||
| Interest expense | 4,263 | 2,110 | 2,153 | 102.0 | % | |||||||||||||||||||||
| Other income, net | (4,818) | (5,107) | (289) | (5.7) | % | |||||||||||||||||||||
| Income tax benefit | (1,446) | (704) | 742 | 105.4 | % | |||||||||||||||||||||
| Net income (loss) | $ | 13,018 | $ | (2,365) | $ | 15,383 | 650.4 | % | ||||||||||||||||||
|
Adjusted EBITDA (3)
|
$ | 59,612 | $ | 35,164 | $ | 24,448 | 69.5 | % | ||||||||||||||||||
|
Adjusted EBITDA margin (3)
|
16.8 | % | 12.0 | % | 4.8 | % | 40.0 | % | ||||||||||||||||||
|
Net income (loss) margin (4)
|
3.7 | % | (0.8) | % | 4.5 | % | 562.5 | % | ||||||||||||||||||
| Hydraulic Fracturing segment results of operations: | ||||||||||||||||||||||||||
| Revenue | $ | 235,155 | $ | 210,190 | $ | 24,965 | 11.9 | % | ||||||||||||||||||
| Cost of services | $ | 185,575 | $ | 170,790 | $ | 14,785 | 8.7 | % | ||||||||||||||||||
|
Adjusted EBITDA (5)
|
$ | 45,434 | $ | 35,393 | $ | 10,041 | 28.4 | % | ||||||||||||||||||
|
Adjusted EBITDA margin (5)
|
19.3 | % | 16.8 | % | 2.5 | % | 14.9 | % | ||||||||||||||||||
(1)Exclusive of depreciation and amortization.
(2)Inclusive of stock-based compensation.
(3)For definitions of the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA margin and reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated in accordance with GAAP, please read "How We Evaluate Our Operations."
(4)Net income (loss) margin reflects our net income (loss) as a percentage of our revenue.
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(5)The non-GAAP financial measure of Adjusted EBITDA margin for the Hydraulic Fracturing segment is calculated by taking Adjusted EBITDA for the Hydraulic Fracturing segment as a percentage of our revenue for the Hydraulic Fracturing segment.
Three Months Ended September 30, 2026 Compared to the Three Months Ended September 30, 2025
Revenues. Revenues increased 20.9%, or $61.5 million, to $355.4 million during the three months ended September 30, 2026, as compared to $293.9 million during the three months ended September 30, 2025. Revenue by reportable segment was as follows:
Hydraulic Fracturing. Our Hydraulic Fracturing segment revenues increased 11.9%, or $25.0 million, to $235.2 million for the three months ended September 30, 2026, as compared to $210.2 million for the three months ended September 30, 2025. The increase was primarily attributable to increased customer activity and restarting previously idled fleets during the three months ended September 30, 2026. Intersegment revenues totaled $0.1 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively. Intersegment revenues were derived from our Wireline, Cementing and Power Generation segments for the three months ended September 30, 2026, and from our Wireline segment for the three months ended September 30, 2025.
Wireline. Our Wireline segment revenues increased 16.3% or $8.5 million, to $60.7 million for the three months ended September 30, 2026, as compared to $52.2 million for the three months ended September 30, 2025. The increase was primarily attributable to increased customer activity and utilization.
Cementing. Our Cementing segment revenue increased 18.3%, or $5.8 million, to $37.4 million for the three months ended September 30, 2026, as compared to $31.6 million for the three months ended September 30, 2025. The increase was primarily attributable to increased customer activity during the three months ended September 30, 2026.
Power Generation. Our Power Generation segment revenue increased $22.1 million to $22.3 million for the three months ended September 30, 2026, as compared to $0.2 million for the three months ended September 30, 2025. The increase was primarily driven by an increase in customer site deployments during the three months ended September 30, 2026. Our Power Generation segment began revenue-generating activities during the third quarter of fiscal year 2025.
Cost of Services. Cost of services increased 14.1%, or $33.2 million, to $269.7 million for the three months ended September 30, 2026, as compared to $236.5 million during the three months ended September 30, 2025. Cost of services by reportable segment was as follows:
Hydraulic Fracturing. Our Hydraulic Fracturing segment cost of services increased 8.7%, or $14.8 million, to $185.6 million for the three months ended September 30, 2026, as compared to $170.8 million for the three months ended September 30, 2025. The increase was primarily attributable to increased customer activity and restarting previously idled fleets during the three months ended September 30, 2026. As a percentage of Hydraulic Fracturing segment revenues, Hydraulic Fracturing cost of services was 78.9% for the three months ended September 30, 2026, as compared to 81.3% for the three months ended September 30, 2025.
Wireline. Our Wireline segment cost of services increased 15.2%, or $5.9 million, to $44.4 million for the three months ended September 30, 2026, as compared to $38.5 million for the three months ended September 30, 2025, due to increased customer activity and the impact of general cost inflation. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.01 million and $0.2 million for the three months ended September 30, 2026 and 2025, respectively.
Cementing. Our Cementing segment cost of services increased 16.2%, or $4.0 million, to $28.9 million for the three months ended September 30, 2026, as compared to $24.9 million for the three months ended September 30, 2025. The increase was primarily attributable to increased customer activity during the three months ended September 30, 2026. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.1 million and $0 for the three months ended September 30, 2026 and 2025, respectively.
