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What changed in Liberty Energy Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Liberty Energy Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+292 added−297 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-10)

Top changes in Liberty Energy Inc.'s 2023 10-K

292 paragraphs added · 297 removed · 227 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

50 edited+20 added−13 removed83 unchanged
Biggest changeOur primary locations of operation include the Permian Basin, the Eagle Ford Shale, the Denver-Julesburg Basin (the “DJ Basin”), the Williston Basin, the San Juan Basin, the Powder River Basin, the Haynesville Shale, the South Central Oklahoma Oil Province and Sooner Trend Anadarko Canadian Kingfisher (collectively, the “SCOOP/STACK”), the Marcellus Shale, the Utica Shale, and the Western Canadian Sedimentary Basin, which are among the most active basins in North America.
Biggest changeOur areas of operations are in all of the most active shale basins in North America, including the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the Denver-Julesburg Basin (the “DJ Basin”), and the Anadarko Basin.
Air Emissions The federal Clean Air Act (the “CAA”) and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other requirements. In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions of toxic air pollutants at specified sources. These regulations change frequently.
Air Emissions The federal Clean Air Act (the “CAA”) and comparable state laws regulate emissions of various air pollutants through air emissions permitting programs and the imposition of other requirements. In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions of toxic air pollutants and other air emissions at specified sources. These regulations change frequently.
The following is a summary of some of the existing laws, rules, and regulations to which we are subject. U.S. Laws and Regulations Hazardous Substances and Waste Handling The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes. Under guidance issued by the U.S.
The following is a summary of some of the existing laws, rules, and regulations to which we are subject. 5 U.S. Laws and Regulations Hazardous Substances and Waste Handling The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes. Under guidance issued by the U.S.
Our employee-centered focus and reputation for safety has enabled us to obtain projects from industry leaders with some of the most demanding safety and operational requirements. 4 Programs and Benefits One way we have demonstrated a history of investing in our workforce is by offering competitive salaries and wages.
Our employee-centered focus and reputation for safety has enabled us to obtain projects from industry leaders with some of the most demanding safety and operational requirements. Programs and Benefits One way we have demonstrated a history of investing in our workforce is by offering competitive salaries and wages.
The adoption of any legislation or regulation that restricts emissions of greenhouse gases from the equipment and operations of our customers or with respect to the oil and natural gas they produce could adversely affect demand for our products and services. Hydraulic Fracturing Our business is clearly dependent on hydraulic fracturing and horizontal drilling activities.
The adoption of any legislation or regulation that restricts emissions of greenhouse gases from the equipment and operations of our customers or with respect to the oil and natural gas they produce could adversely affect demand for our products and services. 7 Hydraulic Fracturing Our business is clearly dependent on hydraulic fracturing and horizontal drilling activities.
Although we are not likely to become subject to greenhouse gas emissions permitting and best available control technology requirements because none of our facilities are presently major sources of greenhouse gas emissions, such requirements could become applicable to our customers. In addition, the EPA has used the CAA to impose additional greenhouse gas emissions control 6 requirements upon our customers.
Although we are not likely to become subject to greenhouse gas emissions permitting and best available control technology requirements because none of our facilities are presently major sources of greenhouse gas emissions, such requirements could become applicable to our customers. In addition, the EPA has used the CAA to impose additional greenhouse gas emissions control requirements upon our customers.
For these reasons, the results of our operations may fluctuate from quarter to quarter and from year to year, and these fluctuations may distort comparisons of results across periods. 3 Seasonality Our results of operations have historically reflected seasonal tendencies relating to holiday seasons, inclement weather and the conclusion of our customers’ annual drilling and completion capital expenditure budgets.
For these reasons, the results of our operations may fluctuate from quarter to quarter and from year to year, and these fluctuations may distort comparisons of results across periods. Seasonality Our results of operations have historically reflected seasonal tendencies relating to holiday seasons, inclement weather and the conclusion of our customers’ annual drilling and completion capital expenditure budgets.
Other potentially applicable provincial legislation in Alberta includes legislation directed at the transportation of dangerous goods, including oil (the Dangerous Goods Transportation and Handling Act, RSA 2000, c D-4 and associated regulations), legislation intended to provide for the responsible management of oil wells and associated sites (the Oil and Gas Conservation Act, RSA 2000, c O-6), legislation establishing regulatory bodies overseeing oil and gas and electricity in Alberta (the Responsible Energy Development Act, SA 2012, c R-17.3 and the Alberta Utilities Commission Act, SA 2007, c A-37.2), legislation governing the removal of gas or propane from Alberta (the Gas Resources Preservation Act, RSA 2000, c G-4), legislation to effect conservation and prevent waste of the oil sands resource in Alberta (the Oil Sands Conservation Act, RSA 2000, c O-7) and legislation governing worker safety (the Occupational Health and Safety Act, SA 2017, c O-2.1).
Other potentially applicable provincial legislation in Alberta includes legislation directed at the transportation of dangerous goods, including oil (the Dangerous Goods Transportation and Handling Act , RSA 2000, c D-4 and associated regulations), legislation intended to provide for the responsible management of oil wells and associated sites, including remediation responsibilities (the Oil and Gas Conservation Act , RSA 2000, c O-6 and associated regulations), legislation establishing regulatory bodies overseeing oil and gas and electricity in Alberta (the Responsible Energy Development Act , SA 2012, c R-17.3 and the Alberta Utilities Commission Act , SA 2007, c A-37.2), legislation governing the removal of gas or propane from Alberta (the Gas Resources Preservation Act , RSA 2000, c G-4), legislation to effect conservation and prevent waste of the oil sands resource in Alberta (the Oil Sands Conservation Act , RSA 2000, c O-7), and legislation governing worker safety (the Occupational Health and Safety Act , SA 2017, c O-2.1).
We currently own, lease, or operate numerous properties that have been used for manufacturing and other operations for many years. These properties and the substances disposed or released on them may be 5 subject to CERCLA and analogous state laws.
We currently own, lease, or operate numerous properties that have been used for manufacturing and other operations for many years. These properties and the substances disposed or released on them may be subject to CERCLA and analogous state laws.
Provincial Legislation Energy services companies are primarily regulated by provincial governments in Canada. For example, in Alberta, provincial legislation potentially applicable to our Canadian operations includes the Environmental Protection and Enhancement Act, RSA 2000, e E-12.
Provincial Legislation Energy services companies are primarily regulated by provincial governments in Canada. For example, in Alberta, provincial legislation potentially applicable to our Canadian operations includes the Environmental Protection and 8 Enhancement Act , RSA 2000, e E-12.
As a result of the PropX Acquisition, which was completed in October 2021, we are now a leading provider of last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America.
As a result of the acquisition of PropX, which was completed in October 2021, we are a leading provider of last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America.
We have grown from one active hydraulic fracturing fleet as of December 2011 to over 40 active fleets as of December 31, 2022. We are focused on providing “next-generation” frac fleets and technologies to assist our customers with completing their wells in an environmental, social, and governance (“ESG”)-friendly manner.
We have grown from one active hydraulic fracturing fleet as of December 2011 to over 40 active fleets as of December 31, 2023. We are focused on providing “next-generation” frac fleets and technologies to assist our customers with completing their wells in an environmental, social, and governance (“ESG”) friendly manner.
We also make available free of charge through our website, www.libertyfrac.com, electronic copies of certain documents that we file with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 10
We also make available free of charge through our website, www.libertyenergy.com, electronic copies of certain documents that we file with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. 11
We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view ESG principles as foundational to our business. We focus on developing and adding technologies to our operations that assist our customers in implementing their ESG goals.
We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view these principles as foundational to our business. We focus on developing and adding technologies to our operations that assist our customers in implementing their goals.
Our wireline units consist of a truck equipped with a spool of wireline that is lowered into wells to convey specialized tools or equipment, such as perforating guns and charges, which are necessary to connect the wellbore with the target formation. This operation is performed between each hydraulic fracturing stage.
Wireline operations supplement our hydraulic fracturing fleets, which consist of a truck equipped with a spool of wireline that is lowered into wells to convey specialized tools or equipment, such as perforating guns and charges, which are necessary to connect the wellbore with the target formation. This operation is performed between each hydraulic fracturing stage.
Our sales and marketing activities typically are performed through our local sales representatives in each geographic region and are supported by our corporate headquarters. For the years ended December 31, 2022, 2021 and 2020, our top five customers collectively accounted for approximatel y 30% , 27%, and 48% of our revenues, respectively.
Our sales and marketing activities typically are performed through our local sales representatives in each geographic region and are supported by our corporate headquarters. For the years ended December 31, 2023, 2022 and 2021, our top five customers collectively accounted for approximatel y 34% , 30%, and 27% of our revenues, respectively.
These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements, or utilize specific equipment or technologies to control emissions of certain pollutants.
These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements, utilize specific equipment or technologies to control emissions of certain pollutants or prohibit certain types of emissions management practices.
Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or increase the cost for such water. Intellectual Property Over the last several years and in connection with the acquisitions of OneStim and PropX, we have significantly invested in our research and technology capabilities.
Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or increase the cost for such water. Intellectual Property Over the last several years and in connection with the acquisitions of PropX, Siren, and others in prior periods, we have significantly invested in our research and technology capabilities.
In addition, our integrated supply chain includes proppant, chemicals, equipment, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers.
In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers.
In addition, we rely, to a great extent, on the technical expertise and know-how of our personnel to maintain our competitive position, and we take commercially reasonable measures to protect trade secrets and other confidential and/or proprietary information relating to the technologies we develop. Human Capital Management As of December 31, 2022, we had 4,580 employees and no unionized labor.
In addition, we rely, to a great extent, on the technical expertise and know-how of our personnel to maintain our competitive position, and we take commercially reasonable measures to protect trade secrets and other confidential and/or proprietary information relating to the technologies we develop. 4 Human Capital Management As of December 31, 2023, we had approximately 5,500 employees and no unionized labor.
In addition, certain materials for which we do not currently have long-term supply agreements could experience shortages and significant price increases in the future. As a result, we may be unable to mitigate any future supply shortages and our results of operations, prospects and financial condition could be adversely affected.
In addition, certain materials for which we do not currently have long-term supply agreements could experience shortages and significant price increases in the future. As a result, we may be unable to mitigate any future supply shortages and our results of operations, prospects and financial condition could be adversely affected. Competition The markets in which we operate are highly competitive.
The list below sets forth specific examples of our efforts towards ESG principles: • In 2013, we introduced Tier 2 dual-fuel technology to our fleets which allows our frac pumps to use natural gas in place of some diesel fuel to lower particulate emissions. • In 2014, we began the use of containerized sand delivery at frac locations, which reduces dust, noise and truck traffic. • In 2016, we introduced Quiet Fleet® technology, which significantly reduces noise levels associated with frac operations. • In 2018, we began a partnership with an equipment supplier to introduce Tier 4 dynamic gas blending, or DGB, engines to our frac fleet that can substitute up to 80% of the diesel typically used by a frac pump with natural gas and significantly lower emission levels in frac operations.
The list below sets forth specific examples of our efforts in this regard: • In 2013, we introduced Tier II dual-fuel technology to our fleets which allows our frac pumps to use natural gas in place of some diesel fuel to lower particulate emissions. • In 2014, we began the use of containerized sand delivery at frac locations, which reduces dust, noise and truck traffic. • In 2016, we introduced Quiet Fleet® technology, which significantly reduces noise levels associated with frac operations. • In 2018, we partnered with an equipment supplier to introduce Tier IV dynamic gas blending, or DGB, engines to our frac fleet that can substitute up to 80% of the diesel typically used by a frac pump with natural gas and significantly lower emission levels in frac operations.
The OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes require maintenance of information about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities, and citizens.
The EPA’s community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes also require maintenance of information about hazardous materials used or produced in operations and provision of this information to employees, state and local government authorities, and citizens.
We currently own or lease the following additional principal properties: District Facility Location Size Leased or Owned Midland, TX 160,000 sq. ft on 147 acres Owned Odessa, TX 77,500 sq. ft on 47 acres Owned Cibolo, TX 90,000 sq. ft on 34 acres Owned Kermit, TX 5,000 acres Owned Monahans, TX 3,200 acres Owned Magnolia, TX 63,350 sq. ft.
We currently own or lease the following additional principal properties: District Facility Location Size Leased or Owned Midland, TX 90,000 sq. ft on 35 acres Owned Midland, TX 70,000 sq. ft on 12 acres Owned Odessa, TX 77,500 sq. ft on 48 acres Owned Cibolo, TX 90,000 sq. ft on 34 acres Owned Kermit, TX 5,000 acres Owned Monahans, TX 3,200 acres Owned Magnolia, TX 63,350 sq. ft.
We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.
We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, compressed natural gas (“CNG”) delivery, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.
We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate and (iv) our dual fuel dynamic gas blending fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) the successful test of digiFrac™, our innovative, purpose-built electric frac pump that has approximately 25% lower CO2e emission profile than the Tier IV DGB; and (vi) our PropX wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites.
We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) 2 our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps, our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB; (vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; and (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield.
Worker Health and Safety We are subject to a number of federal and state laws and regulations, including the OSHA, establishing requirements to protect the health and safety of workers.
Worker Health and Safety We are subject to a number of federal and state laws and regulations, including the OSHA regulatory standards, which establish requirements to protect the health and safety of workers.
As a result, we are among the safest service providers in the industry with a constant focus on Health, Safety and Environmental performance and service quality, as evidenced by an average incident rate that was 29% less than the industry average from 2020 to 2022.
As a result, we are among the safest service providers in the industry with a constant focus on Health, Safety and Environmental performance and service quality, as evidenced by an average incident rate that was consistently lower than the industry average from 2021 to 2023.
