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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________
FORM 10-Q
______________________________
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2024
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission File Number: 001-38035
______________________________
ProPetro Holding Corp.
(Exact name of registrant as specified in its charter)
______________________________
Delaware26-3685382
(State or other jurisdiction of
incorporation or organization)		(I.R.S. Employer
Identification No.)
303 W. Wall Street, Suite 102 Midland, Texas 79701
(Address of principal executive offices) (Zip Code)
(432) 688-0012
(Registrant’s telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per sharePUMPNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒  No  ☐ 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒  No  ☐ 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The number of the registrant’s common shares, par value $0.001 per share, outstanding at October 25, 2024, was 102,929,746.


PROPETRO HOLDING CORP.
TABLE OF CONTENTS
Page
-i-

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this "Form 10-Q") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts contained in this Form 10-Q are forward-looking statements. Forward-looking statements are all statements other than statements of historical fact, and given our expectations or forecasts of future events as of the effective date of this Form 10-Q. Words such as "may," "could," "plan," "project," "budget," "predict," "target," "seek," "believe," "expect," "anticipate," "intend," "estimate," "will," "should," "continue" and similar expressions are generally used to identify forward-looking statements. These statements include, but are not limited to statements about our business strategy, industry, future profitability, future capital expenditures, our fleet conversion strategy and our share repurchase program. Such statements are subject to risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those implied or projected by the forward-looking statements. Factors that could cause our actual results to differ materially from those contemplated by such forward-looking statements include:

•changes in general economic and geopolitical conditions, including as a result of 2024 presidential election, higher interest rates, the rate of inflation and a potential economic recession;
•central bank policy actions, bank failures and associated liquidity risks and other factors;
•the severity and duration of any world events and armed conflict, including the Russian-Ukraine war, conflicts in the Israel-Gaza region and continued hostilities in the Middle East, including rising tensions with Iran, and associated repercussions to supply and demand for oil and gas and the economy generally;
•the actions taken by the members of the Organization of the Petroleum Exporting Countries ("OPEC") and Russia (together with OPEC and other allied producing countries, "OPEC+") with respect to oil production levels and announcements of potential changes in such levels, including the ability of the OPEC+ countries to agree on and comply with supply limitations;
•actions taken by the current government, such as executive orders or new regulations, including climate-related regulations, that may negatively impact the future production of oil and natural gas in the United States and may adversely affect our future operations;
•the level of production and resulting market prices for crude oil, natural gas and other hydrocarbons;
•the effects of existing and future laws and governmental regulations (or the interpretation thereof) on us, our suppliers and our customers;
•cost increases and supply chain constraints related to our services, including any delays and/or supply chain disruptions due to increased hostilities in the Middle East;
•competitive conditions in our industry;
•our ability to attract and retain employees;
•changes in the long-term supply of, and demand for, oil and natural gas;
•actions taken by our customers, suppliers, competitors and third-party operators and the possible loss of customers or work to our competitors;
•technological changes, including lower emissions oilfield service equipment and similar advancements;
•changes in the availability and cost of capital;
•our ability to successfully implement our business plan, including execution of potential mergers and acquisitions;
•large or multiple customer defaults, including defaults resulting from actual or potential insolvencies;
•the effects of consolidation on our customers or competitors;
•the price and availability of debt and equity financing (including higher interest rates) for us and our customers;
•our ability to complete growth projects on time and on budget;
•increases in tax rates or types of taxes enacted that specifically impact exploration and production ("E&P") and related operations resulting in changes in the amount of taxes owed by us;
-ii-

•regulatory and related policy actions intended by federal, state and/or local governments to reduce fossil fuel use and associated carbon emissions, or to drive the substitution of renewable forms of energy for oil and gas, may over time reduce demand for oil and gas and therefore the demand for our services;
•new or expanded regulations that materially limit our customers’ access to federal and state lands for oil and gas development, thereby reducing demand for our services in the affected areas;
•growing demand for electric vehicles that result in reduced demand for gasoline and therefore the demand for our services;
•our ability to successfully implement technological developments and enhancements, including our new Tier IV Dynamic Gas Blending ("DGB") dual-fuel and FORCE® electric-powered hydraulic fracturing equipment, and other lower-emissions equipment we may acquire or that may be sought by our customers;
•the projected timing, purchase price and number of shares purchased under our share repurchase program, the sources of funds under the repurchase program and the impacts of the repurchase program;
•operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control, such as fires, which risks may be self-insured, or may not be fully covered under our insurance programs;
•exposure to cyber-security events which could cause operational disruptions or reputational harm;
•acts of terrorism, war or political or civil unrest in the United States or elsewhere; and
•the effects of current and future litigation.
Whether actual results and developments will conform with our expectations and predictions contained in forward-looking statements is subject to a number of risks and uncertainties which could cause actual results to differ materially from such expectations and predictions, including, without limitation, in addition to those specified in the text surrounding such statements, the risks described under Part II, Item 1A, "Risk Factors" in this Form 10-Q and elsewhere throughout this report, the risks described under Part I, Item 1A, "Risk Factors" in our Form 10-K for the year ended December 31, 2023 (the "Form 10-K"), filed with the U.S. Securities and Exchange Commission (the "SEC") and elsewhere throughout that report, and other risks, many of which are beyond our control.
Readers are cautioned not to place undue reliance on our forward-looking statements, which are made as of the date of this Form 10-Q. We do not undertake, and expressly disclaim, any duty to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by applicable securities laws. Investors are also advised to carefully review and consider the various risks and other disclosures discussed in our SEC reports, including the risk factors described in the Form 10-K.
-iii-
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
September 30, 2024December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$46,566 $33,354 
Accounts receivable - net of allowance for credit losses of $236 and $236, respectively
225,617 237,012 
Inventories16,743 17,705 
Prepaid expenses9,453 14,640 
Short-term investment, net7,405 7,745 
Other current assets1,037 353 
Total current assets306,821 310,809 
PROPERTY AND EQUIPMENT - net of accumulated depreciation716,823 967,116 
OPERATING LEASE RIGHT-OF-USE ASSETS
127,085 78,583 
FINANCE LEASE RIGHT-OF-USE ASSETS35,562 47,449 
OTHER NONCURRENT ASSETS:
Goodwill26,754 23,624 
Intangible assets - net of amortization65,155 50,615 
Other noncurrent assets2,010 2,116 
Total other noncurrent assets93,919 76,355 
TOTAL ASSETS$1,280,210 $1,480,312 
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$128,615 $161,441 
Accrued and other current liabilities 73,738 75,616 
Operating lease liabilities33,532 17,029 
Finance lease liabilities18,967 17,063 
Total current liabilities254,852 271,149 
DEFERRED INCOME TAXES63,882 93,105 
LONG-TERM DEBT 45,000 45,000 
NONCURRENT OPERATING LEASE LIABILITIES56,275 38,600 
NONCURRENT FINANCE LEASE LIABILITIES18,145 30,886 
OTHER LONG-TERM LIABILITIES9,100 3,180 
Total liabilities447,254 481,920 
COMMITMENTS AND CONTINGENCIES (Note 13)
SHAREHOLDERS’ EQUITY:
Preferred stock, $0.001 par value, 30,000,000 shares authorized, none issued, respectively
— — 
Common stock, $0.001 par value, 200,000,000 shares authorized, 103,282,917 and 109,483,281 shares issued, respectively
103 109 
Additional paid-in capital884,616 929,249 
Retained earnings (accumulated deficit)(51,763)69,034 
Total shareholders’ equity832,956 998,392 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY$1,280,210 $1,480,312 
See notes to condensed consolidated financial statements.
-1-
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
REVENUE - Service revenue
$360,868 $423,804 $1,123,732 $1,282,623 
COSTS AND EXPENSES
Cost of services (exclusive of depreciation and amortization)267,555 292,490 822,041 870,767 
General and administrative expenses (inclusive of stock-based compensation)28,356 28,597 87,492 86,364 
Depreciation and amortization54,299 45,361 164,027 124,749 
Impairment expense188,601 — 188,601 — 
Loss on disposal of assets2,149 12,673 11,884 62,117 
Total costs and expenses540,960 379,121 1,274,045 1,143,997 
OPERATING (LOSS) INCOME(180,092)44,683 (150,313)138,626 
OTHER INCOME (EXPENSE):
Interest expense(1,939)(1,169)(5,933)(3,016)
Other income (expense), net3,599 1,883 7,408 (1,749)
Total other income (expense), net1,660 714 1,475 (4,765)
INCOME (LOSS) BEFORE INCOME TAXES(178,432)45,397 (148,838)133,861 
INCOME TAX BENEFIT (EXPENSE)41,365 (10,644)28,041 (31,118)
NET (LOSS) INCOME$(137,067)$34,753 $(120,797)$102,743 
NET (LOSS) INCOME PER COMMON SHARE:
Basic$(1.32)$0.31 $(1.14)$0.90 
Diluted$(1.32)$0.31 $(1.14)$0.90 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic104,121 112,286 106,314 113,960 
Diluted104,121 112,698 106,314 114,294 