Power Generation. Our Power Generation segment cost of services increased $8.5 million to $11.0 million for the three months ended September 30, 2026, as compared to $2.5 million for the three months ended September 30, 2025 driven by an increase in customer site deployments during the three months ended September 30, 2026. Our Power Generation segment began revenue-generating activities during the third quarter of fiscal year 2025. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.04 million and $0 for the three months ended September 30, 2026 and 2025, respectively.
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General and Administrative Expenses. General and administrative expenses increased 37.1%, or $8.3 million, to $30.8 million for the three months ended September 30, 2026, as compared to $22.5 million for the three months ended September 30, 2025. The net increase was primarily attributable to a $2.9 million increase in business acquisition contingent consideration adjustments, a $2.8 million increase in payroll expenses primarily driven by headcount increases in our power generation services segment, a $1.4 million increase in stock-based compensation, a $0.5 million increase in dues and subscriptions and a $0.7 million net increase in other general and administrative expenses.
Excluding nonrecurring and non-cash items (i.e., stock-based compensation of $6.0 million and retention bonuses and severance expenses of $0.5 million, partially offset by business acquisition contingent consideration adjustments of $1.7 million), general and administrative expenses were $26.0 million during the three months ended September 30, 2026, as compared to $22.3 million during the three months ended September 30, 2025.
Depreciation and Amortization. Depreciation and amortization increased 6.6%, or $2.7 million, to $44.4 million for the three months ended September 30, 2026, as compared to $41.7 million for the three months ended September 30, 2025. The increase was primarily attributable to the increase in our power generation fixed asset base.
Gain on Disposal of Assets. Gain on disposal of assets decreased by 9.3%, or $0.1 million, to $0.6 million for the three months ended September 30, 2026, as compared to gain on disposal of $0.7 million for the three months ended September 30, 2025.
Interest Expense. Interest expense increased 102.0%, or $2.2 million, to $4.3 million for the three months ended September 30, 2026, as compared to $2.1 million for the three months ended September 30, 2025. The increase was primarily attributable to the addition of loans under the Caterpillar Equipment Loan Agreement (as defined below) and the addition of Convertible Notes (as defined below) to support the purchase of certain mobile natural gas-fueled power generation equipment.
Other Income. Other income was approximately $4.8 million for the three months ended September 30, 2026, compared to other income of $5.1 million for the three months ended September 30, 2025. Other income for the three months ended September 30, 2026 is primarily comprised of interest income of $5.8 million, partially offset by a $0.8 million loss incurred due to a cementing job failure and approximately $0.2 million of other expenses. Other income for the three months ended September 30, 2025 is primarily comprised of a $2.0 million unrealized gain on short-term investment, tax refunds (net of advisory fees) totaling $1.9 million, insurance reimbursements of $0.8 million and other income of $0.4 million.
Income Taxes. Total income tax benefit was $1.4 million on pre-tax income resulting in an effective tax rate of (12.5)% for the three months ended September 30, 2026, as compared to income tax benefit of $0.7 million on pre-tax loss or an effective tax rate of 22.9% for the three months ended September 30, 2025. The change in income tax benefit recorded during the three months ended September 30, 2026, compared to the three months ended September 30, 2025, is primarily attributable to the difference in the impact of nondeductible expenses, state taxes, and valuation allowances on the pre-tax income for 2026, compared to the pre-tax loss for 2025.
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The following table sets forth the results of operations for the periods presented:
| (in thousands, except for percentages) | Nine Months Ended September 30, |
Change Increase (Decrease) |
||||||||||||||||||||||||
| 2026 | 2025 | $ | % | |||||||||||||||||||||||
| Revenue | ||||||||||||||||||||||||||
| Hydraulic Fracturing | $ | 621,734 | $ | 725,330 | $ | (103,596) | (14.3) | % | ||||||||||||||||||
| Wireline | 179,994 | 153,609 | 26,385 | 17.2 | % | |||||||||||||||||||||
| Cementing | 97,249 | 100,713 | (3,464) | (3.4) | % | |||||||||||||||||||||
| Power Generation | 33,817 | 157 | 33,660 | 21,439.5 | % | |||||||||||||||||||||
| Elimination of intersegment service revenue | (914) | (326) | 588 | 180.4 | % | |||||||||||||||||||||
| Total revenue | 931,880 | 979,483 | (47,603) | (4.9) | % | |||||||||||||||||||||
|
Cost of services (1)
|
||||||||||||||||||||||||||
| Hydraulic Fracturing | 482,634 | 555,803 | (73,169) | (13.2) | % | |||||||||||||||||||||
| Wireline | 132,722 | 116,209 | 16,513 | 14.2 | % | |||||||||||||||||||||
| Cementing | 77,951 | 78,777 | (826) | (1.0) | % | |||||||||||||||||||||
| Power Generation | 23,039 | 3,066 | 19,973 | 651.4 | % | |||||||||||||||||||||
| Elimination of intersegment cost of services | (914) | (326) | 588 | 180.4 | % | |||||||||||||||||||||
| Total cost of services | 715,432 | 753,529 | (38,097) | (5.1) | % | |||||||||||||||||||||
|
General and administrative expense (2)
|
91,125 | 78,618 | 12,507 | 15.9 | % | |||||||||||||||||||||
| Depreciation and amortization | 128,468 | 133,650 | (5,182) | (3.9) | % | |||||||||||||||||||||
| Loss (gain) on disposal of assets | (2,941) | 13,418 | 16,359 | 121.9 | % | |||||||||||||||||||||
| Interest expense | 9,934 | 5,651 | 4,283 | 75.8 | % | |||||||||||||||||||||
| Other income, net | (10,213) | (8,245) | 1,968 | 23.9 | % | |||||||||||||||||||||
| Income tax (benefit) expense | (1,187) | 2,780 | 3,967 | 142.7 | % | |||||||||||||||||||||
| Net income | $ | 1,262 | $ | 82 | $ | 1,180 | 1,439.0 | % | ||||||||||||||||||
|
Adjusted EBITDA (3)
|
$ | 140,770 | $ | 157,457 | $ | (16,687) | (10.6) | % | ||||||||||||||||||
|
Adjusted EBITDA margin (3)
|
15.1 | % | 16.1 | % | (1.0) | % | (6.2) | % | ||||||||||||||||||
|
Net income margin (4)
|
0.1 | % | - | % | 0.1 | % | - | % | ||||||||||||||||||
| Hydraulic Fracturing segment results of operations: | ||||||||||||||||||||||||||
| Revenue | $ | 621,734 | $ | 725,330 | $ | (103,596) | (14.3) | % | ||||||||||||||||||
| Cost of services | $ | 482,634 | $ | 555,803 | $ | (73,169) | (13.2) | % | ||||||||||||||||||
|
Adjusted EBITDA (5)
|
$ | 126,677 | $ | 155,717 | $ | (29,040) | (18.6) | % | ||||||||||||||||||
|
Adjusted EBITDA margin (5)
|
20.4 | % | 21.5 | % | (1.1) | % | (5.1) | % | ||||||||||||||||||
(1)Exclusive of depreciation and amortization.