Leased (through August 31, 2023) Shreveport, LA 225,000 sq ft. on 50 acres Owned Cheyenne, WY 115,000 sq. ft on 60 acres Owned Gillette, WY 32,757 sq. ft on 15 acres Leased (through December 31, 2034) Henderson, CO 50,000 sq. ft on 13 acres Leased (through December 31, 2034) Henderson, CO 96,582 sq. ft on 12 acres Owned Williston, ND 30,000 sq. ft on 15 acres Owned Farmington, NM 34,000 sq. ft on 30 acres Owned El Reno, OK 80,000 sq. ft on 33 acres Owned Red Deer, AB 170,000 sq. ft on 42 acres Owned Grand Prairie, AB 135,000 sq. ft on 40 acres Owned Huallen, AB 80 acres Owned We also lease several smaller facilities, which leases generally have terms of one to six years.
Leased (through May 31, 2024) Shreveport, LA 215,000 sq ft. on 45 acres Owned Cheyenne, WY 115,000 sq. ft on 60 acres Owned Gillette, WY 32,757 sq. ft on 15 acres Leased (through December 31, 2034) Henderson, CO 50,000 sq. ft on 13 acres Leased (through December 31, 2034) Henderson, CO 96,582 sq. ft on 12 acres Owned Williston, ND 55,000 sq. ft on 50 acres Owned Vernal, UT 30,901 sq. ft on 10 acres Leased (through September 30, 2025) Farmington, NM 34,000 sq. ft on 30 acres Owned Farmington, NM 23,000 sq. ft on 9 acres Owned El Reno, OK 80,000 sq. ft on 33 acres Owned Red Deer, AB 170,000 sq. ft on 42 acres Owned Grand Prairie, AB 135,000 sq. ft on 40 acres Owned Huallen, AB 80 acres Owned We also lease several smaller facilities, which leases generally have terms of one to six years.
The recently passed Inflation Reduction Act (“IRA 2022”) imposes a methane emissions charge on certain emissions from specific classes of sources that are required to report their greenhouse gas emissions. The fee will start in calendar year 2024.
Furthermore, the Inflation Reduction Act (“IRA 2022”) imposes a methane emissions charge on certain emissions from specific classes of sources that are required to report their greenhouse gas emissions, which began in calendar year 2024.
We are also passionate about community investment and, in 2019, we joined the Ban the Box initiative which provides work opportunities for formerly incarcerated individuals.
We are also passionate about community investment and are a part of the Ban the Box initiative which provides work opportunities for formerly incarcerated individuals.
Our wireline service is primarily offered alongside our hydraulic fracturing services, which allows us to maximize efficiency for our customers through optimized coordination of the wireline and hydraulic fracturing services. In addition, we also offer our wireline service on a stand-alone basis.
Our wireline service is primarily offered alongside our hydraulic fracturing services, which allows us to maximize efficiency for our customers through optimized coordination of the wireline and hydraulic fracturing services. In addition, we also offer our wireline service on a stand-alone basis. We also operate two sand mines that allows us to vertically integrate our supply-chain in the Permian Basin.
To the extent the agencies expanding the range of properties subject to the Clean Water Act’s jurisdiction, certain energy companies could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas, which in turn could reduce demand for our services.
To the extent the agencies expanding the range of properties subject to the Clean Water Act’s jurisdiction or impose more stringent requirements on discharges of wastewater, certain energy companies could face increased costs and delays with respect to obtaining permits, including for the discharge of dredge and fill activities in waters of the U.S. or wetland areas, which in turn could reduce demand for our services.
Our hydraulic fracturing services compete with large, integrated companies such as Halliburton Company as well as other companies including Calfrac Well Services Ltd., ProFrac Holding Corp., NexTier Oilfield Solutions Inc., Universal Pressure Pumping, Inc., ProPetro Services, Inc., RPC, Inc., and STEP Energy Services. In addition, we compete regionally with smaller service providers.
Our hydraulic fracturing services compete with large, integrated companies such as Halliburton Company as well as other companies including Patterson-UTI Energy Inc., ProFrac Holding Corp., and ProPetro Services, Inc. In addition, we compete regionally with smaller service providers.
In addition, we have built a strong relationship with the assemblers of our custom-designed hydraulic fracturing fleets and believe we will continue to have timely access to new, high capability fleets as we continue to grow. In 2018, we vertically integrated a supplier of certain major components through the acquisition of ST9 Gas and Oil LLC.
In addition, we have built a strong relationship with the assemblers of our custom-designed hydraulic fracturing fleets and believe we will continue to have timely access to new, high capability fleets as we continue to grow.
The Alberta Energy Regulator has a number of directives that are applicable to energy services companies, such as Directive 050 which addresses salinity ranges for soils that can receive drilling wastes, and Directive 058, which sets out regulatory requirements for the handling, treatment, and disposal of upstream oilfield waste.
The Alberta Energy Regulator has a number of directives that are applicable to energy services companies, such as Directive 050, updated in March 2023, which addresses salinity ranges for soils that can receive drilling wastes, Directive 058, which sets out regulatory requirements for the handling, treatment, and disposal of upstream oilfield waste, and Directive 083, updated April 2023, which sets out the requirements for managing subsurface integrity associated with hydraulic fracturing, including seismic monitoring in certain areas of Alberta.
We are continuously committed to engagement in our communities. We provide K-12 scholarships to low-income children through ACE (Alliance for Choice in Education), and we have launched a Liberty Scholars program at Montana Technological University to enable lower-income students to obtain a college engineering education. In 2022, over 100 students received Liberty scholarships.
We provide K-12 scholarships to low-income children through ACE (Alliance for Choice in Education) and we have launched a Liberty Scholars program at Montana Technological University to enable lower-income students to obtain a college education. In total, over 140 students received Liberty scholarships across the U.S. and Canada in 2023.
Our customer base includes a broad range of integrated and independent E&P companies, including some of the largest E&P companies in our areas of operation such as Occidental Petroleum Corp, ConocoPhillips Company, BP p.l.c., and ExxonMobil.
Our customer base includes a broad range of integrated and independent E&P companies, including some of the largest E&P companies in our areas of operation.
Leased (through May 31, 2031) Gainesville, TX 170,000 sq. ft.
Leased (through May 31, 2031) Magnolia, TX 11,680 sq. ft Leased (through February 28, 2025) Gainesville, TX 170,000 sq. ft.
The breadth of our operational footprint provides us an opportunity to leverage our fixed costs and to efficiently reposition our equipment in response to customer requirements. The map below represents our current areas of operation.
Our operations also extend to a few smaller shale basins, including the Uinta Basin, the Powder River Basin, and the San Juan Basin. The breadth of our operational footprint provides us an opportunity to leverage our fixed costs and to efficiently reposition our equipment in response to customer requirements. The map below represents our current primary areas of operation.
Suppliers and Raw Materials We have a dedicated supply chain team that manages sourcing and logistics to ensure flexibility and continuity of supply in a cost-effective manner across our areas of operation.
For the years ended December 31, 2023, 2022, and 2021, no customer accounted for more than 10% of our revenues. 10 Suppliers and Raw Materials We have a dedicated supply chain team that manages sourcing and logistics to ensure flexibility and continuity of supply in a cost-effective manner across our areas of operation.
Alternatively, some municipalities are, or have considered, zoning and other ordinances, the conditions of which could impose a de facto ban on drilling and/or hydraulic fracturing operations.
Some states, counties, and municipalities have enacted or are considering moratoria on hydraulic fracturing. For example, New York, Vermont, Maryland, and Washington have banned the use of high-volume hydraulic fracturing. Alternatively, some municipalities are, or have considered, zoning and other ordinances, the conditions of which could impose a de facto ban on drilling and/or hydraulic fracturing operations.
PropX also offers customers the latest real-time logistics software, PropConnect™, for sale or as hosted software as a service. Our operations are organized into a single business segment, which consists of hydraulic fracturing services, including wireline, proppant delivery and goods, including our Permian Basin sand mines, and we have one reportable geographical segment, North America.
Our operations are organized into a single business segment, which consists of hydraulic fracturing services, including wireline, proppant delivery and goods, including our Permian Basin sand mines, and natural gas compression and delivery, and we have one reportable geographical segment, North America.
Water Discharges The federal Water Pollution Control Act (the “Clean Water Act”) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the U.S.
Substantial fines and penalties can be imposed, and orders or injunctions limiting or prohibiting certain operations may be issued, in connection with any failure to comply with these laws and regulations. 6 Water Discharges The federal Water Pollution Control Act (the “Clean Water Act”) and analogous state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of oil and other substances, into waters of the U.S.
Tier 4 DGB engines were added to our fleet in 2020. • In 2021, we announced the successful test of digiFrac™, our innovative, purpose-built electric frac pump that has approximately a 25% lower CO2e emission profile than the Tier IV DGB.
Tier IV DGB engines were added to our fleet in 2020. • In 2018, we began the design and development of digiFrac SM , our innovative, purpose-built electric frac pump that has approximately a 25% lower CO2e emission profile than the Tier IV DGB. • In 2021, we announced the successful test of digiFrac and in 2022 commenced delivery of commercial pumps. • In October 2021, we acquired PropX, a leading provider of last-mile proppant delivery solutions including proppant handling equipment and logistics software.
In October 2021, we vertically integrated a supplier of our containerized sand and last mile proppant logistics solutions with the acquisition of PropX. 9 We purchase a wide variety of raw materials, parts and components that are manufactured and supplied for our operations. We are not dependent on any single source of supply for those parts, supplies or materials.
This, along with our two state-of-the-art sand mines in the Permian Basin, help us alleviate the risk of proppant supply shortages. We purchase a wide variety of raw materials, parts and components that are manufactured and supplied for our operations. We are not dependent on any single source of supply for those parts, supplies or materials.
Federal legislation potentially applicable to our Canadian operations includes legislation focused on regulating greenhouse gases (the Greenhouse Gas Pollution Pricing Act, SC 2018, c 12, s 186), legislation aimed at protecting wildlife (the Species at Risk Act, SC 2002, c 29), legislation governing approvals for projects (the Impact Assessment Act, SC 2019, c 28, s 1), and legislation governing the transportation of potentially dangerous substances (the Transportation of Dangerous Goods Act, 1992, SC 1992, c 34). 8 Properties Properties Our corporate headquarters are located at 950 17 th Street, Suite 2400, Denver, Colorado 80202.
Federal legislation potentially applicable to our Canadian operations includes legislation focused on regulating greenhouse gases (the Greenhouse Gas Pollution Pricing Act, SC 2018, c 12, s 186), legislation aimed at protecting wildlife (the Species at Risk Act , SC 2002, c 29, Fisheries Act, RSC 1985, c F-14, and Migratory Birds Convention Act, 1994, SC 1994, c 22), and legislation governing the transportation of potentially dangerous substances and prevention of pollution (the Transportation of Dangerous Goods Act, 1992 , SC 1992, c 34 and Canadian Environmental Protection Act, 1999, SC 1999, c 33).
If we or our customers were to have areas within our respective operations designated as critical or suitable habitat for a protected species, it could decrease demand for our services and have a material adverse effect on our business. 7 Canadian Laws and Regulations Companies such as us offering energy services that include hydraulic fracturing, engineering, and wireline services in the Province of Alberta in Canada are regulated by both the provincial government of Alberta (“Province”) and the federal government of Canada (“Canada”).
If we or our customers were to have areas within our respective operations designated as critical or suitable habitat for a protected species, it could decrease demand for our services and have a material adverse effect on our business.
In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle. 2 ESG Focused While we recognize the various environmental and social impacts of hydrocarbon energy, we believe that access to life-enhancing modern energy presents the most pressing global energy challenge.
In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate. ESG Focused We support all energy sources that improve our energy system and better lives.
We lease our general office space at our corporate headquarters. The lease expires in December 2027.
The federal government is currently amending its environmental impact assessment legislation in response to the decision. 9 Properties Properties Our corporate headquarters are located at 950 17 th Street, Suite 2400, Denver, Colorado 80202. We lease our general office space at our corporate headquarters. The lease expires in December 2027.
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We also have wireline operations as a result of the acquisition of Schlumberger’s OneStim business in December 2020, whereby we obtained certain assets and liabilities of the OneStim business including OneStim’s hydraulic fracturing pressure pumping services business in onshore United States and Canada (the “OneStim Acquisition”).
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The mines provide sand to Liberty hydraulic fracturing fleets as well as to third parties. With a secured supply of regional sand in the basin, we reduce our dependency on other providers and any downtime that could result from sand supply issues.
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We have entered into two multi-year arrangements with customers for digiFrac fleets and commenced delivery of commercial pumps in the fourth quarter of 2022. • In October 2021, we closed the acquisition of PropX.
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PropX also offers customers the latest real-time logistics software, PropConnect™, as a hosted software as a service. In early 2023, we launched Liberty Power Innovations LLC (“LPI”), an integrated alternative fuel and power solutions provider for remote applications.
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PropX offers innovative, environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. • In August 2022, we released our second annual Bettering Human Lives report, highlighting the importance of energy in the modern world and Liberty’s ESG 2021 data, which was updated to cover the critical link hydrocarbons play in geopolitics, food, and their role in enabling the modern world.
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On April 6, 2023, LPI expanded its footprint with the acquisition of Siren Energy & Logistics, LLC (“Siren”) (“the Siren Acquisition”), a Permian focused integrated natural gas compression and CNG delivery business. LPI provides CNG supply, field gas processing and treating, and well site fueling and logistics.
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We have numerous other efforts encompassing our three pillars of outreach: education, military services, and alleviating poverty. Since launching Liberty’s matching program in 2021, Love Liberty, we have supported an additional 25 organizations near and dear to our employee’s hearts across all districts.
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LPI was formed with the initial focus on supporting Liberty’s transition towards our next generation digiFleets℠ and dual fuel fleets, as CNG fueling services are limited in the market, yet critical to maintaining highly efficient well site operations.
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Every year we strive to create lasting relationships and impacts throughout all our communities with the mission to better human lives through the growth of individual liberty and opportunity. Cyclical Nature of Industry We operate in a highly cyclical industry.
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Currently, LPI is primarily focused on supporting an industry transition to natural gas fueled technologies, serving as a key enabler of the next step of cost and emissions reductions in the oilfield.
