UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-38081

~~LIBERTY ENERGY INC.~~Liberty Energy Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware

81-4891595

(State or Other Jurisdiction of
Incorporation or Organization)

(I.R.S. Employer
Identification No.)

950 17th Street, Suite 2400

Denver, Colorado

80202

(Address of Principal Executive Offices)

(Zip Code)

(303) 515-2800

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to ~~Section~~section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A Common Stock, par value $0.01

LBRT

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒			Accelerated filer ☐			Non-accelerated filer ☐			Smaller reporting company ☐

Emerging growth company ☐ (Do not check if a smaller reporting company)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): ☐ Yes ☒ No

As of ~~October 18, 2022,~~April 17, 2023, the ~~registrant~~Registrant had ~~182,158,820~~175,112,341 shares of Class A Common Stock and ~~325,902~~0 shares of Class B Common Stock outstanding.

Our Class A Common Stock is traded on the New York Stock Exchange under the symbol “LBRT.” There is no public market for our Class B Common Stock.

Table of Contents

TABLE OF CONTENTS


		Page No.
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	23
	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~(Loss)	34
	Condensed Consolidated Statements of Changes in Equity	45
	Condensed Consolidated Statements of Cash Flows	56
	Notes to Condensed Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	3328
Item 4.	Controls and Procedures	3328

PART II	OTHER INFORMATION	3429
Item 1.	Legal Proceedings	3429
Item 1A.	Risk Factors	3429
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3529
Item 3.	Defaults Upon Senior Securities	3529
Item 4.	Mine Safety Disclosures	3529
Item 5.	Other Information	3629
Item 6.	Exhibits	3730
SIGNATURES		3831

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Quarterly Report”) and certain other communications made by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange of 1934, as amended (the “Exchange Act”)~~, including, among others, statements about our expected growth from recent acquisitions such as the PropX Acquisition (as defined below)~~, expected performance, future operating results, oil and natural gas demand and prices and the outlook for the oil and gas industry, future global economic conditions, the impact of the Russian invasion of Ukraine, the impacts of the novel strain of the coronavirus (“COVID-19”) pandemic, improvements in operating procedures and technology, our business strategy and the business strategies of our customers, in addition to other estimates, and beliefs. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We may use the words “estimate,” “outlook,” “project,” “position,” “potential,” “likely,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “achievable,” “anticipate,” “may,” “will,” “continue,” “should,” “could” and similar expressions to help identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. We cannot assure you that our assumptions and expectations will prove to be correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements, including but not limited to the risks described in this Quarterly Report and other filings that we make with the U.S. Securities Exchange Commission (the “SEC”). We undertake no intention or obligation to update or revise any forward-looking statements, except as required by law, whether as a result of new information, future events or otherwise and readers should not rely on the forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.

All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Table of Contents

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

LIBERTY ENERGY INC.

Condensed Consolidated Balance Sheets

(~~Dollars in~~In thousands, except share data)

(Unaudited)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	24,045	$	19,998	Cash and cash equivalents	$	20,876	$	43,676
Accounts receivable—trade, net of allowances for credit losses of $884 and $884, respectively	Accounts receivable—trade, net of allowances for credit losses of $884 and $884, respectively	480,714		298,531		Accounts receivable—trade, net of allowances for credit losses of $884 and $884, respectively	488,608		410,308
Accounts receivable—related party	Accounts receivable—related party	10,307		—		Accounts receivable—related party	14,310		—
Unbilled revenue (including amounts from related parties of $26,119 and $0, respectively)		200,144		108,923
Unbilled revenue (including amounts from related parties of $9,702 and $13,854, respectively)						Unbilled revenue (including amounts from related parties of $9,702 and $13,854, respectively)	229,753		175,704
Inventories	Inventories	185,647		134,593		Inventories	196,675		214,454
Prepaid and other current assets	Prepaid and other current assets	95,204		68,332		Prepaid and other current assets	119,970		112,531
Total current assets	Total current assets	996,061		630,377		Total current assets	1,070,192		956,673
Property and equipment, net	Property and equipment, net	1,295,189		1,199,287		Property and equipment, net	1,430,979		1,362,364
Finance lease right-of-use assets	Finance lease right-of-use assets	31,812		18,201		Finance lease right-of-use assets	41,375		41,771

Operating lease right-of-use assets	Operating lease right-of-use assets	103,165		109,899		Operating lease right-of-use assets	92,930		97,232
Other assets		98,669		82,289
Deferred tax assets		262		607
Other assets (including amounts from related parties of $13,099 and $11,799, respectively)						Other assets (including amounts from related parties of $13,099 and $11,799, respectively)	103,906		105,300
Deferred tax asset						Deferred tax asset	21,240		12,592
Total assets	Total assets	$	2,525,158	$	2,040,660	Total assets	$	2,760,622	$	2,575,932
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable (including payables to related parties of $3,807 and $2,732, respectively)		$	378,480	$	288,801
Accrued liabilities (including amounts due to related parties of $1,121 and $1,142, respectively)		286,504		235,115
Accounts payable (including payables to related parties of $0 and $2,629, respectively)						Accounts payable (including payables to related parties of $0 and $2,629, respectively)	$	412,498	$	326,818
Accrued liabilities (including amounts due to related parties of $0 and $730, respectively)						Accrued liabilities (including amounts due to related parties of $0 and $730, respectively)	239,748		276,819
Income taxes payable						Income taxes payable	61,946		2,294
Deferred revenue	Deferred revenue	976		4,552		Deferred revenue	3,419		3,859
Current portion of long-term debt, net of discount of $734 and $743, respectively		1,016		1,007
Current portion of long-term debt, net of discount of $0 and $730, respectively						Current portion of long-term debt, net of discount of $0 and $730, respectively	—		1,020
Current portion of finance lease liabilities	Current portion of finance lease liabilities	8,694		8,743		Current portion of finance lease liabilities	10,565		11,393
Current portion of operating lease liabilities	Current portion of operating lease liabilities	29,187		31,029		Current portion of operating lease liabilities	26,601		27,294
Total current liabilities	Total current liabilities	704,857		569,247		Total current liabilities	754,777		649,497
Long-term debt, net of discount of $721 and $1,270, respectively, less current portion		252,682		121,445
Long-term debt, net of discount of $0 and $540, respectively, less current portion						Long-term debt, net of discount of $0 and $540, respectively, less current portion	210,000		217,426
Deferred tax liability	Deferred tax liability	563		563		Deferred tax liability	1,044		1,044
Payable pursuant to tax receivable agreements	Payable pursuant to tax receivable agreements	70,788		37,555		Payable pursuant to tax receivable agreements	114,842		118,874
Noncurrent portion of finance lease liabilities	Noncurrent portion of finance lease liabilities	15,862		4,445		Noncurrent portion of finance lease liabilities	23,440		22,490
Noncurrent portion of operating lease liabilities	Noncurrent portion of operating lease liabilities	72,968		76,966		Noncurrent portion of operating lease liabilities	66,400		69,295
Total liabilities	Total liabilities	1,117,720		810,221		Total liabilities	1,170,503		1,078,626
Commitments & contingencies (Note 15)

Commitments & contingencies (Note 14)						Commitments & contingencies (Note 14)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred Stock, $0.01 par value, 10,000 shares authorized and none issued and outstanding	Preferred Stock, $0.01 par value, 10,000 shares authorized and none issued and outstanding	—		—		Preferred Stock, $0.01 par value, 10,000 shares authorized and none issued and outstanding	—		—
Common Stock:	Common Stock:					Common Stock:
Class A, $0.01 par value, 400,000,000 shares authorized and 182,158,820 issued and outstanding as of September 30, 2022 and 183,385,111 issued and outstanding as of December 31, 2021		1,822		1,834
Class B, $0.01 par value, 400,000,000 shares authorized and 325,902 issued and outstanding as of September 30, 2022 and 2,632,347 issued and outstanding as of December 31, 2021		3		26
Class A, $0.01 par value, 400,000,000 shares authorized and 173,945,136 issued and outstanding as of March 31, 2023 and 178,753,125 issued and outstanding as of December 31, 2022						Class A, $0.01 par value, 400,000,000 shares authorized and 173,945,136 issued and outstanding as of March 31, 2023 and 178,753,125 issued and outstanding as of December 31, 2022	1,739		1,788
Class B, $0.01 par value, 400,000,000 shares authorized and 0 issued and outstanding as of March 31, 2023 and 250,222 issued and outstanding as of December 31, 2022						Class B, $0.01 par value, 400,000,000 shares authorized and 0 issued and outstanding as of March 31, 2023 and 250,222 issued and outstanding as of December 31, 2022	—		3
Additional paid in capital	Additional paid in capital	1,320,731		1,367,642		Additional paid in capital	1,208,183		1,266,097
Retained earnings (accumulated deficit)		90,779		(155,954)
Retained earnings						Retained earnings	388,064		234,525
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(8,595)		(306)		Accumulated other comprehensive loss	(7,867)		(7,396)
Total stockholders’ equity	Total stockholders’ equity	1,404,740		1,213,242		Total stockholders’ equity	1,590,119		1,495,017
Non-controlling interest	Non-controlling interest	2,698		17,197		Non-controlling interest	—		2,289
Total equity	Total equity	1,407,438		1,230,439		Total equity	1,590,119		1,497,306
Total liabilities and equity	Total liabilities and equity	2,525,158		2,040,660		Total liabilities and equity	$	2,760,622	$	2,575,932

Table of Contents

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenue:	Revenue:									Revenue:
Revenue	Revenue	$	1,122,453	$	646,714	$	2,834,304	$	1,778,854	Revenue	$	1,232,320	$	770,481
Revenue—related parties	Revenue—related parties	65,794		7,013		89,332		8,193		Revenue—related parties	29,757		22,289
Total revenue	Total revenue	1,188,247		653,727		2,923,636		1,787,047		Total revenue	1,262,077		792,770
Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Cost of services (exclusive of depreciation, depletion, and amortization shown separately below)	Cost of services (exclusive of depreciation, depletion, and amortization shown separately below)	874,453		593,683		2,258,190		1,614,574		Cost of services (exclusive of depreciation, depletion, and amortization shown separately below)	888,416		670,019
General and administrative	General and administrative	50,473		32,281		130,953		88,043		General and administrative	53,036		38,318
Transaction, severance, and other costs	Transaction, severance, and other costs	1,767		1,556		5,293		12,173		Transaction, severance, and other costs	617		1,334
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	82,848		65,852		234,815		191,122		Depreciation, depletion, and amortization	94,401		74,588
Gain on disposal of assets		(4,277)		(79)		(3,041)		(1,076)
Loss on disposal of assets										Loss on disposal of assets	487		4,672
Total operating costs and expenses	Total operating costs and expenses	1,005,264		693,293		2,626,210		1,904,836		Total operating costs and expenses	1,036,957		788,931
Operating income (loss)		182,983		(39,566)		297,426		(117,789)
Other expense (income):
Loss (gain) on remeasurement of liability under tax receivable agreements		28,900		(4,947)		33,233		(8,252)
Gain on investments		(2,525)		—		(2,525)		—
Operating income										Operating income	225,120		3,839
Other expense:										Other expense:
Loss on remeasurement of liability under tax receivable agreements										Loss on remeasurement of liability under tax receivable agreements	—		4,165

Interest income—related party										Interest income—related party	(373)		—
Interest expense, net	Interest expense, net	6,773		4,007		15,959		11,528		Interest expense, net	8,264		4,324
Total other expense (income)		33,148		(940)		46,667		3,276
Total other expense										Total other expense	7,891		8,489
Net income (loss) before income taxes	Net income (loss) before income taxes	149,835		(38,626)		250,759		(121,065)		Net income (loss) before income taxes	217,229		(4,650)
Income tax expense	Income tax expense	2,572		753		3,637		9,402		Income tax expense	54,483		830
Net income (loss)	Net income (loss)	147,263		(39,379)		247,122		(130,467)		Net income (loss)	162,746		(5,480)

Less: Net income (loss) attributable to non-controlling interests	Less: Net income (loss) attributable to non-controlling interests	310		(489)		389		(6,812)		Less: Net income (loss) attributable to non-controlling interests	91		(104)
Net income (loss) attributable to Liberty Energy Inc. stockholders	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	146,953	$	(38,890)	$	246,733	$	(123,655)	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	162,655	$	(5,376)

Net income (loss) attributable to Liberty Energy Inc. stockholders per common share:	Net income (loss) attributable to Liberty Energy Inc. stockholders per common share:									Net income (loss) attributable to Liberty Energy Inc. stockholders per common share:
Basic	Basic	$	0.79	$	(0.22)	$	1.33	$	(0.72)	Basic	$	0.92	$	(0.03)
Diluted	Diluted	$	0.78	$	(0.22)	$	1.30	$	(0.72)	Diluted	$	0.90	$	(0.03)
Weighted average common shares outstanding:	Weighted average common shares outstanding:									Weighted average common shares outstanding:
Basic	Basic	185,508		178,311		185,414		171,402		Basic	176,569		183,999
Diluted	Diluted	189,907		178,311		190,465		171,402		Diluted	181,088		183,999

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

(Unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Net income (loss) $ 147,263 $ (39,379) $ 247,122 $ (130,467)
Other comprehensive (loss) income
Foreign currency translation (6,343) (2,287) (8,299) 411
Comprehensive income (loss) $ 140,920 $ (41,666) $ 238,823 $ (130,056)
Comprehensive income (loss) attributable to non-controlling interest 299 (513) 379 (6,592)
Comprehensive income (loss) attributable to Liberty Energy Inc. $ 140,621 $ (41,153) $ 238,444 $ (123,464)


