HOUSTON CHRONICLE: ProPetro to invoke millions in idled frac fleet fees on Pioneer Natural Resources
Midland oilfield service company ProPetro plans to exercise a contract clause that obliges Irving oil company Pioneer Natural Resources to pay millions of dollars in fees for idling hydraulic fracturing fleets in the Permian Basin.
ProPetro notified investors about the plan in a late Monday afternoon filing with the U.S. Securities and Exchange Commission. The Midland-based service company bought Pioneer's hydraulic fracturing and coiled tubing fleets for $110 million in a Nov. 2018 deal.
Along with the sale, Pioneer entered into a 10-year service agreement with ProPetro where the Irving oil company agreed to use its former fleets to continue developing oil wells in the Permian Basin. The deal, however, also included a clause where Pioneer agreed to pay idle fleet fees to ProPetro.
ProPetro currently has eight fleets currently committed to Pioneer but expects to receive between $32 million and $36 million in idle fees during the second quarter and another $12 million to $18 million spread out during third and fourth quarters.