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The key factor driving demand for our services is the level of drilling activity by E&P companies, which in turn depends largely on the current and anticipated economics of new well completions. Global supply and demand for oil and the domestic supply and demand for natural gas are critical in assessing industry outlook.
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PropX offers innovative, environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. • In 2022, we began the design and development of digiPrime SM , the first hybrid pump technology, utilizing direct mechanical drive for the pumps while simultaneously generating power capable of electrifying supporting equipment at the well site.
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Demand for oil and natural gas is cyclical and subject to large, rapid fluctuations. E&P companies tend to increase capital expenditures in response to increases in oil and natural gas prices, which generally results in greater revenues and profits for oilfield service companies such as ours.
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These pumps have a lower CO2e emissions profile than digiFrac. • In 2023, we launched LPI and closed the acquisition of Siren.
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Increased capital expenditures also ultimately lead to greater production, which historically has resulted in increased supplies of hydrocarbons and reduced prices which in turn tend to drive a future reduction in E&P companies capital expenditures and reduce demand for energy services.
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We believe that the shift in fuel consumption from diesel to cleaner natural gas has the potential to promote emissions reductions in the industry. • In 2023, we commenced deployment of digiFleets SM , comprised of digiFrac and digiPrime pump technology along with other complementary equipment from our digiTechnologies SM suite. • In January 2024, we established the Bettering Human Lives Foundation, a non-profit organization dedicated to improving the well-being of communities worldwide with an early focus on promoting clean cooking solutions. • In February 2024, we released the third edition of our Bettering Human Lives report, emphasizing energy’s central role in human lives.
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Specifically, OSHA has enacted a regulation regarding crystalline silica exposures, which included requirements that hydraulic fracturing operations implement dust controls to limit exposures to the substance.
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The report has been updated to include real-world case studies and is now segmented into six sections: Energy, Energy and the Modern World, Energy Poverty, Climate Change, Climate Economics, and an in-depth section on Liberty Energy. 3 Furthermore, we are continuously committed to engagement in our communities.
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Substantial fines and penalties can be imposed, and orders or injunctions limiting or prohibiting certain operations may be issued, in connection with any failure to comply with these laws and regulations.
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In addition to our educational initiatives, we have other efforts targeting veterans, poverty abatement, low-income housing, criminal justice reform, and job opportunities for those who had a disadvantaged start in life. To double our impact and encourage our employees to get involved in their communities, we launched Love, Liberty, our corporate matching program in 2021.
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Some states, counties, and municipalities have enacted or are considering moratoria on hydraulic fracturing. For example, New York, Vermont, Maryland, and Washington have banned, or are in the process of banning, the use of high-volume hydraulic fracturing.
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In 2023, Liberty processed over 100 match requests to nearly 50 different organizations, totaling nearly $30,000 in matching contributions. Cyclical Nature of Industry We operate in a cyclical industry reflecting global oil and gas supply and demand dynamics, current and expected future oil and gas commodity prices, and the perceived stability and sustainability of those prices.
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For the years ended December 31, 2022 and 2021, no customer accounted for more than 10% of our revenues. For the year ended December 31, 2020, PDC Energy Inc., WPX Energy, Conoco-Phillips Company, and Parsley Energy Operations, LLC each accounted for more than 10% of our revenues.
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Global oil and gas supply and demand can be impacted by general domestic and international economic conditions, inflationary pressures, geopolitical developments, government regulations, and other factors. Such factors also impact capital expenditures and drilling and completions activities of E&P companies, which in turn can impact demand for our services.
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The OneStim Acquisition included two state-of-the-art sand mines in the Permian Basin, which helps alleviate the risk of proppant supply shortages. Competition The markets in which we operate are highly competitive.
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Among others, we may be subject to OSHA regulations for safe operation of cranes, power industrial trucks and similar equipment at our worksites, safe practices for working in hazardous locations and permit-required confined spaces, and proper use of required personal protective equipment by workers.
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OSHA’s hazard communication standard requires tracking of hazardous chemicals present at the worksite, sharing of such information with the workers, and training the workers to handle the chemicals appropriately.
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We are also subject to OSHA’s regulatory standard for respirable crystalline silica, which provides measures to protect workers in hydraulic fracturing operations from exposure to this chemical including limiting exposure to airborne respirable crystalline silica in excess of a specified limit.
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We are subject to Mine Safety & Health Administration regulations related to operation of sand mines including regulations for training and retraining of workers engaged in sand mine operations.
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Canadian Laws and Regulations Companies such as us offering energy services that include hydraulic fracturing, engineering, and wireline services in the Province of Alberta in Canada are regulated by both the provincial government of Alberta (“Province”) and the federal government of Canada (“Canada”).

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeUnfavorable ESG ratings, as well as recent activism around fossil fuels, may dissuade investors or lenders from us and toward other industries, which could negatively impact our stock price or our access to capital. Additionally, some potential sources of investment or financing have announced an intention to avoid or limit investment in companies that engage in hydraulic fracturing.
Biggest changeSome investors and lenders are factoring these issues into investment and financing decisions. They may rely upon companies that assign ratings to a company’s ESG performance. Unfavorable ESG ratings, as well as recent activism around fossil fuels, may dissuade investors or lenders from us and toward other industries, which could negatively impact our stock price or our access to capital.
While the various lawsuits were pending, in August 2022, Congress passed the 2022 IRA which, among other things, makes changes to the federal oil and gas leasing program (including increasing royalty rates and implementing policies to discourage venting and flaring) and requires the Biden administration to hold several oil and gas lease auctions, including many that had been suspended or cancelled.
While the various lawsuits were pending, in August 2022, Congress passed the IRA 2022 which, among other things, makes changes to the federal oil and gas leasing program (including increasing royalty rates and implementing policies to discourage venting and flaring) and requires the Biden administration to hold several oil and gas lease auctions, including many that had been suspended or cancelled.
While the various lawsuits were pending, in August 2022, Congress passed the 2022 IRA which, among other things, makes changes to the federal oil and gas leasing program (including increasing royalty rates and implementing policies to discourage venting and flaring) and requires the Biden administration to hold several oil and gas lease auctions, including many that had been suspended or cancelled.
While the various lawsuits were pending, in August 2022, Congress passed the IRA 2022 which, among other things, makes changes to the federal oil and gas leasing program (including increasing royalty rates and implementing policies to discourage venting and flaring) and requires the Biden administration to hold several oil and gas lease auctions, including many that had been suspended or cancelled.
Additionally, in 2016 EPA adopted a pretreatment standard that prohibits the discharge of wastewater pollutants from onshore unconventional oil and gas extraction facilities to publicly owned treatment works.
Additionally, in 2016, the EPA adopted a pretreatment standard that prohibits the discharge of wastewater pollutants from onshore unconventional oil and gas extraction facilities to publicly owned treatment works.
Any borrowings we may incur in the future would have several important consequences for our future operations, including that: • covenants contained in the documents governing such indebtedness may require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited; • our ability to use operating cash flow in other areas of our business may be limited because we must dedicate a substantial portion of these funds to make principal and interest payments on our indebtedness; • we may be more vulnerable to interest rate increases to the extent that we incur variable rate indebtedness; 22 • we may be competitively disadvantaged to our competitors that are less leveraged or have greater access to capital resources; and • we may be more vulnerable to adverse economic and industry conditions.
Any borrowings we may incur in the future would have several important consequences for our future operations, including that: • covenants contained in the documents governing such indebtedness may require us to meet or maintain certain financial tests, which may affect our flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage of acquisition opportunities when they arise; • our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate and other purposes may be limited; • our ability to use operating cash flow in other areas of our business may be limited because we must dedicate a substantial portion of these funds to make principal and interest payments on our indebtedness; • we may be more vulnerable to interest rate increases to the extent that we incur variable rate indebtedness; • we may be competitively disadvantaged to our competitors that are less leveraged or have greater access to capital resources; and • we may be more vulnerable to adverse economic and industry conditions.
The trucking industry is subject to possible regulatory and legislative changes that may impact our operations, such as changes in fuel emissions limits, hours of service regulations that govern the amount of time a driver may drive or work in any specific period and requiring onboard electronic logging devices or limits on vehicle weight and size.
The trucking industry is subject to possible regulatory and legislative changes that may impact our operations, such as changes in fuel emissions limits, hours of service regulations that govern the amount of 22 time a driver may drive or work in any specific period and requiring onboard electronic logging devices or limits on vehicle weight and size.
We may not be able to comply with any new laws and regulations that are adopted, and any new laws and regulations could have a material adverse effect on our operating results by requiring us to modify or cease our operations. In addition, the inhalation of respirable crystalline silica is associated with the lung disease silicosis.
We may not be able to comply with any new laws and regulations that are adopted, and any new 24 laws and regulations could have a material adverse effect on our operating results by requiring us to modify or cease our operations. In addition, the inhalation of respirable crystalline silica is associated with the lung disease silicosis.
Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or 23 increase the cost for such water. As a result, a natural disaster or inclement weather conditions could severely disrupt the normal operation of our business and adversely impact our financial condition and results of operations.
Additionally, extended drought conditions in our operating regions could impact our ability or our customers’ ability to source sufficient water or increase the cost for such water. As a result, a natural disaster or inclement weather conditions could severely disrupt the normal operation of our business and adversely impact our financial condition and results of operations.
This may be more likely as we continue to grow, if we experience high employee turnover or labor shortage, or hire inexperienced personnel to bolster our staffing needs. If we are unable to fully protect our intellectual property rights, we may suffer a loss in our competitive advantage or market share.
This may be more likely as we continue to grow, if we experience high employee turnover or labor shortage, or hire inexperienced personnel to bolster our staffing needs. 23 If we are unable to fully protect our intellectual property rights, we may suffer a loss in our competitive advantage or market share.
Remedial and abatement costs and other damages arising as a result of environmental and occupational health and safety laws and costs 17 associated with changes in these laws and regulations could be significant and have a material adverse effect on our liquidity, consolidated results of operations and financial condition.
Remedial and abatement costs and other damages arising as a result of environmental and occupational health and safety laws and costs associated with changes in these laws and regulations could be significant and have a material adverse effect on our liquidity, consolidated results of operations and financial condition.
Uncertainty regarding future sanctions or actions to be taken by OPEC+ members or other oil 18 exporting countries could lead to increased volatility in the price of oil and natural gas, which could adversely affect our business, future financial condition and results of operations.
Uncertainty regarding future sanctions or actions to be taken by OPEC+ members or other oil exporting countries could lead to increased volatility in the price of oil and natural gas, which could adversely affect our business, future financial condition and results of operations.
If we are unable 16 to obtain trucking services on a timely basis or the services of a sufficient number of field employees with CDLs, it could have a material adverse impact on our financial condition, results of operations and cash flows.
If we are unable to obtain trucking services on a timely basis or the services of a sufficient number of field employees with CDLs, it could have a material adverse impact on our financial condition, results of operations and cash flows.
As a result, in such circumstances the Company could make payments that are greater than its actual cash tax savings, if any, and may not be able to recoup those payments, which could adversely affect the Company’s liquidity.
As a result, in such circumstances the Company could make payments that are greater than its actual cash tax savings, if any, and may not be able 20 to recoup those payments, which could adversely affect the Company’s liquidity.
Under the Securities Act, federal and state courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
Under the Securities Act, federal and 25 state courts have concurrent jurisdiction over all suits brought to enforce any duty or liability created by the Securities Act, and stockholders cannot waive compliance with the federal securities laws and the rules and regulations thereunder.
In addition to civil and other penalties associated with enforcement activities regarding compliance with occupational health and safety laws, our operations may be subject to abatement obligations that could require significant modifications to existing operations to achieve compliance.
In addition to civil and other penalties associated 18 with enforcement activities regarding compliance with occupational health and safety laws, our operations may be subject to abatement obligations that could require significant modifications to existing operations to achieve compliance.
Industry conditions are influenced by numerous factors over which we have no control, including: • expected economic returns to E&P companies of new well completions; • domestic and foreign economic conditions and supply of and demand for oil and natural gas; • the level of prices, and expectations about future prices, of oil and natural gas; • the level of global oil and natural gas exploration and production; • the level of domestic and global oil and natural gas inventories; • the supply of and demand for hydraulic fracturing services and equipment in the United States and Canada; • federal, tribal, state and local laws, regulations and taxes, including the policies of governments regarding hydraulic fracturing, oil and natural gas exploration, development and production activities and the transportation of oil and gas by pipeline, as well as non-U.S. governmental regulations and taxes; • governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves; • political and economic conditions in oil and natural gas producing countries; • actions by the members of the Organization of Petroleum Exporting Countries and other oil exporting nations with respect to oil production levels and potential changes in such levels; • global weather conditions and natural disasters; • worldwide political, military and economic conditions; • the cost of producing and delivering oil and natural gas; • lead times associated with acquiring equipment and products and availability of qualified personnel; • the discovery rates of new oil and natural gas reserves; • the production decline rate of existing oil and gas wells; • stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or to restrict the exploration, development, production and transportation of oil and natural gas; • the availability of water resources, suitable proppant and chemical additives in sufficient quantities for use in hydraulic fracturing fluids; • advances in exploration, development and production technologies or in technologies affecting energy consumption; • the availability, proximity and capacity of oil and natural gas pipelines and other transportation facilities; • merger and divestiture activity among oil and natural gas producers; • the price and availability of alternative fuels and energy sources; and • uncertainty in capital and commodities markets and the ability of oil and natural gas companies to raise equity capital and debt financing. 13 The volatility of oil and natural gas prices may adversely affect the demand for our hydraulic fracturing services and negatively impact our results of operations.
