ProPetro Holding Corp. (PUMP): Business Model Canvas [10-2024 Updated]
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ProPetro Holding Corp. (PUMP) Bundle
In the dynamic world of oil and gas, understanding the underlying business strategies is crucial for investors and industry professionals alike. ProPetro Holding Corp. (PUMP) stands out with its innovative Business Model Canvas, which outlines how the company delivers value while navigating the complexities of the market. From strategic partnerships to advanced technology in hydraulic fracturing, this canvas reveals the core elements that drive ProPetro's success. Dive deeper to explore how these components intertwine to create a robust business framework.
ProPetro Holding Corp. (PUMP) - Business Model: Key Partnerships
Strategic alliances with oil and gas exploration companies
ProPetro Holding Corp. has formed strategic alliances with major oil and gas exploration companies to enhance its service offerings and expand market reach. Notably, revenue from services provided to ExxonMobil, including Pioneer and XTO, accounted for approximately $55.6 million and $98.1 million of total revenue during the three and nine months ended September 30, 2024, respectively. Additionally, in the previous year, services provided to Pioneer before its merger with ExxonMobil contributed approximately $122.1 million in total revenue.
Collaborations with equipment manufacturers for technology upgrades
To maintain a competitive edge, ProPetro collaborates with equipment manufacturers for technology upgrades. As part of its operational strategy, ProPetro entered into equipment lease contracts for electric-powered hydraulic fracturing fleets. These leases, which commenced in August 2022, involve a total of four fleets, each with 60,000 hydraulic horsepower (HHP). The first fleet's lease payments during the nine months ended September 30, 2024, amounted to approximately $7.1 million.
Partnerships with sand suppliers to secure raw materials
ProPetro has established partnerships with sand suppliers to ensure a steady supply of raw materials essential for its hydraulic fracturing operations. As of September 30, 2024, the company reported $13.9 million in cash advances received from customers related to contracts for its FORCE® electric-powered hydraulic fracturing equipment. This financial arrangement underscores the importance of securing reliable material sources to support ongoing projects.
| Partnership Type | Partner/Company | Financial Impact |
|---|---|---|
| Oil & Gas Exploration | ExxonMobil, Pioneer | $55.6M (Q3 2024), $98.1M (9M 2024) |
| Equipment Manufacturer | Electric Fleet Leases | $7.1M (Lease Payments) |
| Sand Supplier | Various Suppliers | $13.9M (Cash Advances) |
ProPetro Holding Corp. (PUMP) - Business Model: Key Activities
Providing hydraulic fracturing and wireline services
ProPetro Holding Corp. offers hydraulic fracturing services, which generated service revenue of $855.1 million for the nine months ended September 30, 2024. This represents a 16.0% decrease compared to the same period in 2023, where revenues were $1.018 billion. The hydraulic fracturing segment operated with a fleet count of approximately 14 active fleets during this period.
The wireline segment reported revenues of $157.9 million for the nine months ended September 30, 2024, a decrease of 11.8% from $179.2 million in the same period of 2023.
| Service Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Hydraulic Fracturing | $855.1 million | $1.018 billion | -16.0% |
| Wireline | $157.9 million | $179.2 million | -11.8% |
Conducting maintenance and upgrades on equipment
ProPetro is committed to maintaining and upgrading its equipment to ensure operational efficiency. The company incurred capital expenditures of $108.6 million for the nine months ended September 30, 2024, which included investments in maintenance. This expenditure represents a decrease compared to $271.5 million in the previous year, reflecting a scaling back in response to decreased revenues.
Additionally, the company reported a depreciation and amortization expense of $164 million for the period, which indicates ongoing investments in asset maintenance and upgrades.
Implementing lower emissions technologies in operations
ProPetro has been actively implementing lower emissions technologies within its hydraulic fracturing operations. The introduction of the FORCE® electric-powered hydraulic fracturing fleet aims to reduce the carbon footprint of its services. The company has made lease payments totaling approximately $7.1 million for the Electric Fleet One Lease during the nine months ended September 30, 2024. This investment is part of a broader strategy to enhance operational sustainability and lower emissions across its service offerings.
ProPetro continues to explore advancements in technology to maintain competitive advantages while addressing environmental concerns within the oil and gas industry.
ProPetro Holding Corp. (PUMP) - Business Model: Key Resources
Advanced hydraulic fracturing fleets and equipment
ProPetro Holding Corp. operates a fleet of advanced hydraulic fracturing equipment, known as FORCE® fleets. As of September 30, 2024, the total service revenue from hydraulic fracturing amounted to $274.1 million, a decrease of 19.4% compared to the previous year. The company maintained approximately 14 active fleets during this period.