See notes to condensed consolidated financial statements.
-2-
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)

Nine Months Ended September 30, 2024
Common Stock
SharesAmountAdditional Paid-In CapitalRetained Earnings (Accumulated Deficit)Total
BALANCE - January 1, 2024109,483 $109 $929,249 $69,034 $998,392 
Stock-based compensation cost— — 3,742 — 3,742 
Issuance of equity awards, net376 1 (1)— — 
Tax withholdings paid for net settlement of equity awards— — (1,209)— (1,209)
Share repurchases(2,968)(3)(22,505)— (22,508)
Excise tax on share repurchases— — (193)— (193)
Net income— — — 19,930 19,930 
BALANCE - March 31, 2024106,891 $107 $909,083 $88,964 $998,154 
Stock-based compensation cost— — 4,618 — 4,618 
Issuance of equity awards, net168 — — — — 
Tax withholdings paid for net settlement of equity awards— — (61)— (61)
Share repurchases(2,535)(2)(22,986)— (22,988)
Excise tax on share repurchases— — (215)— (215)
Net loss— — — (3,660)(3,660)
BALANCE - June 30, 2024104,524 $105 $890,439 $85,304 $975,848 
Stock-based compensation cost— — 4,615 — 4,615 
Issuance of equity awards, net28 — — — — 
Tax withholdings paid for net settlement of equity awards— — (107)— (107)
Share repurchases(1,269)(2)(10,231)— (10,233)
Excise tax on share repurchases— — (100)— (100)
Net loss— — — (137,067)(137,067)
BALANCE - September 30, 2024103,283 $103 $884,616 $(51,763)$832,956 

See notes to condensed consolidated financial statements.
-3-
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)
Nine Months Ended September 30, 2023
Common Stock
SharesAmountAdditional Paid-In CapitalRetained Earnings (Accumulated Deficit)Total
BALANCE - January 1, 2023114,515 $114 $970,519 $(16,600)$954,033 
Stock-based compensation cost— — 3,536 — 3,536 
Issuance of equity awards, net656 1 (1)— — 
Tax withholdings paid for net settlement of equity awards— — (3,379)— (3,379)
Net income— — — 28,733 28,733 
BALANCE - March 31, 2023115,171 $115 $970,675 $12,133 $982,923 
Stock-based compensation cost— — 3,758 — 3,758 
Issuance of equity awards, net76 — — — — 
Tax withholdings paid for net settlement of equity awards— — (4)— (4)
Share repurchases(2,289)(2)(17,468)— (17,470)
Excise tax on share repurchases— — (105)— (105)
Net income— — — 39,257 39,257 
BALANCE - June 30, 2023112,958 $113 $956,856 $51,390 $1,008,359 
Stock-based compensation cost— — 3,310 — 3,310 
Issuance of equity awards, net25 — — — — 
Tax withholdings paid for net settlement of equity awards— — (123)— (123)
Share Repurchases(1,892)(2)(18,785)— (18,787)
Excise tax on share repurchases— — (185)— (185)
Net income— — — 34,753 34,753 
BALANCE - September 30, 2023111,091 $111 $941,073 $86,143 $1,027,327 

