ProPetro Holding Profit Misses, Shares Fall

Shares of ProPetro Holding Corp fell by as much as 12.9 percent on Tuesday after the U.S. pressure pumper reported a lower than expected quarterly profit on weather-related delays and a higher mix of lower-margin services.

The Midland, Texas, company posted earnings per share of 12 cents in the fourth quarter, below analysts' expectations of 35 cents, according to Thomson Reuters I/B/E/S. Fourth-quarter revenue of $313.7 million was roughly in line with expectations of $311.7 million.

Pressure pumping has been a bright spot in the oilfield services sector, which was hit hard by a brutal three-year downturn in prices that began in 2014. ProPetro's operations are focused in the Permian Basin, a shale patch in West Texas and New Mexico where there has been strong demand for completion services amid a surge in drilling activity.

ProPetro's results were affected by inclement weather, a larger mix of less-lucrative vertical completion jobs than previously anticipated, and more time off during the holidays, the company said.

Harsh winter conditions in the northern United States impacted the company's supply chain, Chief Executive Dale Redman told analysts on a conference call. He cited rail, which is used to haul in sand from Wisconsin and Minnesota for hydraulic fracturing. He said customers performed more vertical well completions because of lease obligations.

Oilfield services competitor Halliburton Co last month warned investors that its first-quarter results also would be hurt by rail delays affecting frac sand deliveries.

ProPetro plans to add two new fracking fleets in the second and third quarters of 2018, bringing its total to 20. The company also plans to enhance its legacy fleet by an incremental 35,000 hydraulic horsepower this year.

Although demand for fracking and other well-completion services has climbed, more announcements of new builds have sparked concerns among investors and analysts that the market may become oversupplied.

"While the domestic pressure pumping sector remains under supplied (and Permian new builds warranted), we believe this announcement could be viewed negatively by a market still fearful of frac over building in NAM (North America)," James West, senior managing director and partner at investment bank Evercore ISI, wrote in a note following the earnings release, referring to ProPetro's plans to add two fleets.

ProPetro shares were down 7 percent at $15.78 in late morning, off an earlier low at $14.78.

Reporting by Liz Hampton