(2)Inclusive of stock-based compensation.
(3)For definitions of the non-GAAP financial measures of Adjusted EBITDA and Adjusted EBITDA margin and reconciliation of Adjusted EBITDA to our most directly comparable financial measures calculated in accordance with GAAP, please read "How We Evaluate Our Operations."
(4)Net income margin reflects our net income as a percentage of our revenue.
(5)The non-GAAP financial measure of Adjusted EBITDA margin for the Hydraulic Fracturing segment is calculated by taking Adjusted EBITDA for the Hydraulic Fracturing segment as a percentage of our revenue for the Hydraulic Fracturing segment.
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Nine Months Ended September 30, 2026 Compared to the Nine Months Ended September 30, 2025
Revenues. Revenues decreased 4.9%, or $47.6 million, to $931.9 million during the nine months ended September 30, 2026, as compared to $979.5 million during the nine months ended September 30, 2025. Revenue by reportable segment was as follows:
Hydraulic Fracturing. Our Hydraulic Fracturing segment revenues decreased 14.3%, or $103.6 million, to $621.7 million for the nine months ended September 30, 2026, as compared to $725.3 million for the nine months ended September 30, 2025. The decrease was primarily attributable to decreased customer activity, reduced customer pricing and inclement weather-related operational disruptions during the nine months ended September 30, 2026 along with idling of certain fleets during fiscal year 2025. Intersegment revenues totaled $0.9 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively. Intersegment revenues were derived from our Wireline, Cementing and Power Generation segments for the nine months ended September 30, 2026, and from our Wireline segment for the nine months ended September 30, 2025.
Wireline. Our Wireline segment revenues increased 17.2%, or $26.4 million, to $180.0 million for the nine months ended September 30, 2026, as compared to $153.6 million for the nine months ended September 30, 2025. The increase was primarily attributable to increased customer activity and utilization.
Cementing. Our Cementing segment revenue decreased 3.4%, or $3.5 million, to $97.2 million for the nine months ended September 30, 2026, as compared to $100.7 million for the nine months ended September 30, 2025. The decrease was primarily attributable to decreased customer activity and inclement weather-related operational disruptions during the nine months ended September 30, 2026.
Power Generation. Our Power Generation segment revenue increased $33.6 million to $33.8 million for the nine months ended September 30, 2026, as compared to $0.2 million for the nine months ended September 30, 2025 driven by an increase in customer site deployments during the nine months ended September 30, 2026. Our Power Generation segment began revenue-generating activities during the third quarter of fiscal year 2025.
Cost of Services. Cost of services decreased 5.1%, or $38.1 million, to $715.4 million for the nine months ended September 30, 2026, as compared to $753.5 million during the nine months ended September 30, 2025. Cost of services by reportable segment was as follows:
Hydraulic Fracturing. Our Hydraulic Fracturing segment cost of services decreased 13.2%, or $73.2 million, to $482.6 million for the nine months ended September 30, 2026, as compared to $555.8 million for the nine months ended September 30, 2025. As a percentage of Hydraulic Fracturing segment revenues, Hydraulic Fracturing cost of services was 77.6% for the nine months ended September 30, 2026, as compared to 76.6% for the nine months ended September 30, 2025, driven by the absorption of fixed costs as a result of inclement weather-related operational disruptions, lower revenue during the nine months ended September 30, 2026 and the impact of general cost inflation.
Wireline. Our Wireline segment cost of services increased 14.2%, or $16.5 million to $132.7 million, for the nine months ended September 30, 2026, as compared to $116.2 million for the nine months ended September 30, 2025, due to increased customer activity and the impact of general cost inflation. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.5 million and $0.3 million for the nine months ended September 30, 2026 and 2025, respectively.
Cementing. Our Cementing segment cost of services decreased 1.0%, or $0.8 million, to $78.0 million for the nine months ended September 30, 2026, as compared to $78.8 million for the nine months ended September 30, 2025. The decrease was primarily attributable to decreased customer activity and inclement weather-related operational disruptions during the nine months ended September 30, 2026. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.3 million and $0 for the nine months ended September 30, 2026 and 2025, respectively.