Industry conditions are influenced by numerous factors over which we have no control, including: • expected economic returns to E&P companies of new well completions; • domestic and foreign economic conditions and supply of and demand for oil and natural gas; • the level of prices, and expectations about future prices, of oil and natural gas; • the level of global oil and natural gas exploration and production; • the level of domestic and global oil and natural gas inventories; • the supply of and demand for hydraulic fracturing services and equipment in the United States and Canada; • federal, tribal, state and local laws, regulations and taxes, including the policies of governments regarding hydraulic fracturing, oil and natural gas exploration, development and production activities and the transportation of oil and gas by pipeline, as well as non-U.S. governmental regulations and taxes; • governmental regulations, including the policies of governments regarding the exploration for and production and development of their oil and natural gas reserves; • political and economic conditions in oil and natural gas producing countries; • actions by the members of the Organization of Petroleum Exporting Countries and other oil exporting nations (“OPEC+”) with respect to oil production levels and potential changes in such levels; • global weather conditions and natural disasters; • worldwide political, military and armed conflict, and economic conditions; • the cost of producing and delivering oil and natural gas; • lead times associated with acquiring equipment and products and availability of qualified personnel; • the discovery rates of new oil and natural gas reserves; • the production decline rate of existing oil and gas wells; • stockholder activism or activities by non-governmental organizations to limit certain sources of funding for the energy sector or to restrict the exploration, development, production and transportation of oil and natural gas; • the availability of water resources, suitable proppant and chemical additives in sufficient quantities for use in hydraulic fracturing fluids; • advances in exploration, development and production technologies or in technologies affecting energy consumption; • the availability, proximity and capacity of oil and natural gas pipelines and other transportation facilities; • merger and divestiture activity among oil and natural gas producers; • the price and availability of alternative fuels and energy sources; and • uncertainty in capital and commodities markets and the ability of oil and natural gas companies to raise equity capital and debt financing. 14 The volatility of oil and natural gas prices may adversely affect the demand for our hydraulic fracturing services and negatively impact our results of operations.
In connection with the Company’s initial public offering (the “IPO”), on January 17, 2018, the Company entered into two Tax Receivable Agreements (the “TRAs”) with R/C Energy IV Direction Partnership, L.P. and the then-existing owners of Liberty Oilfield Services Holdings LLC (“Liberty Holdings”) that continued to own Liberty LLC Units (each such person and any permitted transferee, a “TRA Holder”).
In connection with the Company’s initial public offering (the “IPO”), on January 17, 2018, the Company entered into two Tax Receivable Agreements (the “TRAs”) with R/C Energy IV Direct Partnership, L.P. and the then-existing owners of Liberty Oilfield Services Holdings LLC (“Liberty Holdings”) that continued to own Liberty LLC Units (each such person and any permitted transferee, a “TRA Holder”).
Applicable laws impose restrictions and strict controls regarding the discharge of pollutants into waters of the United States and require that permits or other approvals be obtained to discharge pollutants to such waters.
Applicable laws impose restrictions and strict controls regarding the discharge of 15 pollutants into waters of the United States and require that permits or other approvals be obtained to discharge pollutants to such waters.
The settlement agreements apply to nearly four 12 million acres of land in Colorado, Wyoming, Utah, Montana, and New Mexico. If the U.S. Bureau of Land Management fails to complete its obligations under the settlement agreements, the plaintiffs can reinstate the litigation.
The settlement agreements apply to nearly four 13 million acres of land in Colorado, Wyoming, Utah, Montana, and New Mexico. If the U.S. Bureau of Land Management fails to complete its obligations under the settlement agreements, the plaintiffs can reinstate the litigation.
Moreover, many states and local governments have adopted regulations that impose more stringent permitting, disclosure, disposal and well-construction requirements on hydraulic fracturing operations, including states where we or our customers operate, such as Texas, Colorado and North Dakota. States could also elect to place prohibitions on hydraulic fracturing, as several states have already done.
Moreover, many states and local governments have adopted, or are considering, regulations that impose new or more stringent permitting, disclosure, disposal and well-construction requirements on hydraulic fracturing operations, including states where we or our customers operate, such as Texas, Colorado and North Dakota. States could also elect to place prohibitions on hydraulic fracturing, as several states have already done.
Our Second Amended and Restated Bylaws (the “Bylaws”) further provide that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933 (the “Securities Act”).
Our Second Amended and Restated Bylaws (the “Bylaws”) further provide that unless the Company consents in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Furthermore, we may incur additional costs with respect to purchasing specialized equipment designed to reduce exposure to crystalline silica in connection with our operations or invest capital in new equipment. We are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on numerous aspects of its operations.
Furthermore, we may incur additional costs with respect to purchasing specialized equipment designed to reduce exposure to crystalline silica in connection with our operations or invest capital in new equipment. We are subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on certain aspects of our operations.
We currently utilize two preferred assemblers and a limited number of suppliers for major equipment to both build our new fleets and upgrade any fleets we may acquire to our custom design.
We currently utilize a limited number of assemblers and suppliers for major equipment to both build our new fleets and upgrade any fleets we may acquire to our custom design.
Our top five customers represented approximately 30%, 27%, and 48%, of our consolidated revenue for the years ended December 31, 2022, 2021, and 2020, respectively. It is possible that we will derive a significant portion of our revenue from a concentrated group of customers in the future.
Our top five customers represented approximately 34%, 30%, and 27%, of our consolidated revenue for the years ended December 31, 2023, 2022, and 2021, respectively. It is possible that we will derive a significant portion of our revenue from a concentrated group of customers in the future.
Additionally, if we were to lose any material customer or our customers were to consolidate or merge with other operators, we may not be able to redeploy our equipment at similar utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels. 20 We are subject to cyber security risks.
Additionally, if we were to lose any material customer or our customers were to consolidate or merge with other operators, we may not be able to redeploy our equipment at similar utilization or pricing levels or within a short period of time and such loss could have a material adverse effect on our business until the equipment is redeployed at similar utilization or pricing levels.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements.” Moreover, subject to the limits contained in our ABL Facility, we may incur substantial additional debt from time to time.
Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” Moreover, subject to the limits contained in our ABL Facility, we may incur substantial additional debt from time to time.
The timing and amount of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives and other factors beyond our control. Our share repurchase program may be modified, suspended, extended or terminated by the Company at any time and without notice.
The timing and amount of any repurchases will be determined by the Company’s management based on its evaluation of market conditions, capital allocation alternatives and other factors beyond our control. Our share repurchase program may be modified, suspended, extended or terminated by the Company at any time and without notice. 26 Item 1B. Unresolved Staff Comments None.
Furthermore, the payments under the TRAs will not be conditioned upon a holder of rights under each of the TRAs having a continued ownership interest in the Company or Liberty LLC. For further details of the TRAs, see Note 12 —Income Taxes to the consolidated financial statements included in “Item 8.
Furthermore, the payments under the TRAs will not be conditioned upon a holder of rights under each of the TRAs having a continued ownership interest in the Company or Liberty LLC. For further details of the TRAs, see Note 12 —Income Taxes to the consolidated financial statements included in Part II, Item 8 of this Annual Report.
The risks described below highlight potential events, trends or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity or access to sources of financing, and consequently, the market value of our Class A Common Stock.
The risks described below highlight potential events, trends or other circumstances that could adversely affect our business, financial condition, results of operations, cash flows, liquidity or access to sources of financing, and consequently, the market value of our Class A common stock, par value $0.01 per share (“Class A Common Stock”).
Furthermore, if the area in which we operate or the market demand for oil and natural gas is affected by a public health crisis, such as the coronavirus, or other similar catastrophic event outside of our control, our business and results of operations could suffer.
Furthermore, if the area in which we operate or the market demand for oil and natural gas is affected by a public health crisis, such as the COVID-19 pandemic, or other similar catastrophic event outside of our control, our business and results of operations could be adversely impacted.
As a result, such rule, if adopted, could result in a decline in the completion of new oil and gas wells or the recompletion of existing wells, which could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the demand for our services.
These rules may result in a decline in the completion of new oil and gas wells or the recompletion of existing wells, which could negatively impact the drilling programs of our customers and, consequently, delay, limit or reduce the demand for our services.
We may be adversely affected by uncertainty in the global financial markets and the deterioration of the financial condition of our customers.
General Risks Related to our Business We may be adversely affected by uncertainty in the global financial markets and the deterioration of the financial condition of our customers.
Any explosive incident could expose us to adverse publicity or liability for damages or cause production restrictions, delays or cancellations, any of which developments could have a material adverse effect on our ability to compete, business, financial condition and results of operations. 24 The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations.
Any explosive incident could expose us to adverse publicity or liability for damages or cause production restrictions, delays or cancellations, any of which developments could have a material adverse effect on our ability to compete, business, financial condition and results of operations.
There can be no assurance that OPEC+ members and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor can there be any assurance that sanctions or other global conflicts will not further impact oil prices.
There can be no assurance that OPEC+ members and other oil exporting nations will agree to future production cuts or other actions to support and stabilize oil prices, nor can there be any assurance that sanctions or other global conflicts, including the Russia-Ukraine conflict and various conflicts in the broader Middle East, will not further impact oil prices.
We determined that this cyberattack did not materially affect any of our operations. We engaged in extensive data evaluation for potential damage and concluded that minimal to no data loss had occurred as a result of this cyberattack.
We engaged in extensive data evaluation for potential damage and concluded that minimal to no data loss had occurred as a result of this cyberattack.
Separately, the SEC has also announced that it is scrutinizing existing climate change related disclosure in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient. Furthermore, in November 2022, the U.S.
To the extent that any proposed rules impose additional reporting obligations, we could face increased costs. Separately, the SEC has also announced that it is scrutinizing existing climate change related disclosure in public filings, increasing the potential for enforcement if the SEC were to allege our existing climate disclosures are misleading or deficient. Furthermore, in November 2022, the U.S.
The sand mining operations are subject to a number of risks relating to the proppant industry. In connection with the OneStim Acquisition, we acquired two state-of-the-art sand mines in the Permian Basin. Sand mining operations are subject to risks normally encountered in the proppant industry.
The sand mining operations are subject to a number of risks relating to the proppant industry. We operate two sand mines in the Permian Basin. Sand mining operations are subject to risks normally encountered in the proppant industry.
Insurance may not be available to cover any or all of the risks to which we are subject, or, even if available, it may be inadequate, or insurance premiums or other costs could rise significantly in the future so as to make such insurance prohibitively expensive.
Insurance may not be available to cover any or all of the risks to which we are subject, or, even if available, it may be inadequate, or insurance premiums or other costs could rise significantly in the future so as to make such insurance prohibitively expensive. 17 We could experience continued or increased severity of trucking related issues or trucking accidents, which could materially affect our results of operations.
A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing activities. For example, we depend on digital technologies to perform many of our services and to process and record financial and operating data.
We are subject to cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption and/or financial loss. The oil and natural gas industry has become increasingly dependent on digital technologies to conduct certain processing activities.
Should PFAS be in hydraulic fracturing chemicals, this could open up a new front for the regulation of hydraulic fracturing. 11 Some states in which we operate require the disclosure of some or all of the chemicals used in our hydraulic fracturing operations.
Should PFAS be in hydraulic fracturing chemicals, this could open up a new front for the regulation of hydraulic fracturing and result in additional exposure to liability for contamination resulting from the use or release of hydraulic fracturing chemicals. 12 Some states in which we operate require the disclosure of some or all of the chemicals used in our hydraulic fracturing operations.
During 2021 and into 2022 there has been a shortage of available trucking services in the United States due to the industry not having enough qualified drivers, which has impacted our field operations at times.
Trucking services can be adversely impacted by traffic congestion, shortage of drivers and weather delays which could hinder our service levels. During 2021 and into 2022 there was a shortage of available trucking services in the United States due to the industry not having enough qualified drivers, which impacted our field operations at times.
We immediately shutdown critical systems, diagnosed the root cause of the attack and then methodically returned systems online. This cyberattack disrupted certain non-financial aspects of our internal system for a period of less than one day, while limited and non-critical portions of our systems were kept offline for up to one week in order to properly evaluate the breach.
This cyberattack disrupted certain non-financial aspects of our internal system for a period of less than one day, while limited and non-critical portions of our systems were kept offline for up to one week in order to properly evaluate the breach. We determined that this cyberattack did not materially affect us or any of our operations.
In February of 2022, Russian military forces invaded Ukraine, resulting in conflict and disruption in the region. The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.
The ongoing military action between Russia and Ukraine could adversely affect our business, financial condition and results of operations. In February of 2022, Russian military forces invaded Ukraine, resulting in conflict and disruption in the region. The length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable.
If our approaches to such matters fall out of step with common or best practice, we may be subject to additional scrutiny, criticism, regulatory and investor engagement or litigation, any of which may adversely impact our business, financial condition or results of operation.
If our approaches to such matters fall out of step with common or best practice, we may be subject to additional scrutiny, criticism, regulatory and investor engagement or litigation, any of which may adversely impact our business, financial condition or results of operation. 16 Furthermore, the SEC has announced proposed rules that, among other matters, will establish a framework for reporting climate related risks.
In most states, our operations and the operations of our oil and natural gas producing customers require permits from one or more governmental agencies in order to perform drilling and completion activities, secure water rights, or other regulated activities. Such permits are typically issued by state agencies, but federal and local governmental permits may also be required.
In most states, our hydraulic fracturing services, our natural gas compression and CNG delivery operations, and the operations of our oil and natural gas producing customers require permits from one or more governmental agencies in order to perform drilling and completion activities, secure water rights, or other regulated activities.
Department of the Interior and the FWS alleging that they have unlawfully delayed protection of the dunes sagebrush.
Department of the Interior and the FWS alleging that they have unlawfully delayed protection of the dunes sagebrush. In July 2023, the FWS proposed to list the dunes sagebrush lizard as endangered.
Our customers’ inability to locate or contractually acquire and sustain the receipt of sufficient amounts of water could adversely impact their E&P operations and have a corresponding adverse effect on our business, results of operations and financial condition. 14 Moreover, the imposition of new environmental regulations and other regulatory initiatives could include increased restrictions on our producing customers’ ability to dispose of flowback and produced water generated in hydraulic fracturing or other fluids resulting from E&P activities.
Moreover, the imposition of new environmental regulations and other regulatory initiatives could include increased restrictions on our producing customers’ ability to dispose of flowback and produced water generated in hydraulic fracturing or other fluids resulting from E&P activities.