See notes to condensed consolidated financial statements.
-4-
PROPETRO HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
Nine Months Ended September 30,
20242023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income$(120,797)$102,743 
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization164,027 124,749 
Impairment expense188,601 — 
Deferred income tax (benefit) expense(29,224)28,753 
Amortization of deferred debt issuance costs327 250 
Stock-based compensation12,975 10,604 
Loss on disposal of assets11,884 62,117 
Unrealized loss on short-term investment340 2,120 
Noncash gain from adjustment of business acquisition contingent consideration(1,800)— 
Changes in operating assets and liabilities, net of effects of business acquisition:
Accounts receivable21,876 (44,832)
Other current assets(480)(2,584)
Inventories962 (4,520)
Prepaid expenses4,966 (275)
Accounts payable(31,933)9,584 
Accrued and other current liabilities(7,292)16,362 
Net cash provided by operating activities214,432 305,071 
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures(112,449)(320,747)
Business acquisition, net of cash acquired(21,038)— 
Proceeds from sale of assets2,884 7,976 
Net cash used in investing activities(130,603)(312,771)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings— 30,000 
Repayments of borrowings— (15,000)
Payment of debt issuance costs— (1,179)
Payments on finance lease obligations(13,067)(889)
Tax withholdings paid for net settlement of equity awards(1,377)(3,506)
Share repurchases(55,729)(36,258)
Payment of excise tax on share repurchases(444)— 
Net cash used in financing activities(70,617)(26,832)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS13,212 (34,532)
CASH AND CASH EQUIVALENTS - Beginning of period33,354 88,862 
CASH AND CASH EQUIVALENTS - End of period$46,566 $54,330 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital expenditures included in accounts payable and accrued liabilities$17,779 $33,189 
Business acquisition deferred cash consideration included in other current liabilities$3,664 $— 
Business acquisition contingent consideration included in other long-term liabilities$10,900 $— 