Power Generation. Our Power Generation segment cost of services increased $19.9 million to $23.0 million for the nine months ended September 30, 2026, as compared to $3.1 million for the nine months ended September 30, 2025 driven by an increase in customer site deployments during the nine months ended September 30, 2026. Our Power Generation segment began revenue-generating activities during the third quarter of fiscal year 2025. Intersegment cost of services, consisting of cost of services incurred to our Hydraulic Fracturing segment, totaled $0.1 million and $0 for the nine months ended September 30, 2026 and 2025, respectively.
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General and Administrative Expenses. General and administrative expenses increased 15.9%, or $12.5 million, to $91.1 million for the nine months ended September 30, 2026, as compared to $78.6 million for the nine months ended September 30, 2025. The net increase was primarily attributable to an $8.6 million increase in payroll expenses primarily driven by headcount increases in our power generation services segment, a $3.9 million increase in stock-based compensation, a $2.8 million increase in business acquisition contingent consideration adjustments and a $0.5 million net increase in other general and administrative expenses, partially offset by a $2.1 million decrease in professional fees and a $1.2 million decrease in retention bonus and severance expense.
Excluding nonrecurring and non-cash items (i.e., stock-based compensation of $16.6 million and retention bonuses and severance expenses of $1.0 million, partially offset by business acquisition contingent consideration adjustments of $2.2 million), general and administrative expenses were $75.7 million during the nine months ended September 30, 2026, as compared to $68.5 million during the nine months ended September 30, 2025.
Depreciation and Amortization. Depreciation and amortization decreased 3.9%, or $5.2 million, to $128.5 million for the nine months ended September 30, 2026, as compared to $133.7 million for the nine months ended September 30, 2025. The decrease was primarily attributable to assets fully depreciating and a reduction in the cost basis of conventional Tier II hydraulic fracturing equipment sold in 2025, partially offset by an increase in our power generation fixed asset base.
Loss (gain) on Disposal of Assets. Gain on disposal of assets increased by 121.9%, or $16.3 million, to $2.9 million for the nine months ended September 30, 2026, as compared to loss on disposal of $13.4 million for the nine months ended September 30, 2025 due to losses incurred during the nine months ended September 30, 2025 from the sale of conventional Tier II hydraulic fracturing equipment.
Interest Expense. Interest expense increased 75.8%, or $4.3 million, to $9.9 million for the nine months ended September 30, 2026, as compared to $5.7 million for the nine months ended September 30, 2025. The increase was primarily attributable to the addition of loans under the Caterpillar Equipment Loan Agreement and the addition of Convertible Notes to support the purchase of certain mobile natural gas-fueled power generation equipment.
Other Income. Other income was approximately $10.2 million for the nine months ended September 30, 2026, compared to other income of $8.2 million for the nine months ended September 30, 2025. Other income for the nine months ended September 30, 2026 is primarily comprised of interest income of $10.7 million, and approximately $0.3 million of other income, partially offset by a $0.8 million loss incurred due to a cementing job failure. Other income for the nine months ended September 30, 2025 is primarily comprised of a $2.3 million unrealized gain on short-term investment, tax refunds (net of advisory fees) totaling $2.3 million, adjustments to workers' compensation and general liability insurance premiums of $1.0 million, interest income from note receivable from sale of business of $0.9 million, insurance reimbursements of $0.8 million and $0.9 million of other income.
Income Taxes. Total income tax benefit was $1.2 million on pre-tax income resulting in an effective tax rate of (1,582.7)% for the nine months ended September 30, 2026, as compared to income tax expense of $2.8 million on pre-tax income or an effective tax rate of 97.1% for the nine months ended September 30, 2025. The change in income tax benefit (expense) recorded during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025, is primarily attributable to the difference in the impact of nondeductible expenses, state taxes, and valuation allowances on the pre-tax income for 2026, compared to 2025.
Liquidity and Capital Resources
Our liquidity is currently provided by (i) existing cash balances, including net proceeds of approximately $163.1 million from the 2026 Common Stock Offering (as defined below) after deducting underwriting discounts and commissions and estimated offering expenses paid by the Company and net proceeds of approximately $668.4 million from the issuance of Convertible Notes (as defined below) after deducting initial purchasers' discounts and commissions and offering expenses paid by the Company, (ii) operating cash flows, and (iii) borrowings under our Caterpillar Equipment Loan Agreement. See "Credit Facility and Other Financing Arrangements" below. Additionally, on December 29, 2025, we entered into the Stonebriar Equipment Lease Facility to support the lease of certain mobile power generation equipment, including turbine generator sets along with auxiliary equipment, for our PROPWR® business line. Our cash is primarily used to fund our operations, support growth opportunities, fund share repurchases under our share repurchase program and satisfy future debt repayments and lease payments. Our Borrowing Base (as defined below), under our ABL Credit Facility (as defined below), as redetermined monthly, is tied to the sum of 85% to 90% of monthly eligible accounts receivable, 80% of eligible unbilled accounts (up to a maximum of 25% of the Borrowing Base in the aggregate), in each case, depending on the credit ratings of our accounts receivable counterparties and certain value of eligible power generation equipment (up to a maximum of 35% of the Borrowing Base), less customary reserves (the "Borrowing Base"). Changes to our operational activity levels and our customers' credit
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ratings have an impact on our total eligible accounts receivable, which could result in significant changes to our Borrowing Base and therefore, our availability under our ABL Credit Facility.