The costs of components and labor have increased in the past and may increase in the future with increases in demand, which will require us to incur additional costs for any fleets we may acquire in the future. Our fleets and other equipment typically do not generate revenue while they are undergoing maintenance, upgrades or refurbishment.
Our hydraulic fracturing fleets and other completion service-related equipment require significant capital investment in maintenance, upgrades and refurbishment to maintain their competitiveness. The costs of components and labor have increased in the past and may increase in the future with increases in demand, which will require us to incur additional costs for any fleets we may acquire in the future.
As cyber incidents continue to evolve, we will likely be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents. Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks.
As cyber incidents continue to evolve, we will likely be required to expend additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber incidents.
The ability or willingness of OPEC and other oil exporting nations to set and maintain production levels and/or the impact of sanctions on Russia related to the war in Ukraine may have a significant impact on natural gas commodity prices.
The ability or willingness of OPEC+ and other oil exporting nations to set and maintain production levels and/or the impact of sanctions and global conflicts may have a significant impact on natural gas commodity prices. OPEC+ is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market.
During the year 2022, the posted WTI price traded at an average of $94.90 per barrel (“Bbl”), as compared to the 2021 average of $68.13 per Bbl and the 2020 average of $39.16 per Bbl.
During the year 2023, the posted WTI price traded at an average of $77.58 per barrel (“Bbl”), as compared to the 2022 average of $94.90 per Bbl and the 2021 average of $68.13 per Bbl. During this three-year period, the WTI price fluctuated between a high of $123.64 per Bbl and a low of $47.47 per Bbl.
Furthermore, to the extent our contracts require us to purchase more materials, including proppant, than we ultimately require, we may be forced to pay for the excess amount under “take or pay” contract provisions. 21 We currently utilize two preferred assemblers and a limited number of suppliers for major equipment to both build new fleets and upgrade any fleets we acquire to our preferred specifications, and our reliance on these vendors exposes us to risks including price and timing of delivery.
We currently utilize a limited number of assemblers and suppliers for major equipment to both build new fleets and upgrade any fleets we acquire to our preferred specifications, and our reliance on these vendors exposes us to risks including price and timing of delivery.
At the same time, cyber incidents, including deliberate attacks, have increased. The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats. In early 2020, we experienced a denial of service cyberattack that targeted a portion of our non-financial data.
For example, we depend on digital technologies to perform many of our services and to process and record financial and operating data. At the same time, cyber incidents, including deliberate attacks, have increased. The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats.
Effective January 23, 2023, using proceeds from borrowings on our ABL Facility, we repaid all amounts outstanding under the Term Loan Facility. As of February 6, 2023, we had $284.0 million outstanding under our ABL Facility (defined herein), as well as a letter of credit in the amount of $2.6 million, with a borrowing base of $430.4 million.
Effective January 23, 2023, using proceeds from borrowings on our ABL Facility (as defined herein), we repaid all amounts outstanding under the Term Loan Facility (as defined herein).
Environmental groups, local citizens groups and others continue to seek to use a variety of means to force action on additional restrictions on hydraulic fracturing and oil and gas development generally.
The RRC continues to approve flaring permits, but at least one lawsuit has been filed by a pipeline operator challenging the RRC’s flaring approval practices. Environmental groups, local citizens groups and others continue to seek to use a variety of means to force action on additional restrictions on hydraulic fracturing and oil and gas development generally.
These actions could, in turn, reduce demand for hydrocarbons and therefore for our services, which would lead to a reduction in our revenues. An increased societal and governmental focus on ESG and climate change issues may adversely impact our business, impact our access to investors and financing, and decrease demand for our services.
An increased societal and governmental focus on ESG and climate change issues may adversely impact our business, impact our access to investors and financing, and decrease demand for our services. An increased expectation that companies address ESG matters (including climate change) may have a myriad of impacts on our business.
The requirements for such permits vary depending on the location where such regulated activities will be conducted.
Such permits are typically issued by state agencies, but federal and local governmental permits may also be required. The requirements for such permits vary depending on the location where such regulated activities will be conducted.
To the extent we are unable to fund such projects, we may have less equipment available for service or our equipment may not be attractive to potential or current customers. Additionally, competition or advances in technology within our industry may require us to update or replace existing fleets or build or acquire new fleets.
Additionally, competition or advances in technology within our industry may require us to update or replace existing fleets or build or acquire new fleets.
We may not be able to mitigate any future shortages of materials, including proppant, or the impact of supply chain disruptions.
We may not be able to mitigate any future shortages of materials, including proppant, or the impact of supply chain disruptions. Furthermore, to the extent our contracts require us to purchase more materials, including proppant, than we ultimately require, we may be forced to pay for the excess amount under “take or pay” contract provisions.
Any maintenance, upgrade or refurbishment project for our assets could increase our indebtedness or reduce cash available for other opportunities. Furthermore, such projects may require proportionally greater capital investments as a percentage of total asset value, which may make such projects difficult to finance on acceptable terms.
Furthermore, such projects may require proportionally greater capital investments as a percentage of total asset value, which may make such projects difficult to finance on acceptable terms. To the extent we are unable to fund such projects, we may have less equipment available for service or our equipment may not be attractive to potential or current customers.
During the fourth quarter of 2022, WTI oil prices averaged $82.79 compared to $93.06 in the third quarter of 2022 and $77.33 in the fourth quarter of 2021. If the prices of oil and natural gas remain or become more volatile, our operations, financial condition, cash flows and level of expenditures may be materially and adversely affected.
If the prices of oil and natural gas remain or become more volatile, our operations, financial condition, cash flows and level of expenditures may be materially and adversely affected. Delays or restrictions in obtaining permits by us for our operations or by our customers for their operations could impair our business.
For example, OPEC+ and certain other oil exporting nations have previously agreed to take measures, including production cuts, to support crude oil prices. In March 2020, members of OPEC+ considered extending and potentially increasing these oil production cuts, however these negotiations were unsuccessful.
Actions taken by OPEC+ members, including those taken alongside other oil exporting nations, have a significant impact on 19 global oil supply and pricing. For example, OPEC+ and certain other oil exporting nations have previously agreed to take measures, including production cuts, to support crude oil prices.
On November 2021, the EPA proposed such a rule and in November 2022, EPA issued a proposal that updates and expands on the November 2021 proposal. If adopted, such a rule could make it significantly more difficult and/or costly to drill and operate oil and gas wells.
Most recently, in December 2022, the EPA finalized additional methane rules for new and existing petroleum operations. The EPA rules could make it more difficult and/or costly to drill and operate oil and gas wells.
Our assets require significant amounts of capital for maintenance, upgrades and refurbishment and may require significant capital expenditures for new equipment. Our hydraulic fracturing fleets and other completion service-related equipment require significant capital investment in maintenance, upgrades and refurbishment to maintain their competitiveness.
Our insurance coverage for cyberattacks may not be sufficient to cover all the losses we may experience as a result of such cyberattacks. 21 Our assets require significant amounts of capital for maintenance, upgrades and refurbishment and may require significant capital expenditures for new equipment.
As a result, Saudi Arabia announced an immediate reduction in export prices and Russia announced that all previously agreed oil production cuts expired on April 1, 2020. These actions led to an immediate and steep decrease in oil prices. Conversely, sanctions imposed on Russia in the last few months have increased prices.
In 2020, largely as a result of the COVID-19 pandemic, oil prices decreased dramatically, and OPEC+ agreed to historic production cuts in an effort to support prices. Conversely, sanctions imposed on Russia as a result of the Russia-Ukraine conflict in 2022 increased prices.
Removed
In January 2021, President Biden issued an executive order that called for issuance of proposed rules by no later than September 2021 that would restore rules for methane standards applicable to new, modified, and reconstructed sources and establish new methane and volatile organic compound standards applicable to existing oil and gas operations, including the production, transmission, processing and storage segments.
Added
The Colorado Department of Public Health and the Environment also finalized rules related to the control of emissions from certain pre-production activities.
Removed
Additionally, in July 2021, a non-governmental organization issued a report that raised concerns that chemicals used in hydraulic fracturing could be within the class of chemicals known as per- and polyfluoroalkylated substances (“PFAS”) or precursors to such substances. PFAS is the subject of intense federal and state regulatory scrutiny.
Added
In Texas, there has been increased pressure on the Railroad Commission (“RRC”) to impose more stringent limitations on the flaring of gas from wells to prevent waste and because of increased concerns related to the environmental effects of flaring.
Removed
Delays or restrictions in obtaining permits by us for our operations or by our customers for their operations could impair our business.
Added
Additionally, some states have enacted legislation limiting PFAS usage in certain products or limiting PFAS usage generally. For example, Colorado has banned the use of PFAS in oil and gas products including hydraulic fracturing fluids, drilling fluids and proppants.
Removed
An increased expectation that companies address ESG matters (including climate change) may have a myriad of impacts on our business. Some investors and lenders are factoring these issues into investment and financing decisions. They may rely upon companies that assign ratings to a company’s ESG performance.
Added
Our customers’ inability to locate or contractually acquire and sustain the receipt of sufficient amounts of water could adversely impact their E&P operations and have a corresponding adverse effect on our business, results of operations and financial condition.
Removed
Furthermore, the SEC has announced proposed rules that, among other matters, will establish a framework for reporting climate related risks. To the extent that any proposed rules impose additional reporting obligations, we could face increased 15 costs.
Added
At the 28 th Conference of the Parties (the “COP28”) in 2023, the United States announced a new rule on requiring reductions in methane and other air pollutants from oil and natural gas industry.
Removed
We could experience continued or increased severity of trucking related issues or trucking accidents, which could materially affect our results of operations. Trucking services can be adversely impacted by traffic congestion, shortage of drivers and weather delays which could hinder our service levels.
Added
At COP28, the parties adopted a statement calling for “transitioning away from fossil fuels” and an increased focus on renewable energy capacity and energy efficiency. These actions could, in turn, reduce demand for hydrocarbons and therefore for our services, which would lead to a reduction in our revenues.
Removed
The Organization of Petroleum Exporting Countries and their allies (collectively, OPEC+), is an intergovernmental organization that seeks to manage the price and supply of oil on the global energy market. Actions taken by OPEC+ members, including those taken alongside other oil exporting nations, have a significant impact on global oil supply and pricing.
Added
Additionally, on January 26, 2024, the Biden Administration announced a temporary pause on pending decisions regarding exports of liquified natural gas until the U.S. Department of Energy can update the underlying analyses for authorization.
Removed
Financial Statements and Supplementary Data.” 19 General Risks Related to our Business COVID-19 has had in the past, and may in the future have, a material adverse effect on the demand for our services, our operations, business and financial results.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K. 27 PART II
Biggest changeItem 4. Mine Safety Disclosures Information concerning mine safety violations or other regulatory matters required by section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-K. 28 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

12 edited+7 added−2 removed7 unchanged
Biggest changeDividend Policy On April 2, 2020, the Company suspended future quarterly dividends until they were reinstated on October 18, 2022 by the Company’s Board of Directors (the “Board”). The Company paid cash dividends of $0.05 per share of Class A Common Stock on December 20, 2022 to stockholders of record as of December 6, 2022.
Biggest changeDividend Policy On October 18, 2022, the Company’s Board of Directors (the “Board”) reinstated quarterly dividends after they were suspended on April 2, 2020.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers On July 25, 2022, the Board authorized and the Company announced a share repurchase program that allows the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through and including July 31, 2024.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers On July 25, 2022, the Board authorized and the Company announced a share repurchase program that allowed the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through and including July 31, 2024.
The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that we specifically incorporate it by reference into such filing.
The following graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The graph assumes that $100 was invested in our Class A Common Stock in each index on January 12, 2018 and that any dividends were reinvested on the last day of the month in which they were paid. The cumulative total return set forth is not necessarily indicative of future performance.
The graph assumes that $100 was invested in our Class A Common Stock in each index on December 31, 2018 and that any dividends were reinvested on the last day of the month in which they were paid. The cumulative total return set forth is not necessarily indicative of future performance.
Holders of our Common Stock As of February 6, 2023, there were 24 stockholders of record of our Class A Common Stock and no stockholders of record of our Class B Common Stock.
Holders of our Common Stock As of February 5, 2024, there were 17 stockholders of record of our Class A Common Stock and no stockholders of record of our Class B Common Stock.
(2) The average price paid per share of $15.84 was calculated excluding commissions. 29 Stock Performance Graph The following graph and table compares the cumulative total return on our Class A Common Stock with the cumulative total return on the Standard & Poor’s 500 ® Index and the Philadelphia Oil Service Index, since January 12, 2018, the first day on which shares of our Common Stock issued in our IPO commenced trading on the NYSE and each semi-annual period thereafter through December 31, 2022.
(2) The average price paid per share of $19.21 was calculated excluding commissions. 30 Stock Performance Graph The following graph and table compares the cumulative total return on our Class A Common Stock with the cumulative total return on the Standard & Poor’s 500 ® Index and the Philadelphia Oil Service Index, since December 31, 2018 and each annual period thereafter through December 31, 2023.
During the year ended December 31, 2022, the Company repurchased and retired 8,185,890 shares of Class A Common Stock for $125.3 million or $15.31 average price per share including commissions, under the share repurchase program.
During the year ended December 31, 2023, the Company repurchased and retired 13,705,622 shares of Class A Common Stock for $203.1 million or $14.82 average price per share including commissions, under the share repurchase program.
As of December 31, 2022, $124.7 million remained authorized for future repurchases of Class A Common Stock under the share repurchase program and $329.7 million as of February 6, 2023, following the authorization increase. 28 The following sets forth information with respect to our repurchases of shares of Class A Common Stock during the three months ended December 31, 2022: Period Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs October 1, 2022 - October 31, 2022 — — — 180,000,041 November 1, 2022 - November 30, 2022 1,906,221 16.30 1,906,221 148,922,516 December 1, 2022 - December 31, 2022 1,577,503 15.28 1,577,503 124,816,890 Total 3,483,724 15.84 3,483,724 124,816,890 (1) On July 25, 2022, the Board authorized and the Company announced a share repurchase program that allows the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through and including July 31, 2024.