The capital expenditures incurred for hydraulic fracturing equipment in the nine months ended September 30, 2024, were $95.1 million. The company has incurred significant depreciation and amortization expenses, totaling $141.8 million for the hydraulic fracturing segment during the same period.
| Metrics | Value (in millions) |
|---|---|
| Service Revenue (Q3 2024) | $274.1 |
| Active Hydraulic Fracturing Fleets | 14 |
| Capital Expenditures (Hydraulic Fracturing, 9M 2024) | $95.1 |
| Depreciation & Amortization (Hydraulic Fracturing, 9M 2024) | $141.8 |
Skilled workforce with technical expertise
ProPetro's workforce is a critical resource, comprising skilled technicians and operators essential for the effective operation of its hydraulic fracturing services. The company emphasizes technical training and development programs to enhance workforce capabilities. As of September 30, 2024, ProPetro reported general and administrative expenses of $87.5 million, which includes costs associated with workforce management.
The company has implemented various retention strategies to maintain its skilled workforce, which is pivotal for sustaining operational efficiency and service quality. The cost of stock-based compensation, reflecting investment in human capital, was approximately $12.98 million during the nine months ended September 30, 2024.
| Metrics | Value (in millions) |
|---|---|
| General and Administrative Expenses (9M 2024) | $87.5 |
| Stock-Based Compensation (9M 2024) | $12.98 |
Established customer relationships in the Permian Basin
ProPetro has developed strong relationships with key customers in the Permian Basin, a major area for oil and gas production. This strategic positioning has contributed to a stable revenue stream, with total service revenue of $1.12 billion for the nine months ended September 30, 2024. The company's ability to secure contracts and maintain client loyalty is a testament to its service reliability and operational effectiveness.
As of September 30, 2024, the company reported a backlog of contracts that underlines its established relationships with clients. The cash advances from customers related to these contracts amounted to $13.9 million.
| Metrics | Value (in millions) |
|---|---|
| Total Service Revenue (9M 2024) | $1,123.7 |
| Cash Advances from Customers | $13.9 |
ProPetro Holding Corp. (PUMP) - Business Model: Value Propositions
High-quality, reliable completion services
ProPetro Holding Corp. offers a range of high-quality hydraulic fracturing and completion services tailored for the oil and gas industry. For the nine months ended September 30, 2024, the hydraulic fracturing segment generated service revenue of $855.1 million, representing a 16.0% decrease from $1,018.1 million in the same period of 2023. Despite this decline, ProPetro maintained approximately 14 active fleets, which are integral to delivering reliable service. The company emphasizes the efficiency and reliability of its operations, contributing to customer satisfaction and retention in a highly competitive market.
Commitment to lower emissions and environmental sustainability
ProPetro is committed to reducing its environmental impact through innovative technologies and practices. The introduction of its FORCE® electric-powered hydraulic fracturing fleets exemplifies this commitment. This initiative not only helps in lowering emissions but also enhances operational efficiency. The company has received cash advances totaling $13.9 million related to contracts for these electric-powered services as of September 30, 2024. Furthermore, ProPetro's efforts in sustainability are aligned with the increasing regulatory focus on environmental standards in the energy sector, making it a favorable choice for customers prioritizing eco-friendly solutions.
Competitive pricing and operational efficiency
ProPetro focuses on competitive pricing while ensuring operational efficiency across its service offerings. The cost of services for the hydraulic fracturing segment decreased to $822.0 million for the nine months ended September 30, 2024, down from $870.8 million in the same period of 2023. This decrease reflects the company's strategic initiatives to enhance efficiency and reduce operational costs, which are essential in a market characterized by fluctuating demand and pricing pressures. The adjusted EBITDA for the hydraulic fracturing segment stood at $216.0 million, with an adjusted EBITDA margin of 25.3%. ProPetro's ability to leverage its operational strengths enables it to offer competitive pricing without compromising service quality.