	Three Months Ended March 31,
	2023		2022
Net income (loss)	$	162,746	$	(5,480)
Other comprehensive (loss) income
Foreign currency translation	(470)		1,056
Comprehensive income (loss)	$	162,276	$	(4,424)
Comprehensive income (loss) attributable to non-controlling interest	92		(97)
Comprehensive income (loss) attributable to Liberty Energy Inc.	$	162,184	$	(4,327)

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Changes in Equity

(In thousands, except per unit and per share data)

(Unaudited)


		Shares of Class A Common Stock	Shares of Class B Common Stock	Class A Common Stock, Par Value		Class B Common Stock, Par Value		Additional Paid in Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Non-controlling Interest		Total Equity			Shares of Class A Common Stock	Shares of Class B Common Stock	Class A Common Stock, Par Value		Class B Common Stock, Par Value		Additional Paid in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Total Stockholders’ Equity		Non-controlling Interest		Total Equity
Balance—December 31, 2021		183,385	2,632	$	1,834	$	26	$	1,367,642	$	(155,954)	$	(306)	$	1,213,242	$	17,197	$	1,230,439
Balance—December 31, 2022																				Balance—December 31, 2022	178,753	250	$	1,788	$	3	$	1,266,097	$	234,525	$	(7,396)	$	1,495,017	$	2,289	$	1,497,306
Exchange of Class B Common Stock for Class A Common Stock	Exchange of Class B Common Stock for Class A Common Stock	2,306	(2,306)	23		(23)		15,817		—		—		15,817		(15,817)		—		Exchange of Class B Common Stock for Class A Common Stock	250	(250)	3		(3)		2,360		—		—		2,360		(2,360)		—
Offering Costs	Offering Costs	—	—	—		—		(79)		—		—		(79)		—		(79)		Offering Costs	—	—	—		—		(223)		—		—		(223)		—		(223)

Other distributions and advance payments to non-controlling interest unitholders		—	—	—		—		—		—		—		—		924		924
Effect of exchange on deferred tax asset, net of liability under tax receivable agreements																				Effect of exchange on deferred tax asset, net of liability under tax receivable agreements	—	—	—		—		7,782		—		—		7,782		—		7,782
Deferred tax impact of ownership changes from issuance of Class A Common Stock																				Deferred tax impact of ownership changes from issuance of Class A Common Stock	—	—	—		—		103		—		—		103		—		103
$0.05/share of Class A Common Stock dividend																				$0.05/share of Class A Common Stock dividend	—	—	—		—		—		(9,116)		—		(9,116)		—		(9,116)
Share repurchases	Share repurchases	(4,702)	—	(47)		—		(69,987)		—				(70,034)		(60)		(70,094)		Share repurchases	(5,167)	—	(52)		—		(74,573)		—				(74,625)		(23)		(74,648)
Excise tax on share repurchases																				Excise tax on share repurchases	—	—	—		—		(539)		—		—		(539)		—		(539)
Stock-based compensation expense	Stock-based compensation expense	—	—	—		—		17,031		—		—		17,031		95		17,126		Stock-based compensation expense	—	—	—		—		7,175		—		—		7,175		3		7,178
Vesting of restricted stock units	Vesting of restricted stock units	1,170	—	12		—		8		—		—		20		(20)		—		Vesting of restricted stock units	109	—	—		—		1		—		—		1		(1)		—
Tax withheld on vesting of restricted stock units		—	—	—		—		(9,701)		—		—		(9,701)		—		(9,701)

Currency translation adjustment	Currency translation adjustment	—	—	—		—		—		—		(8,289)		(8,289)		(10)		(8,299)		Currency translation adjustment	—	—	—		—		—		—		(471)		(471)		1		(470)
Net income	Net income	—	—	—		—		—		246,733		—		246,733		389		247,122		Net income	—	—	—		—		—		162,655		—		162,655		91		162,746
Balance—September 30, 2022		182,159	326	$	1,822	$	3	$	1,320,731	$	90,779	$	(8,595)	$	1,404,740	$	2,698	$	1,407,438
Balance—March 31, 2023																				Balance—March 31, 2023	173,945	—	$	1,739	$	—	$	1,208,183	$	388,064	$	(7,867)	$	1,590,119	$	—	$	1,590,119

Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital Retained Earnings (Accumulated Deficit) Accumulated Other Comprehensive Income
Total Stockholders’ Equity
Non-controlling Interest Total Equity
Balance—December 31, 2020 157,952 21,550 $ 1,579 $ 216 $ 1,125,554 $ 23,288 $ — $ 1,150,637 $ 159,406 $ 1,310,043
Exchange of Class B Common Stock for Class A Common Stock 19,690 (19,690) 197 (197) 142,204 — — 142,204 (142,204) —
Offering Costs — — — — (938) — — (938) (75) (1,013)
Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 1,372 1,372
Stock-based compensation expense — — — — 14,335 — — 14,335 756 15,091
Vesting of restricted stock units 668 — 7 — (3,082) — — (3,075) (510) (3,585)
Restricted stock and RSU forfeitures — — — — — 2 — 2 — 2
Currency translation adjustment — — — — — — 191 191 220 411
Net loss — — — — — (123,655) — (123,655) (6,812) (130,467)
Balance—September 30, 2021 178,310 1,860 $ 1,783 $ 19 $ 1,278,073 $ (100,365) $ 191 $ 1,179,701 $ 12,153 $ 1,191,854


	Shares of Class A Common Stock	Shares of Class B Common Stock	Class A Common Stock, Par Value		Class B Common Stock, Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive (Loss) Income		Total Stockholders’ Equity		Non-controlling Interest		Total Equity
Balance—December 31, 2021	183,385	2,632	$	1,834	$	26	$	1,367,642	$	(155,954)	$	(306)	$	1,213,242	$	17,197	$	1,230,439
Exchange of Class B Common Stock for Class A Common Stock	2,292	(2,292)	23		(23)		15,687		—		—		15,687		(15,687)		—
Offering Costs	—	—	—		—		(62)		—		—		(62)		—		(62)


Other distributions and advance payments to non-controlling interest unitholders	—	—	—		—		—		—		—		—		924		924

Stock-based compensation expense	—	—	—		—		6,737		—		—		6,737		76		6,813
Vesting of restricted stock units	84	—	1		—		7		—		—		8		(8)		—

Tax withheld on vesting of restricted stock units	—	—	—		—		(24)		—		—		(24)		—		(24)
Currency translation adjustment	—	—	—		—		—		—		1,049		1,049		7		1,056
Net loss	—	—	—		—		—		(5,376)		—		(5,376)		(104)		(5,480)
Balance—March 31, 2022	185,761	340	$	1,858	$	3	$	1,389,987	$	(161,330)	$	743	$	1,231,261	$	2,405	$	1,233,666

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	247,122	$	(130,467)	Net income (loss)	$	162,746	$	(5,480)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	234,815		191,122		Depreciation, depletion, and amortization	94,401		74,588
Gain on disposal of assets		(3,041)		(1,076)
Inventory write-down		1,724		—
Loss on disposal of assets						Loss on disposal of assets	487		4,672
Amortization of debt issuance costs						Amortization of debt issuance costs	1,176		336

Non-cash lease expense	Non-cash lease expense	3,085		2,834		Non-cash lease expense	861		1,034
Stock-based compensation expense	Stock-based compensation expense	17,126		15,091		Stock-based compensation expense	7,178		6,813
Deferred income tax expense		316		6,124
Loss (gain) on remeasurement of liability under tax receivable agreements		33,233		(8,252)
Other non-cash (income) expense, net		(1,007)		2,449

Loss on remeasurement of liability under tax receivable agreements						Loss on remeasurement of liability under tax receivable agreements	—		4,165

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue	Accounts receivable and unbilled revenue	(250,471)		(121,282)		Accounts receivable and unbilled revenue	(136,514)		(95,206)
Accounts receivable and unbilled revenue—related party	Accounts receivable and unbilled revenue—related party	(36,295)		—		Accounts receivable and unbilled revenue—related party	(11,458)		(11,183)
Inventories	Inventories	(56,472)		(6,878)		Inventories	17,790		(5,030)
Other assets	Other assets	(31,030)		(5,001)		Other assets	(14,917)		(2,599)

Deferred revenue	Deferred revenue	(3,476)		—		Deferred revenue	(441)		(2,782)
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	143,986		135,981		Accounts payable and accrued liabilities	82,879		47,582
Accounts payable and accrued liabilities—related party	Accounts payable and accrued liabilities—related party	(4,696)		—		Accounts payable and accrued liabilities—related party	—		(1,857)
Initial payment of operating lease liability	Initial payment of operating lease liability	(2,309)		(503)		Initial payment of operating lease liability	(249)		(501)
Net cash provided by operating activities	Net cash provided by operating activities	292,610		80,142		Net cash provided by operating activities	203,939		14,552
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment and construction in-progress	Purchases of property and equipment and construction in-progress	(326,960)		(123,008)		Purchases of property and equipment and construction in-progress	(133,138)		(90,989)
Investment in sand logistics	Investment in sand logistics	(6,721)		—		Investment in sand logistics	—		(795)
Investment in Fervo Energy Company and Natron Energy, Inc.		(15,000)		—
Proceeds from sale of assets	Proceeds from sale of assets	14,806		3,689		Proceeds from sale of assets	3,484		927
Net cash used in investing activities	Net cash used in investing activities	(333,875)		(119,319)		Net cash used in investing activities	(129,654)		(90,857)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from borrowings on line-of-credit	Proceeds from borrowings on line-of-credit	543,000		100,000		Proceeds from borrowings on line-of-credit	242,000		185,000
Repayments of borrowings on line-of-credit		(411,000)		(84,000)
Repayments on borrowings on line-of-credit						Repayments on borrowings on line-of-credit	(147,000)		(95,000)
Repayments of borrowings on term loan	Repayments of borrowings on term loan	(1,313)		(1,313)		Repayments of borrowings on term loan	(104,716)		(438)
Payments on finance lease obligations	Payments on finance lease obligations	(4,791)		(6,144)		Payments on finance lease obligations	(2,165)		(1,218)
Class A Common Stock dividends and dividend equivalents upon restricted stock vesting	Class A Common Stock dividends and dividend equivalents upon restricted stock vesting	(148)		(168)		Class A Common Stock dividends and dividend equivalents upon restricted stock vesting	(8,777)		—

Other distributions and advance payments to non-controlling interest unitholders	Other distributions and advance payments to non-controlling interest unitholders	924		1,372		Other distributions and advance payments to non-controlling interest unitholders	—		924
Share repurchases	Share repurchases	(70,094)		—		Share repurchases	(74,648)		—

Tax withholding on restricted stock unit vesting		(9,701)		(3,585)
Tax withholding on restricted stock units						Tax withholding on restricted stock units	—		(24)
Payments of equity issuance costs	Payments of equity issuance costs	(557)		(1,013)		Payments of equity issuance costs	(223)		(62)
Payments of debt issuance costs	Payments of debt issuance costs	(678)		—		Payments of debt issuance costs	(1,566)		(224)
Net cash provided by financing activities		45,642		5,149
Net increase (decrease) in cash and cash equivalents before translation effect		4,377		(34,028)
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(97,095)		88,958
Net (decrease) increase in cash and cash equivalents before translation effect						Net (decrease) increase in cash and cash equivalents before translation effect	(22,810)		12,653
Translation effect on cash	Translation effect on cash	(330)		(245)		Translation effect on cash	10		274
Cash and cash equivalents—beginning of period	Cash and cash equivalents—beginning of period	19,998		68,978		Cash and cash equivalents—beginning of period	43,676		19,998
Cash and cash equivalents—end of period	Cash and cash equivalents—end of period	$	24,045	$	34,705	Cash and cash equivalents—end of period	$	20,876	$	32,925

Table of Contents

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Cash Flows ~~cont.~~(cont.)

(Dollars in thousands)

(Unaudited)
Nine Months Ended September 30,
2022 2021
Supplemental disclosure of cash flow information:
Cash paid for income taxes $ 6,502 $ —
Cash paid for interest $ 13,622 $ 9,686
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities $ 83,298 $ 25,484
Capital expenditures reclassified from prepaid and other current assets $ 12,445 $ —


	Three Months Ended March 31,
	2023		2022
Supplemental disclosure of cash flow information:
Net cash (received) paid for income taxes	$	(3,473)	$	4,828
Cash paid for interest	$	5,765	$	3,847
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities	$	126,847	$	71,702
Capital expenditures reclassified from prepaid and other current assets	$	8,060	$	1,190

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 1—Organization and Basis of Presentation

Organization

Liberty Energy Inc., formerly known as Liberty Oilfield Services Inc. (the “Company”), was incorporated as a Delaware corporation on December 21, 2016, to become a holding corporation for Liberty Oilfield Services New HoldCo LLC (“Liberty LLC”) and its subsidiaries upon completion of a corporate reorganization (the “Corporate Reorganization”) and planned initial public offering of the Company (“IPO”). On April 19, 2022, the stockholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation for the purpose of changing the Company’s name from “Liberty Oilfield Services Inc.” to “Liberty Energy Inc.” and thereafter, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect the new name, effective April 25, 2022. Effective January 31, 2023, Liberty LLC was merged into the Company, with the Company surviving the merger (the “Merger”). In connection with the Merger, all outstanding shares of the Company’s Class B Common Stock, par value $0.01 per share (the “Class B Common Stock”) were redeemed and exchanged for an equal number of shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”). The Company ~~has no material assets other than its ownership of units~~did not make any distributions or receive any proceeds in ~~Liberty LLC (“Liberty LLC Units”).~~connection with this exchange. Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, filed with the SEC on February ~~22, 2022~~10, 2023 (the “Annual Report”), for additional information on the Merger completed on January 31, 2023, and the Corporate Reorganization and IPO that were completed on January 17, 2018.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the annual financial statements and notes thereto included in the Annual Report.

The accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, and the results of operations, cash flows, and ~~changes in~~ equity of the Company as of and for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, ~~2022.~~2023. Further, these estimates and other factors, including those outside the Company’s control, such as the impact of sustained lower commodity prices, could have a significant adverse impact to the Company’s financial condition, results of operations and cash flows.

All intercompany amounts have been eliminated in the presentation of the unaudited condensed consolidated financial statements of the Company. The Company’s operations are organized into a single reportable segment, which consists of hydraulic fracturing and related goods and services.

Note 2—Significant Accounting Policies

Reclassifications

Certain amounts in the prior period financial statements have been reclassified from ~~interest~~accrued liabilities to income ~~to interest expense, net~~tax payable in the accompanying unaudited condensed consolidated ~~statements of operation~~balance sheets to conform to the presentation of the current period financial statements. Additionally, amounts in the prior period financial statements have been reclassified from provision for credit losses to other non-cash (income) expense, net in the accompanying unaudited condensed consolidated statement of cash flows to conform to the presentation of the current period financial statements. These reclassificationsThis reclassification had no effect on the previously reported net income or loss.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 3—~~The PropX Acquisition~~

On October 26, 2021, the Company entered into the certain Unit Purchase Agreement (the “Transaction Agreement”) with Proppant Express Investments, LLC to acquire the assets and liabilities of Proppant Express Solutions, LLC (“PropX”), which provides last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America (the “PropX Acquisition”). PropX was acquired in exchange for $11.9 million in cash and 3,405,526 shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”) and 2,441,010 shares of the Company’s Class B Common Stock, par value $0.01 per share (the “Class B Common Stock”, and together with the Class A Common Stock, the “Common Stock”), for total consideration of $103.0 million based on the October 26, 2021 closing price of Class A Common Stock of $15.58. In connection with the issuance of 2,441,010 shares of Class B Common Stock, Liberty LLC also issued 2,441,010 Liberty LLC Units to the Company. The Liberty LLC Units are redeemable for an equivalent number of shares of Class A Common Stock at any time, at the election of the shareholder.

The Company accounted for the PropX Acquisition using the acquisition method of accounting. The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair value at the date of the acquisition. The estimated fair values of certain assets and liabilities require significant judgments and estimates. The majority of the measurements of assets acquired and liabilities assumed, are based on inputs that are not observable in the market and thus represent Level 3 inputs.

In accordance with ASC Topic 805, an acquirer is allowed a period, referred to as the measurement period, in which to complete its accounting for the transaction. Such measurement period ends at the earliest date that the acquirer a) receives the information necessary or b) determines that it cannot obtain further information, and such period may not exceed one year. As the PropX Acquisition closed on October 26, 2021 the Company completed the purchase price allocation, particularly as it relates to current assets and current liabilities, during the nine months ended September 30, 2022.

The following table summarizes the fair value of the consideration transferred in the PropX Acquisition and the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed as of October 26, 2021, the date of the closing of the PropX Acquisition:


~~($ in thousands)~~
~~Total Purchase Consideration:~~
~~Consideration~~	$	~~103,023~~

~~Cash and cash equivalents~~	$	53
~~Accounts receivable and unbilled revenue~~	~~4,089~~
~~Inventory~~	8
~~Prepaid and other current assets~~	~~1,722~~
~~Property and equipment~~ ~~(1)~~	~~94,137~~
~~Intangible assets (included in other assets in the accompanying consolidated balance sheet as of December 31, 2021)~~ ~~(2)~~	~~7,100~~
~~Total identifiable assets acquired~~	~~107,109~~
~~Accounts payable~~	~~2,152~~
~~Accrued liabilities~~	~~1,934~~
~~Total liabilities assumed~~	~~4,086~~
~~Total purchase consideration~~	$	~~103,023~~

~~(1)~~ ~~Useful lives average of 10 years, see Note 5—Property and Equipment~~

~~(2)~~ ~~Definite lived intangibles with an amortization period ranging from~~ ~~seven~~ ~~to 10 years~~

Transaction costs, costs associated with issuing additional equity and integration costs were recognized separately from the acquisition of assets and assumptions of liabilities in the PropX Acquisition. Transaction costs consist of legal and professional fees. Integration costs consist of expenses incurred to integrate PropX’s operations, aligning accounting processes and procedures, and integrating its enterprise resource planning system with those of the Company. Merger and integration costs are expensed as incurred, and equity offering costs were recorded as a reduction to additional paid in capital.

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2021 do not include any results from PropX operations as the PropX Acquisition closed on October 26, 2021. The Company does not present pro forma financial information for the periods prior to the PropX Acquisition as such information, after elimination of PropX’s historical transactions with the Company, is not materially different than the results presented in the accompanying condensed consolidated statements of operations for three and nine months ended September 30, 2021.

~~Note 4—~~Inventories

Inventories consist of the following:


		September 30,		December 31,			March 31,		December 31,
($ in thousands)	($ in thousands)	2022		2021		($ in thousands)	2023		2022
Proppants	Proppants	$	31,156	$	23,413	Proppants	$	21,775	$	31,350
Chemicals	Chemicals	20,139		17,996		Chemicals	28,359		32,392
Maintenance parts		134,352		93,184
Maintenance parts and other						Maintenance parts and other	146,541		150,712
		$	185,647	$	134,593		$	196,675	$	214,454

During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023, the Company did not record any write-downs to inventory carrying values. During the year ended December 31, 2022, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to the inventory carrying value of $1.7 ~~million. The Company did not record any write-down to the inventory carrying value~~million recorded during the ~~year~~quarter ended ~~December 31, 2021.~~September 30, 2022.

Note 5—4—Property and Equipment

Property and equipment consist of the following:


		Estimated useful lives (in years)	September 30,		December 31,			Estimated useful lives (in years)	March 31,		December 31,
($ in thousands)	($ in thousands)		2022		2021		($ in thousands)		2023		2022
Land	Land	N/A	$	29,384	$	33,812	Land	N/A	$	29,283	$	29,276
Field services equipment	Field services equipment	2-7	1,817,333		1,579,420		Field services equipment	2-10	2,057,006		1,925,848
Vehicles	Vehicles	4-7	61,674		61,282		Vehicles	4-7	63,149		62,683
Lease Equipment	Lease Equipment	10	90,897		64,770		Lease Equipment	10	110,844		106,087
Buildings and facilities	Buildings and facilities	5-30	133,607		148,555		Buildings and facilities	5-30	135,772		135,281
Mineral reserves	Mineral reserves	>25	76,823		76,823		Mineral reserves	>25	76,823		76,823
Office equipment and furniture	Office equipment and furniture	2-7	8,826		8,218		Office equipment and furniture	2-7	9,917		9,504
			2,218,544		1,972,880				2,482,794		2,345,502
Less accumulated depreciation and depletion	Less accumulated depreciation and depletion		(1,073,092)		(863,194)		Less accumulated depreciation and depletion		(1,224,736)		(1,141,656)
			1,145,452		1,109,686				1,258,058		1,203,846
Construction in-progress	Construction in-progress	N/A	149,737		89,601		Construction in-progress	N/A	172,921		158,518
			$	1,295,189	$	1,199,287
Property and equipment, net							Property and equipment, net		$	1,430,979	$	1,362,364

~~Depreciation expense for~~During the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021 was~~ ~~$77.5 million~~ ~~and $61.1 million, respectively. During the nine months ended September 30, 2022 and 2021,~~ the Company recognized depreciation expense of ~~$219.9~~$88.4 million and ~~$175.9~~$69.9 million, respectively. Depletion expense for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021was~~was $0.3 million and $0.3 million, respectively. ~~Depletion expense for the nine months ended September 30, 2022 and 2021 was $0.9 million and $1.0 million, respectively.~~

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company concluded that no triggering events that could indicate possible impairment of property and equipment had occurred, other than related to the assets held for sale discussed below.

AsAdditionally, as of ~~September 30,~~March 31, 2023 and December 31, 2022, the Company classified ~~$2.5~~$1.1 million of land and ~~$11.4~~$6.2 million of buildings, net of accumulated depreciation, of two properties that it intends to sell within the next year, and that ~~meets~~meet the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet. The Company estimates that the carrying value of the assets ~~were~~is equal to the fair value less the estimated costs to sell, net of write-downs taken in the prior period, and therefore no gain or loss was recorded during the three months ended March 31, 2023.

As of March 31, 2022, the Company classified $3.4 million of land and $8.4 million of buildings, net of accumulated depreciation, of two properties as assets held for sale. The Company estimated that carrying value of the assets was greater than the fair value less the estimated costs to sell, and therefore recorded a ~~$2.7~~$4.4 million loss during the ~~nine~~three months ended ~~September 30,~~March 31, 2022, included as a component of ~~gain~~loss on disposal of assets in the accompanying unaudited condensed consolidated statements of operations.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note 6—5—Leases

The Company has operating and finance leases primarily for vehicles, equipment, railcars, office space, and facilities. The terms and conditions for these leases vary by the type of underlying asset.

Certain leases include variable lease payments for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Payments that vary based on an index or rate are included in the measurement of lease assets and liabilities at the rate as of the commencement date. All other variable lease payments are excluded from the measurement of lease assets and liabilities, and are recognized in the period in which the obligation for those payments is incurred.

The components of lease expense for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2023		2022
Finance lease cost:	Finance lease cost:									Finance lease cost:
Amortization of right-of-use assets	Amortization of right-of-use assets	$	1,590	$	1,213	$	3,796	$	4,565	Amortization of right-of-use assets	$	2,236	$	977
Interest on lease liabilities	Interest on lease liabilities	453		347		1,066		1,318		Interest on lease liabilities	694		261
Operating lease cost	Operating lease cost	10,675		12,869		32,809		29,702		Operating lease cost	10,574		9,499
Variable lease cost	Variable lease cost	1,337		1,273		3,473		3,116		Variable lease cost	1,246		1,091
Short-term lease costs		2,121		1,479		5,113		3,483
Short-term lease cost										Short-term lease cost	2,051		1,546
Total lease cost	Total lease cost	$	16,176	$	17,181	$	46,257	$	42,184	Total lease cost	$	16,801	$	13,374

~~Supplemental~~Supplemental cash flow and other information related to leases for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021~~2022 were as follows:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
($ in thousands)	($ in thousands)	2022		2021		2022		2021		($ in thousands)	2023		2022
Cash paid for amounts included in measurement of liabilities:	Cash paid for amounts included in measurement of liabilities:									Cash paid for amounts included in measurement of liabilities:
Operating leases	Operating leases	$	10,170	$	12,136	$	32,065	$	27,420	Operating leases	$	9,877	$	9,032
Finance leases	Finance leases	2,548		2,064		5,857		7,099		Finance leases	2,936		1,479
Right-of-use assets obtained in exchange for new lease liabilities:	Right-of-use assets obtained in exchange for new lease liabilities:									Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases	Operating leases	3,323		10,999		22,693		70,205		Operating leases	4,562		9,461
Finance leases	Finance leases	8,409		—		14,742		—		Finance leases	2,789		—

Lease terms and discount rates as of March 31, 2023 and December 31, 2022 were as follows:


	March 31, 2023		December 31, 2022
Weighted-average remaining lease term:
Operating leases	4.7 years		4.8 years
Finance leases	3.1 years		3.1 years
Weighted-average discount rate:
Operating leases	4.8	%	4.6	%
Finance leases	8.1	%	8.2	%

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

During the nine months ended September 30, 2022, the Company amended certain operating leases, the change in terms of which caused the leases to be reclassified as finance leases. In connection with the amendments, the Company wrote-off operating lease right-of-use assets of $0.2 million and liabilities of $0.1 million. Additionally, the Company recognized finance lease right-of-use assets of $2.7 million and liabilities of $2.7 million. During the nine months ended September 30, 2021, the Company amended certain finance leases, the change in terms of which caused the leases to be reclassified to operating leases. In connection with the amendments the Company wrote-off finance lease right-of-use assets of $13.7 million and liabilities of $10.6 million. Additionally, the Company recognized operating lease right-of-use assets of $11.8 million and liabilities of $8.8 million. There was no gain or loss recognized as a result of these amendments.