As of December 31, 2023, $171.9 million remained authorized for future repurchases of Class A Common Stock under the share repurchase program and $417.5 million as of February 5, 2024, following the authorization increase. 29 The following sets forth information with respect to our repurchases of shares of Class A Common Stock during the three months ended December 31, 2023: Period Total number of shares purchased Average price paid per share (2) Total number of shares purchased as part of publicly announced plans or programs (1) Approximate dollar value of shares that may yet be purchased under the plans or programs (1) October 1, 2023 - October 31, 2023 351,632 19.91 351,632 203,968,909 November 1, 2023 - November 30, 2023 1,161,489 19.45 1,161,489 181,379,741 December 1, 2023 - December 31, 2023 518,615 18.22 518,615 171,930,956 Total 2,031,736 19.21 2,031,736 171,930,956 (1) On July 25, 2022, the Board authorized and the Company announced a share repurchase program that allowed the Company to repurchase up to $250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through and including July 31, 2024.
The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice. The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated through July 2024.
The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice.
Additionally, on January 24, 2023 the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million. The $250.0 million increase is not represented in the dollar value of shares that may yet be purchased under the plans or programs in the chart above.
On January 24, 2023, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million.
Additionally, on January 24, 2023 the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million. The shares may be repurchased from time to time in open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.
The shares may be repurchased from time to time in open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.
We are not required to pay dividends, and our stockholders will not be guaranteed, or have contractual or other rights to receive, dividends.
We are not required to pay dividends, and our stockholders will not be guaranteed, or have contractual or other rights to receive, dividends. During the years ended December 31, 2023 and 2022, dividend payments totaled $37.5 million and $9.0 million, respectively.
Removed
Included in these repurchases, on November 15, 2022, the Company repurchased and retired 1,700,000 shares of Class A Common Stock for $27.8 million or $16.35 average price per share from Schlumberger, under the share repurchase program.
Added
The Company paid cash dividends of $0.05 per share of Class A Common Stock on December 20, 2022, March 20, 2023, June 20, 2023, and September 20, 2023 to stockholders of record as of December 6, 2022, March 6, 2023, June 6, 2023, and September 6, 2023, respectively.
Removed
For Year Ended 2018 For the Year Ended 2019 For the Year Ended 2020 January 12, June 30, December 31, June 30, December 31, June 30, December 31, Liberty Energy Inc. $ 100.00 $ 83.87 $ 58.38 $ 73.40 $ 50.91 $ 25.55 $ 48.08 Standard & Poor’s 500 ® Index 100.00 97.00 89.45 104.97 115.28 110.62 134.02 Philadelphia Oil Service Index 100.00 95.91 49.91 50.37 48.48 20.67 27.45 For the Year Ended 2021 For the Year Ended 2022 June 30, December 31, June 30, December 31, Liberty Energy Inc. $ 66.03 $ 45.23 $ 59.50 $ 74.89 Standard & Poor’s 500 ® Index 153.34 170.07 135.07 137.00 Philadelphia Oil Service Index 39.47 32.65 41.05 51.93 30 Item 6. [Reserved] 31
Added
Additionally, the Company paid cash dividends of $0.07 per share of Class A Common Stock on December 20, 2023 to stockholders of record as of December 6, 2023.
Added
Furthermore, on January 23, 2024, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $750.0 million and extended the authorization through July 31, 2026.
Added
The Company expects to fund any repurchases by using cash on hand, borrowings under the ABL Facility and expected free cash flow to be generated through the duration of the share repurchase program.
Added
On January 24, 2023, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million.
Added
Furthermore, on January 23, 2024, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $750.0 million and extended the authorization through July 31, 2026.
Added
For the Years Ended December 31 2018 2019 2020 2021 2022 2023 Liberty Energy Inc. $ 100.00 $ 87.20 $ 82.35 $ 77.48 $ 128.28 $ 147.43 Standard & Poor’s 500 ® Index 100.00 131.49 155.68 200.37 164.08 207.21 Philadelphia Oil Service Index 100.00 99.44 57.60 69.54 112.31 114.47 31 Item 6. [Reserved] 32

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

92 edited+24 added−33 removed46 unchanged
Biggest changeWe define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the loss or gain on remeasurement of liability under our tax receivable agreements, the gain or loss on investments and other non-recurring expenses that management does not consider in assessing ongoing performance.
Biggest changeWe define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, and other non-recurring expenses that management does not consider in assessing ongoing performance. 37 Our board of directors, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period.
PropX offers innovative environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. We believe that PropX wet sand handling technology is a key enabler of the next step of cost and emissions reductions in the proppant industry.
PropX offers innovative environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions. We believe that PropX wet sand handling technology and logistics is a key enabler of the next step of cost and emissions reductions in the proppant industry.
On October 26, 2021, the Company acquired PropX in exchange for $11.9 million in cash, 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units, for total consideration of $103.0 million, based on the Class A Common Stock closing price of $15.58 on October 26, 2021, subject to customary post-closing adjustments.
Acquisitions On October 26, 2021, the Company acquired PropX in exchange for $11.9 million in cash, 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units, for total consideration of $103.0 million, based on the Class A Common Stock closing price of $15.58 on October 26, 2021, subject to customary post-closing adjustments.
Operating Income We analyze our operating income, which we define as revenues less direct operating expenses, depreciation and amortization and general and administrative expenses, to measure our financial performance. We believe operating income is a meaningful metric because it provides insight on profitability and true operating performance based on the historical cost basis of our assets.
Operating Income We analyze our operating income, which we define as revenues less direct operating expenses, depreciation, depletion, and amortization and general and administrative expenses, to measure our financial performance. We believe operating income is a meaningful metric because it provides insight on profitability and true operating performance based on the historical cost basis of our assets.
We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income (loss) is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure.
We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure.
To complete the well, hydraulic fracturing is applied in stages along the wellbore to break-up the resource so that oil and gas can be produced. As wellbores have increased in length, the number of frac stages and/or the number of perforation clusters (frac initiation points) has also increased.
To complete the well, hydraulic fracturing is applied in stages along the wellbore to break-up the resource so that oil and gas can be produced. As wellbores have increased in length, the number of frac stages and/ 34 or the number of perforation clusters (frac initiation points) has also increased.
Inventory: Inventory consists of raw materials used in the hydraulic fracturing process, such as proppants, chemicals and field service equipment maintenance parts, and is stated at the lower of cost or net realizable value, determined using the weighted average cost method.
Inventory: Inventory consists of raw materials used in the hydraulic fracturing process, such as proppants, chemicals and field service equipment maintenance parts, and is stated at the lower of cost or net realizable value, determined using the 42 weighted average cost method.
Impairment of long-lived and other intangible assets: Long-lived assets, such as property and equipment, right-of-use lease assets and intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
Impairment of long-lived assets: Long-lived assets, such as property and equipment, right-of-use lease assets and intangible assets, are evaluated for impairment whenever events or changes in circumstances indicate that their carrying value may not be recoverable.
On January 31, 2023, the last redemption of the Liberty LLC Units occurred. 40 With respect to obligations the Company expects to incur under the TRAs (except in cases where the Company elects to terminate the TRAs early, the TRAs are terminated early due to certain mergers, asset sales, or other changes of control or the Company has available cash but fails to make payments when due), generally the Company may elect to defer payments due under the TRAs if the Company does not have available cash to satisfy its payment obligations under the TRAs or if its contractual obligations limit its ability to make such payments.
On January 31, 2023, the last redemption of the Liberty LLC Units occurred. 41 With respect to obligations the Company expects to incur under the TRAs (except in cases where the Company elects to terminate the TRAs early, the TRAs are terminated early due to certain mergers, asset sales, or other changes of control or the Company has available cash but fails to make payments when due), generally the Company may elect to defer payments due under the TRAs if the Company does not have available cash to satisfy its payment obligations under the TRAs or if its contractual obligations limit its ability to make such payments.
Today the majority of E&P drilling is on multi-well pad development, allowing efficient drilling of multiple horizontal wellbores from the same pad or location. The aggregate effect of these improved techniques and technologies have reduced the average days required to drill a well, which according to Lium Research, has dropped from 28 days in 2014 to 18 days in 2022.
Today the majority of E&P drilling is on multi-well pad development, allowing efficient drilling of multiple horizontal wellbores from the same pad or location. The aggregate effect of these improved techniques and technologies have reduced the average days required to drill a well, which according to Lium Research, has dropped from 28 days in 2014 to 18 days in 2023.
Certain amounts included in our contractual obligations as of December 31, 2022 are based on our estimates and assumptions about these obligations, including pricing, volumes and duration. We have no material off balance sheet arrangements as of December 31, 2022, except for purchase commitments under supply agreements disclosed below.
Certain amounts included in our contractual obligations as of December 31, 2023 are based on our estimates and assumptions about these obligations, including pricing, volumes and duration. We have no material off balance sheet arrangements as of December 31, 2023, except for purchase commitments under supply agreements disclosed below.
Risk Factors.” Except as required by law, we assume no obligation to update any of these forward-looking statements. This section of this Annual Report generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.
Risk Factors.” Except as required by law, we assume no obligation to update any of these forward-looking statements. This section of this Annual Report generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
The aggregate effect of increased number of stages and the increasing amount of proppant in each stage has greatly increased the total amount of proppant used in each well, according to Liberty’s FracTrends database, from six million pounds per well in 2014 to over 20 million pounds per well in 2022.
The aggregate effect of increased number of stages and the increasing amount of proppant in each stage has greatly increased the total amount of proppant used in each well, according to Liberty’s FracTrends database, from six million pounds per well in 2014 to over 20 million pounds per well in 2023.
Among other measures, management considers each of the following: • Revenue; • Operating Income; • EBITDA; • Adjusted EBITDA; • Net Income Before Taxes; and • Earnings per Share. Revenue We analyze our revenue by comparing actual monthly revenue to our internal projections for a given period and to prior periods to assess our performance.
Among other measures, management considers each of the following: • Revenue; • Operating Income; • EBITDA; • Adjusted EBITDA; • Net Income; and • Earnings per Share. Revenue We analyze our revenue by comparing actual revenue to our internal projections for a given period and to prior periods to assess our performance.
We also compare operating income to our internal projections for a given period and to prior periods. 34 EBITDA and Adjusted EBITDA We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income (loss) before interest, income taxes, depreciation, depletion, and amortization.
We also compare operating income to our internal projections for a given period and to prior periods. 35 EBITDA and Adjusted EBITDA We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization.
We have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of December 31, 2022.
We have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of December 31, 2023.
As of December 31, 2022, we had $425.0 million committed under the ABL Facility subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs.
As of December 31, 2023, we had $525.0 million committed under the ABL Facility, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs.
In addition, our integrated supply chain includes proppant, chemicals, equipment, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers.
In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers.
We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the loss or gain on remeasurement of liability under our tax receivable agreements, the gain or loss on investments and other non-recurring expenses that management does not consider in assessing ongoing performance.
We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, provision for credit losses, transaction, severance, and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, and other non-recurring expenses that management does not consider in assessing ongoing performance.
We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.
We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, CNG delivery, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.
See “Comparison of Non-GAAP Financial Measures” for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most directly comparable financial measure calculated and presented in accordance with GAAP.
See “Comparison of Non-GAAP Financial Measures” for more information and a reconciliation of EBITDA and Adjusted EBITDA to net income, the most comparable financial measures calculated and presented in accordance with GAAP.
We believe the following are the critical accounting policies used in the preparation of our consolidated financial statements, as well as the significant estimates and judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in “Item 8.
We believe the following are the critical accounting policies used in the preparation of our consolidated financial statements, as well as the significant estimates and judgments affecting the application of these policies. This discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in Part II, Item 8 of this Annual Report.
We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition, such as with the OneStim Acquisition and the PropX Acquisition.
We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition.
The gain as of December 31, 2022 was a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market offset by a loss on sale of two non-strategic facilities acquired in the OneStim Acquisition and a loss on plan of sale for two other non-strategic facilities.
The gain recognized in the year ended December 31, 2022 was a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market offset by a loss on sale of two non-strategic facilities acquired in a previous acquisition and a loss on plan of sale for two other non-strategic facilities.
We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) the successful test of digiFrac™, our innovative, purpose-built electric frac pump that has approximately 25% lower CO2e emission profile than the Tier IV DGB; and (vi) our PropX wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites.
We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending (“DGB”) fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps, our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB; (vi) our wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; and (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield..
Financial Statements and Supplementary Data. ” 41 Revenue Recognition: Revenue from hydraulic fracturing services is recognized as specific services are provided in accordance with contractual arrangements. If our assessment of performance under a particular contract change, our revenue and / or costs under that contract may change.
Revenue Recognition: Revenue from hydraulic fracturing services is recognized as specific services are provided in accordance with contractual arrangements. If our assessment of performance under a particular contract change, our revenue and / or costs under that contract may change.
PropX also offers customers the latest real-time logistics software, PropConnect, for sale or as hosted software as a service.
PropX also offers customers the latest real-time logistics software, PropConnect, as a hosted software as a service.
Recoverability is assessed using undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets.
If a triggering event is identified, recoverability is assessed using undiscounted future net cash flows of assets grouped at the lowest level for which there are identifiable cash flows independent of the cash flows of other groups of assets.
In addition, the average domestic onshore rig count for the United States and Canada was 947 rigs reported in the fourth quarter of 2022, up from the average in the fourth quarter of 2021 of 704, according to a report from Baker Hughes.
In addition, the average domestic onshore rig count for the United States and Canada was 781 rigs reported in the fourth quarter of 2023, down from the average in the fourth quarter of 2022 of 947, according to a report from Baker Hughes.
The Company’s effective tax rate is significantly less than the federal statutory income tax rate of 21.0% due to the Company releasing the valuation allowance on its U.S. net deferred tax assets as of December 31, 2022, primarily due to entering into a three-year cumulative pre-tax book income position and improved operating results.
