Shares of ProPetro Holding Corp. PUMP have dropped 14.2% since the third-quarter 2021 earnings announcement on Nov 2.

This southbound stock movement is induced by a wider-than-anticipated loss reported for the third quarter and higher-service cost resulting from ramped-up activity levels and inflationary effects from other direct expenditures.

Insight Into the Earnings Report

ProPetro reported third-quarter adjusted net loss of 5 cents per share, wider than the Zacks Consensus Estimate of a loss of 3 cents. This underperformance was due to escalated service costs.

However, the bottom line narrowed from the year-ago quarter’s loss of 29 cents per share, attributable to better-than-expected revenue contribution from the Pressure Pumping unit. The segment reported revenues of $245.6 million, outpacing the consensus mark of $225 million.

Quarterly revenues of $250.1 million outpaced the Zacks Consensus Estimate of $227 million and increased from the year-ago quarter’s $133.71 million.

This oilfield service provider’s adjusted EBITDA in the third quarter amounted to $42 million, up from $17.4 million in the year-ago quarter. Greater activity, better pricing and increased profitability drove the Adjusted EBITDA.

ProPetro’s adjusted EBITDA of $53.98 million in its Pressure Pumping unit during the September quarter surpassed the Zacks Consensus Estimate of $51 million. Investors should know that pressure pumping is the main contributor to PUMP’s earnings.

Pressure Pumping Division

The Midland, TX-based PUMP provides hydraulic fracturing, cementing and acidizing functions through the Pressure Pumping segment. The business contributed 98.2% to ProPetro's total revenues in the quarter under review. Service revenues soared 87.1% from the prior-year quarter’s levels to $245.6 million, attributable to higher fleet strength and enhanced pricing.

ProPetro Holding Corp. Price, Consensus and EPS Surprise

ProPetro Holding Corp. price-consensus-eps-surprise-chart | ProPetro Holding Corp. Quote

Costs & Expenses

ProPetro reported service cost of $188.7 million for the third quarter, up 89.5% from the year-ago quarter’s level. General and administrative expenses were $21.35 million, down 2.1% from $21.82 million in the prior-year quarter.

Balance Sheet & Capital Expenditures

As of Sep 30, 2021, ProPetro had cash and cash equivalents worth $84.6 million and did not incur any long-term debt. It also had $69 million under its revolving credit facility. Capital expenditures in the September quarter of 2021 summed $53 million, up 571% from the third-quarter 2020 level.

Guidance

ProPetro expects full-year capital expenditures in the $155-$165 million range, based on its current and expected activity levels. It allocated approximately $30 million to its Tier IV DGB dual-fuel equipment investment of 90,000 HHP, while the rest constitutes maintenance spending, mainly.

ProPetro expects pressure pumping fundamentals to improve further as the year goes into 2022. PUMP is well equipped to respond to the slight rise in business that it anticipates in the coming months. PUMP's primary goal is to maintain capital discipline and be the most efficient frac supplier in the Permian Basin.

Zacks Rank & Stocks to Consider

ProPetro has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are EOG Resources EOG, Diamondback Energy FANG and ConocoPhillips COP, each presently flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EOG Resources reported third-quarter 2021 adjusted earnings per share of $2.16, beating the Zacks Consensus Estimate of $2.01. Strong earnings were driven by increased production volumes and a higher realization of commodity prices.

EOG announced a quarterly dividend of 75 cents per share, indicating an 82% increase from the previous level. The dividend will be paid out on Jan 28, 2022, to its shareholders of record as of Jan 14, 2022. EOG Resources also declared a special dividend of $2 per share. Moreover, the board of directors updated its share repurchase authorization to $5 billion.

Diamondback Energy reported third-quarter 2021 adjusted earnings of $2.94 per share, which surpassed the Zacks Consensus Estimate of $2.81 and the year-ago quarter’s earnings of 62 cents. FANG’s bottom line was aided by better-than-expected production.

The board of directors declared a dividend of 50 cents per share for the third quarter, accounting for an 11.1% hike in Diamondback Energy’s quarterly payout from the previous level of 45 cents. The amount will be paid out on Nov 18, 2021, to its shareholders of record as of Nov 11. FANG also generated a free cash flow of $740 million in the third quarter.

ConocoPhillips reported third-quarter 2021 adjusted earnings per share of $1.77, comfortably beating the Zacks Consensus Estimate of $1.53. This outperformance is led by increased production volumes owing to the Concho acquisition and the rising realized commodity prices.

Based in Houston, TX, this one of the world’s largest independent oil and gas producers’ capital expenditures and investments totaled $1.3 billion, and dividend payments grossed $579 million. ConocoPhillips’ net cash provided by operating activities was recorded at $4.8 billion, up from the year-ago figure of $868 million. COP generated a free cash flow of $2.8 billion in the third quarter.

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