ProPetro Holding Corp. (NYSE: PUMP) announced plans to offer $500 million in convertible senior notes due 2031 through a private placement to qualified institutional buyers. The company also granted initial purchasers an option to buy up to an additional $75 million in notes within 13 days of issuance.

The notes will be senior, unsecured obligations that accrue interest payable semi-annually and mature on November 15, 2031. Noteholders can convert their notes under certain circumstances, with ProPetro settling conversions through cash, common stock shares, or a combination of both at the company's discretion.

ProPetro plans to use a portion of proceeds to fund capped call transactions designed to reduce potential dilution from note conversions. The remaining proceeds will support general corporate purposes, including growth capital for additional power generation equipment.

The notes will be redeemable at ProPetro's option starting May 15, 2029, provided the common stock price exceeds 130% of the conversion price for a specified period. The company must repurchase notes for cash if certain fundamental changes occur.

In connection with the offering, ProPetro expects to enter into capped call transactions with initial purchasers or affiliates. These transactions aim to offset potential dilution or cash payments if the stock price exceeds the conversion price, though dilution may still occur if the stock price surpasses the cap price.

The hedging activities by option counterparties could affect ProPetro's stock price and trading volume during and after the offering period. Interest rates, conversion rates, and other terms will be determined at pricing.

ProPetro provides completion services to oil and gas companies focused on North American unconventional resources and is based in Midland, Texas.