For 2022, the Company’s effective tax rate was less than the statutory federal income tax rate due to the Company releasing the valuation allowance recorded in a previous year on its U.S. net deferred tax assets as of December 31, 2022, primarily due to entering into a three-year cumulative pre-tax book income position and improved operating results.
For discussion of year ended December 31, 2020, as well as the year ended 2021 compared to the year ended December 31, 2020, refer to Part II, Item 7— “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2021 Annual Report.
For discussion of year ended December 31, 2021, as well as the year ended 2022 compared to the year ended December 31, 2021, refer to Part II, Item 7— Management’s Discussion and Analysis of Financial Condition and Results of Operations of our 2022 Annual Report.
During the year 2022, the posted WTI price traded at an average of $94.90 per barrel (“Bbl”), as compared to the 2021 average of $68.13 per Bbl, and the 2020 average of $39.16 per Bbl.
During the year 2023, the posted WTI price traded at an average of $77.58 per barrel (“Bbl”), as compared to the 2022 average of $94.90 per Bbl, and the 2021 average of $68.13 per Bbl.
Thereafter, any excess purchase price will be recorded as a reduction to retained earnings. All Class A Common Stock shares repurchased are retired upon repurchase. 42
Thereafter, any excess purchase price will be recorded as a reduction to retained earnings. All Class A Common Stock shares repurchased to date have been retired upon repurchase. 43
In the past, including as a result of the COVID-19 pandemic on the industry, we have experienced delays in customer payments and agreed to extended payment terms, however, we have not experienced any material non-payment events. Tax Receivable Agreements In connection with the IPO, on January 17, 2018, the Company entered into two TRAs with the TRA Holders.
In the past, we have experienced delays in customer payments and periodically agreed to extended payment terms, however, we have not experienced any material non-payment events. Tax Receivable Agreements In connection with the IPO, on January 17, 2018, the Company entered into two TRAs with the TRA Holders.
As of December 31, 2022, we had expected cash payments for estimated interest on our finance lease obligations of $2.3 million payable within the next twelve months and $3.4 million payable thereafter. Effective January 23, 2023 the Company withdrew $106.7 million on the ABL Facility and used the proceeds to pay off the Term Loan Facility.
As of December 31, 2023, the Company had expected cash payments for estimated interest on our finance lease obligations of $12.2 million payable within the next twelve months and $16.9 million payable thereafter. On January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and terminate the Term Loan Facility.
Improved drilling economics from horizontal drilling and greater rig efficiencies . Unconventional resources are increasingly being targeted through the use of horizontal drilling. According to Baker Hughes, as reported on January 27, 2023, horizontal rigs accounted for approximately 91% of all rigs drilling in the United States and Canada, up from 77% as of December 26, 2014.
Unconventional resources are increasingly being targeted through the use of horizontal drilling. According to Baker Hughes, as reported on January 26, 2024, horizontal rigs accounted for approximately 90% of all rigs drilling in the United States and Canada, up from 77% as of December 26, 2014.
Income Tax (Benefit) Expense The Company recognized an income tax benefit of $0.8 million for the year ended December 31, 2022, at an effective rate of (0.2)%, compared to income tax expense of $9.2 million, at an effective rate of (5.2)%, recognized for the year ended December 31, 2021.
Income Tax Expense (Benefit) The Company recognized income tax expense of $178.5 million for the year ended December 31, 2023, an effective rate of 24.3%, compared to an income tax benefit of $0.8 million, an effective rate of (0.2)%, recognized for the year ended December 31, 2022.
The Company recognized an income tax benefit of $(0.8) million and income tax expense of $9.2 million for the years ended December 31, 2022 and 2021, respectively.
The Company recognized income tax expense of $178.5 million and an income tax benefit of $0.8 million for the years ended December 31, 2023 and 2022, respectively.
Additionally, on January 23, 2023 the Company withdrew $106.7 million on the ABL Facility and used the proceeds to pay off the Term Loan Facility. The balance of the Term Loan Facility upon pay off was $104.7 million and included $0.9 38 million of accrued interest and a $1.1 million prepayment premium or 1% of the principal.
Additionally, on January 23, 2023, the Company borrowed $106.7 million on the ABL Facility and used the proceeds to pay off and and terminate the Term Loan Facility. The amount paid included the balance of the Term Loan Facility upon payoff of $104.7 million, $0.9 million of accrued interest, and a $1.1 million prepayment premium.
Investing Activities . Net cash used in investing activities was $450.7 million for the year ended December 31, 2022, compared to $186.5 million for the year ended December 31, 2021.
Investing Activities . Net cash used in investing activities was $672.3 million for the year ended December 31, 2023, compared to $450.7 million for the year ended December 31, 2022.
In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate. Recent Trends and Outlook We believe the fundamental outlook for North American hydrocarbons remains healthy.
In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate. Recent Trends and Outlook Entering 2024, we believe the fundamental outlook for the frac industry is stable.
Cash used in investing activities was higher during the year ended December 31, 2022, compared to the year ended December 31, 2021 as the Company continued to invest in equipment, including building new digiFrac™ fleets and deploying additional fleets, to support increased customer demand in next generation equipment and technology. Financing Activities .
Cash used in investing activities was higher during the year ended December 31, 2023, compared to the year ended December 31, 2022 as the Company continued to invest in equipment, including the new digiTechnologies SM suite, to support increased customer demand in next generation equipment and technology.
The balance of the Term Loan Facility upon pay off was $104.7 million and included $0.9 million of accrued interest and a $1.1 million prepayment premium. As such, the only outstanding debt facility after January 23, 3023 is the ABL Facility.
The balance of the Term Loan Facility at pay off was $104.7 million and included $0.9 million of accrued interest, and a $1.1 million prepayment premium. As such, the only outstanding debt facility as of December 31, 2023 was the ABL Facility.
See Note 8 —Debt to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for information regarding scheduled maturities of our long-term debt. See Note 6 —Leases to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for information regarding scheduled maturities of finance and operating leases.
See Note 8 —Debt to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information regarding scheduled maturities of our long-term debt. See Note 6 —Leases to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information regarding scheduled maturities of finance and operating leases.
Net cash provided by operating activities was $530.4 million for the year ended December 31, 2022, compared to $135.5 million for the year ended December 31, 2021.
Net cash provided by operating activities was $1.0 billion for the year ended December 31, 2023, compared to $530.4 million for the year ended December 31, 2022.
The operating income is primarily due to the $1.7 billion, or 68%, increase in total revenue partially offset by a $1.0 billion increase in total operating expenses, the significant components of which are discussed above.
The change in operating income was primarily due to the $598.7 million, or 14%, increase in total revenue partially offset by a $334.0 million increase in total operating expenses, the significant components of which are discussed above.
Other Expense (Income), net The Company recorded other expense, net of $96.4 million for the year ended December 31, 2022 compared to other income, net of $3.4 million during the year ended December 31, 2021. Other expense (income), net is comprised of loss on remeasurement of liability under the TRAs, gain on investments, and interest expense, net.
Other Expense, net Other expense, net decreased by $70.7 million to $25.7 million for the year ended December 31, 2023 compared to $96.4 million during the year ended December 31, 2022. Other expense, net is comprised of (gain) loss on remeasurement of liability under the TRAs, gain on investments, interest income—related party, and interest expense, net.
Net cash used in financing activities was $55.8 million for the year ended December 31, 2022, compared to net cash provided by financing activities of $2.1 million for the year ended December 31, 2021.
Net cash used in financing activities was $349.3 million for the year ended December 31, 2023, compared to net cash used in financing activities of $55.8 million for the year ended December 31, 2022.
The increase in revenue is attributable to higher service pricing, the reactivation of several fleets during the year, and an activity-driven increase in fleet utilization and efficiency commensurate with increased demand for hydraulic fracturing services.
The increase in revenue was primarily attributable to higher service pricing, the reactivation of several fleets not fully reflected in the prior year, and an activity-driven increase in fleet efficiency commensurate with consistent demand for hydraulic fracturing services.
Cost of Services Cost of services (excluding depreciation, depletion, and amortization) increased $0.9 billion, or 40%, to $3.1 billion for the year ended December 31, 2022 compared to $2.2 billion for the year ended December 31, 2021.
Cost of Services Cost of services (excluding depreciation, depletion, and amortization) increased $200.3 million, or 6%, to $3.3 billion for the year ended December 31, 2023 compared to $3.1 billion for the year ended December 31, 2022.
Operating Income (Loss) The Company recorded operating income of $495.9 million for the year ended December 31, 2022 compared to operating loss of $181.2 million for the year ended December 31, 2021.
Operating Income The Company recorded operating income of $760.6 million for the year ended December 31, 2023 compared to $495.9 million for the year ended December 31, 2022.
Net Income (Loss) Before Income Taxes The Company realized net income before income taxes of $399.5 million for the year ended December 31, 2022 compared to a net loss before income taxes of $177.8 million for the year ended December 31, 2021.
Net Income Before Income Taxes The Company realized net income before income taxes of $734.9 million for the year ended December 31, 2023 compared to $399.5 million for the year ended December 31, 2022.
We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business. We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations.
We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations.
Adjusted EBITDA was $860.3 million for the year ended December 31, 2022 compared to $120.9 million for the year ended December 31, 2021.
Adjusted EBITDA was $1.2 billion for the year ended December 31, 2023 compared to $860.3 million for the year ended December 31, 2022.
The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated over the next two years.
The Company expects to fund any repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated through the duration of the share repurchase program.
The Eighth ABL Amendment also includes an agreement from the Wells Fargo Bank, National Association, as administrative agent, to release its second priority liens and security interests on all collateral that served as first priority collateral under the Term Loan Facility, with such release to occur within 120 days after January 23, 2023.
The Eighth ABL Amendment also includes an agreement from Wells Fargo Bank, National Association, as administrative agent, to release its second priority liens and security interests on all collateral that served as first priority collateral under the Term Loan Facility. This release was completed during the three months ended June 30, 2023.
The $394.9 million increase in cash from operating activities is primarily attributable to a $1.7 billion increase in revenues, offset by a $0.9 billion increase in cash operating expenses and a $277.9 million decrease in cash from changes in working capital for the year ended December 31, 2022, compared to a $46.9 million increase in cash from changes in working capital for the year ended December 31, 2021.
The $484.2 million increase in cash from operating activities is primarily attributable to a $598.7 million increase in revenues, offset by a $280.7 million increase in cash operating expenses, interest expense, net, and income tax, and a $111.7 million decrease in cash from changes in working capital for the year ended December 31, 2023, compared to a $277.9 million decrease in cash from changes in working capital for the year ended December 31, 2022.
Critical Accounting Policies and Estimates The preparation of financial statements requires the use of judgments and estimates. Our critical accounting policies are described below to provide a better understanding of how we develop our assumptions and judgments about future events and related estimates and how they can impact our financial statements.
Our critical accounting policies are described below to provide a better understanding of how we develop our assumptions and judgments about future events and related estimates and how they can impact our financial statements. A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations.
As E&P companies have improved drilling and completion techniques to maximize return and efficiency, we believe that their “break-even oil prices” continue to decline. These improvements in well economics have kept U.S. Shale oil and gas production competitive even as oil and gas prices have declined. Liberty has been a significant partner with our customers in driving these continued improvements.
As E&P companies have improved drilling and completion techniques to maximize return and efficiency, we believe that well economics have improved and unconventional oil and gas production is globally competitive. Liberty has been a significant partner with our customers in driving these continued improvements. Improved drilling economics from horizontal drilling and greater rig efficiencies .
We expect to fund operations and organic growth with cash flows from operations and available borrowings under our ABL Facility. We monitor the availability of capital resources such as equity and debt financings that could be leverage for current or future financial obligations including those related to acquisitions, capital expenditures, working capital and other liquidity requirements.
We monitor the availability and cost of capital resources such as equity and debt financings that could be leveraged for current or future financial obligations including those related to acquisitions, capital expenditures, working capital, and other liquidity requirements.
Financial Statements and Supplementary Data” for further details. We have no material off balance sheet arrangements as of December 31, 2022, except for purchase commitments under supply agreements as disclosed below under Note 15—Commitments & Contingencies in “Item 8.
See Note 8 —Debt to the consolidated financial statements included in Part II, Item 8 of this Annual Report for further details. We have no material off balance sheet arrangements as of December 31, 2023, except for purchase commitments under supply agreements as disclosed below under Note 15—Commitments & Contingencies in Part II, Item 8 of this Annual Report.
The $57.8 million change in cash used in financing activities was primarily due to $125.3 million of cash payments made in connection with share repurchases for the year ended December 31, 2022, compared to none in the year ended December 31, 2021 as the Company reinstated the share buyback program.
The $293.5 million change in cash used in financing activities was primarily due to a $77.8 million increase in cash payments made in connection with share repurchases to $203.1 million for the year ended December 31, 2023, compared to $125.3 million for the year ended December 31, 2022.
Given the expected returns that E&P companies have reported for new well development activities due to improved rig efficiencies and increasing well completion complexity and intensity, we expect these industry trends to continue. How We Generate Revenue We currently generate revenue through the provision of hydraulic fracturing and wireline services and goods, including sand from our Permian Basin sand mines.
Given the expected returns that E&P companies have reported for new well development activities due to improved rig efficiencies and increasing well completion complexity and intensity, we expect these industry trends to continue.
As a result of the valuation allowance on the U.S. net deferred tax assets, discussed below, the Company remeasured the liability under the TRAs resulting in a loss of $76.2 million during the year ended December 31, 2022, compared to a gain of $19.0 million for the year ended December 31, 2021.
As a result of the release of a valuation allowance on the U.S. net deferred tax assets the Company remeasured the liability under the TRAs resulting in a loss of $76.2 million, offset by a $2.5 million gain on investments during the year ended December 31, 2022, compared to a $1.8 million gain on remeasurement of the liability under the TRAs, due to a change in the overall expected effective tax rate, during the year ended December 31, 2023.
