ProPetro: Pivot Into Industrial For A Multiple Rerate, But No Margin Of Safety

Wiebe De Ruyck
129 Followers

Summary

  • ProPetro is investing in PROPWR and electric fleets to reposition as an industrial firm, which could lead to a multiple rerate if successful.
  • Despite $1.6B in capex since 2019, revenue has remained flat and debt has increased, raising concerns about capital allocation and leverage.
  • Growth is challenged by slowing Permian Basin activity and reliance on oil prices, but diversification into industrial power offers potential upside.
  • Valuation is pressured by capital intensity and cyclical risks, but cost optimizations, share repurchases, and PROPWR expansion are key catalysts.

A safety engineer in an orange jumpsuit and white hard hat uses a radio to communicate at site, ensuring smooth operations. The image highlights the importance of safety, communication, and coordination in industrial settings.

ultramansk/iStock via Getty Images

ProPetro (NYSE:PUMP) provides complementary services to upstream E&P companies, exclusively within the Permian Basin. Even if the U.S. would like to drill, baby, drill, Permian Basin activity still just reflects oil prices. ProPetro is transitioning to electric fleets, reducing sustaining capex and

This article was written by

129 Followers
I'm Wiebe, a dedicated investment enthusiast with a strong focus on value investing. I firmly believe in conducting thorough research, pinpointing undervalued assets, and constructing portfolios with a long-term perspective. I'm committed to delivering well-researched, insightful articles that cater to the interests of Seeking Alpha's discerning readers.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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