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ProPetro (PUMP) Declares $35.6M Acquisition of Aqua Prop

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ProPetro Holding Corp. (PUMP - Free Report) , a leading provider of oilfield services, announced its acquisition of Aqua Prop LLC, a provider of cost-effective wet sand solutions. This all-cash acquisition, valued at $35.6 million net of working capital, signifies a substantial step in PUMP's ongoing commitment to delivering more integrated and industrial solutions while enhancing value for stakeholders.

Strategic Alignment and Integration

ProPetro's Vision for Integration: The acquisition of Aqua Prop LLC is in perfect sync with PUMP’s strategic vision of innovation and integration within its disciplined operating model. Sam Sledge, CEO of ProPetro, emphasized the seamless alignment of this acquisition with the company's long-term goals. By incorporating Aqua Prop’s innovative wet sand solutions, PUMP aims to enhance its operational efficiency and capital allocation strategies, which would bring more value to its customers and stakeholders.

Enhanced Operational Capabilities: PUMP will now own and provide onsite sand storage and handling, leveraging strategic agreements for logistics and preferred access to wet sand supply. This enhanced capability should streamline operations, reduce costs and improve service delivery in the Permian Basin, a region known for prolific oil and gas production.

Financial and Strategic Benefits

Value for Shareholders: The deal structure contains cash consideration, future earnout incentives and potential growth capital expenditure considerations, all tailored to support and align with Aqua Prop and PUMP’s growth targets and objectives.

This structure aims to maximize value creation for PUMP’s shareholders by ensuring that the acquisition provides measurable financial benefits.

Strengthening Market Position: By integrating Aqua Prop’s wet sand solutions into service offerings, PUMP strengthens its market position as a provider of best-in-class integrated completion services. This strategic move not only diversifies PUMP’s service portfolio, but also enhances its competitive edge in the highly competitive oilfield services market.

Operational and Strategic Synergies

Streamlined Logistics and Supply Chain: The acquisition should allow ProPetro to optimize logistics and supply-chain management through preferred access to wet sand supply. This strategic advantage is expected to reduce operational bottlenecks and enhance the overall efficiency of PUMP’s service delivery.

Onsite Sand Storage and Handling: With the ownership of onsite sand storage and handling capabilities, PUMP will be able to offer more reliable and efficient sand management solutions to its clients. This capability is crucial for maintaining the high standards of service that is expected by the operators in the Permian Basin.

Innovation and Growth

Promoting Innovation: Aqua Prop’s innovative approach to wet sand solutions is a significant addition to ProPetro’s service offerings. This acquisition fosters a culture of innovation within PUMP, encouraging the development and adoption of new technologies that can drive operational efficiency and customer satisfaction.

Growth Opportunities: The acquisition opens up new growth opportunities for PUMP, allowing the company to expand its service offerings and enter new markets. By leveraging Aqua Prop’s expertise and innovative solutions, PUMP can explore new avenues for growth and profitability.

Industry Impact and Prospects

Setting Industry Standards: PUMP’s acquisition of Aqua Prop sets a new standard in the oilfield services industry. By integrating cutting-edge wet sand solutions into its operations, PUMP is expected to emerge as a leader in innovation and operational efficiency.

Prospects: Looking ahead, PUMP is well-positioned to capitalize on the synergies created by this acquisition. The company’s focus on innovation, integration and value creation should drive growth and success in the coming years, ensuring long-term benefits for its shareholders, customers and stakeholders.

Conclusion

The acquisition of Aqua Prop by ProPetro marks a milestone in the journey toward more integrated and industrial solutions. This strategic move enhances PUMP’s operational capabilities, strengthens its market position and sets the stage for growth and innovation. As PUMP continues to build on its reputation for delivering best-in-class services in the Permian Basin, the acquisition of Aqua Prop will undoubtedly play a crucial role in driving PUMP’s success and value creation for all its stakeholders.

Zacks Rank and Other Key Picks

Currently, PUMP carries a Zacks Rank #2 (Buy).

Investors interested in the energy sector might look at some other top-ranked stocks like Archrock, Inc. (AROC - Free Report) and SM Energy Company (SM - Free Report) , each sporting a Zacks Rank #1 (Strong Buy), and Sunoco LP (SUN - Free Report) , carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archrock is valued at $3.16 billion. The company currently pays a dividend of 66 cents per share, or 3.26%, on an annual basis.

AROC, together with its subsidiaries, works as an energy infrastructure company in the United States. The company operates under two segments — Contract Operations and Aftermarket Services.

Denver, CO-based SM Energy is valued at $5.8 billion. The company currently pays a dividend of 72 cents per share, or 1.43%, on an annual basis.

SM, an independent energy company, engages in the acquisition, exploration, development and production of oil, gas and natural gas liquids in the state of Texas.

Sunoco is valued at $5.14 billion. It is a major wholesale motor fuel distributor in the United States, distributing over 10 fuel brands through long-term contracts with more than 10,000 convenience stores, ensuring consistent cash flow.

SUN’s extensive distribution network across 40 states provides a robust and reliable source of income and the Brownsville terminal expansion should add to its revenue diversification.


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