ProPetro (PUMP) Buys Par Five, Solidifies Cementing Position
ProPetro Holding PUMP has agreed to acquire the assets and business operations of Par Five Energy Services LLC, an established leader in cementing services in the Delaware Basin.
Par Five Energy Services, founded in 2011, has built a strong reputation for providing efficient cementing services to major oil and gas producers in southeastern New Mexico. The recent expansion of its bulk plant further underscores its commitment to meeting operational demands with state-of-the-art facilities.
ProPetro's existing cementing business in the Midland Basin region of the Permian Basin should complement Par Five’s operations. To ensure a smooth transition, Par Five will be integrated into ProPetro’s cementing and operating team and brand. This acquisition aligns with the Midland, Texas-based oilfield service provider’s strategy to strengthen its position in the Permian Basin, serving both the Midland and Delaware Basin areas.
PUMP emphasized the strategic importance of the acquisition, highlighting its alignment with Par Five’s growth strategy and the potential for increased free cash flow generation. The move is seen as an opportunity to capitalize on revenue synergies by leveraging Par Five’s capacity alongside ProPetro’s commercial architecture and established customer relationships.
The acquisition is expected to boost ProPetro's 2024 adjusted EBITDA by approximately $10 million, with 80-90% converting into free cash flow. This financial enhancement strengthens ProPetro’s position and supports its strategy of pursuing increased free cash flow generation while expanding its cementing operations into the Delaware Basin.
By uniting their strengths, ProPetro and Par Five aim to consolidate their positions in the cementing services industry, offering a comprehensive suite of high-quality solutions to meet market demands. This strategic move is a testament to ProPetro’s commitment to growth, innovation, and delivering exceptional value to its stakeholders as the two players continue expanding their capabilities.
Zacks Rank & Stock Picks
ProPetro Holding — which focuses on growth through a combination of acquisitions and pressure pumping services in the lucrative Permian Basin — carries a Zacks Rank #5 (Strong Sell) at present.
Meanwhile, investors interested in the energy sector might look at operators like PBF Energy PBF, EOG Resources EOG and Oceaneering International OII, each carrying a Zacks Rank #2 (Buy) currently.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PBF Energy: PBF beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed in the other. It has a trailing four-quarter earnings surprise of 9.3%, on average.
PBF Energy is valued at around $5.5 billion. The company has seen its shares gain 30.4% in a year.
EOG Resources: EOG Resources beat the Zacks Consensus Estimate for earnings in three of the last four quarters and missed in the other. EOG has a trailing four-quarter earnings surprise of 9.2%, on average.
EOG Resources is valued at around $72.1 billion. EOG has seen its shares drop 3.7% in a year.
Oceaneering International: The 2023 Zacks Consensus Estimate for OII indicates 177.4% year-over-year earnings per share growth.
Oceaneering International is valued at around $2.1 billion. OII has seen its shares rise 40.7% in a year.
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