By Avi Salzman

Shares of ProPetro Holding, a company known for oil services, jumped 16% on Monday after the company struck a deal to provide power to a data center operator. The move shows that investors are ready to reward any company that can provide electricity quickly, even if it isn't its main source of business.

ProPetro is a small-cap Texas oil services firm that has struggled because oil companies have pulled back on drilling. The stock is down 26% this year, even after Monday's jump.

But it's finding new life in the data center business, which is a natural extension of its existing power-supply operations in the oil fields. Oil companies have been electrifying their operations lately, in part because electricity is seen as a more efficient power source than fuels like diesel. It turns out that the same machinery it's using to electrify oil fields can also be used to power data centers.

Monday's announcement was for a relatively small data center somewhere in the Midwest, far from ProPetro's main operations. "One of the industry's largest data infrastructure players" -- which wasn't named in the release -- will use 60 megawatts worth of power, a substantial amount of electricity capacity but not nearly as much as the gigawatt-scale data centers that OpenAI and others are planning.

In an interview, ProPetro executives said the company will use reciprocating engines powered by natural gas, paired with batteries that can ramp power supply up and down quickly. The engines are made by Caterpillar, which has lately been doing a brisk business in providing electrical equipment for data centers.

ProPetro's entire power system will operate outside of the electric grid, allowing it to start up much faster than projects that have to wait for regulatory approval. The company thinks it can start operations by the second quarter of 2026. A traditional large-scale natural gas plant would likely take five years to build, based on current waiting times for natural gas turbines.

This is ProPetro's second significant power deal under a new unit called PROPWR. Matt Augustine, the company's head of investor relations, said that the payback on the company's capital investments will be at least as good as its traditional oil and gas business -- with the added benefit that the contracts are likely to be longer than most oil services contracts.

ProPetro says these deals can add $300,000 in earnings before interest, taxes, depreciation and amortization per megawatt a year. That implies that PROPWR can add more than $40 million of Ebitda a year from these two contracts alone, enough to move the needle on the company's economics. In 2024, its Ebitda was $283 million.

Write to Avi Salzman at avi.salzman@barrons.com

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October 27, 2025 14:37 ET (18:37 GMT)

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