We received advance payments from customers for our services, and the amount outstanding in connection with the advance payments as of September 30, 2026 was $32.2 million, which does not include any restricted cash.
As of September 30, 2026, we had no outstanding borrowings under our ABL Credit Facility, our outstanding borrowings under our Caterpillar Equipment Loan Agreement were $171.8 million and our total liquidity was approximately $934.1 million, consisting of cash and cash equivalents of $728.9 million, $185.3 million of availability under our ABL Credit Facility and $19.9 million of availability under our Caterpillar Equipment Loan Agreement.
In May 2025, the Company's board of directors (the "Board") approved a further extension of the share repurchase program initially authorized on May 17, 2023. As extended, the program permits the repurchase of up to $200 million of the Company's common stock through December 31, 2026. 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, as amended, in compliance with applicable state and federal securities laws. The timing, as well as the number and value of shares repurchased under the share repurchase 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. The Company is not obligated to purchase any shares under the share repurchase program, and the share repurchase 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 December 2026. During the three and nine months ended September 30, 2026, the Company made no share repurchases under the share repurchase program as it prioritized the scaling of its PROPWR® business line. The Company expects to continue to prioritize investment in its PROPWR® business line in the near term, although it may make share repurchases from time to time. As of September 30, 2026, $89.2 million remained authorized for future repurchases of common stock under the share repurchase program.
In January 2026, the Company sold 17.25 million shares of its common stock under an underwritten public offering for $10.00 per share, pursuant to an effective shelf registration statement on Form S-3 filed with the SEC (the "2026 Common Stock Offering"). The Company received approximately $163.1 million in net proceeds from this sale after deducting underwriting discounts and commissions and estimated offering expenses. The Company used the net proceeds from this sale for general corporate purposes, including to fund growth capital for additional power generation equipment.
In May 2026, the Company issued $690.0 million aggregate principal amount of 0.00% convertible senior notes (the "Convertible Notes") due November 15, 2031, unless earlier converted, redeemed or repurchased. The Company received approximately $668.4 million in net proceeds from the issuance of the Convertible Notes after deducting initial purchasers' discounts and commissions and offering expenses paid by the Company. In connection with the issuance of the Convertible Notes, the Company paid approximately $36.8 million for entering into privately negotiated capped call transactions relating to the Convertible Notes with an affiliate of one of the initial purchasers and certain other financial institutions. See "Note 5 - Interim and Long-Term Debt" to the condensed consolidated financial statements for further details on the Convertible Notes and the Capped Calls.
There can be no assurance that our cash on hand, cash from operations and other capital resources will provide cash in sufficient amounts to maintain planned or future levels of capital expenditures and to continue with our share repurchases under our share repurchase program or fund future business acquisitions. Future cash flows are subject to a number of variables, and are highly dependent on the drilling, completion, and production activity by our customers, which in turn is highly dependent on oil and natural gas prices. Depending upon market conditions and other factors, we may issue equity and debt securities or take other actions necessary to fund our business, strategy or meet our future long-term liquidity requirements.
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Capital Requirements, Future Sources and Use of Cash and Contractual Obligations
Capital expenditures incurred were $171.5 million during the three months ended September 30, 2026, as compared to $98.4 million during the three months ended September 30, 2025. The significant portion of our total capital expenditures incurred during the three months ended September 30, 2026 were for our power generation segment totaling $128.0 million, including $15.8 million of financed equipment purchases for this business, and maintenance capital expenditures for our completion services operations. Capital expenditures incurred were $327.1 million during the nine months ended September 30, 2026, as compared to $210.1 million during the nine months ended September 30, 2025. The significant portion of our total capital expenditures incurred during the nine months ended September 30, 2026 were for our power generation segment totaling $246.5 million, including $76.1 million of financed equipment purchases for this business, and maintenance capital expenditures for our completion services operations.
Our future material use of cash will be to fund our capital expenditures and to repay debt and other financing obligations. Although we expect to prioritize investment in our PROPWR® business line in the near term, we may make share repurchases from time to time under our share repurchase program. Capital expenditures for 2026 are projected to be primarily related to capital expenditures to purchase power generation equipment, costs to extend the useful life of our existing completion services assets, costs to convert some existing equipment to lower emissions equipment, potential purchase of leased FORCE® electric-powered hydraulic fracturing fleets, strategic purchases and other ancillary equipment purchases, subject to market conditions and customer demand. Our future capital expenditures depend on our projected operational activity, emission requirements, planned conversions to lower emissions equipment and demand for our power generation services, among other factors, which could vary significantly throughout the year. We now anticipate full-year 2026 capital expenditures incurred to be between $525 million and $575 million. Of this, our completion services business is expected to account for approximately $125 million to $145 million, including approximately $15 million to $20 million related to the lease purchase option for one of our FORCE® electric-powered hydraulic fracturing fleets that we elected to exercise during the fourth quarter of fiscal year 2026. Additionally, we expect to incur capital expenditures of approximately $400 million to $430 million for our PROPWR® business line.
We entered into contractual arrangements with an equipment manufacturer to purchase mobile natural gas-fueled power generation equipment, including turbine generator sets along with auxiliary equipment, for our PROPWR® business line, with a total cost of $201.0 million. The total remaining commitment (after our initial down payment and financed payments) under these arrangements as of September 30, 2026 was approximately $13.3 million, none of which will be financed under the Caterpillar Equipment Loan Agreement. We expect to receive the remaining equipment currently on order under these arrangements in the second quarter of fiscal year 2027.