~~Lease terms and discount rates as of September 30, 2022 and December 31, 2021 were as follows:~~
September 30, 2022 December 31, 2021
Weighted-average remaining lease term:
Operating leases 4.9 years 5.2 years
Finance leases 3.0 years 1.5 years
Weighted-average discount rate:
Operating leases 4.5 % 4.2 %
Finance leases 8.0 % 8.6 %

Future minimum lease commitments as of ~~September 30, 2022~~March 31, 2023 are as follows:


($ in thousands)	($ in thousands)	Finance		Operating		($ in thousands)	Finance		Operating
Remainder of 2022		$	2,204	$	9,330
2023		9,610		30,228
Remainder of 2023						Remainder of 2023	$	9,027	$	23,556
2024	2024	4,799		23,758		2024	7,871		25,812
2025	2025	4,910		21,430		2025	7,982		23,278
2026	2026	6,709		10,384		2026	13,234		12,130
2027						2027	1,200		4,815
Thereafter	Thereafter	—		19,074		Thereafter	—		14,504
Total lease payments	Total lease payments	28,232		114,204		Total lease payments	39,314		104,095
Less imputed interest	Less imputed interest	(3,676)		(12,049)		Less imputed interest	(5,309)		(11,094)
Total Liability		$	24,556	$	102,155
Total						Total	$	34,005	$	93,001

The Company’s vehicle leases typically include a residual value guarantee. For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of ~~September 30, 2022~~March 31, 2023 is ~~$12.9~~$13.3 million; the payment is not probable and therefore has not been included in the measurement of the lease liability and right-of-use asset. For vehicle leases that are classified as finance leases, the Company includes the residual value guarantee, estimated in the lease agreement, in the financing lease liability.

Lessor Arrangements

The Company leases dry and wet sand containers and conveyor belts ~~to customers through PropX. PropX leases~~ to customers through operating leases, where the lessor for tax purposes is considered to be the owner of the equipment during the term of the lease. The lease agreements do not include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value. However, some of the leases contain a termination clause in which the customer can cancel the contract. The leases can be subject to variable lease payments if the customer requests more units than what is agreed upon in the lease. The Company does not record any lease assets or liabilities related to these variable items.

The carrying amount of equipment leased to others, included in property, plant and equipment, under operating leases as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were as follows:


($ in thousands)	March 31, 2023		December 31, 2022
Lease Equipment	$	110,844	$	106,087
Less: Accumulated depreciation	(14,699)		(11,408)
Lease Equipment - net	$	96,145	$	94,679

Future payments receivable for operating leases commenced as of March 31, 2023 are as follows:


($ in thousands)
Remainder of 2023	$	12,392
2024	9,218
2025	1,051
2026	—
2027	—
Thereafter	—
Total	$	22,661

Revenues from operating leases for the three months ended March 31, 2023 and 2022 were $8.6 million and $5.9 million, respectively.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

($ in thousands) September 30, 2022 December 31, 2021
Equipment leased to others - at original cost $ 90,897 $ 64,770
Less: Accumulated depreciation (8,288) (1,377)
Equipment leased to others - net $ 82,609 $ 63,393

~~Future payments receivable for operating leases commenced and committed but not delivered as of~~ ~~September 30, 2022~~ ~~are as follows:~~

($ in thousands)
Remainder of 2022 $ 4,126
2023 16,704
2024 9,218
2025 1,051
2026 —
Thereafter —
Total $ 31,099

~~Revenues from operating leases for the three and nine months ended~~ ~~September 30, 2022~~ ~~were $6.7 million and $18.4 million, respectively. There was no revenue from operating leases for the three and nine months ended September 30, 2021.~~

Note 7—6—Accrued Liabilities

Accrued liabilities consist of the following:


($ in thousands)	($ in thousands)	September 30, 2022		December 31, 2021		($ in thousands)	March 31, 2023		December 31, 2022
Accrued vendor invoices	Accrued vendor invoices	$	116,859	$	109,903	Accrued vendor invoices	$	102,805	$	119,801
Operations accruals	Operations accruals	93,979		64,707		Operations accruals	66,786		72,348
Accrued benefits and other	Accrued benefits and other	75,666		60,505		Accrued benefits and other	70,157		84,670
		$	286,504	$	235,115		$	239,748	$	276,819

Note 8—7—Debt

Debt consists of the following:


		September 30,		December 31,			March 31,		December 31,
($ in thousands)	($ in thousands)	2022		2021		($ in thousands)	2023		2022
Term Loan outstanding	Term Loan outstanding	$	105,153	$	106,465	Term Loan outstanding	$	—	$	104,716
Revolving Line of Credit	Revolving Line of Credit	150,000		18,000		Revolving Line of Credit	210,000		115,000
Deferred financing costs and original issue discount	Deferred financing costs and original issue discount	(1,455)		(2,013)		Deferred financing costs and original issue discount	—		(1,270)
Total debt, net of deferred financing costs and original issue discount	Total debt, net of deferred financing costs and original issue discount	$	253,698	$	122,452	Total debt, net of deferred financing costs and original issue discount	$	210,000	$	218,446
Current portion of long-term debt, net of discount	Current portion of long-term debt, net of discount	$	1,016	$	1,007	Current portion of long-term debt, net of discount	$	—	$	1,020
Long-term debt, net of discount and current portion	Long-term debt, net of discount and current portion	252,682		121,445		Long-term debt, net of discount and current portion	210,000		217,426
Total debt, net of deferred financing costs and original issue discount	Total debt, net of deferred financing costs and original issue discount	$	253,698	$	122,452	Total debt, net of deferred financing costs and original issue discount	$	210,000	$	218,446

On September 19, 2017, the Company entered into two credit agreements for a revolving line of credit up to $250.0 million, subsequently increased to ~~$425.0~~$525.0 million, see below, (the “ABL Facility”) and a $175.0 million term loan (the “Term Loan Facility”, and together with the ABL Facility the “Credit Facilities”).

~~On July 18, 2022,~~Effective January 23, 2023, the Company entered into an ~~amendment~~Eighth Amendment to the ABL Facility (the ~~“Seventh~~“Eighth ABL Amendment”). The ~~Seventh~~Eighth ABL Amendment ~~amended~~amends certain terms, provisions and covenants of the ABL Facility, including, among other things: (i) increasing the maximum ~~borrowing~~revolver amount byfrom $425.0 million to $525.0 million (the “Upsized Revolver”); (ii) increasing the amount of the accordion feature from $75.0 million to ~~$425.0~~$100.0 million; (iii) extending the maturity date from October 22, 2026 to January 23, 2028; (iv) modifying the dollar amounts of various credit facility triggers and tests proportionally to the Upsized Revolver; (v) permitting repayment under the Term Loan Facility prior to February 10, 2023; and (vi) increasing certain indebtedness, intercompany advance, and investment baskets. 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.

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 amount paid includes the balance of the Term Loan Facility upon pay off of $104.7 million, $0.9 million of accrued interest, and a $1.1 million prepayment premium or 1% of the principal. Additionally, there were $0.2 million in bank and legal fees included in the pay off.

The weighted average interest rate on all borrowings outstanding as of March 31, 2023 and December 31, 2022 was 6.7% and 9.0%, respectively.

Term Loan Facility

The Term Loan Facility provided for a $175.0 million term loan, of which $0 million remained outstanding as of March 31, 2023. In connection with the Eighth ABL Amendment and payoff of the Term Loan Facility, on January 23, 2023, the Company terminated the Term Loan Facility, see above for further discussion.

ABL Facility

Under the terms of the ABL Facility, up to $525.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory. As of March 31, 2023, the borrowing base was calculated to be $499.9 million, and the Company had $210.0 million outstanding in addition to letters of credit in the amount of $2.6 million, with $287.3 million of remaining availability. Borrowings under the ABL Facility bear interest at SOFR or a base rate, plus an applicable SOFR margin of 1.5% to 2.0% or base rate margin of 0.5% to 1.0%, as defined in the ABL Facility credit agreement. Additionally, borrowings as of March 31, 2023 incurred interest at a weighted average rate of 6.7%. The average

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

based on percentage of eligible accounts receivable and inventory, (ii) modifying certain covenant and reporting-related baskets, and (iii) replacing LIBOR with the secured overnight financing rate (“SOFR”) as the interest rate benchmark.

On August 12, 2022, the Company entered into an amendment to the Term Loan Facility (the “Sixth Term Loan Amendment”). The Sixth Term Loan Amendment amended certain terms, provisions and covenants of the Term Loan Facility, including among other things: (i) a waiver of the fixed charge coverage ratio requirements for up to $100.0 million of restricted payments made in connection with the Company’s 2022 stock repurchase program for its common stock; (ii) the addition of a minimum liquidity requirement of $150.0 million in order to make selected restricted payments, including those made under the 2022 stock repurchase program; (iii) the modification of certain covenant and reporting-related terms, including an increase in the allowance for permitted purchase money indebtedness from $50.0 million to $70.0 million; (iv) the addition of a prepayment premium of 1.0% through the first anniversary of the Sixth Term Loan Amendment effective date; and (v) the addition and modification of several provisions to replace LIBOR with SOFR as the interest rate benchmark.

~~The weighted average interest rate on all borrowings outstanding as of~~ ~~September 30, 2022~~ ~~and December 31, 2021 was 7.0% and 7.9%, respectively.~~

~~ABL Facility~~

Under the terms of the ABL Facility, up to $425.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory. As of September 30, 2022, the borrowing base was calculated to be $425.0 million, and the Company had $150.0 million outstanding in addition to a letter of credit in the amount of $1.4 million, with $273.6 million of remaining availability. Borrowings under the ABL Facility bear interest at SOFR or a base rate, plus an applicable SOFR margin of 1.5% to 2% or base rate margin of 0.5% to 1%, as defined in the ABL Facility credit agreement. Additionally, borrowings as of ~~September 30, 2022 incurred interest at a weighted average rate of 4.8%.~~ ~~The average~~ monthly unused commitment is subject to an unused commitment fee of 0.25% to 0.375%. Interest and fees are payable in arrears at the end of each month, or, in the case of SOFR loans, at the end of each interest period. The ABL Facility matures on the earlier of (i) October 22, 2026 and (ii) to the extent the debt under the Term Loan Facility remains outstanding, 90 days prior to the final maturity of the Term Loan Facility, which matures on September 19, 2024.January 23, 2028. Borrowings under the ABL Facility are collateralized by accounts receivable and inventory, and further secured by the Company ~~Liberty LLC, and R/C IV Non-U.S. LOS Corp., a Delaware corporation and a subsidiary of the Company,~~ as parent ~~guarantors.~~

~~Term Loan Facility~~guarantor.

The ~~Term Loan~~ABL Facility provides for a $175.0 million term loan, of which $105.2 million remained outstanding as of September 30, 2022. Amounts outstanding bear interest at SOFR or a base rate, plus an applicable margin of 7.625% or 6.625%, respectively, and borrowings as of September 30, 2022 incurred interest at a rate of 10.18%. The Company is required to make quarterly principal payments of 1% per annum of the outstanding principal balance, commencing on December 31, 2017, with final payment due at maturity on September 19, 2024. The Term Loan Facility is collateralized by the fixed assets of LOS and its subsidiaries, and is further secured by the Company, Liberty LLC, and R/C IV Non-U.S. LOS Corp., a Delaware corporation and a subsidiary of the Company, as parent guarantors.

~~The Credit Facilities include~~includes certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions. Moreover, the ability of the Company to incur additional debt and to make distributions is dependent on maintaining a maximum leverage ratio.

The ~~Term Loan~~ABL Facility requires mandatory prepayments upon certain dispositions of property or issuance of other indebtedness, as defined, and annually a percentage of excess cash flow (25% to 50%, depending on leverage ratio, of consolidated net income less capital expenditures and other permitted payments, commencing with the year ending December 31, 2018). Certain mandatory prepayments and optional prepayments are subject to a prepayment premium of 1% of the prepaid principal declining to 0% after the first anniversary of the Sixth Term Loan Amendment effective date.

~~The Credit Facilities are~~is not subject to financial covenants unless liquidity, as defined in the ~~respective~~ credit ~~agreements,~~agreement, drops below a specific level. ~~Under the ABL Facility, the~~The Company is required to maintain a minimum fixed charge coverage ratio, as defined in the credit agreement governing the ABL Facility, of 1.0 to 1.0 for each period if excess availability is less than 10% of the borrowing base or ~~$12.5~~$52.5 million, whichever is greater. Under the Term Loan Facility, the Company is required to maintain a minimum fixed charge coverage ratio, as defined, of 1.2 to 1.0 for each trailing twelve-month period if the Company’s liquidity, as defined, is less than $25.0 million for at least ~~five~~ ~~consecutive business days.~~

The Company was in compliance with these covenants as of ~~September 30, 2022.~~

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

March 31, 2023.

Maturities of debt are as follows:
($ in thousands)
Remainder of 2022 $ 438
2023 $ 1,750
2024 $ 252,965
2025 $ —
2026 $ —
$ 255,153


($ in thousands)

Remainder of 2023	$	—
2024	—
2025	—
2026	—
2027	—
Thereafter	210,000
	$	210,000

Note 9—8—Fair Value Measurements and Financial Instruments

The fair values of the Company’s assets and liabilities represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction on the reporting date. These fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability on the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. The Company discloses the fair values of its assets and liabilities according to the quality of valuation inputs under the following hierarchy:

•Level 1 Inputs: Quoted prices (unadjusted) in an active market for identical assets or liabilities.

•Level 2 Inputs: Inputs other than quoted prices that are directly or indirectly observable.

•Level 3 Inputs: Unobservable inputs that are significant to the fair value of assets or liabilities.

