ProPetro Holding Corp. (PUMP): A Bull Case Theory

Core Thesis - ProPetro Holding Corp. (PUMP) is viewed as a highly asymmetric investment opportunity, combining a traditional oilfield services business with a rapidly growing behind-the-meter (BTM) power subsidiary, ProPwr [2] Business Overview - ProPetro's legacy pressure pumping operations in the Permian Basin are cyclical and capital-intensive, historically valued at 4-5x EBITDA, yet they generate significant free cash flow, currently yielding 15% [2] - ProPwr, launched in late 2024, provides modular onsite power solutions for oil & gas and data center clients, addressing the industry's critical power delivery bottleneck [3] Market Trends - The demand for BTM power has shifted from a temporary solution to a long-term structural necessity, supported by recent market trends and regulatory changes [4] - Major multi-gigawatt projects, such as XAI's Colossus and Oracle-OpenAI's 2.3GW deployment, underscore the permanence of onsite power solutions [4] Growth Potential - ProPwr currently has 240MW contracted, including a significant 60MW deal with a hyperscale data center, with targets of 750MW by 2027 and 1GW by 2030, which may be conservative [5] - The leadership team at ProPwr has extensive experience, enhancing the potential for scalable deployment [5] Valuation and Catalysts - The legacy business offers downside protection through cash flow, while ProPwr's growth potential could lead to a 3-4x stock appreciation over two years, with a possibility of 10x if execution is flawless [6] - Near-term catalysts include additional data center contracts and expansions, which would accelerate ProPwr's deployment [7] Investment Outlook - ProPetro presents a unique combination of defensive cash flow, strategic optionality, and exposure to a growing market in data center electrification, with a three-year price target of $35, indicating significant upside potential [7]