See notes to condensed consolidated financial statements.
-5-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 - Basis of Presentation
The accompanying condensed consolidated financial statements of ProPetro Holding Corp. and its subsidiaries (the "Company," "we," "us" or "our") have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission ("SEC") for interim financial information and do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for annual financial statements. Those adjustments (which consisted of normal recurring accruals) that are, in the opinion of management, necessary for a fair presentation of the results of the interim periods have been made. Results of operations for such interim periods are not necessarily indicative of the results of operations for a full year due to changes in market conditions and other factors. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023, included in our Form 10-K filed with the SEC (our "Form 10-K").
Revenue Recognition
The Company’s services are sold based upon contracts with customers. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.
Hydraulic fracturing is an oil well completion technique, which is part of the overall well completion process. It is a well-stimulation technique intended to optimize hydrocarbon flow paths during the completion phase of shale wellbores. The process involves the injection of water, sand and chemicals under high pressure into shale formations. Our hydraulic fracturing contracts with our customers have one performance obligation, which is the contracted total stages, satisfied over time. We recognize revenue over time using a progress output, unit-of-work performed method, which is based on the agreed fixed transaction price and actual stages completed. We believe that recognizing revenue based on actual stages completed accurately depicts how our hydraulic fracturing services are transferred to our customers over time. In addition, certain of our hydraulic fracturing equipment may be entitled to reservation fee charges if a customer were to reserve committed hydraulic fracturing equipment. The Company recognizes revenue related to reservation fee charges on a daily basis as the performance obligations are met. We also deliver wet sand to customer oil well sites for use in the hydraulic fracturing process. The Company recognizes revenue related to its sale of sand and delivery service as it fulfills sand deliveries to the customer.
Acidizing, which is part of our hydraulic fracturing operating segment, involves a well-stimulation technique where acid or similar chemicals are injected under pressure into formations to form or expand fissures. Our acidizing contracts have one performance obligation, satisfied at a point-in-time, upon completion of the contracted service or sale of the acid or chemical when control is transferred to the customer. Jobs for these services are typically short term in nature, with most jobs completed in less than a day. We recognize acidizing revenue at a point-in-time, upon completion of the performance obligation.
Our cementing services use pressure pumping equipment to deliver a slurry of liquid cement that is pumped down a well between the casing and the borehole. Our cementing contracts have one performance obligation, satisfied at a point-in-time, upon completion of the contracted service when control is transferred to the customer. Jobs for these services are typically short term in nature, with most jobs completed in less than a day. We recognize cementing revenue at a point-in-time, upon completion of the performance obligation.
Wireline services (including pumpdown) are oil well completion techniques, which are part of the well completion process. Our wireline services utilize equipment with a drum of wireline to deploy perforating guns in the well to perforate the casing, cement, and formation. Once the well is perforated, the well can be fractured. Pumpdown utilizes pressure pumping equipment to pump water into the well to deploy perforating guns attached to wireline through the lateral section of a well. Our wireline contracts with our customers have one performance obligation, which is the contracted total stages, satisfied over time. We recognize revenue over time using a progress output, unit-of-work performed method, which is based on the agreed fixed transaction price and actual stages completed. We believe that recognizing revenue based on actual stages completed accurately depicts how our wireline services are transferred to our customers over time. In addition, certain of our wireline equipment is entitled to daily equipment charges while the equipment is on the customer’s locations. The Company recognizes revenue related to daily equipment charges on a daily basis as the performance obligations are met.
The transaction price for each performance obligation for all our completion services is fixed per our contracts with our customers.
-6-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Accounts Receivable
Accounts receivable are stated at the amount billed and billable to customers. At September 30, 2024 and December 31, 2023, accrued revenue (unbilled receivable) included as part of our accounts receivable was $83.6 million and $55.4 million, respectively. At September 30, 2024, the transaction price allocated to the remaining performance obligation for our partially completed hydraulic fracturing and wireline operations was $24.2 million, which is expected to be completed and recognized as revenue within one month following the current period balance sheet date.
Allowance for Credit Losses
As of September 30, 2024, the Company had $0.2 million allowance for credit losses. Our allowance for credit losses is based on the evaluation of both our historic collection experience and the economic outlook for the oil and gas industry. We evaluated the historic loss experience on our accounts receivable and also separately considered customers with receivable balances that may be negatively impacted by current or future economic developments and market conditions. While the Company has not experienced significant credit losses in the past and has not yet seen material adverse changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the impacts of depressed economic activities, including the potential impact of periodically adjusted borrowing base limits, level of hedged production, or unforeseen well shut-downs may affect the ability of its customers to timely pay receivables when due. Accordingly, in future periods, the Company may revise its estimates of expected credit losses.
The table below shows a summary of allowance for credit losses during the nine months ended September 30, 2024:
(in thousands)
Balance - January 1, 2024$236 
Provision for credit losses during the period— 
Write-off during the period— 
Balance - September 30, 2024$236 
Customer Cash Advances
We have received cash advances from a customer in connection with our contract with the customer to provide FORCE® electric-powered hydraulic fracturing equipment and services. These cash advances from the customer will be credited towards the customer’s invoice as our revenue performance obligations are met over the contract period. The cash advances received represent contract liabilities in connection with the performance of certain completion services. The cash advance (contract liability) balances, which are included in accrued and other current liabilities in our condensed consolidated balance sheets, were $13.9 million and $19.2 million as of September 30, 2024 and December 31, 2023, respectively. During the nine months ended September 30, 2024 and 2023, we recognized revenue of $4.9 million and $4.2 million, respectively, from the cash advance amount outstanding at the beginning of the period.
Reclassification of Prior Period Presentation
Certain reclassifications have been made to prior period segment information to conform to the current period presentation. These reclassifications had no effect on our balance sheet, operating and net income (loss) or cash flows from operating, investing and financing activities. The write-offs of remaining book value of prematurely failed power ends are recorded as loss on disposal of assets in 2024. In order to conform to current period presentation, we have reclassified the corresponding amount of $8.4 million and $32.7 million from depreciation to loss on disposal of assets for the three and nine months ended September 30, 2023, respectively.
-7-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Depreciation and Amortization
Depreciation and amortization comprised the following:
(in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Depreciation and amortization related to cost of services$52,046 $43,889 $158,586 $120,255 
Depreciation and amortization related to general and administrative expenses2,253 1,472 5,441 4,494 
Total depreciation and amortization$54,299 $45,361 $164,027 $124,749 
Income Taxes
Total income tax benefit was $28.0 million resulting in an effective tax rate of 18.8% for the nine months ended September 30, 2024, as compared to income tax expense of $31.1 million or an effective tax rate of 23.2% for the nine months ended September 30, 2023. The change in effective tax rate for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, is primarily attributable to the difference in the impact of nondeductible expenses and state taxes on the pre-tax loss for 2024, as compared to pre-tax income for 2023.
Share Repurchases
All shares of common stock repurchased through the Company's share repurchase program are retired upon repurchase. The Company accounts for the purchase price of repurchased common stock in excess of par value ($0.001 per share of common stock) as a reduction of additional paid-in capital, and will continue to do so until additional paid-in capital is reduced to zero. Thereafter, any excess purchase price will be recorded as a reduction of retained earnings or an increase in accumulated deficit.
Note 2 - Recently Issued Accounting Standards
In October 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. This ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards Codification (“Codification” or "ASC"). The amendments in the ASU represent changes to clarify or improve disclosure and presentation requirements of a variety of Codification topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. ASU 2023-06 will become effective for each amendment on the effective date of the SEC's corresponding disclosure rule changes. We do not expect ASU No. 2023-06 to have a material impact on our condensed consolidated financial statements.
-8-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose on an annual and interim basis, 1) significant segment expenses that are regularly provided to the Chief Operating Decision Maker (the “CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”) and 2) an amount for other segment items representing the difference between segment revenue less the segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss. This ASU also requires public entities to provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods, clarifies that if the CODM uses more than one measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report one or more of those additional measures of segment profit or loss but at least one of the reported segment profit or loss measures (or the single reported measure, if only one is disclosed) should be the measure that is most consistent with the measurement principles under GAAP. This ASU also requires disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources, and requires a public entity that has a single reportable segment to provide all the disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. We do not expect to early adopt ASU No. 2023-07. This ASU will result in additional disclosures in our Reportable Segment Information note, but will not have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disaggregation of certain components included in the Company’s effective tax rate and income taxes paid disclosures. The guidance is effective for annual periods beginning after December 15, 2024. We are currently assessing the impact of ASU No. 2023-09 on our income tax disclosures.