The classification of an asset or liability is based on the lowest level of input significant to its fair value. Those that are initially classified as Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is inconsequential to the overall fair value, or if corroborating market data becomes available. Assets and liabilities that are initially reported as Level 2 are subsequently reported as Level 3 if corroborating market data is no longer available. Transfers occur at the end of the reporting period. There were no transfers into or out of Levels 1, 2, and 3 during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, accrued liabilities, long-term debt, and finance and operating lease obligations. These financial instruments do not require disclosure by level. The carrying values of all of the Company’s financial instruments included in the accompanying unaudited condensed consolidated balance sheets approximated or equaled their fair values on ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021.~~2022.

•The carrying values of cash and cash equivalents, accounts receivable, and accounts payable (including accrued liabilities) approximated fair value on ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, due to their short-term nature.

•The carrying value of amounts outstanding under long-term debt agreements with variable rates approximated fair value on ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, as the effective interest rates approximated market rates.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

•The carrying values of amounts outstanding under finance and operating lease obligations approximated fair value on March 31, 2023 and December 31, 2022, as the effective borrowing rates approximated market rates.

Nonrecurring Measurements

Certain assets and liabilities are measured at fair value on a nonrecurring basis. These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances. ~~These assets and liabilities include those acquired through the PropX Acquisition, which are required to be measured at fair value on the acquisition date in accordance with~~ ~~ASC Topic 805. See Note 3—The PropX Acquisition.~~

As of ~~September 30,~~March 31, 2023 and December 31, 2022, the Company recorded ~~$2.5~~$1.1 million of land and ~~$11.4~~$6.2 million of buildings of two properties that met the held for sale criteria, to assets held for sale at a total fair value of ~~$11.2~~$6.3 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet. The Company estimated the fair value of the properties based on a purchase and sale agreement for one property and a communicated selling price, which are Level 3 inputs.

Recurring Measurements

The fair values of the Company’s cash equivalents measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosures are carried at estimated fair value. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had cash equivalents, measured at fair value, of $0.3 million and $0.3 million, respectively.

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Nonfinancial assets

The Company estimates fair value to perform impairment tests as required on long-lived assets. The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified within Level 3 in the event that such assets were required to be measured and recorded at fair value within the unaudited condensed consolidated financial statements. No such measurements were required as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 as no triggering event was identified.

Credit Risk

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents, and trade receivables.

The Company’s cash and cash equivalent balances on deposit with financial institutions total $~~24.0~~20.9 million and ~~$20.0~~$43.7 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively, which exceeded FDIC insured limits. The Company regularly monitors these institutions’ financial condition.

The majority of the Company’s customers have payment terms of 45 days or less.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, customer A accounted for ~~10.5%~~14% and ~~11.8%~~11%, respectively, of total ~~consolidated~~ accounts receivable and unbilled revenue. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and March 31, 2022, ~~and 2021, no customers~~customer A accounted for 12% and 10%, respectively, of ~~consolidated~~ revenues.

The Company mitigates the associated credit risk by performing credit evaluations and monitoring the payment patterns of its customers.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had ~~$0.9~~$0.9 million in allowance for credit losses as follows:


($ in thousands)
~~Allowance~~Provision for credit losses aton December 31, ~~2021~~2022	$	884
Credit Losses:
Current period provision	—
Amounts written off	—
~~Allowance~~Provision for credit losses ~~at September 30, 2022~~on March 31, 2023	$	884

1514

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note ~~10—~~9—Equity

Restricted Stock Units

Restricted stock units (“RSUs”) granted pursuant to the Long Term Incentive Plan (“LTIP”), if they vest, will be settled in shares of the Company’s Class A Common Stock. RSUs were granted with vesting terms up to five years. Changes in non-vested RSUs outstanding under the LTIP during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows:


		Number of Units	Weighted Average Grant Date Fair Value per Unit			Number of Units	Weighted Average Grant Date Fair Value per Unit
Non-vested as of December 31, 2021		2,741,061	$	11.04
Non-vested as of December 31, 2022					Non-vested as of December 31, 2022	2,985,727	$	12.15
Granted	Granted	1,726,959	12.90		Granted	553,069	15.49
Vested	Vested	(1,350,246)	11.00		Vested	(108,543)	11.83
Forfeited	Forfeited	(103,539)	10.23		Forfeited	(25,297)	11.69
Outstanding at September 30, 2022		3,014,235	$	12.15
Outstanding as of March 31, 2023					Outstanding as of March 31, 2023	3,404,956	$	12.71

Performance Restricted Stock Units

Performance restricted stock units (“PSUs”) granted pursuant to the LTIP, if they vest, will be settled in shares of the Company’s Class A Common Stock. PSUs were granted with a ~~three year~~three-year cliff vesting schedule, subject to a performance target compared to an index of competitors’ results over the ~~three year~~three-year period as designated in the award. The Company records compensation expense based on the Company’s best estimate of the number of PSUs that will vest at the end of the performance period. If such performance targets are not met, or are not expected to be met, no compensation expense is recognized and any recognized compensation expense is reversed. Changes in non-vested PSUs outstanding under the LTIP during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows:


		Number of Units	Weighted Average Grant Date Fair Value per Unit			Number of Units	Weighted Average Grant Date Fair Value per Unit
Non-vested as of December 31, 2021		1,306,945	$	12.45
Non-vested as of December 31, 2022					Non-vested as of December 31, 2022	1,390,588	$	11.87
Granted	Granted	412,920	12.47		Granted	341,928	15.64
Vested	Vested	(329,277)	14.93		Vested	—	—
Forfeited	Forfeited	—	—		Forfeited	—	—
Outstanding at September 30, 2022		1,390,588	$	11.87
Outstanding as of March 31, 2023					Outstanding as of March 31, 2023	1,732,516	$	12.61

Stock-based compensation is included in cost of services and general and administrative expenses in the Company’s unaudited condensed consolidated statements of operations. The Company recognized stock-based compensation expense of $~~6.1~~7.2 million and ~~$17.1~~$6.8 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~respectively. The Company recognized stock-based compensation of $4.2 million and $15.1 million for the three and nine months ended September 30, 2021,~~ respectively. There was approximately $~~36.2~~36.9 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of ~~September 30, 2022.~~March 31, 2023. The unrecognized compensation expense will be recognized on a straight-line basis over the weighted average remaining vesting period of two years.

Dividends

~~On April 2, 2020, the~~The Company ~~suspended future quarterly~~paid cash dividends ~~until business conditions warrant reinstatement. As of September 30, 2022 dividends had not been reinstated by the Company. Subsequent to quarter end, the Company reinstated a quarterly dividend~~ of $0.05 per share of Class A Common Stock ~~refer~~on March 20, 2023 to ~~Note 17—Subsequent Events for more information.~~stockholders of record as of March 6, 2023. The Company paid the cash dividend to all holders of shares of Class A Common Stock as of March 6, 2023, which totaled $8.8 million.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company had ~~$0.1~~$0.5 million and $0.2 million of ~~dividends~~dividend equivalents payable related to RSUs and PSUs to be paid upon vesting, respectively. Dividends related to forfeited RSUs will be forfeited.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Share Repurchase Program

On July 25, 2022, the Company’s ~~Board~~board of ~~Directors~~directors 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. 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

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

privately negotiated transactions or by other means in accordance with applicable state and federal securities laws. The timing, as well as the number and value of shares repurchased under the program, will be determined by the Company at its discretion and will depend on a variety of factors, including management’s assessment of the intrinsic value of the Company’s Class A Common Stock, the market price of the Company’s Class A Common Stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations. 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.

During the ~~nine~~three months ended ~~September 30, 2022, Liberty LLC purchased and retired 4,702,166 LLC Units from the Company for $70.1 million, and~~March 31, 2023, the Company repurchased and retired ~~4,702,166~~5,166,730 shares of Class A Common Stock for ~~$70.1~~$74.6 million or ~~$14.91~~$14.45 average price per share including commissions, under the share repurchase program.

As of ~~September 30, 2022, $180.0~~March 31, 2023, $300.0 million, including commissions paid, remained authorized for future repurchases of Class A Common Stock under the share repurchase program.

The Company accounts for the purchase price of repurchased common shares in excess of par value ($0.01 per share of Class A Common Stock) as a reduction of additional paid-in capital, and will continue to do so until additional paid-in capital is reduced to zero. Thereafter, any excess purchase price will be recorded as a reduction to retained earnings.

As enacted by the Inflation Reduction Act of 2022 (“IRA”), the Company has accrued stock repurchase excise tax of $0.5 million for the three months ended March 31, 2023.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note ~~11—~~10—Net Income (Loss) per Share

Basic net income (loss) per share measures the performance of an entity over the reporting period. Diluted net income (loss) per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The Company uses the “if-converted” method to determine the potential dilutive effect of its Class B Common Stock and the treasury stock method to determine the potential dilutive effect of outstanding restricted stock and RSUs.

The following table reflects the allocation of net income (loss) to common stockholders and net ~~loss~~income (loss) per share computations for the periods indicated based on a weighted average number of ~~common stock~~Class A Common Stock and Class B Common Stock outstanding:


		Three Months Ended				Nine Months Ended					Three Months Ended
(In thousands)		September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
(In thousands, except per share data)										(In thousands, except per share data)	March 31, 2023		March 31, 2022
Basic Net Income (Loss) Per Share	Basic Net Income (Loss) Per Share									Basic Net Income (Loss) Per Share
Numerator:	Numerator:									Numerator:
Net income (loss) attributable to Liberty Energy Inc. stockholders	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	146,953	$	(38,890)	$	246,733	$	(123,655)	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	162,655	$	(5,376)
Denominator:	Denominator:									Denominator:
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	185,508		178,311		185,414		171,402		Basic weighted average common shares outstanding	176,569		183,999
Basic net income (loss) per share attributable to Liberty Energy Inc. stockholders	Basic net income (loss) per share attributable to Liberty Energy Inc. stockholders	$	0.79	$	(0.22)	$	1.33	$	(0.72)	Basic net income (loss) per share attributable to Liberty Energy Inc. stockholders	$	0.92	$	(0.03)
Diluted Net Income (Loss) Per Share	Diluted Net Income (Loss) Per Share									Diluted Net Income (Loss) Per Share
Numerator:	Numerator:									Numerator:
Net income (loss) attributable to Liberty Energy Inc. stockholders	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	146,953	$	(38,890)	$	246,733	$	(123,655)	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	162,655	$	(5,376)
Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock	Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock	258		—		389		—		Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock	70		—
Diluted net income (loss) attributable to Liberty Energy Inc. stockholders	Diluted net income (loss) attributable to Liberty Energy Inc. stockholders	$	147,211	$	(38,890)	$	247,122	$	(123,655)	Diluted net income (loss) attributable to Liberty Energy Inc. stockholders	$	162,725	$	(5,376)
Denominator:	Denominator:									Denominator:
Basic weighted average shares outstanding	Basic weighted average shares outstanding	185,508		178,311		185,414		171,402		Basic weighted average shares outstanding	176,569		183,999
Effect of dilutive securities:	Effect of dilutive securities:									Effect of dilutive securities:
Restricted stock units	Restricted stock units	326		—		910		—		Restricted stock units	4,433		—
Class B Common Stock	Class B Common Stock	4,073		—		4,141		—		Class B Common Stock	86		—
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	189,907		178,311		190,465		171,402		Diluted weighted average shares outstanding	181,088		183,999
Diluted net income (loss) per share attributable to Liberty Energy Inc. stockholders	Diluted net income (loss) per share attributable to Liberty Energy Inc. stockholders	$	0.78	$	(0.22)	$	1.30	$	(0.72)	Diluted net income (loss) per share attributable to Liberty Energy Inc. stockholders	$	0.90	$	(0.03)

In accordance with GAAP, diluted weighted average common shares presented above do not include certain weighted average shares of Class B Common Stock and restricted stock units, because to do so would have had an antidilutive effect, as follows:
Three Months Ended Nine Months Ended
(In thousands) September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Weighted average shares of Class B Common Stock — 1,860 — 8,558
Weighted average shares of restricted stock units — 3,256 — 3,470


	Three Months Ended
(In thousands)	March 31, 2023	March 31, 2022
Weighted average shares of Class B Common Stock	—	2,092
Weighted average shares of restricted stock units	—	4,745

Note ~~12—~~11—Income Taxes

The Company is a corporation and is subject to taxation in the United States, Canada and various state, local and provincial jurisdictions. Liberty LLC is treated as a partnership, and its income is passed through to its owners for income tax purposes. Liberty LLC’s members, including the Company, are liable for federal, state and local income taxes based on their share of Liberty LLC’s pass-through taxable income.

Effective January 31, 2023, the Company adopted a plan of merger, pursuant to which Liberty LLC merged into the Company, ceasing the existence of Liberty LLC with the Company remaining as the surviving entity. Liberty LLC will file a final tax return during the 2023 calendar year. The Company is still party to the TRAs, as defined below, of which the Company’s liability under the TRAs’ is $119.5 million, presented as $4.7 million as a current liability included in accrued

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

liabilities in the accompanying unaudited condensed consolidated balance sheet, and $114.8 million as a non-current liability as of March 31, 2023.

The Company may distribute cash from foreign subsidiaries to its U.S. parent as business needs arise. The Company has not provided for deferred income taxes on the undistributed earnings from certain foreign subsidiaries, as such earnings are considered to be indefinitely reinvested. If such earnings were to be distributed, any income and/or withholding tax would not be significant.