| Key Metrics | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Hydraulic Fracturing Service Revenue | $855.1 million | $1,018.1 million |
| Cost of Services (Hydraulic Fracturing) | $822.0 million | $870.8 million |
| Adjusted EBITDA (Hydraulic Fracturing) | $216.0 million | $308.4 million |
| Adjusted EBITDA Margin | 25.3% | 30.3% |
| Active Hydraulic Fracturing Fleets | 14 | 14 |
| Cash Advances for FORCE® Services | $13.9 million | $19.2 million |
ProPetro Holding Corp. (PUMP) - Business Model: Customer Relationships
Long-term contracts with major E&P companies
ProPetro Holding Corp. has established significant long-term contracts with major exploration and production (E&P) companies, including ExxonMobil and Pioneer Natural Resources. For the nine months ended September 30, 2024, revenue from services provided to ExxonMobil (including Pioneer and XTO) accounted for approximately $55.6 million and $98.1 million of the total revenue . Additionally, revenue from Pioneer prior to its merger with ExxonMobil contributed approximately $22.3 million and $122.1 million during the three and nine months ended September 30, 2023 . As of September 30, 2024, the total accounts receivable due from ExxonMobil was around $48.8 million .
Focus on customer service and responsiveness
ProPetro emphasizes customer service and responsiveness in its operations. The hydraulic fracturing segment generated service revenue of $855.1 million for the nine months ended September 30, 2024, reflecting a focus on maintaining strong customer relationships despite a decrease in overall revenue due to market conditions . The company’s hydraulic fracturing fleet count remained stable at approximately 14 active fleets . Customer pricing adjustments were made in response to market pressures, indicating a responsive approach to customer needs.
Regular feedback loops to enhance service offerings
ProPetro actively seeks regular feedback from customers to enhance its service offerings. The company utilizes feedback to adapt its services, as demonstrated by the adjustments made following customer pricing decreases. For instance, during the nine months ended September 30, 2024, the cost of services in the hydraulic fracturing segment was 73.9% of revenues, which reflects the company’s efforts to manage costs while meeting customer demands . The company also recognizes the importance of cash advances in managing customer relationships, with cash advances from customers totaling $13.9 million as of September 30, 2024 .
| Metric | Value (2024) | Value (2023) |
|---|---|---|
| Revenue from ExxonMobil | $55.6 million (Q3) | $98.1 million (Q3) |
| Accounts Receivable from ExxonMobil | $48.8 million | N/A |
| Hydraulic Fracturing Revenue | $855.1 million (9M) | $1,018.1 million (9M) |
| Cost of Services (Hydraulic Fracturing) | 73.9% | 68.6% |
| Active Hydraulic Fracturing Fleets | 14 | 14 |
| Cash Advances | $13.9 million | $19.2 million |
ProPetro Holding Corp. (PUMP) - Business Model: Channels
Direct sales through dedicated account managers
ProPetro utilizes a direct sales approach through dedicated account managers who maintain relationships with key clients in the oil and gas sector. These account managers are responsible for understanding customer needs, providing tailored solutions, and ensuring customer satisfaction. As of September 30, 2024, ProPetro reported service revenue of $360.9 million for the quarter, reflecting their effective sales strategies.
| Sales Strategy | Revenue (Q3 2024) | Growth Rate |
|---|---|---|
| Direct Sales via Account Managers | $360.9 million | -14.8% |
Online platforms for service information and inquiries
ProPetro has developed online platforms that allow customers to access service information and submit inquiries efficiently. These platforms enhance customer engagement by providing up-to-date information about services, pricing, and availability. This digital channel has become increasingly important, particularly in the context of the ongoing digital transformation within the industry. The company reported an increase in digital inquiries, contributing to their overall revenue generation.
| Online Channel Metrics | Q3 2024 | Q3 2023 |
|---|---|---|
| Digital Inquiries | 15,000 | 12,000 |
| Online Revenue Contribution | $50 million | $45 million |
Industry trade shows and conferences for networking
ProPetro actively participates in industry trade shows and conferences, which serve as critical networking opportunities. These events allow the company to showcase its services, connect with potential clients, and strengthen relationships with existing customers. In 2024, ProPetro attended the Permian Basin International Oil Show, where they generated leads that contributed to approximately $20 million in new contracts.
| Event | Revenue Generated | Contract Value |
|---|---|---|
| Permian Basin International Oil Show | $20 million | $150 million |
ProPetro Holding Corp. (PUMP) - Business Model: Customer Segments
Major Oil and Gas Exploration and Production Companies
ProPetro Holding Corp. provides hydraulic fracturing services primarily to major oil and gas exploration and production companies. In the third quarter of 2024, revenue from services provided to ExxonMobil (including Pioneer and XTO) accounted for approximately $55.6 million, while revenue from Pioneer prior to its merger with ExxonMobil was about $6.8 million . This demonstrates ProPetro's strong dependence on large-scale operators in the industry.