Note 3 - Business Acquisitions
AquaPropSM Wet Sand Solutions Acquisition
On May 31, 2024, the Company completed the acquisition of all of the outstanding equity interests in Aqua Prop, LLC (“AquaProp”). AquaProp is an oilfield service company based in Midland, Texas that provides wet sand solutions for hydraulic fracturing sand requirements at oil well sites. As a result of the acquisition, the Company expanded its operations into the wet sand service business unit.
The following table summarizes the consideration transferred to AquaProp at the acquisition date:
(in thousands)
Fair value of purchase consideration:
Cash$21,216 
Deferred cash consideration3,664 
Contingent consideration10,900 
Total consideration$35,780 
Cash consideration includes $13.7 million paid to the seller, $7.2 million paid to settle the seller’s outstanding debt, and $0.3 million paid for the seller’s transaction expenses.
Included in the deferred cash consideration is a liability incurred to the seller of $1.8 million. In the purchase agreement as a post-closing transaction, AquaProp's seller agreed to purchase and then sell to the Company, and the Company agreed to purchase from the seller, two additional equipment spreads within 90 days of the closing at a purchase price equal to cost plus a 50% premium. The post-closing transaction was determined to be a transaction separate from the business combination, but the premium was determined to represent consideration transferred in the business combination as the above market terms of the arrangement would not have been agreed upon absent the business combination. Accordingly, the liability incurred to the seller was recognized as consideration in the business combination as cash was not paid at closing. The post-closing transaction for the Company’s purchase of the additional equipment occurred in July 2024 and the purchases were accounted for as additions
-9-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 - Business Acquisitions (Continued)
to property and equipment in our condensed consolidated balance sheet and capital expenditures in our condensed consolidated statement of cash flows.
Also in the purchase agreement as an additional post-closing transaction, the seller agreed to purchase and then deliver to the Company up to five more additional equipment spreads at the request of the Company within a 30-month period following the delivery of the first additional spread at a purchase price equal to the lower of $4.8 million or cost. The additional post-closing transaction was determined to be a transaction separate from the business combination, and no portion of the transaction was determined to represent consideration transferred in the business combination as the terms were at market. The additional post-closing transaction for the Company’s purchase of the additional equipment will be accounted for as additions to property and equipment in our condensed consolidated balance sheet and capital expenditures in our condensed consolidated statement of cash flows.
The acquisition of AquaProp also included a contingent consideration arrangement that requires additional consideration to be paid by the Company to the seller based on the amount of wet sand delivered during a 30-month period following the delivery of the first additional spread, attributable to the five additional equipment spreads described above. Amounts are payable under the earnout arrangement if the Company reaches certain delivery thresholds (in tons) of wet sand using the specific equipment provided by the seller or by other parties. The range of the undiscounted amounts the Company could be obligated to pay under the contingent consideration agreement is between $0 and $12.5 million. The fair value of the contingent consideration for the business combination recognized at the acquisition date of $10.9 million was estimated by applying the probability-weighted expected return method for the different scenarios that may occur based on the amount of additional equipment delivered by the seller, at the request of the Company, and the amount of wet sand expected to be delivered by such equipment. The fair value measurement of the contingent consideration is based on significant inputs not observable in the market, and thus represent Level 3 measurements. The contingent consideration payable will be adjusted to estimated fair value at the end of each subsequent reporting period until the contingencies are resolved and consideration payments are made. The estimated fair value of the contingent consideration payable was $9.1 million at September 30, 2024, resulting in a $1.8 million decrease from June 30, 2024. The decrease in the estimated fair value of the contingent consideration payable was primarily driven by updated projections regarding the probability of different scenarios and the amount and timing of additional equipment to be delivered by the seller under those scenarios. The decrease in the estimated contingent consideration payable is included in other income (expense) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2024.
The following table summarizes the recognized preliminary amounts of identified assets, and liabilities assumed at the acquisition date:
(in thousands)
Recognized amounts of assets acquired and liabilities assumed:
Cash$178 
Accounts receivable10,551 
Property and equipment13,468 
Intangible assets:
Trade name1,300 
Customer relationships18,600 
Accounts payable(1,423)
Factored receivables(10,024)
Total net assets acquired32,650 
Goodwill3,130 
Total consideration$35,780 
Preliminary estimates of fair values of the assets acquired and the liabilities assumed are based on information provided by AquaProp's seller and available through the issuance of these condensed consolidated financial statements. The Company is continuing to evaluate the underlying inputs and assumptions used in the valuations and the completeness of assets and liabilities recognized as the AquaProp Acquisition closed on May 31, 2024. Amounts recorded for all assets acquired, other than cash, and liabilities assumed, and the completeness of assets and liabilities recognized, are provisional. Accordingly, these preliminary estimates are subject to change during the measurement period. The measurement period ends on the earlier of the Company obtaining all necessary information that existed as of the acquisition date or one year from the acquisition date. As we
-10-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 - Business Acquisitions (Continued)
continue to integrate the acquired business, we may obtain additional information on the acquired accounts receivable, property and equipment, identifiable intangible assets, accounts payable and factoring receivables which if significant, may require revisions to preliminary valuation assumptions, estimates and resulting fair values. We expect to finalize these amounts within one year from the acquisition date.
The fair value of the assets acquired includes accounts receivable of $10.6 million. The gross amount due under contracts is $10.6 million, of which none is expected to be uncollectible. The Company did not acquire any other class of receivable as a result of the acquisition of AquaProp.
The assets acquired include two intangible assets, the trademark/trade name for AquaProp and the customer relationships. The trademark was assigned a fair value of $1.3 million with zero residual value and will be amortized on a straight‑line basis over fifteen years. The customer relationships were assigned a fair value of $18.6 million with zero residual value and will be amortized on a straight‑line basis over six years. The fair value of the trademark was estimated using the relief-from-royalty method, which calculates the hypothetical royalty fees that would be saved by owning an intangible asset rather than licensing it from another owner. This method forecasts revenue over the estimated useful life of the asset and then applies the following: a royalty rate based on comparable royalty and/or licensing transactions, income tax rate and discount rate, to calculate the discounted cash flows to arrive at the value of the trademark. Key assumptions include revenue forecasted at historical trends with a 0% long-term growth rate, 1.0% royalty rate, 21.6% income tax rate and a 40.5% discount rate. The fair value of the customer relationships was estimated using the multi-period excess earnings method. This method is a specific application of the discounted cash flow method, in which revenue derived from the intangible asset is estimated using total business revenue as a proxy and subsequently adjusted for attrition. Then deductions are made for business expenses and required returns attributable to other assets in the business. The excess earnings after these deductions are discounted to present value at an appropriate rate of return to arrive at the intangible asset value. Key assumptions include revenue forecasted at historical trends with a 0% long-term growth rate, 20.0% attrition rate, 21.6% income tax rate and a 40.5% discount rate.
The goodwill is attributable to the acquired workforce and significant synergies. Goodwill is assigned 100% to the hydraulic fracturing operating segment of the Company. The goodwill recognized is deductible for income tax purposes.
During the three months ended September 30, 2024, the Company made a measurement period adjustment to increase accounts payable acquired as part of the acquisition of AquaProp by $0.5 million to reflect facts and circumstances in existence as of the acquisition date. This adjustment decreased the deferred cash consideration payable to the seller.
The acquired business generated revenues of $18.7 million and a net loss of $2.2 million for the three months ended September 30, 2024, and revenues of $23.6 million and a net loss of $1.5 million for the period from May 31, 2024, to September 30, 2024.
The following combined supplemental pro forma information assumes the AquaProp Acquisition occurred on January 1, 2023. The supplemental pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after September 30, 2024 or any operating efficiencies or inefficiencies that may result from the AquaProp Acquisition. The information is not necessarily indicative of results that would have been achieved had the Company controlled AquaProp during the periods presented.
(unaudited, in thousands)
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Revenue$360,868 $428,435 $1,166,222 $1,289,157 
Net (loss) income(136,647)35,413 (109,682)102,298 
-11-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 3 - Business Acquisitions (Continued)
For the three and nine ended September 30, 2024, the Company incurred acquisition-related costs of $0.4 million and $1.5 million, respectively. These expenses are included in general and administrative expenses on the Company’s condensed consolidated statement of operations.
Par Five Acquisition
On December 1, 2023, the Company completed the acquisition of certain assets and certain liabilities of Par Five Energy Services LLC ("Par Five"), an oilfield service company based in Artesia, New Mexico that provides cementing and remediation services across the Permian Basin in Texas and New Mexico (the "Par Five Acquisition"). As a result of the Par Five Acquisition, the Company expanded its operations in the cementing service business unit.
The following table summarizes the consideration transferred to Par Five and the recognized amounts of identified assets acquired and liabilities assumed at the acquisition date:
(in thousands)
Total purchase consideration:
Cash$22,215 
Deferred cash consideration3,109 
Total consideration$25,324 

