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ProPetro Trades Cash, Shares for Pioneer Natural’s Permian HHP Assets

Pioneer Natural Resources Co. is selling its pressure pumping assets to ProPetro Holding Corp., which plans to provide oilfield services (OFS) in the Permian Basin for the independent for 10 years.

The sale of Pioneer Pumping Services, set to be completed by year’s end, is a $400 million trade comprised of $110 million cash and 16.6 million shares of common stock, representing about 17% ownership in ProPetro.

ProPetro’s “robust operational track record aligns with our commitment to being the most efficient, low-cost Permian operator,” Pioneer CEO Timothy L. Dove said. “We have had a strong relationship with the ProPetro team for many years, and this contract solidifies their position as a key partner in our development program. The long-term nature of this agreement will benefit both companies.”

ProPetro CEO Dale Redman said the Midland, TX-based OFS, which he co-founded, “could not be more excited about the opportunity to expand our relationship with Pioneer through this transformational transaction. The combination of ProPetro and Pioneer Pumping Services will result in the largest and most efficient pressure pumping provider in the Permian Basin.

“As important is our strategic long-term service agreement, and we look forward to continuing our close partnership with Pioneer as they further develop their extensive resource base in the Permian Basin.”

Pioneer Pumping employees are being offered positions to continue working with ProPetro.

The Pioneer assets include eight fleets with 510,000 hydraulic horsepower (hhp), three coiled tubing units and associated equipment.

ProPetro, which only works in the Permian, launched an initial public offering last year. Fleet capacity at the end of 2017 was 64% higher than at year-end 2016, reaching 690,000 hhp or 16 fleets, from 420,000 hhp or 10 fleets. It also maintained 100% fleet utilization throughout 2017. One newbuild fleet with 45,000 hhp was deployed in the final three months of 2017.

Once the transaction is completed, ProPetro would have 28 fleets with an estimated 1.415 million hhp operating in the Permian.

Pioneer, which has been peeling off assets to finance its exploration and development in the Permian, has a pressure pumping maintenance facility on 111 contiguous acres near ProPetro’s current maintenance operations in Midland. As a result, the combination would increase ProPetro’s scale in the Permian.

The 16.6 million shares issued by ProPetro are valued at an estimated $17.48/share. ProPetro agreed to pay $55 million cash to Pioneer at closing, with the balance to be paid within the following 60 days.

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