On April 28, 2026, ProPetro Energy Solutions, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company ("PROPWR"), entered into a global framework agreement with Caterpillar Inc., a Delaware corporation ("Caterpillar"), under which PROPWR agreed to purchase approximately 1.5 gigawatts of incremental power generation assets, subject to certain termination rights of PROPWR and Caterpillar (the "Framework Agreement"). Under the Framework Agreement, we had a minimum purchase obligation at signing of approximately $1,106.0 million subject to adjustments including annual escalations, taxes and tariffs, not inclusive of balance of plant, as well as the option to acquire up to an additional approximately 600 megawatts over a period of approximately five years ending December 31, 2031. As of September 30, 2026, we had approximately 570 megawatts of equipment on order under this Framework Agreement with a remaining commitment of approximately $463.1 million. We expect to receive this equipment from the fourth quarter of fiscal year 2026 through late fiscal year 2028.
We also entered into contractual arrangements with other equipment manufacturers to purchase additional power generation and auxiliary equipment for our PROPWR® business line, with a total remaining commitment of approximately $169.8 million. We expect to receive the remaining equipment currently on order under these arrangements from the fourth quarter of fiscal year 2026 through the end of fiscal year 2027.
We intend to use part of the net proceeds received from the 2026 Common Stock Offering and the issuance of Convertible Notes (net of the cost of capped call transactions) to fund our equipment purchases. We continue to actively negotiate additional contracts amid increasing demand for power solutions and to explore various financing alternatives for our power equipment.
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We could incur significant additional capital expenditures if our projected activity levels increase during the course of the year, inflation and supply chain tightness continue to adversely impact our operations or we invest in new or different lower emissions hydraulic fracturing equipment. The Company will continue to evaluate the emissions profile of its equipment over the coming years and may, depending on market conditions, convert or retire additional conventional Tier II equipment in favor of lower emissions equipment. The Company's decisions regarding the retirement or conversion of equipment or the addition of lower emissions equipment will be subject to a number of factors, including (among other factors) the availability of equipment, including parts and major components, supply chain disruptions, prevailing and expected commodity prices, customer demand and requirements and the Company's evaluation of projected returns on conversion or other capital expenditures. Depending on the impacts of these factors, the Company may decide to retain conventional equipment for a longer period of time or accelerate the retirement, replacement or conversion of that equipment. In October 2026, the Company notified the lessor of its election to exercise its purchase option under the lease for one of its five FORCE® electric-powered hydraulic fracturing fleets. The Company may decide to exercise its purchase options on the remaining fleets at the end of their leases.
We anticipate our capital expenditures will be funded by existing cash, including proceeds from the 2026 Common Stock Offering and the Notes Offering, cash flows from operations, the Caterpillar Equipment Loan Agreement, other financing arrangements including the Stonebriar Equipment Lease Facility, and borrowings under our ABL Credit Facility. Our cash flows from operations will be generated from services we provide to our customers.
We entered into three-year electric fleet leases for five FORCE® electric-powered hydraulic fracturing fleets (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. As of September 30, 2026, all five of the Electric Fleet Leases had commenced when the Company took possession of all equipment associated with its five FORCE® electric-powered hydraulic fracturing fleets under these leases. The total estimated remaining 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 $43.0 million. We also entered into a three-year lease (the "Power Equipment Lease") for certain power generation equipment. The total estimated contractual commitment in connection with the Power Equipment Lease is approximately $1.7 million. We also have leases for facilities and office spaces with a total estimated contractual commitment of approximately $10.0 million.
The Stonebriar Equipment Lease Facility requires us to pay an unused commitment fee of 0.5% of any unused portion of the lessor's $350.0 million funding commitment at December 31, 2028. The maximum amount we may owe for this fee is $1.8 million.
In the normal course of business, we enter into various contractual obligations and incur expenses in connection with routine growth, conversion and maintenance capital expenditures that impact our future liquidity. There were no other known future material contractual obligations as of September 30, 2026.
In October 2026, we placed an order for battery energy storage systems equipment representing a commitment of approximately $53.4 million. We expect to receive this equipment in the second half of fiscal year 2027.
Cash and Cash Flows
The following table sets forth the historical cash flows for the nine months ended September 30, 2026 and 2025:
| (in thousands) | ||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 115,088 | $ | 150,563 | ||||||||||
| Net cash used in investing activities | $ | (221,264) | $ | (111,025) | ||||||||||
| Net cash provided by (used in) financing activities | $ | 743,716 | $ | (23,440) | ||||||||||
Operating Activities
Net cash provided by operating activities was $115.1 million for the nine months ended September 30, 2026, compared to $150.6 million for the nine months ended September 30, 2025. The net decrease of approximately $35.5 million was primarily due to approximately $13.6 million lower net income adjusted for noncash expenses and working capital headwinds which consumed approximately $21.9 million more cash in the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
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Investing Activities
Net cash used in investing activities increased to $221.3 million for the nine months ended September 30, 2026, from $111.0 million for the nine months ended September 30, 2025. The increase was primarily attributable to a $105.8 million increase in capital expenditures, a $3.0 million decrease in proceeds from sale of assets and a $1.4 million decrease in proceeds from note receivable from sale of business.