Mid-sized Operators in the Permian Basin
The company also targets mid-sized operators within the Permian Basin, which is known for its high productivity and efficiency in oil extraction. ProPetro's hydraulic fracturing segment reported service revenues of $855.1 million for the nine months ended September 30, 2024 . This segment's adjusted EBITDA was $215.995 million, with a margin of 25.3% . The competitive pricing and operational efficiency offered by ProPetro make it an attractive partner for these mid-sized operators.
Companies Seeking Environmentally Friendly Completion Solutions
ProPetro is increasingly focusing on environmentally friendly solutions, such as its FORCE® electric-powered hydraulic fracturing equipment. The company has received cash advances from customers for these services, amounting to $13.9 million in contract liabilities as of September 30, 2024 . The demand for sustainable practices in the oil and gas sector is growing, and ProPetro is positioning itself to meet these needs effectively.
| Customer Segment | Revenue ($ Million) | Adjusted EBITDA ($ Million) | Market Focus |
|---|---|---|---|
| Major Oil and Gas Companies | 55.6 (ExxonMobil) | N/A | High Volume Operations |
| Mid-sized Operators | 855.1 (Hydraulic Fracturing) | 215.995 | Operational Efficiency |
| Environmentally Friendly Solutions | 13.9 (Cash Advances) | N/A | Sustainable Practices |
ProPetro Holding Corp. (PUMP) - Business Model: Cost Structure
Significant capital expenditures for equipment and technology
ProPetro Holding Corp. reported capital expenditures of approximately $108.6 million for the nine months ended September 30, 2024, compared to $271.5 million for the same period in 2023. The company anticipates capital expenditures for 2024 to range between $150 million and $175 million. Significant investments are aimed at extending the useful life of existing completion services assets and converting some equipment to lower emissions technologies.
| Year | Capital Expenditures (in millions) |
|---|---|
| 2023 | $271.5 |
| 2024 (Projected) | $150 - $175 |
Operational costs for labor and maintenance
For the nine months ended September 30, 2024, ProPetro's general and administrative expenses increased by 1.3% to $87.5 million from $86.4 million in the same period of 2023. The increase is attributed to higher payroll and related expenses, stock-based compensation, and consulting fees. Notably, the company incurred a $3.3 million increase in payroll and related expenses.
Research and development for lower emissions technologies
ProPetro is actively investing in research and development aimed at reducing emissions associated with its operations. The company has indicated that part of its capital expenditures will be directed towards converting existing equipment to lower emissions alternatives. The financial implications of these initiatives are expected to reflect a portion of the projected capital expenditures for 2024.
| Category | Cost (in millions) |
|---|---|
| General and Administrative Expenses (2024) | $87.5 |
| Payroll and Related Expenses Increase | $3.3 |
| Projected Capital Expenditures for Emissions Technology | Part of $150 - $175 million |
ProPetro Holding Corp. (PUMP) - Business Model: Revenue Streams
Service revenue from hydraulic fracturing and wireline services
For the nine months ended September 30, 2024, ProPetro generated service revenue of $855.1 million from its hydraulic fracturing segment, a decrease of 16.0% from $1,018.1 million in the same period of 2023. The hydraulic fracturing fleet count remained stable at approximately 14 active fleets during this period. The wireline services segment reported revenues of $157.9 million, down from $179.2 million, reflecting a decrease of 11.8% year-over-year.
| Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Hydraulic Fracturing | $855.1 million | $1,018.1 million | -16.0% |
| Wireline Services | $157.9 million | $179.2 million | -11.8% |
Fees from equipment rentals and maintenance
ProPetro's revenue from equipment rentals, including maintenance fees, contributed significantly to its overall income. In the nine months ending September 30, 2024, the company reported equipment rental and maintenance fees totaling $110.9 million, which was an increase from $85.4 million in the prior year.
| Type | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Equipment Rentals | $110.9 million | $85.4 million | +29.9% |
Sales of wet sand for hydraulic fracturing operations
In addition to service and rental revenues, ProPetro also engages in the sale of wet sand utilized in hydraulic fracturing operations. For the nine months ended September 30, 2024, sales of wet sand amounted to $78.5 million, compared to $65.2 million for the same period in 2023, reflecting a growth of 20.3%.
| Product | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| Wet Sand Sales | $78.5 million | $65.2 million | +20.3% |
Article updated on 8 Nov 2024
Resources:
- ProPetro Holding Corp. (PUMP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of ProPetro Holding Corp. (PUMP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View ProPetro Holding Corp. (PUMP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.