ProPetro Holding Corp.PUMP
ProPetro Holding Corp. Leases Disclosure
LEASES
Operating Leases
Description of Leases
We have operating leases for five FORCE® electric-powered hydraulic fracturing equipment fleets (the “Electric Fleet Leases”), facilities and office spaces. The terms and conditions of these leases vary by the type of the underlying asset. We did not account for land separately from buildings under our leases of facilities and office spaces because we concluded that the accounting effect was insignificant. Our operating leases do not include residual value guarantees, covenants or financial restrictions. Further, our operating leases do not contain variability in payments resulting from either an index change or rate change. Our operating leases have remaining lease terms of approximately 1.0 year to 4.7 years as of December 31, 2025. Our operating leases have renewal options ranging from none to three renewal options of up to one year each at the end of their current contractual lease periods. Further, our Electric Fleet Leases have options to purchase the underlying equipment at the end of their initial term of approximately three years or at the end of each renewal period. However, in management's judgment the exercise of neither the renewal options nor the purchase options are reasonably assured for any lease. In addition to fixed rent payments, the Electric Fleet Leases contain variable payments based on equipment usage. The right-of-use assets and liabilities related to the Electric Fleet Leases are included in our Hydraulic Fracturing reportable segment, related to leases for facilities are included in our Hydraulic Fracturing and Wireline reportable segments, and related to office spaces are included in our Wireline and Power Generation reportable segments and our corporate administrative function.
| December 31, | ||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Operating lease right-of-use assets - cost | $ | 206,518 | $ | 182,130 | ||||||||||
| Operating lease right-of-use assets - accumulated amortization | (106,731) | (49,836) | ||||||||||||
| Operating lease right-of-use assets - net | $ | 99,787 | $ | 132,294 | ||||||||||
Finance Leases
Description of Lease
We have a three-year equipment lease contract (the “Power Equipment Lease”) for certain power generation equipment. In addition to the contractual lease period, the contract includes an optional renewal for one year, and in management's judgment the exercise of the renewal option is not reasonably assured. The contract does not include a residual value guarantee, covenants or financial restrictions. Further, the Power Equipment Lease does not contain variability in payments resulting from either an index change or rate change. The right-of-use assets and liabilities under this contract are included in our Hydraulic Fracturing reportable segment.
We accounted for the Power Equipment Lease as a finance lease. This conclusion resulted from the existence of the right to control the use of the assets throughout the lease term, the present value of lease payments being equal to or in excess of substantially all of the fair value of the underlying assets and the lease term being the major part of the remaining economic life of the underlying assets.
| December 31, | ||||||||||||||
| (in thousands) | 2025 | 2024 | ||||||||||||
| Finance lease right-of-use assets - cost | $ | 53,292 | $ | 54,842 | ||||||||||
| Finance lease right-of-use assets - accumulated amortization | (42,655) | (24,129) | ||||||||||||
| Finance lease right-of-use assets - net | $ | 10,637 | $ | 30,713 | ||||||||||
Lease Costs
The components of lease costs are as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Operating lease cost | $ | 63,674 | $ | 48,759 | $ | 6,636 | ||||||||||||||
| Finance lease cost: | ||||||||||||||||||||
| Amortization of right-of-use assets | 18,526 | 18,966 | 5,163 | |||||||||||||||||
| Interest on lease liabilities | 1,620 | 2,892 | 1,014 | |||||||||||||||||
| Total finance lease cost | 20,146 | 21,858 | 6,177 | |||||||||||||||||
| Variable lease cost | 4,802 | 3,950 | 144 | |||||||||||||||||
| Short-term lease cost | 589 | 833 | 830 | |||||||||||||||||
Short-Term Leases
We elected the practical expedient option, consistent with FASB ASC Topic 842, to exclude leases with a term of twelve months or less (“short-term lease”) from our balance sheet and continue to record short-term leases as a period expense.
Initial Direct Costs
We elected to analogize to the measurement guidance of FASB ASC Topic 360 to capitalize costs incurred to place a leased asset into its intended use and to present such capitalized costs as part of the related lease right-of-use asset cost as initial direct costs. The Company incurred initial direct costs of approximately $4.1 million, $25.5 million and $25.0 million during the years ended December 31, 2025, 2024 and 2023, respectively, to place the leased equipment into its intended use, which are included in the right-of-use assets cost related to our Electric Fleet Leases.
