Create a new document approx 500x500 pixels.

Black background and white foreground.

Write the text.

Rotate the textlayer (Edit > transform > Rotate 90 CCW)

Then select Filter > Stylize > Wind (Method Wind) and apply it to the text 4 times.

Photohop will ask you to rasterize the layer... click OK

<< This is how it will look now.

Now rotate the textlayer back (90 CW) and flatten the image... (Merge Layer)

Apply the Gaussian Blur filter with radius 3.0

Now, let's colorize it a bit
by using Image > adjustments > Hue/Saturation

See the image here to the left.

Don't forget to mark the "Colorize option"

 
Now select the Filter > Liquify and the warp tool. It's selected by default when you open the Liquify filter.

Set the brush size to approx 40-45 and use it to distort the flames above the text
It should look something like this pic below.

Now, Go to Image > Adjustments > Levels and drag that little black arrow a bit to the right

Right click on your background layer and select duplicate layer.

Adjust the Hue/Saturation so it will look something like the pic here to the left

(-30 on the Hue)

Set the new, red, layer to color dodge mode.

Now, all that remain is to write the text that you did in step one. Same size and same font.

Apply the layerstyle Gradient overlay (White to black) and inner glow with a red shade.

Done!