The following table reconciles our capital expenditures paid to capital expenditures incurred for the periods indicated:
| (in thousands) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
|
Capital expenditures paid (1)
|
$ | 227,910 | $ | 122,084 | |||||||
| Less: Capital expenditures included in accounts payable and accrued liabilities - beginning of period | (28,095) | (14,695) | |||||||||
| Add: Capital expenditures included in accounts payable and accrued liabilities - end of period | 51,208 | 50,509 | |||||||||
| Add: Capital expenditures related to financed equipment purchases during the period | 76,120 | 51,850 | |||||||||
| Add: Capital expenditures financed by operating lease landlord during the period | - | 350 | |||||||||
|
Capital expenditures incurred (1)
|
$ | 327,143 | $ | 210,098 | |||||||
(1) This table reconciles cash basis capital expenditures reported in the Company's condensed consolidated statements of cash flows to accrual basis capital expenditures reported in "Note 6 - Reportable Segment Information" and below.
The following table summarizes our capital expenditures incurred by reportable segment for the periods indicated:
| (in thousands) | |||||||||||
| Nine Months Ended September 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Reportable Segments: | |||||||||||
| Hydraulic Fracturing | $ | 66,661 | $ | 59,010 | |||||||
| Wireline | 8,416 | 6,278 | |||||||||
| Cementing | 5,598 | 5,145 | |||||||||
| Power Generation | 246,459 | 139,665 | |||||||||
|
Reconciling Items (1)
|
9 | - | |||||||||
| Total capital expenditures incurred | $ | 327,143 | $ | 210,098 | |||||||
(1) Reconciling Items include our corporate facilities.
Cash Flows From Financing Activities
Net cash provided by financing activities was $743.7 million for the nine months ended September 30, 2026, as compared to net cash used in financing activities of $23.4 million for the nine months ended September 30, 2025. The net increase was primarily driven by $690.0 million of gross proceeds received from the Notes Offering, $164.3 million of proceeds received from the 2026 Common Stock Offering, $32.7 million of proceeds received from equipment financing loans, a $4.5 million decrease in repayments of insurance financing and a $0.5 million decrease in payment of excise tax on share repurchases, partially offset by $45.0 million repayments of borrowings under the ABL Credit Facility, $36.8 million paid for the purchase of capped calls related to the Convertible Notes and $1.2 million of costs paid related to the 2026 Common Stock Offering during the nine months ended September 30, 2026, $13.9 million increase in repayments of equipment financing term loans, a $24.3 million increase in payment of debt issuance costs (including debt issuance costs and discounts related to the Notes Offering), a $0.8 million increase in payments of finance lease obligations and a $2.9 million increase in tax withholdings paid for net settlement of equity awards.
Credit Facility and Other Financing Arrangements
The Company is party to the ABL Credit Facility that provides for borrowing capacity of up to $350.0 million (subject to the Borrowing Base limit), and matures on May 4, 2031.
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ABL Credit Facility: Effective May 4, 2026 and August 10, 2026, the Company entered into amendments 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, as amended in December 2025, as amended in May 2026, as amended in August 2026 and as may be amended further, the "ABL Credit Facility"). The amendments increased the debt basket for leverage-ratio-based indebtedness, capital/finance leases, purchase money debt and other similar indebtedness from $425.0 million to the greater of (i) $600.0 million and (ii) 300% of the Company's consolidated earnings before interest expense, income taxes, depreciation and amortization for its most recently completed four consecutive fiscal quarters, and added a new $690.0 million debt basket for the incurrence or refinancing of convertible indebtedness. The amendments also updated the Borrowing Base to include certain value of eligible power generation equipment (up to a maximum of 35% of the Borrowing Base in the aggregate). The Borrowing Base as of September 30, 2026, was approximately $196.4 million. The ABL Credit Facility includes a springing fixed charge coverage ratio that applies when excess availability is less than the greater of (i) 10% of the lesser of the facility size or the Borrowing Base or (ii) $15.0 million. Under the ABL Credit Facility we are 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. Borrowings under the ABL Credit Facility are secured by a first priority lien and security interest in substantially all assets of the Company excluding certain mobile natural gas-fueled power generation equipment purchased under a financing arrangement.
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 1.50% to 2.00% for SOFR loans and 0.50% to 1.00% for base rate loans. The weighted average annual interest rate on our outstanding borrowings under the ABL Credit Facility for the nine months ended September 30, 2026 was 5.64%.
As of September 30, 2026 and December 31, 2025, we had borrowings outstanding under our ABL Credit Facility of $0 and $45.0 million, respectively.