(in thousands)
Recognized amounts of assets acquired and liabilities assumed:
Accounts receivable$8,641 
Inventory321 
Property, plant and equipment17,175 
Accrued liabilities(813)
Total net assets acquired$25,324 

The deferred cash consideration of $3.1 million will be used to cover the amount by which the estimated purchase price exceeds the final purchase price, if any. The unused amount is payable to Par Five or its beneficiary on June 1, 2025 and accrues interest at 4.0% per annum. This obligation is shown within other current liabilities in our condensed consolidated balance sheets. As of September 30, 2024, the outstanding amount for this obligation was $3.1 million.

The fair value of the assets acquired includes account receivables of $8.6 million. The gross amount due under contracts is $8.6 million, of which none is expected to be uncollectible. The Company did not acquire any other class of receivable as a result of the acquisition of Par Five. The Company previously recognized a preliminary estimate of $8.7 million for accounts receivable acquired as part of the Par Five Acquisition. During the three months ended September 30, 2024, the Company made a measurement period adjustment to increase accounts receivable by $0.1 million. During the nine months ended September 30, 2024, the Company made a measurement period adjustment to decrease accounts receivable by $0.1 million. These measurement period adjustments reflect facts and circumstances in existence as of the acquisition date. The cumulative impact of these adjustments was a decrease in deferred cash consideration payable.
Note 4 - Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the "exit price") in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches and establishes a hierarchy for inputs used in measuring fair value that maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used, when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the assumptions other market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the observability of inputs as follows:
-12-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 - Fair Value Measurements (Continued)
Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment.
Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The fair values of cash, cash equivalents and restricted cash, accounts receivable, accounts payable, accrued and other current liabilities, and long-term debt are estimated to be approximately equivalent to carrying amounts as of September 30, 2024 and December 31, 2023 and have been excluded from the table below.
Assets and liabilities measured at fair value on a recurring basis are set forth below:
(in thousands)
Estimated fair value measurements
BalanceQuoted prices in active market
(Level 1)		Significant other observable inputs (Level 2)Significant other unobservable inputs (Level 3)Total gains
(losses)
September 30, 2024:
Short-term investment$7,405 $7,405 $— $— $(340)
Business acquisition contingent consideration payable$9,100 $— $— $9,100 $1,800 
December 31, 2023:
Short-term investment$7,745 $7,745 $— $— $(2,538)
Short-term investment— On September 1, 2022, the Company received 2.6 million common shares of STEP Energy Services Ltd. ("STEP") with an estimated fair value of $11.8 million as part of the consideration for the sale of our coiled tubing assets to STEP. The shares were treated as an investment in equity securities measured at fair value using Level 1 inputs based on observable prices on the Toronto Stock Exchange and are shown under current assets in our condensed consolidated balance sheets. As of September 30, 2024, the fair value of the short-term investment was estimated at $7.4 million. The fluctuation in stock price resulted in an unrealized loss of $0.4 million and $0.3 million for the three and nine months ended September 30, 2024, respectively. Included in the unrealized loss for three and nine months ended September 30, 2024 was a gain of $0.1 million and a loss of $0.1 million, respectively, resulting from non-cash foreign currency translation. The fluctuation in stock price resulted in an unrealized gain of $1.8 million and an unrealized loss of $2.1 million for the three and nine months ended September 30, 2023, respectively. Included in the unrealized gain for the three months ended September 30, 2023 and the unrealized loss for the nine months ended September 30, 2023 was a loss of $0.2 million and $0.1 million resulting from non-cash foreign currency translation during the three and nine months ended September 30, 2023, respectively. The unrealized loss resulting from stock price fluctuation and the unrealized gain and loss resulting from non-cash foreign currency translation are included in other income (expense) in our condensed consolidated statements of operations. The Company is restricted from selling, transferring or assigning more than 0.9 million shares in any one calendar month.
-13-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 - Fair Value Measurements (Continued)
Business acquisition contingent consideration payable— On May 31, 2024, the Company completed the acquisition of all of the outstanding equity interests in AquaProp in exchange for $13.7 million of cash, $3.7 million of deferred cash consideration payable to AquaProp's seller by May 31, 2025, the payoff of $7.2 million of assumed debt, the payment of $0.3 million of certain transaction costs and estimated contingent consideration of $10.9 million. The contingent consideration payable was measured at fair value using Level 3 inputs based on the probability-weighted expected return method and is shown under other long-term liabilities in our condensed consolidated balance sheets. The fair value of the contingent consideration payable is remeasured at the end of each reporting period. As of September 30, 2024, the estimated fair value of the contingent consideration payable was $9.1 million resulting in a $1.8 million decrease from June 30, 2024. The decrease in the estimated fair value of the contingent consideration payable was primarily driven by updated projections regarding the probability of different scenarios and the amount and timing of additional equipment to be delivered by the seller under those scenarios. Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future.
The following table presents a reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3):
(in thousands)
Three Months Ended September 30, 2024Nine Months Ended September 30, 2024
Business acquisition contingent consideration payable - opening balance$10,900 $— 
Addition— 10,900 
Decrease in estimated fair value (1)
(1,800)(1,800)
Business acquisition contingent consideration payable - closing balance$9,100 $9,100 
(1)The decrease in the estimated fair value of the business acquisition contingent consideration payable is included in other income (expense) in our condensed consolidated statements of operations for the three and nine months ended September 30, 2024.
Assets Measured at Fair Value on a Nonrecurring Basis
Assets measured at fair value on a nonrecurring basis are set forth below:
(in thousands)
Estimated fair value measurements
BalanceQuoted prices in active market
(Level 1)		Significant other observable inputs (Level 2)Significant other unobservable inputs (Level 3)Total gains
(losses)
September 30, 2024:
Property and equipment, net$63,791 $— $— $63,791 $(188,601)
December 31, 2023:
Property and equipment, net$— $— $— $— $— 
Certain assets and liabilities are measured at fair value on a nonrecurring basis. These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances. These assets and liabilities include those acquired through the AquaProp and Par Five Acquisitions, which are required to be measured at fair value on the acquisition date according to the FASB ASC Topic 805, Business Combinations.
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PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 4 - Fair Value Measurements (Continued)
Whenever events or circumstances indicate that the carrying value of long-lived assets may not be recoverable, the Company reviews the carrying values of long‑lived assets, such as property and equipment and other assets to determine if they are recoverable. If any long‑lived assets are determined to be unrecoverable, an impairment expense is recorded in the period. As part of the quarterly evaluation for the three months ended September 30, 2024, after evaluating the current market conditions and new information available, such as decreasing customer demand for and related pricing pressures on its conventional Tier II diesel-only hydraulic fracturing pumping units and associated conventional assets, (the "Tier II Units"), among other factors, the Company determined that the marketability of its Tier II had declined. As a result, the Company plans to strategically phase out its Tier II Units before the end of the original weighted average remaining useful life of this asset group. The Company performed an impairment analysis on its Tier II Units as of September 30, 2024 by comparing estimated future cash flows on an undiscounted basis to the carrying value of these assets. The Company determined that its Tier II Units were impaired, as their carrying value was greater than their estimated future cash flows on an undiscounted basis. Accordingly, an impairment expense of approximately $188.6 million which represented the difference between the carrying value and estimated fair value of the Company's Tier II Units was recorded in our hydraulic fracturing reportable segment for the three months ended September 30, 2024. At September 30, 2024, the estimated fair value of our Tier II Units of $63.8 million was determined using the market and cost approaches, which represent nonrecurring Level 3 inputs in the fair value measurement hierarchy. Our fair value estimates required us to use significant unobservable inputs, including assumptions related to replacement cost, among others. The carrying value of our Tier II Units prior to the impairment expense was approximately $252.4 million. No impairment of property and equipment was recorded during the three and nine months ended September 30, 2023.
Additionally, since the Company plans to phase out its Tier II Units earlier than the current weighted average remaining useful life of this asset group, we shortened the remaining useful lives of those Tier II Units that currently have useful lives beyond 2027 to no longer than the end of 2027 to align with management's use and expected economic life. This change was made effective October 1, 2024.
There were no additions to goodwill during the three months ended September 30, 2024. During the nine months ended September 30, 2024, we added $3.1 million of goodwill to our hydraulic fracturing operating segment related to the acquisition of AquaProp. There were no additions to goodwill during the three and nine months ended September 30, 2023. At September 30, 2024, our hydraulic fracturing operating segment and our wireline operating segment (which are also considered reporting units) included goodwill amounting to $3.1 million and $23.6 million, respectively. The wireline operating segment was the only segment with goodwill at December 31, 2023. Our Tier II Units are only a portion of our hydraulic fracturing reporting unit and the impairment of these assets did not indicate an overall decrease in the fair value of the reporting unit below its carrying value. Accordingly, we determined that no impairment to the carrying value of goodwill for either of our reporting units (hydraulic fracturing and wireline operating segments) was required as of September 30, 2024. There were no goodwill impairment losses during the three and nine months ended September 30, 2024 and 2023, respectively. We conducted our annual impairment test of goodwill in accordance with ASC 350, Intangibles—Goodwill and Other, as of December 31, 2023 and determined that no impairment to the carrying value of goodwill for our reporting unit (wireline operating segment) was required.
Note 5 - Intangible Assets
Intangible assets consist of customer relationships and trademark/trade names. Customer relationships are amortized on a straight‑line basis over useful lives of six and ten years. Trademark/trade names are amortized on a straight‑line basis over useful lives of ten and fifteen years. Amortization expense included in net (loss) income for the three and nine months ended September 30, 2024 was $2.2 million and $5.4 million, respectively. Amortization expense included in net income for the three and nine months ended September 30, 2023 was $1.4 million and $4.2 million, respectively. The Company’s intangible assets subject to amortization consisted of the following:
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PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