We provide our services primarily in the Permian Basin, the Eagle Ford Shale, the DJ Basin, the Williston Basin, the San Juan Basin, the Powder River Basin, the Haynesville Shale, the SCOOP/STACK, the Marcellus Shale, Utica Shale, and the Western Canadian Sedimentary Basin. Additionally, we operate two sand mines in the Permian Basin.
We provide our services primarily in the Permian Basin, the Williston Basin, the Eagle Ford Shale, the Haynesville Shale, the Appalachian Basin (Marcellus Shale and Utica Shale), the Western Canadian Sedimentary Basin, the DJ Basin, and the Anadarko Basin.
The combined effective tax rate applicable to the Company for the year ended December 31, 2022 and 2021 was (0.2)% and (5.2)%, respectively.
The effective global income tax rate applicable to the Company for the year ended December 31, 2023 was 24.3% compared to (0.2)% for the year ended December 31, 2022.
Share Repurchase Program Under our share repurchase program, the Company is authorized to repurchase up to $250.0 million of outstanding Class A Common Stock through and including July 31, 2024. Additionally, on January 24, 2023 the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million.
On January 24, 2023, the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $500.0 million.
As of December 31, 2022, we had purchase obligations of $158.7 million payable within the next twelve months and $44.8 million payable thereafter. See Note 15 —Commitments & Contingencies to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for information regarding scheduled contractual obligations.
As of December 31, 2023, the Company has purchase obligations of $143.9 million payable within the next twelve months and $13.0 million payable thereafter. See Note 15 —Commitments & Contingencies to the consolidated financial statements in Part II, Item 8 of this Annual Report for information regarding scheduled contractual obligations.
The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net income (loss), which is the most directly comparable GAAP measure for the periods presented: Year Ended December 31, 2022 Compared to Year Ended December 31, 2021: EBITDA and Adjusted EBITDA Years Ended December 31, Description 2022 2021 Change (in thousands) Net income (loss) $ 400,302 $ (187,004) $ 587,306 Depreciation, depletion, and amortization 323,028 262,757 60,271 Interest expense, net 22,715 15,603 7,112 Income tax (benefit) expense (793) 9,216 (10,009) EBITDA $ 745,252 $ 100,572 $ 644,680 Stock-based compensation expense 23,108 19,946 3,162 Fleet start-up and lay-down costs 17,007 2,751 14,256 Transaction, severance and other costs 5,837 15,138 (9,301) (Gain) loss on disposal of assets (4,603) 779 (5,382) Provision for credit losses — 745 (745) Loss (gain) on remeasurement of liability under tax receivable agreements 76,191 (19,039) 95,230 Gain on investments $ (2,525) $ — $ (2,525) Adjusted EBITDA $ 860,267 $ 120,892 $ 739,375 EBITDA was $745.3 million for the year ended December 31, 2022 compared to $100.6 million for the year ended December 31, 2021.
The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP financial measure for the periods presented: Year Ended December 31, 2023, Compared to Year Ended December 31, 2022: EBITDA and Adjusted EBITDA Years Ended December 31, Description 2023 2022 Change (in thousands) Net income $ 556,408 $ 400,302 $ 156,106 Depreciation, depletion, and amortization 421,514 323,028 98,486 Interest expense, net 27,506 22,715 4,791 Income tax expense 178,482 (793) 179,275 EBITDA $ 1,183,910 $ 745,252 $ 438,658 Stock-based compensation expense 33,026 23,108 9,918 Fleet start-up and lay-down costs 2,082 17,007 (14,925) Transaction, severance, and other costs 2,053 5,837 (3,784) Gain on disposal of assets, net (6,994) (4,603) (2,391) Provision for credit losses 808 — 808 (Gain) loss on remeasurement of liability under tax receivable agreements (1,817) 76,191 (78,008) Gain on investments — (2,525) 2,525 Adjusted EBITDA $ 1,213,068 $ 860,267 $ 352,801 EBITDA was $1.2 billion for the year ended December 31, 2023 compared to $745.3 million for the year ended December 31, 2022.
(Gain) Loss on Disposal of Assets The Company recorded a gain on disposal of assets of $4.6 million for the year ended December 31, 2022 due to miscellaneous equipment disposals and sales of facilities in the normal course of business, compared to a loss of $0.8 million for the year ended December 31, 2021.
Gain on Disposal of Assets, net The Company recorded a gain on disposal of assets, net of $7.0 million for the year ended December 31, 2023 compared to $4.6 million for the year ended December 31, 2022.
As of December 31, 2022, the borrowing base was calculated to be $425.0 million, and the Company had $115.0 million outstanding, in addition to a letter of credit in the amount of $2.6 million, with $307.4 million of remaining availability.
As of December 31, 2023, the borrowing base was calculated to be $420.3 million, and the Company had $140.0 million outstanding, in addition to a letter of credit in the amount of $2.6 million, with $277.7 million of remaining availability. On January 23, 2023, the Company entered into an Eighth Amendment to the ABL Facility (the “Eighth ABL Amendment”).
As of December 31, 2022, we do not expect to make any payments under the TRAs within the next twelve months, future amounts payable under the TRAs are dependent upon future events. See Note 12 —Income Taxes to the consolidated financial statements included in “Item 8. Financial Statements and Supplementary Data” for information regarding the TRAs.
As of December 31, 2023, the Company expects to make a $5.2 million payment under the TRAs within the next twelve months. Future amounts payable under the TRAs are dependent upon future events. See No te 12 —Income Taxes to the consolidated financial statements included in Part II, Item 8 of this Annual Report for information regarding the TRAs.
Cash Requirements Our material cash commitments consist primarily of obligations under long-term debt, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of shares of our Class A Common Stock, and purchase obligations as part of normal operations.
Net pay down of $79.7 million on the Credit Facilities during the year ended December 31, 2023, including the $104.7 million pay off and termination of the Term Loan Facility, contributed to the financing cash outflow during the year ended December 31, 2023, compared to $95.3 million of net borrowings on the Credit Facilities for the year ended December 31, 2022. 40 Cash Requirements Our material cash commitments consist primarily of obligations under long-term debt, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations.
We define EBITDA as net income (loss) before interest, income taxes, and depreciation, depletion, and amortization.
Comparison of Non-GAAP Financial Measures We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization.
No impairment was recognized during the years ended December 31, 2022 and 2021. Leases: In accordance with ASC Topic 842, Leases , the Company determines if an arrangement is a lease at inception and evaluates identified leases for operating or finance lease treatment.
Leases: In accordance with ASC Topic 842, Leases , the Company determines if an arrangement is a lease at inception and evaluates identified leases for operating or finance lease treatment. Operating or finance lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.
The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and increased activity levels as described above under the captions Revenue , Cost of Services, and General and Administrative Expenses for the Year Ended December 31, 2022, Compared to Year Ended December 31, 2021 . 37 Liquidity and Capital Resources Overview Historically, our primary sources of liquidity to date have been cash flows from operations, proceeds from our IPO, and borrowings under our ABL Facility and Term Loan Facility (collectively, the “Credit Facilities”).
The increases in EBITDA and Adjusted EBITDA primarily resulted from increased activity levels in 2023 as described above under the captions Revenue , Cost of Services, and General and Administrative Expenses for the Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 .
The increase in expense was primarily related to increases in materials and parts consumption and higher labor costs related to additional fleets and higher fleet utilization as well as ongoing inflationary increases impacting costs for materials, labor, and maintenance parts.
The increase in expense was primarily related to increases in materials and parts consumption and higher labor costs related to reactivated fleets and higher fleet efficiency during the year ended December 31, 2023.
Lease terms may include options to renew; however, we typically cannot determine our intent to renew a lease with reasonable certainty at inception. Tax Receivable Agreements: In connection with the IPO, on January 17, 2018, the Company entered into two TRAs with the TRA Holders.
Tax Receivable Agreements: In connection with the IPO, on January 17, 2018, the Company entered into two TRAs with the TRA Holders.
Results of Operations Year Ended December 31, 2022, Compared to Year Ended December 31, 2021 Years Ended December 31, Description 2022 2021 Change (in thousands) Revenue $ 4,149,228 $ 2,470,782 $ 1,678,446 Cost of services, excluding depreciation, depletion, and amortization shown separately 3,149,036 2,249,926 899,110 General and administrative 180,040 123,406 56,634 Transaction, severance and other costs 5,837 15,138 (9,301) Depreciation, depletion, and amortization 323,028 262,757 60,271 (Gain) loss on disposal of assets (4,603) 779 (5,382) Operating income (loss) 495,890 (181,224) 677,114 Other expense (income), net 96,381 (3,436) 99,817 Net income (loss) before income taxes 399,509 (177,788) 577,297 Income tax (benefit) expense (793) 9,216 (10,009) Net income (loss) 400,302 (187,004) 587,306 Less: Net income (loss) attributable to non-controlling interests 700 (7,760) 8,460 Net income (loss) attributable to Liberty Energy Inc. stockholders $ 399,602 $ (179,244) $ 578,846 Revenue Our revenue increased $1.7 billion, or 68%, to $4.1 billion for the year ended December 31, 2022 compared to $2.5 billion for the year ended December 31, 2021.
Results of Operations Year Ended December 31, 2023, Compared to Year Ended December 31, 2022 Years Ended December 31, Description 2023 2022 Change (in thousands) Revenue $ 4,747,928 $ 4,149,228 $ 598,700 Cost of services, excluding depreciation, depletion, and amortization shown separately 3,349,370 3,149,036 200,334 General and administrative 221,406 180,040 41,366 Transaction, severance, and other costs 2,053 5,837 (3,784) Depreciation, depletion, and amortization 421,514 323,028 98,486 Gain on disposal of assets, net (6,994) (4,603) (2,391) Operating income 760,579 495,890 264,689 Other expense, net 25,689 96,381 (70,692) Net income before income taxes 734,890 399,509 335,381 Income tax expense (benefit) 178,482 (793) 179,275 Net income 556,408 400,302 156,106 Less: Net income attributable to non-controlling interests 91 700 (609) Net income attributable to Liberty Energy Inc. stockholders $ 556,317 $ 399,602 $ 156,715 Revenue Our revenue increased $598.7 million, or 14%, to $4.7 billion for the year ended December 31, 2023 compared to $4.1 billion for the year ended December 31, 2022.
Such costs were lower during the year ended December 31, 2022 as the integration efforts were completed during the year. Depreciation, Depletion, and Amortization Depreciation, depletion, and amortization expense increased $60.3 million, or 23%, to $323.0 million for the year ended December 31, 2022 compared to $262.8 million for the year ended December 31, 2021.
Depreciation, Depletion, and Amortization Depreciation, depletion, and amortization expense increased $98.5 million, or 30%, to $421.5 million for the year ended December 31, 2023 compared to $323.0 million for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDuring the years ended December 31, 2022 and 2021, the Company recorded foreign currency translation losses to comprehensive income (loss) of $7.1 million and $0.1 million, respectively. Item 8. Financial Statements and Supplementary Data Our financial statements and supplementary data are included in this Annual Report beginning on page F-1 and incorporated by reference herein. Item 9.
Biggest changeDuring the years ended December 31, 2023 and 2022, the Company recorded a foreign currency translation gain of $1.3 million and foreign currency translation loss of $7.1 million to comprehensive income (loss), respectively. Item 8.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk Industry Risk The demand, pricing and terms for hydraulic fracturing services and related goods provided by us are largely dependent upon the level of drilling activity in the U.S. oil and natural gas industry, as well as the available supply of hydraulic fracturing equipment.
Item 7A. Quantitative and Qualitative Disclosure about Market Risk Industry Risk The demand, pricing and terms for hydraulic fracturing services and related goods provided by us are largely dependent upon the level of drilling and completions activity in the U.S. oil and natural gas industry, as well as the available supply of hydraulic fracturing equipment.
Fuel costs consist of diesel fuel used by trucks and other motorized equipment used for hydraulic fracturing services. At times, we have been able to pass along price increases for material costs and fuel costs to customers and conversely have been required to pass along price decreases for material costs to our customers, depending on market conditions.
Fuel costs consist of diesel fuel and natural gas used by trucks and other motorized equipment used for hydraulic fracturing services. At times, we have been able to pass along price increases for material costs and fuel costs to customers and conversely have been required to pass along price decreases for material costs to our customers, depending on market conditions.
The level of U.S. oil and natural gas drilling is volatile. Expected trends in oil and natural gas production activities may not materialize and demand for our services may not reflect the level of activity in the industry.
The level of U.S. oil and natural gas drilling can be volatile. Expected trends in oil and natural gas production activities may not materialize and demand for our services may not reflect the level of activity in the industry.
Interest Rate Risk At December 31, 2022, we had $219.7 million of debt outstanding, with a weighted average interest rate of 9.0%. Interest is calculated under the terms of our Credit Facilities based on our selection, from time to time, of one of the index rates available to us plus an applicable margin that varies based on certain factors.
Interest Rate Risk At December 31, 2023, we had $140.0 million of debt outstanding, with a weighted average interest rate of 7.6%. Interest is calculated under the terms of our ABL Facility based on our selection, from time to time, of one of the index rates available to us plus an applicable margin that varies based on certain factors.
See “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Debt Agreements.” Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the weighted average interest rate would be approximately $2.2 million per year.
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the weighted average interest rate would be approximately $1.4 million per year.
Further, we have purchase commitments with certain vendors to supply proppant inventory used in our operations at a fixed purchase price, including certain commitments which include minimum purchase obligations. Refer t o Note 15 — Commitments and Contingencies included in “Item 8. Financial Statements and Supplementary Data” for further discussion regarding pur chase commitments.
Further, we have purchase commitments with certain vendors to supply proppant inventory used in our operations at a fixed purchase price, including certain commitments which include minimum purchase obligations. Refer t o Note 15 — Commitments & Contingencies included in Part II, Item 8. of this Annual Report for further discussion regarding pur chase commitments.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 43
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Financial Statements and Supplementary Data Our financial statements and supplementary data are included in this Annual Report beginning on page F-1 and incorporated by reference herein. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. 44

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