The effective global income tax rate applicable to the Company for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~1.5%~~25.1%, compared to ~~(7.8)~~(17.8)%, for the period ended ~~September 30, 2021.~~March 31, 2022. The Company’s effective tax rate is ~~less~~greater than the statutory federal income tax rate of 21.0% due to the Company’s ~~full valuation allowance on its U.S. net deferred tax assets while calculating~~Canadian operations, state income ~~tax expense on Canada operations that are not subject to a valuation allowance. The Company’s effective tax rate is also less than~~taxes in the ~~statutory rate because of~~states the ~~non-controlling interest’s share of Liberty LLC’s pass-through results for federal, state and local income tax reporting, upon which no taxes are payable by the Company.~~Company operates, as well as nondeductible executive compensation. The Company recognized an income tax expense of ~~$2.6~~$54.5 million ~~and $3.6~~and $0.8 million during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively. ~~The Company recognized an income tax expense~~

As of ~~$0.8 million~~March 31, 2023 and ~~$9.4 million during~~December 31, 2022, the ~~three and nine months ended September 30, 2021, respectively, which included the impact of recording a valuation allowance on a portion of the Company’s net deferred tax assets.~~

Per the Coronavirus Aid, Relief and Economic Security (“CARES”) Act enacted on March 27, 2020, net operating losses (“NOL”) incurred in 2019 and 2020 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company has applied for and expects to receive a NOL carryback refund to recover $5.5 million of cash taxes paid by the Company in 2018. This amount has been reflected as a receivable in prepaids and other current assets line item in the accompanying unaudited condensed consolidated balance sheets. The remaining deferred tax asset for net operating losses available for carryforward are presented net of the Company’s valuation allowance.

~~The~~ Company recognized a deferred tax liability in the amount of ~~$0.6~~$1.0 million asand $1.0 million, respectively. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021. The~~2022, the Company ~~also~~ recognized a net deferred tax asset ~~related to foreign jurisdictions~~ in the amount of ~~$0.3~~$21.2 million and ~~$0.6~~$12.6 million, ~~as of September 30, 2022 and December 31, 2021,~~ respectively. Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

~~The Company evaluated its deferred tax assets as of September 30, 2022 and considered both positive and negative evidence in applying the guidance of ASC 740~~ ~~Income Taxes~~ (“ASC 740”) related to the realizability of its deferred tax assets. Consistent with the prior quarter, in accordance with ASC 740, the objective negative evidence of remaining in a three year cumulative pre-tax book loss position, primarily due to COVID-19 related losses, outweighed the consideration of the Company’s subjective positive evidence of expected future profitability in evaluating the realizability of its deferred tax assets.

The CHIPS and Science Act of 2022 (“CHIPS”) and the Inflation Reduction Act (“IRA”) of 2022 were recently signed into law by President Biden on August 9, 2022 and August 16, 2022, respectively. The legislation introduces new options for monetizing certain credits, a corporate alternative minimum tax, and a stock repurchase excise tax. The Company is currently evaluating the impact of both CHIPS and IRA, but at present does not expect that any of the provisions included would result in a material impact to the Company’s deferred tax assets, liabilities, or income taxes payable.

Tax Receivable Agreements

In connection with 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 that continued to own units in Liberty LLC ~~Units~~(“Liberty LLC Units”) (each such person and any permitted transferee, a “TRA Holder” and together, the “TRA Holders”). The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S. federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each TRA Holder, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S. federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of redemption or call rights, (ii) any net operating losses available to the Company as a result of the Corporate Reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs. On January 31, 2023, the last redemption of the Liberty LLC Units occurred.

During the ~~nine~~three months ended ~~September 30,~~March 31, 2023, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in a net increase of $0.7 million in deferred tax assets, and an increase of $0.6 million in amounts payable under the TRAs, all of which are recorded through equity. The Company did not make any TRA payments for the three months ended March 31, 2023. On January 31, 2023 the Company also recorded an increase of $7.8 million of deferred tax assets for the impact of the adopted plan of merger of Liberty LLC into the Company, all of which was recorded through equity.

During the three months ended March 31, 2022, exchanges of Liberty LLC Units and shares of Class B Common Stock ~~initially~~ resulted in a net increase of $6.5 million in deferred tax assets, and an increase of $5.5 million in amounts payable under the TRAs, all of which ~~are subject to the valuation allowance and remeasurement of TRA liability discussed below, and which are~~were recorded through equity. ~~There were no redemptions of Liberty LLC units for the three months ended~~

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~September 30, 2022. In addition, the~~The Company did not make any TRA payments for the ~~nine~~three months ended ~~September 30,~~March 31, 2022.

~~At September 30, 2022 and December~~As of March 31, ~~2021,~~2023, the Company’s liability under the TRAs was ~~$70.8~~$119.5 million, of which $4.7 million is presented as a current liability included in accrued liabilities in the accompanying unaudited condensed consolidated balance sheet, and ~~$37.6~~$114.8 million ~~respectively,~~is presented as a component of long-term liabilities. As of December 31, 2022, the Company’s liability under the TRAs was $118.9 million, all of which is presented as a component of long-term ~~liabilities,~~liabilities. At March 31, 2023 and December 31, 2022 the related deferred tax ~~asset~~assets totaled ~~$97.8~~$99.9 million and ~~$91.3~~$99.9 million, respectively, of which a valuation allowance on the net deferred tax asset has been recorded. The Company also remeasured the liability under the TRAs as of September 30, 2022 and recorded a loss on remeasurement of liabilities subject to the TRAs for the nine months ended September 30, 2022 of $33.2 million recorded as part of continuing operations. The increase in the liability under the TRA is primarily driven by increased pre-tax book earnings, current additions of property and equipment and amortization of expected tax benefits that are subject to the valuation allowance, which are expected to be realized in the foreseeable future.respectively.

Note ~~13—~~12—Defined Contribution Plan

The Company sponsors a 401(k) defined contribution retirement plan covering eligible employees. The Company ~~has historically made~~makes matching contributions at a rate of $1.00 for each $1.00 of employee contribution, subject to a cap of 6% of the employee’s salary and federal limits. Contributions made by the Company ~~wer~~w~~e $6.8 million~~ ~~and~~ere $~~5.4~~7.7 million an ~~for~~d $6.0 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $18.8 million and $13.3 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Note ~~14—~~13—Related Party Transactions

~~OneStim Acquisition and Related Transaction~~Schlumberger Limited

~~On December 31,~~During 2020, the Company acquired certain assets and liabilities of Schlumberger Technology Corporation (“Schlumberger”). During the three months ended March 31, 2023, the Company repurchased and retired 3,000,000 shares of Class A Common Stock for $45.0 million or $15.00 average price per share from Schlumberger, ~~Canada Limited OneStim® business (“OneStim”), which provides hydraulic fracturing pressure pumping services in onshore United States~~under the share repurchase program. Effective January 31, 2023, after the repurchase and ~~Canada (the “OneStim Acquisition”). As of September 30, 2022~~retirement, Schlumberger ~~owned 23,069,461~~owns no shares of Class A Common Stock of the Company ~~or approximately 12.6% of the issued~~ and ~~outstanding shares of Common Stock. In conjunction with closing the OneStim Acquisition, the Company entered into~~no longer qualifies as a transition services agreement with Schlumberger under which Schlumberger provides certain administrative transition services until the Company fully integrates the acquired business. The Company incurred $0.0 million and $5.7 million of fees payable to Schlumberger for such transaction services during the three and nine months ended September 30, 2021. No fees were incurred during the three and nine months ended September 30, 2022.related party.

During 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $4.9 million in cash for a separate property that the Company will utilize with its existing operations. The Company did not recognize any gain or loss on the transaction.

~~Following the OneStim Acquisition, in~~Within the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries. During the period from January 1, 2023 until January 31, 2023, total purchases from Schlumberger were approximately $1.7 million. During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 total purchases from Schlumberger were approximately $7.4 million and $15.5 million, respectively. During the three and nine months ended September 30, 2021, total purchases from Schlumberger were approximately $6.5 million and $26.4 million, respectively.$3.6 million. As of ~~September 30,~~December 31, 2022 amounts due to Schlumberger were ~~$3.8~~$2.6 million and ~~$1.1 million included in accounts payable and accrued liabilities, respectively. As of December 31, 2021 amounts due to Schlumberger were $2.7 million and $1.1~~$0.7 million, included in accounts payable and accrued liabilities, respectively, in the accompanying unaudited condensed consolidated balance sheet. Although the Company continues to do business with Schlumberger, the Company no longer presents cash flows with Schlumberger as related party in the accompanying unaudited condensed consolidated statements of cash flows.

Franklin Mountain Energy, LLC

~~Effective on June 15,~~During 2021, Audrey Robertson was appointed to the board of directors of the Company. Ms. Robertson serves as the Chief Financial Officer of Franklin Mountain Energy, LLC (“Franklin Mountain”). During the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $23.3 million or 1.8% of the Company’s revenues for such period. During the three months ended March 31, 2022 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of ~~$55.5~~$22.3 million or ~~4.7% and $79.0 million or 2.7%~~2.8% of the Company’s revenues for such periods, respectively. During the three and nine months ended September 30, 2021 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $7.0 million or 1.1% and $7.0 million or 0.4% of the Company’s revenues for such periods, respectively.period. Amounts included in unbilled revenue from Franklin Mountain as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022, were ~~$26.1~~$9.7 million and ~~$0.0~~$13.9 million, respectively. Receivables from Franklin Mountain as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were $14.3 million and $0.0 ~~million.~~

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

million, respectively.

Liberty Resources LLC

Liberty Resources LLC, an oil and gas exploration and production company, and its successor entity (collectively, the “Affiliate”) has certain common ownership and management with the Company. The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was ~~$10.3~~$6.5 million and $0.0 million, ~~respectively, and $10.3 million and $1.2 million~~respectively.

On December 28, 2022 (the “Agreement Date”), the Company entered into an agreement with the Affiliate to amend payment terms for outstanding invoices due as of the ~~nine months ended September 30, 2022 and 2021, respectively. As~~Agreement Date to be due on April 1, 2024. Amounts outstanding from the Affiliate as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021, there~~2022 were ~~$10.3~~$13.1 million and $11.8 million, respectively, included in other assets in the accompanying unaudited condensed consolidated balance sheet. Any receivable amount outstanding ~~accounts receivable with~~at the ~~Affiliate.~~end of each month is subject to 12% interest through March 31, 2023, 15% from April 1, 2023 through September 30, 2023, and 18% thereafter.

~~PropX Acquisition~~

During 2016, Liberty Holdings entered into a future commitment to invest and become a non-controlling minority member in PropX, the provider of proppant logistics equipment. Effective October 26, 2021, the Company completed the purchase of all membership interest in PropX, refer to Note 3—PropX Acquisition for further discussion of the transaction. During the three ~~and nine~~ months ended ~~September 30, 2021, prior to~~March 31, 2023 and 2022, interest income from the ~~PropX Acquisition, the Company leased proppant logistics equipment from PropX for $3.2~~Affiliate was $0.4 million and ~~$7.3~~$0.0 million, respectively.

R/C IV Liberty Big Box Holdings, L.P., a Riverstone Holdings LLC (“Riverstone”) fund and a former significant stockholder of the Company, held a greater than 10% equity interest in PropX. Christopher Wright, the Chief Executive Officer, Michael Stock, the Chief Financial Officer and Ron Gusek, the President of the Company, held a less than 5% equity interest in PropX through Big Box Proppant Investments LLC. Cary Steinbeck, a director of the Company, served on the PropX board of the directors and held a less than 5% indirect equity interest in PropX. In addition, Brett Staffieri, a Riverstone appointed director, served on the board of the directors of the Company until June 15, 2021 and on the PropX board of directors until the acquisition date. The PropX Acquisition was reviewed and approved by the disinterested members of the Board and pursuant to the Company’s related party transactions policy.

~~Secondary Offering by Selling Stockholder~~

On April 29, 2022, the Company, Liberty LLC, Schlumberger, and BofA Securities, Inc. and J.P. Morgan Securities LLC (together, the “Underwriters”), entered into an underwriting agreement, dated as of April 29, 2022, pursuant to which Schlumberger sold 14,500,000 shares of Class A Common Stock at a price of $15.50 per share to the Underwriters (the “Sale”). The Sale closed on May 3, 2022. Following the Sale, Schlumberger held 35,101,961 shares of Class A Common Stock. The Company did not receive any proceeds from the Sale.

Note ~~15—~~14—Commitments & Contingencies

Purchase Commitments (tons ~~and gallons~~ are not in thousands)

The Company enters into purchase and supply agreements to secure supply and pricing of proppants, chemicals, and equipment. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the agreements ~~commit~~provide pricing and committed supply sources for the Company to purchase ~~1,664,421~~2,822,891 and ~~89,317~~2,915,172 tons, respectively, of proppant through ~~March~~December 31, 2024. Amounts ~~below~~above also include commitments to pay for transport fees on minimum amounts of proppants. Additionally, related proppant transload service commitments ~~extend into~~run through 2023.