(in thousands)
September 30, 2024December 31, 2023
Intangible assets:
Trademark/trade names$12,100 $10,800 
Customer relationships65,100 46,500 
Total intangible assets77,200 57,300 
Accumulated amortization:
Trademark/trade name(2,099)(1,260)
Customer relationships(9,946)(5,425)
Total accumulated amortization(12,045)(6,685)
Intangible assets — net$65,155 $50,615 
Estimated remaining amortization expense for each of the subsequent fiscal years is expected to be as follows:
(in thousands)
YearEstimated future amortization expense
2024$2,229 
20258,917 
20268,917 
20278,917 
2028 and beyond36,175 
Total$65,155 
The average amortization period for our remaining intangible assets is approximately 7.6 years.
Note 6 - Long-Term Debt
Asset-Based Loan Credit Facility
Our revolving credit facility, as amended and restated in April 2022, prior to giving effect to the amendment to the revolving credit facility in June 2023, had a total borrowing capacity of $150.0 million. The revolving credit facility had a borrowing base of 85% to 90%, depending on the credit ratings of our accounts receivable counterparties, of monthly eligible accounts receivable less customary reserves. The revolving credit facility included a springing fixed charge coverage ratio to apply when excess availability was less than the greater of (i) 10% of the lesser of the facility size or the borrowing base or (ii) $10.0 million. Under the revolving credit facility we were required to comply, subject to certain exceptions and materiality qualifiers, with certain customary affirmative and negative covenants, including, but not limited to, covenants pertaining to our ability to incur liens, indebtedness, changes in the nature of our business, mergers and other fundamental changes, disposal of assets, investments and restricted payments, amendments to our organizational documents or accounting policies, prepayments of certain debt, dividends, transactions with affiliates, and certain other activities.
Effective June 2, 2023, the Company entered into an amendment to its amended and restated revolving credit facility. The amendment increased the borrowing capacity under the revolving credit facility to $225.0 million (subject to the Borrowing Base (as defined below) limit), and extended the maturity date to June 2, 2028.
Effective June 26, 2024, the Company entered into an amendment to its amended and restated revolving credit facility (the revolving credit facility, as amended and restated in April 2022, as amended in June 2023, as amended in June 2024 and as may be amended further, "ABL Credit Facility"). The amendment increased the amount of non-cash consideration that may be considered cash pursuant to certain permitted dispositions. The ABL Credit Facility has a borrowing base of the sum of 85% to
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PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6 - Long-Term Debt (Continued)
90% of monthly eligible accounts receivable and 80% of eligible unbilled accounts (up to a maximum of 25% of the borrowing base), in each case, depending on the credit ratings of our accounts receivable counterparties, less customary reserves (the "Borrowing Base"), as redetermined monthly. The Borrowing Base as of September 30, 2024, was approximately $131.4 million. The ABL Credit Facility includes a springing fixed charge coverage ratio to apply 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 or 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.
Borrowings under the ABL Credit Facility accrue interest based on a three-tier pricing grid tied to availability, and we may elect for loans to be based on either the Secured Overnight Financing Rate ("SOFR") or the base rate, plus the applicable margin, which ranges from 1.75% to 2.25% for SOFR loans and 0.75% to 1.25% for base rate loans. For the three months ended September 30, 2024, the weighted average interest rate on our outstanding borrowings under the ABL Credit Facility was 7.18%.
The loan origination costs relating to the ABL Credit Facility are classified as an asset in the condensed consolidated balance sheets. As of September 30, 2024 and December 31, 2023, we had borrowings outstanding under our ABL Credit Facility of $45.0 million and $45.0 million, respectively. After borrowings outstanding and letters of credit of approximately $6.0 million under the ABL Credit Facility, we had approximately $80.4 million available for borrowing under our ABL Credit Facility as of September 30, 2024.
Note 7 - Reportable Segment Information
The Company currently has three operating segments for which discrete financial information is readily available: hydraulic fracturing (inclusive of acidizing), wireline and cementing. These operating segments represent how the CODM evaluates performance and allocates resources.
Prior to the fourth quarter of fiscal year 2023, our operating segments met the aggregation criteria in accordance with ASC 280—Segment Reporting and were aggregated into the “Completion Services” reportable segment. Effective as of the fourth quarter of fiscal year 2023, we revised our segment reporting as we determined that our three operating segments no longer met the criteria to be aggregated. Our Hydraulic Fracturing and Wireline operating segments meet the criteria of a reportable segment. Our cementing segment does not meet the reportable segment criteria and is included within the “All Other” category. Additionally, our corporate administrative activities do not involve business activities from which it may earn revenues and its results are not regularly reviewed by the Company’s CODM when making key operating and resource decisions. As a result, corporate administrative expenses and inter-segment revenue have been included under “Reconciling Items.” Prior period segment information has been revised to conform to our current presentation.
-17-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 - Reportable Segment Information (Continued)