Caterpillar Equipment Loan Agreement: Effective July 27, 2026, we entered into an amendment to our financing arrangement with Caterpillar Financial Services Corporation (as amended on February 6, 2026, and as originally entered into on April 2, 2025, the "Caterpillar Equipment Loan Agreement"), pursuant to which Caterpillar Financial Services Corporation agreed to increase the total availability of funds under the Caterpillar Equipment Loan Agreement to an aggregate amount not to exceed $167.0 million (the "Equipment Loans") for the purpose of purchasing certain electric power generation equipment and associated auxiliary equipment for our PROPWR® business line. The Equipment Loans will be available on a revolving basis and loan amounts that are subject to a non-recourse syndication by Caterpillar Financial Services Corporation will not count against the $167.0 million cap. Certain Equipment Loans consist of two phases: (a) a progress payment phase during which an interim advance is made, evidenced by a separate floating rate promissory note based on an interim loan schedule (each, an "Interim Note"), and (b) after satisfaction of the applicable milestones, a term loan phase in which such Interim Note converts into a separate fixed rate promissory note based on a term loan schedule (each, a "Term Note" and together with the Interim Notes, each, a "Note"). Other Equipment Loans will consist only of a Term Note that is issued upon receipt of the applicable equipment. Interim loans will accrue interest at a floating rate per annum based on SOFR, plus a 3.85% margin, plus any increase or minus any decrease in the Bloomberg Industrial Single A Total Return Index since November 15, 2024. Interest on interim loans is payable on a monthly basis until conversion to term loans. Each term loan will accrue interest at a fixed rate per annum based on the three-year U.S. Treasury rate as of the date of conversion of interim loans to the term loan for each unit of equipment, plus a 3.70% margin, plus any increase or minus any decrease in the Bloomberg Industrial Single A Total Return Index since November 15, 2024 and will be payable in equal monthly installments over a period not to exceed five years. Each Note will be secured on a first lien basis by equipment collateral and related support documents, casualty proceeds and other proceeds or products related thereto, and any proceeds from an Equipment Loan must be used for payment or reimbursement for the equipment subject to such Equipment Loan. Each Note is fully and unconditionally guaranteed by the guarantors set forth in the Caterpillar Equipment Loan Agreement. The Caterpillar Equipment Loan Agreement contains customary affirmative and negative covenants, including limitations on further encumbrance of the collateral subject to the applicable loans under the Caterpillar Equipment Loan Agreement. The weighted average interest rate on our term loans (long-term loans) for the nine months ended September 30, 2026 was 7.73%.
Under the Caterpillar Equipment Loan Agreement, we have incurred interim loans and term loans with outstanding amounts of $0 and $171.8 million, respectively, as of September 30, 2026, related to funding for equipment under construction and equipment received, of which approximately $24.7 million had been syndicated by Caterpillar Financial Services Corporation on a non-recourse basis and therefore does not count against the $167.0 million cap. As of September 30, 2026, we had approximately $19.9 million available for future borrowings under the Caterpillar Equipment Loan Agreement after giving
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effect to that syndication. See "Note 5 - Interim and Long-Term Debt." Financed payments from the lender to the Company, net of related debt issuance costs paid by the Company to the lender, are presented as cash inflows under cash flows from financing activities in our condensed consolidated statements of cash flows. Financed payments from the lender to an equipment manufacturer, equipment dealer or equipment packager on the Company's behalf are presented as non-cash investing and financing activities within the "Supplemental Disclosure of Non-Cash Investing and Financing Activities" section of our condensed consolidated statements of cash flows. The repayments of term loans are presented as cash outflows under cash flows from financing activities in our condensed consolidated statements of cash flows.
Convertible Senior Notes. On May 7, 2026, the Company issued the Convertible Notes. The Company received approximately $668.4 million in net proceeds from the issuance of the Convertible Notes after deducting initial purchasers' discounts and commissions and offering expenses paid by the Company. In connection with the issuance of the Convertible Notes, the Company paid approximately $36.8 million for entering into privately negotiated capped call transactions relating to the Convertible Notes with an affiliate of one of the initial purchasers and certain other financial institutions. Before August 15, 2031, noteholders have the right to convert their Convertible Notes only in certain circumstances and during specified periods. From and after August 15, 2031, noteholders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will settle conversions by paying or delivering, as applicable, cash, shares of the Company's common stock, par value $0.001, or a combination of cash and the Company's common stock, at its election. As of September 30, 2026, the outstanding amount under the Convertible Notes was $690.0 million.
Stonebriar Equipment Lease Facility. On December 29, 2025, PROPWR entered into an Interim Funding Agreement and a Master Lease Agreement with Stonebriar for the right, but not the obligation, to fund up to $350.0 million of purchases of power generator equipment for our PROPWR® business line. Under the Interim Funding Agreement, Stonebriar provides funding to finance down payments and progress payments owing to equipment suppliers. Monthly rent under the Interim Funding Agreement is based on the unpaid balance of the aggregate amounts advanced under the Interim Funding Agreement and not yet converted to a lease schedule under the Master Lease Agreement, times a per annum lease rate factor equal to the sum of 1-Month SOFR plus 6.25%. Upon delivery and acceptance of a power generator, amounts outstanding under the Interim Funding Agreement with respect to such equipment are converted into a lease schedule under the Master Lease Agreement. Stonebriar will hold legal title to such leased equipment. The lease term for each item of equipment will be 84 months, and the rental payment amounts will be based on the equipment cost times a lease rate factor set forth in the applicable lease schedule. PROPWR will have certain early termination and purchase options with respect to the leased equipment at various points during the lease, as set forth in the Master Lease Agreement and related lease schedule for such equipment. Upon exercise of such rights and payment of the required amounts, PROPWR would acquire legal title to such equipment. As of September 30, 2026, we had no leases and no outstanding lease liability amounts under the Stonebriar Equipment Lease Facility.
Off-Balance Sheet Arrangements
We had no off-balance sheet arrangements as of September 30, 2026.
Critical Accounting Estimates
There have been no material changes during the nine months ended September 30, 2026 to the methodology applied by our management for critical accounting estimates previously disclosed in our Form 10-K. Please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in our Form 10-K for a discussion of our critical accounting policies and estimates.
Recently Issued Accounting Standards
Disclosure concerning recently issued accounting standards is incorporated by reference to Note 2 of our Condensed Consolidated Financial Statements (Unaudited) contained in this Form 10-Q.
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