Table of Contents

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Future proppant, transload, ~~equipment~~ and ~~mancamp~~equipment commitments are as follows:


($ in thousands)	($ in thousands)			($ in thousands)
Remainder of 2022		$	44,491
2023		47,349
Remainder of 2023				Remainder of 2023	$	192,200
2024	2024	4,200		2024	60,759
2025	2025	—		2025	—
2026	2026	—		2026	—
2027				2027	—
Thereafter	Thereafter	—		Thereafter	—
		$	96,040		$	252,959

Certain supply agreements contain a clause whereby in the event that the Company fails to purchase minimum volumes, as defined in the agreement, during a specific time period, a shortfall fee may apply. In circumstances where the Company does not make the minimum purchase required under the contract, the Company and its suppliers have a history of amending such minimum purchase contractual terms and in rare cases does the Company incur shortfall fees. If the Company were unable to make any of the minimum purchases and the Company and its suppliers cannot come to an agreement to avoid such fees, the Company could incur shortfall fees in the amounts of ~~$17.0 million, $9.8~~$51.0 million and ~~$0.7~~$7.8 million for the remainder of ~~2022~~

~~Table of Contents~~

~~LIBERTY ENERGY INC.~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~and the years ended~~ 2023 and year ended 2024, respectively. Based on forecasted levels of activity, the Company does not currently expect to incur significant shortfall fees.

Included in the commitments for the remainder of ~~2022~~2023 are ~~$8.5~~approximately $7.9 million of payments expected to be made ~~to Schlumberger, in conjunction with a permissive use agreement provided by Schlumberger,~~ in the ~~fourth~~second quarter of ~~2022~~2023 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in frac and wireline operations. The Company is in negotiations with the third-party owner of such equipment to lease or purchase some or all of such aforementioned vehicles and equipment, subject to agreement on terms and conditions. No gain or loss is expected upon consummation of any such agreement.

Litigation

From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions. The Company’s assessment of the likely outcome of litigation matters is based on its judgment of a number of factors including experience with similar matters, past history, precedents, relevant financial and other evidence and facts specific to the matter. Notwithstanding the uncertainty as to the final outcome, based upon the information currently available, management does not believe any matters in aggregate will have a material adverse effect on its financial position or results of operations.

Note ~~16—Selected Quarterly Financial Data~~

~~The following tables summarizes consolidated changes in equity for the three months ended September 30, 2022 and 2021:~~
Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Loss
Total Stockholders’ equity
Noncontrolling Interest Total Equity
Balance—June 30, 2022 186,859 326 $ 1,869 $ 3 $ 1,384,134 $ (56,174) $ (2,263) $ 1,327,569 $ 2,447 $ 1,330,016
Offering Costs — — — — 485 — — 485 — 485
Share repurchases (4,702) (47) (69,987) — (70,034) (60) (70,094)
Stock-based compensation expense 6,100 — — 6,100 12 6,112
Vesting of restricted stock units 2 — — — — — — — —
Tax withheld on vesting of restricted stock units — — — — (1) — — (1) (1)
Currency translation adjustment — — — — — — (6,332) (6,332) (11) (6,343)
Net income — — — — — 146,953 — 146,953 310 147,263
Balance—September 30, 2022 182,159 326 $ 1,822 $ 3 $ 1,320,731 $ 90,779 $ (8,595) $ 1,404,740 $ 2,698 $ 1,407,438
Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital Accumulated Deficit Accumulated Other Comprehensive Income
Total Stockholders’ equity
Noncontrolling Interest Total Equity
Balance—June 30, 2021 178,310 $ 1,860 $ 1,783 $ 19 $ 1,274,031 $ (61,475) $ 2,454 $ 1,216,812 $ 12,622 $ 1,229,434
Offering Costs — — — — (159) — — (159) — (159)
Stock-based compensation expense — — — — 4,201 — — 4,201 44 4,245
Currency translation adjustment — — — — — — (2,263) (2,263) (24) (2,287)
Net loss — — — — — (38,890) — (38,890) (489) (39,379)
Balance—September 30, 2021 178,310 1,860 1,783 19 1,278,073 (100,365) 191 1,179,701 12,153 $ 1,191,854

~~Note 17—~~15—Subsequent Events

On ~~October~~April 18, ~~2022,~~2023, the Company’s board of directors approved a quarterly dividend of $0.05 per share of Class A Common Stock ~~and a distribution of $0.05 per Liberty LLC Unit,~~ to be paid on ~~December~~June 20, ~~2022~~2023 to holders of record as of ~~December~~June 6, ~~2022.~~2023.

On April 10, 2023, the Company acquired Siren Energy (“Siren”), a Permian focused integrated natural gas compression and compressed natural gas (“CNG”) delivery business. At the acquisition date, Siren had 16 MMcf per day of natural gas compression capacity at two expandable Permian sites and transportation, logistics, and pressure reduction services. Siren currently delivers fuel to customers in both the drilling and completions markets, and its logistics system is designed to deliver CNG, renewable natural gas (“RNG”), or hydrogen to remote locations. The Company ~~will use~~acquired Siren for an aggregate cash purchase price of $78.0 million, subject to normal closing adjustments. The initial accounting for the ~~proceeds from~~business combination is incomplete at the ~~Liberty LLC distribution~~time of this filing due to ~~pay~~ the ~~dividend.~~limited amount of time between the acquisition date and the date these financial statements are issued. Further, it is impracticable for us to provide all of the disclosures required for a business combination pursuant to ASC 805 Business Combinations.

No other significant subsequent events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial ~~statements.~~statements and notes thereto.

2220

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains “forward-looking statements” that reflect our future plans, estimates, beliefs, and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in “Cautionary Note Regarding Forward-Looking Statements,” the Annual Report under the heading “Item 1A. Risk Factors,” and in ~~“Part~~"Part II – Other Information, Item 1A.–Risk ~~Factors”~~Factors" included ~~herein.~~therein. We assume no obligation to update any of these forward-looking statements.

Overview

The Company, together with its subsidiaries, is a leading integrated ~~oilfield~~energy services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas E&P companies in North America. 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 have grown from one active hydraulic fracturing fleet in December 2011 to over 40 active fleets as of ~~September 30, 2022.~~March 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.

On December 31, 2020, the Company acquired certain assets and liabilities of Schlumberger’s OneStim business, which provides hydraulic fracturing pressure pumping services in onshore United States and Canada, including its pressure pumping, pumpdown perforating and Permian frac sand business, in exchange for consideration resulting in a total of 66,326,134 shares of the Class A Common Stock being issued in connection with the OneStim Acquisition. As of October 18, 2022, Schlumberger owned 12.6% of the issued and outstanding shares of our Common Stock. The combined company delivers best-in-class completion services for the sustainable development of unconventional resource plays in the United States and Canada onshore markets.

On October 26, 2021, the Company acquired PropX in exchange for $11.9 million in cash and 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. The Liberty LLC Units are redeemable for an equivalent number of shares of Class A Common Stock at any time, at the election of the shareholder. Founded in 2016, PropX is a leading provider of last-mile proppant delivery solutions including proppant handling equipment and logistics software across North America. 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 also offers customers the latest real-time logistics software, PropConnect, for sale or as hosted software as a service.

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 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 first digiFleet℠, comprising digiFrac℠ pumps, 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. 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 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.

~~Table of Contents~~

Recent Trends, Developments and Outlook

~~Current global macroeconomic concerns include rising interest rates, elevated inflation levels, and Chinese Covid lockdowns. Despite these headwinds, oil and~~Tight frac markets persist in North America. Domestic natural gas markets ~~remained tight~~are now beginning to show signs of a widely anticipated slowdown, but the softness is likely transitory ahead of a wave of LNG and Mexico pipeline export growth. The vast majority of frac services are weighted toward oilier basins and are working to simply maintain production levels.

The fundamental outlook for North American hydrocarbons is strong, as constrained global oil supply is confronted by rising demand in emerging markets and a gradual recovery in China. North American E&P companies have demonstrated strength and discipline amidst economic turbulence. Development programs are largely unchanged, as production has been roughly aligned with oil demand in the ~~third quarter. As we look ahead, risks~~years since the pandemic and E&P companies are financially healthier relative to prior cycles.

In early spring, financial sector stresses and the ~~delicate balance~~heightened perceived recessionary risk on global oil demand resulted in an abrupt fall in oil prices. Concerns have since eased as markets digested the news and ~~gas markets appear~~economic data showed resiliency. A surprise collective and proactive output cut from OPEC+ members coupled with falling Russian supply drove oil prices back to ~~come from both demand and supply.~~pre-bank stress levels.

With regards to demand, while a mild recession may modestly impact the global demand for energy, and may already be reflected in prices, a global economic downturn could result in increased demand destruction, further pressuring commodity prices.At the same time, global supply risks are also present. OPEC+ preemptive cuts to production quotas may result in a decline in production from key producers including Saudi Arabia and the United Arab Emirates. Currently, Russian oil exports have been modestly curbed since the Ukraine invasion, however, impending sanctions on Russian seaborne crude could further lower global oil supplies. Low levels of spare production capacity, worldwide oil and gas commercial inventories, and global strategic petroleum reserves further exacerbate supply concerns.~~Together, these factors may strengthen the demand for secure North American energy.~~

Today’s commodity prices continue to offer returns for E&P operators, even after the decline in oil and gas prices in recent months. The combination of capital discipline among many public operators and tight supply chains, particularly inWe believe the frac ~~services~~ market ~~have constrained activity levels~~will remain strong at least into the second quarter, where we are seeing stable pricing and normal seasonality. High utilization and demand in larger, oilier basins will likely offset softer conditions isolated to deliver only modest U.S. oil production growth. The limited capital being deployed is expected to be primarily directed towards the buildout of next generation frac fleet capacity at levels roughly sufficient to offset aging equipment with next generation fleets in demand. We believe that the current frac market is relatively tight with near full utilization of available capacity. Tight service supply has made service quality and reliability important for customers.~~Given that we pride ourselves on both our service quality and fleet modernization program, these two factors may further strengthen Liberty’s competitive position.~~gas basins.

During the ~~third~~first quarter of ~~2022,~~2023, the posted WTI price traded at an average of ~~$93.06~~$75.93 per barrel (“Bbl”), as compared to the ~~third quarter of 2021 average of $70.58 per Bbl, and second~~first quarter of 2022 average of ~~$108.83~~$95.18 per Bbl, and fourth quarter of 2022 average of $82.79 per Bbl. In addition, the average domestic onshore rig count for the United States and Canada was ~~942~~965 rigs reported in the ~~third~~first quarter of ~~2022,~~2023, up from the ~~third quarter of 2021 of 634 and an increase from the second~~first quarter of 2022 of ~~810,~~816 and the fourth quarter of 2022 of 947, according to a report from Baker Hughes.

2421

Table of Contents

On April 10, 2023, the Company acquired Siren, a Permian focused integrated natural gas compression and CNG delivery business. At the acquisition date, Siren had 16 MMcf per day of natural gas compression capacity at two expandable Permian sites and transportation, logistics, and pressure reduction services. Siren currently delivers fuel to customers in both the drilling and completions markets, and its logistics system is designed to deliver CNG, RNG, or hydrogen to remote locations. The Company acquired Siren for an aggregate cash purchase price of $78.0 million, subject to normal closing adjustments.

Results of Operations

Three ~~months ended September 30,~~Months Ended March 31, 2023, Compared to Three Months Ended March 31, 2022 ~~compared to three months ended September 30, 2021~~


		Three months ended September 30,							Three months ended March 31,
Description	Description	2022		2021		Change		Description	2023		2022		Change
		(in thousands)							(in thousands)
Revenue	Revenue	$	1,188,247	$	653,727	$	534,520	Revenue	$	1,262,077	$	792,770	$	469,307
Cost of services, excluding depreciation, depletion, and amortization shown separately	Cost of services, excluding depreciation, depletion, and amortization shown separately	874,453		593,683		280,770		Cost of services, excluding depreciation, depletion, and amortization shown separately	888,416		670,019		218,397
General and administrative	General and administrative	50,473		32,281		18,192		General and administrative	53,036		38,318		14,718
Transaction, severance and other costs		1,767		1,556		211
Transaction, severance, and other costs								Transaction, severance, and other costs	617		1,334		(717)
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	82,848		65,852		16,996		Depreciation, depletion, and amortization	94,401		74,588		19,813
Gain on disposal of assets		(4,277)		(79)		(4,198)
Operating income (loss)		182,983		(39,566)		222,549
Other expense (income), net		33,148		(940)		34,088
Loss on disposal of assets								Loss on disposal of assets	487		4,672		(4,185)
Operating income								Operating income	225,120		3,839		221,281
Other expense, net								Other expense, net	7,891		8,489		(598)
Net income (loss) before income taxes	Net income (loss) before income taxes	149,835		(38,626)		188,461		Net income (loss) before income taxes	217,229		(4,650)		221,879
Income tax expense	Income tax expense	2,572		753		1,819		Income tax expense	54,483		830		53,653
Net income (loss)	Net income (loss)	147,263		(39,379)		186,642		Net income (loss)	162,746		(5,480)		168,226

Less: Net income (loss) attributable to non-controlling interests	Less: Net income (loss) attributable to non-controlling interests	310		(489)		799		Less: Net income (loss) attributable to non-controlling interests	91		(104)		195
Net income (loss) attributable to Liberty Energy Inc. stockholders	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	146,953	$	(38,890)	$	185,843	Net income (loss) attributable to Liberty Energy Inc. stockholders	$	162,655	$	(5,376)	$	168,031

Revenue

Our revenue increased $~~534.5~~469.3 million, or ~~81.8%~~59.2%, to $~~1.2~~1.3 billion for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$653.7~~$792.8 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase in revenue is attributable to higher service pricing, the addition and reactivation of several fleets subsequent to the prior year period, and an activity-driven increase in fleet utilization and efficiency commensurate with increased demand for hydraulic fracturing services.