Supplemental Cash Flow Information
Supplemental cash flow information related to leases are as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash paid for amounts included in the measurements of lease liabilities: | ||||||||||||||||||||
| Operating cash flows from operating leases | $ | 46,156 | $ | 34,688 | $ | 4,573 | ||||||||||||||
| Operating cash flows from finance lease | 1,620 | 2,892 | 1,014 | |||||||||||||||||
| Financing cash flows from finance lease | 18,513 | 17,676 | 4,663 | |||||||||||||||||
| Noncash lease obligations arising from obtaining right-of-use assets related to: | ||||||||||||||||||||
Operating leases (1) | 25,970 | 70,856 | 56,108 | |||||||||||||||||
Finance lease (2) | — | 2,230 | 52,612 | |||||||||||||||||
(1)During the year ended December 31, 2025, we recorded noncash operating lease obligations arising from obtaining right-of-use assets related to office leases for our corporate headquarters and our power generation business. During the year ended December 31, 2024, we recorded noncash operating lease obligations arising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases. During the year ended December
31, 2023, we recorded noncash operating lease obligations arising from obtaining right-of-use assets related to the receipt of equipment under the Electric Fleet Leases, our execution of facilities and office leases and our extension of a facilities lease.
(2)During the year ended December 31, 2024, we recorded noncash finance lease obligations related to additional rent on the Power Equipment Lease. During the year ended December 31, 2023, we recorded noncash finance lease obligations arising from obtaining right-of-use assets related to the commencement of the Power Equipment Lease.
Lease Terms and Discount Rates
Lease terms and discount rates are as follows:
| December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Weighted average remaining lease term: | ||||||||||||||||||||
| Operating leases | 2.2 years | 2.4 years | 3.1 years | |||||||||||||||||
| Finance leases | 0.6 years | 1.6 years | 2.6 years | |||||||||||||||||
| Weighted average discount rate: | ||||||||||||||||||||
| Operating leases | 6.6 | % | 7.0 | % | 7.1 | % | ||||||||||||||
| Finance leases | 7.3 | % | 7.3 | % | 7.3 | % | ||||||||||||||
The discount rates used for our operating and finance leases are determined based on the weighted average annual interest rate on our ABL Credit Facility effective at the time of inception or modification of each lease.
Maturity Analysis of Lease Liabilities
The maturity analysis of liabilities and reconciliation to undiscounted and discounted remaining future lease payments for operating leases as of December 31, 2025 are as follows:
| (in thousands) | Operating Leases | Finance Leases | ||||||||||||
| 2026 | $ | 47,426 | $ | 12,767 | ||||||||||
| 2027 | 23,545 | — | ||||||||||||
| 2028 | 12,122 | — | ||||||||||||
| 2029 | 1,150 | — | ||||||||||||
| 2030 | 741 | — | ||||||||||||
| Total undiscounted future lease payments | 84,984 | 12,767 | ||||||||||||
| Amount representing interest | (5,771) | (325) | ||||||||||||
| Present value of future lease payments (lease obligation) | $ | 79,213 | $ | 12,442 | ||||||||||
Stonebriar Equipment Lease Facility
On December 16, 2025, we entered into an Interim Funding Agreement (the “Interim Funding Agreement”) and a Master Lease Agreement (the “Master Lease Agreement” and together with the Interim Funding Agreement, the “Stonebriar Equipment Lease Facility”) with Stonebriar Commercial Finance LLC (“Stonebriar”) for the right, but not the obligation, to fund up to $350.0 million of purchases of power generator equipment for our PROPWR business line. Under the Interim Funding Agreement, Stonebriar provides funding to finance down payments and progress payments owing to equipment suppliers. Monthly rent under the Interim Funding Agreement is based on the unpaid balance of the aggregate amounts advanced under the Interim Funding Agreement and not yet converted to a lease schedule under the Master Lease Agreement, times a per annum lease rate factor equal to sum of 1-Month SOFR plus 6.25%. Upon delivery and acceptance of a power generator, amounts outstanding under the Interim Funding Agreement with respect to such equipment shall be converted into a lease schedule under the Master Lease Agreement. Stonebriar will hold legal title to such leased equipment. The lease term for each item of equipment will be 84 months, and the rental payment amounts will be based on the equipment cost times a lease rate factor set forth in the applicable lease schedule. With respect to the leased equipment, PROPWR will have certain early termination and purchase options at various points during the lease, as set forth in the Master Lease Agreement and related lease schedule for such equipment. Upon exercise of such rights and payment of the required amounts, PROPWR would acquire legal
title to such equipment. The Interim Funding Agreement expires on December 31, 2028, or earlier if the full amount of the facility is funded before this date.
The origination costs relating to the Stonebriar Equipment Lease Facility will be classified as an asset in our consolidated balance sheet until leases are executed, at which time the amounts that correspond to the proportion of funding obtained compared to the total funding originally available under the facility will be recognized as initial direct costs for such leases. As of December 31, 2025, we had no leases and no outstanding lease liability amounts under the Stonebriar Equipment Lease Facility.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 19, 2026 | Showing above |
| 2024 | Feb 20, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Mar 5, 2021 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.