UPDATE 3-ProPetro confirms U.S. SEC probe, accounting weaknesses

(Adds attempt to seek comment from Ian Denholm)
By Liz Hampton and Shariq Khan
Nov 13 (Reuters) - Oilfield services firm ProPetro Holding
Corp PUMP.N on Wednesday said a board investigation had
uncovered material weaknesses in its financial controls and an
undisclosed related-party transaction with its former chief
accountant.
The Midland, Texas-based company also confirmed Reuters'
report last month that the U.S. Securities and Exchange
Commission had opened an investigation in its financial
disclosures and reporting.
ProPetro provided the first snapshot of its business since
disclosing the departure of its chief accounting officer and the
demotion of two top officials amid an internal investigation
into its financial accounting and disclosures.
Its board identified weaknesses in internal controls, two of
which were material and at least one of which existed since Dec.
31. It plans to amend its 2018 annual report and first-quarter
2019 financial filing to reflect the change, it said in a
statement.
The undisclosed related-party transaction involved a
business owned in part by former chief accounting officer Ian
Denholm that had sold or leased a facility to ProPetro. Denholm
resigned in October.
He did not immediately respond to a LinkedIn request seeking
comment and attempts to reach him by phone were unsuccessful.
ProPetro also said it would not file its second- and
third-quarter reports to the SEC before Dec. 31 due to the
continuing investigation. Its internal review, however, has not
to date identified anything requiring restatements of its
balance sheet, statement of operations, shareholders' equity or
statements of cash flow, it said.
A company spokesman declined a request to interview an
executive on Wednesday. ProPetro will hold a conference call on
Thursday morning to discuss its results.
The company reported net income fell to $34.4 million, or 33
cents per share, for the three months ended Sept. 30, from $46.3
million, or 53 cents per share, a year earlier. ProPetro has disclosed real-estate and rental transactions
with executives and board members. In addition, Chief Executive
Officer and co-founder Dale Redman and former finance chief and
co-founder Jeffrey Smith reimbursed the company a combined
$364,000 for expenses improperly billed to ProPetro.
Shares of ProPetro, which went public in early 2017, were up
about 5.5% at $7.74 in after-hours trading after closing down
4.6% on Wednesday.
Its stock has fallen sharply this year amid slowing oilfield
activity and concerns about its internal review and SEC
investigation.

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EXCLUSIVE-SEC probes oilfield firm ProPetro over accounting,
disclosures: sources ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>