The Company manages and assesses the performance of the reportable segment by its adjusted EBITDA (earnings before interest expense, income taxes, depreciation and amortization, stock-based compensation expense, other income or expense, gain or loss on disposal of assets and other unusual or nonrecurring expenses or income such as impairment charges, retention bonuses, severance, costs related to asset acquisitions, insurance recoveries, one-time professional fees and legal settlements).
The following tables set forth certain financial information with respect to the Company’s reportable segments; inter-segment revenues are shown under "Reconciling Items" (in thousands):
Three Months Ended September 30, 2024
Hydraulic FracturingWirelineAll OtherReconciling ItemsTotal
Service revenue$274,138 $47,958 $38,920 $(148)$360,868 
Adjusted EBITDA for reportable segments$66,166 $9,194 $8,989 $— $84,349 
Depreciation and amortization$46,752 $5,260 $2,264 $23 $54,299 
Impairment expense (1)
$188,601 $— $— $— $188,601 
Capital expenditures incurred$33,465 $1,757 $1,575 $38 $36,835 
Goodwill$3,130 $23,624 $— $— $26,754 
Total assets September 30, 2024$953,914 $197,599 $75,259 $53,438 $1,280,210 
Three Months Ended September 30, 2023
Hydraulic FracturingWirelineAll OtherReconciling ItemsTotal
Service revenue$340,089 $52,775 $30,940 $— $423,804 
Adjusted EBITDA for reportable segments$99,586 $14,011 $6,375 $— $119,972 
Depreciation and amortization (2)
$39,098 $4,860 $1,363 $40 $45,361 
Capital expenditures incurred$52,713 $5,488 $880 $— $59,081 
Goodwill$— $23,624 $— $— $23,624 
Total assets at December 31, 2023$1,189,526 $198,957 $78,475 $13,354 $1,480,312 
Nine Months Ended September 30, 2024
Hydraulic FracturingWirelineAll OtherReconciling ItemsTotal
Service revenue$855,066 $157,966 $110,935 $(235)$1,123,732 
Adjusted EBITDA for reportable segments$215,995 $36,687 $20,433 $— $273,115 
Depreciation and amortization$141,828 $15,304 $6,813 $82 $164,027 
Impairment expense (1)
$188,601 $— $— $— $188,601 
Capital expenditures incurred$95,084 $6,086 $7,417 $38 $108,625 
Goodwill$3,130 $23,624 $— $— $26,754 
Total assets at September 30, 2024$953,914 $197,599 $75,259 $53,438 $1,280,210 
-18-
PROPETRO HOLDING CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 7 - Reportable Segment Information (Continued)

Nine Months Ended September 30, 2023
Hydraulic FracturingWirelineAll OtherReconciling ItemsTotal
Service revenue$1,018,074 $179,182 $85,367 $— $1,282,623 
Adjusted EBITDA for reportable segments$308,448 $50,667 $16,861 $— $375,976 
Depreciation and amortization (2)
$106,587 $13,862 $4,104 $196 $124,749 
Capital expenditures incurred$256,350 $10,887 $4,247 $— $271,484 
Goodwill$— $23,624 $— $— $23,624 
Total assets at December 31, 2023$1,189,526 $198,957 $78,475 $13,354 $1,480,312 
(1)Represents noncash impairment expense on our Tier II Units.
(2)The write-offs of remaining book value of prematurely failed power ends are recorded as loss on disposal of assets in 2024. In order to conform to current period presentation, we have reclassified the corresponding amounts of $8.4 million and $32.7 million from depreciation to loss on disposal of assets for the three and nine months ended September 30, 2023, respectively.
A reconciliation from reportable segment level financial information to the condensed consolidated statement of operations is provided in the table below (in thousands):
Three Months Ended September 30,Nine Months Ended September 30,
2024202320242023
Service Revenue
Hydraulic Fracturing$274,138 $340,089 $855,066 $1,018,074 
Wireline47,958 52,775 157,966 179,182 
All Other38,920 30,940 110,935 85,367 
Total service revenue for reportable segments361,016 423,804 1,123,967 1,282,623 
Elimination of inter-segment service revenue(148)— (235)— 
Total consolidated service revenue$360,868 $423,804 $1,123,732 $1,282,623 
Adjusted EBITDA
Hydraulic Fracturing$66,166 $99,586 $215,995 $308,448 
Wireline9,194 14,011 36,687 50,667 
All Other8,989 6,375 20,433 16,861 
Total Adjusted EBITDA for reportable segments84,349 119,972 273,115 375,976 
Unallocated corporate administrative expenses(13,219)(12,258)(42,529)(36,284)
Depreciation and amortization (1)
(54,299)(45,361)(164,027)(124,749)
Impairment expense (2)
(188,601)— (188,601)— 
Interest expense(1,939)(1,169)(5,933)(3,016)
Income tax benefit (expense)41,365 (10,644)28,041 (31,118)
Loss on disposal of assets (1)
(2,149)(12,673)(11,884)