S&P puts ProFrac on positive watch

S&P said it placed ProFrac Holdings LLC’s ratings on CreditWatch with positive implications.

ProFrac reported it is acquiring U.S. Well Services in a stock for stock transaction that issues $270 million of equity, including the conversion of USWS' preferred stock and convertible debt to ProFrac common equity.

“We expect the acquisition to materially expand ProFrac's completion fleets to a total 44, including 12 electric fleets, by the end of 2022. In addition, the company expects to realize up to $35 million of synergies from the transaction in 2023. Given the equity financing and favorable market conditions for the completions sector, including the potential re-contracting of the currently active USWS' fleet at current market rates, we expect ProFrac to maintain strong financial measures pro forma for the acquisition,” S&P said in a press release.

S&P said it aims to resolve the CreditWatch around the close of the acquisition, which is expected to occur during the fourth quarter of 2022 and could raise ProFrac’s ratings a notch.

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