Cost of Services

Cost of services (excluding depreciation, depletion, and amortization) increased $~~280.8~~218.4 million, or ~~47.3%~~32.6%, to $~~874.5~~888.4 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$593.7~~$670.0 million for the three months ended ~~September 30, 2021.~~March 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.

General and Administrative

General and administrative ~~expenses increased~~ expense~~$18.2~~s increased $14.7 million, or ~~56.4%~~38.4%, to $~~50.5~~53.0 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$32.3~~$38.3 million for the three months ended ~~September 30, 2021~~March 31, 2022, primarily related to ~~increases~~an increase in performance-based variable compensation, labor cost inflation, and corporate costs related to increased levels of activity.

Table of Contents

Transaction, Severance, and Other Costs

Transaction, severance and other costs ofdecreased $~~1.8~~0.7 million ~~and~~, or 53.7%, to $~~1.6~~0.6 millionfor the three months ended ~~September 30, 2022 and 2021, respectively,~~March 31, 2023 compared to $1.3 million for the three months ended March 31, 2022. The costs incurred in the three months ended March 31, 2023 consist of ~~integration cost, investment banking, legal, accounting, and other professional services provided~~due diligence work for the acquisition of Siren. See Note 15— Subsequent Events to the unaudited condensed consolidated financial statements included in ~~connection with the OneStim Acquisition and PropX Acquisition.~~“Item 1. Financial Statements (Unaudited)” for further details.

Depreciation, Depletion, and Amortization

Depreciation, depletion, and amortization expense increased ~~$17.0~~$19.8 million,, or ~~25.8%~~26.6%, to ~~$82.8 million~~ ~~for the three months ended September 30, 2022 compared to $65.9~~$94.4 million for the three months ended ~~September 30, 2021.~~March 31, 2023 compared to $74.6 million for the three months ended March 31, 2022. The increase in ~~2022~~2023 was due to additional equipment placed in service since the prior year ~~period and additional depreciation from property acquired in the PropX Acquisition.~~period.

~~Table of Contents~~

~~Gain~~Loss on Disposal of Assets

The Company ~~recognized~~recorded a ~~gain~~loss on disposal of assets of ~~$4.3~~$0.5 million for the three months ended ~~September 30, 2022 primarily as a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market~~March 31, 2023 compared to ~~a gain of $0.1~~$4.7 million for the three months ended ~~September 30, 2021 due to miscellaneous~~March 31, 2022. The loss as of March 31, 2023 was a result of the Company regularly selling equipment ~~disposals. All disposals recorded during the three months ended September 30, 2022 and 2021 were~~that is no longer in ~~the~~use as part of normal course fleet and equipment management. The loss as of ~~business.~~March 31, 2022 was as a result of plans to sell two non-strategic facilities.

Operating Income ~~(Loss)~~

The Company recorded operating income of ~~$183.0~~$225.1 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to operating ~~loss~~income of ~~$39.6~~$3.8 million for the three months ended ~~September 30, 2021, an increase in operating results of $222.5 million, or 562.5%.~~March 31, 2022. The increase in operating income is primarily due to the ~~$534.5~~$469.3 million, or ~~81.8%~~59.2%, increase in total revenue ~~only~~ partially offset by a ~~$312.0~~$248.0 million increase in total operating expenses, the significant components of which are discussed above.

Other Expense, ~~(Income)~~Net

Other expense, net decreased by $0.6 million, or 7.0%, ~~net~~

~~The Company recognized other expense of $33.1~~to $7.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~other income of $0.9~~$8.5 million for the three months ended ~~September 30, 2021.~~March 31, 2022. Other expense, ~~(income),~~ net is comprised of loss ~~(gain)~~ on remeasurement of liability under the TRAs, ~~gain on investments,~~interest income—related party, and interest expense, net. The Company remeasured the liability under the TRAs resulting in a loss of ~~$28.9~~$4.2 million for the three months ended ~~September 30,~~March 31, 2022, ~~compared to a gain of $4.9 million for the three months ended September 30, 2021. A $2.5 million gain on investments~~there was ~~recorded~~no such remeasurement required during the three months ended ~~September 30, 2022, compared~~March 31, 2023. Interest income—related party increased $0.4 million related to ~~no gain for the three months ended September 30, 2021.~~a note receivable agreement executed in December 2022. Additionally, interest expense, net increased ~~$2.8~~$3.9 million as a result of increased borrowings and higher interest rates under the credit facility ~~along with higher interest rates.~~during the three months ended March 31, 2023 compared to the three months ended March 31, 2022.

Net Income ~~(loss)~~(Loss) before Income Taxes

The Company realized net income before income taxes of ~~$149.8~~$217.2 million for the three months ended March 31, 2023 compared to a net loss before income taxes of $4.7 million for the three months ended September 30, 2022 compared to net loss before income taxes of $38.6 million for the three months ended September 30, 2021. The increase in income is primarily attributable to an increase in revenue, as discussed above, related to the increase in activity and service pricing.

~~Income Tax Expense~~

Income tax expense increased $1.8 million to $2.6 million for the three months ended September 30, 2022, at an effective rate of 1.7%, compared to a tax expense of $0.8 million, at an effective rate of (1.9)%, recognized during the three months ended September 30, 2021. The increase in income tax expense is primarily attributable to the increase in Company’s foreign operations as a valuation allowance was recorded on the Company’s U.S. net deferred tax assets, beginning in the second quarter of 2021.

~~Table of Contents~~

~~Nine months ended September 30, 2022 compared to nine months ended September 30, 2021~~

Nine months ended September 30,
Description 2022 2021 Change
(in thousands)
Revenue $ 2,923,636 $ 1,787,047 $ 1,136,589
Cost of services, excluding depreciation, depletion, and amortization shown separately 2,258,190 1,614,574 643,616
General and administrative 130,953 88,043 42,910
Transaction, severance and other costs 5,293 12,173 (6,880)
Depreciation, depletion, and amortization 234,815 191,122 43,693
Gain on disposal of assets (3,041) (1,076) (1,965)
Operating income (loss) 297,426 (117,789) 415,215
Other expense, net 46,667 3,276 43,391
Net income (loss) before income taxes 250,759 (121,065) 371,824
Income tax expense 3,637 9,402 (5,765)
Net income (loss) 247,122 (130,467) 377,589
Less: Net income (loss) attributable to non-controlling interests 389 (6,812) 7,201
Net income (loss) attributable to Liberty Energy Inc. stockholders $ 246,733 $ (123,655) $ 370,388

~~Revenue~~

Our revenue increased $1.1 billion, or 63.6%, to $2.9 billion for the nine months ended September 30, 2022 compared to $1.8 billion for the nine months ended September 30, 2021. The increase in revenue is attributable to higher service pricing and an activity-driven increase in fleet utilization and efficiency commensurate with increased demand for hydraulic fracturing services.

~~Cost of Services~~

Cost of services (excluding depreciation, depletion, and amortization) increased $643.6 million, or 39.9%, to $2.3 billion for the nine months ended September 30, 2022 compared to $1.6 billion for the nine months ended September 30, 2021. The higher expense was primarily related to increases in materials and parts consumption and higher labor costs related to higher fleet utilization as well as inflationary increases impacting costs for materials, labor, and maintenance parts.

~~General and Administrative~~

General and administrative expenses increased $42.9 million, or 48.7%, to $131.0 million for the nine months ended September 30, 2022 compared to $88.0 million for the nine months ended September 30, 2021 primarily related to increases from reinstated bonus programs which had been temporarily suspended during the first quarter of 2020 as a result of the COVID-19 pandemic, labor cost inflation, and corporate costs related to increased levels of activity.

~~Transaction, Severance and Other Costs~~

Transaction, severance and other costs decreased $6.9 million, or 56.5%, to $5.3 million for the nine months ended September 30, 2022 compared to $12.2 million for the nine months ended September 30, 2021. The costs incurred in the nine months ended September 30, 2021 primarily related to integration costs, investment banking, legal, accounting, and other professional services provided in connection with the OneStim Acquisition and PropX Acquisition. Such costs were lower during the nine months ended September 30, 2022 as the integration efforts move towards completion.

~~Depreciation, Depletion, and Amortization~~

Depreciation, depletion, and amortization expense increased $43.7 million, or 22.9%, to $234.8 million for the nine months ended September 30, 2022 compared to $191.1 million for the nine months ended September 30, 2021. The increase in 2022 was due to additional equipment placed in service since the prior year period and additional depreciation from property acquired in the PropX Acquisition.

~~Table of Contents~~

~~Gain on disposal of assets~~

Gain on disposal of assets increased $2.0 million, or 182.6%, to $3.0 million for the nine months ended September 30, 2022, compared to $1.1 million for the nine months ended September 30, 2021 due to miscellaneous equipment disposals in the normal course of business. The increase was a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market offset by the loss on sale of one and plan of sale for two other non-strategic facilities acquired in the OneStim Acquisition

~~Operating Income (Loss)~~

The Company recorded operating income of $297.4 million for the nine months ended September 30, 2022 compared to operating loss of $117.8 million for the nine months ended September 30, 2021, the operating income is primarily due to the $1.1 billion, or 63.6%, increase in total revenue partially offset by a $721.4 million increase in total operating expenses, the significant components of which are discussed above.

~~Other Expense, net~~

Other expense, net increased $43.4 million to $46.7 million for the nine months ended September 30, 2022 compared to $3.3 million for the nine months ended September 30, 2021. Other expense, net is comprised of loss on remeasurement of liability under the TRAs, gain on investments, and interest expense, net. The Company remeasured the liability under the TRAs resulting in a loss of $33.2 million for the nine months ended September 30, 2022, compared to a gain of $8.3 million for the nine months ended September 30, 2021. A $2.5 million gain on investments was recorded during the nine months ended September 30, 2022, compared to no gain for the nine months ended September 30, 2021. Additionally, interest expense increased $4.4 million as a result of increased borrowings under the credit facility along with higher interest rates.

~~Net Income (Loss) before Income Taxes~~

The Company realized net income before income taxes of $250.8 million for the nine months ended September 30, 2022 compared to net loss before income taxes of $121.1 million for the nine months ended September 30, 2021.March 31, 2022. The increase in results is primarily attributable to an increase in revenue, as discussed above, related to the fleet deployments and an increase in activity and service pricing.

Income Tax Expense

~~Income~~The Company recognized income tax expense ~~decreased $5.8 million to $3.6~~of $54.5 million for the ~~nine~~three months ended ~~September 30, 2022, at~~March 31, 2023, an effective rate of ~~1.5%~~25.1%, compared to ~~$9.4~~$0.8 million, at an effective rate of ~~(7.8)~~(17.8)%, recognized ~~during~~for the ~~nine~~three months ended ~~September 30, 2021. This decrease~~March 31, 2022. The increase in income tax expense is primarily attributable to the Company recording taxes on the Company’s U.S. activity during the three months ended March 31, 2023, compared to having a valuation allowance on its U.S. net deferred tax assets ~~beginning in~~for the ~~second quarter of 2021, resulting in income tax expense for that period, while in subsequent periods no tax expense or benefit is recognized on U.S. state and federal income or loss.~~three months ended March 31, 2022.

Comparison of Non-GAAP Financial Measures

We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income (loss) before interest, income taxes, and depreciation, depletion, and amortization. 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.

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

Table of Contents

amortization) and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.

~~Table of Contents~~

Note Regarding Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. 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. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net ~~loss,~~income (loss), which is the most directly comparable GAAP measure for the periods presented:

Three ~~and nine months ended September 30, 2022 compared~~Months Ended March 31, 2023 Compared to ~~three and nine months ended September 30, 2021:~~Three Months Ended March 31, 2022: EBITDA and Adjusted EBITDA


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
Description	Description	2022		2021		Change		2022		2021		Change		Description	2023		2022		Change
		(in thousands)													(in thousands)
Net income (loss)	Net income (loss)	$	147,263	$	(39,379)	$	186,642	$	247,122	$	(130,467)	$	377,589	Net income (loss)	$	162,746	$	(5,480)	$	168,226
Depreciation, depletion, and amortization	Depreciation, depletion, and amortization	82,848		65,852		16,996		234,815		191,122		43,693		Depreciation, depletion, and amortization	94,401		74,588		19,813
Interest expense, net	Interest expense, net	6,773		4,007		2,766		15,959		11,528		4,431		Interest expense, net	7,891		4,324		3,567
Income tax expense	Income tax expense	2,572		753		1,819		3,637		9,402		(5,765)		Income tax expense	54,483		830		53,653
EBITDA	EBITDA	$	239,456	$	31,233	$	208,223	$	501,533	$	81,585	$	419,948	EBITDA	$	319,521	$	74,262	$	245,259
Stock-based compensation expense	Stock-based compensation expense	6,112		4,245		1,867		17,126		15,091		2,035		Stock-based compensation expense	7,178		6,813		365
Fleet start-up and lay-down costs	Fleet start-up and lay-down costs	7,420		—		7,420		13,174		—		13,174		Fleet start-up and lay-down costs	2,082		585		1,497
Transaction, severance and other costs		1,767		1,556		211		5,293		12,173		(6,880)
Gain on disposal of assets		(4,277)		(79)		(4,198)		(3,041)		(1,076)		(1,965)
Provision for credit losses		—		—		—		—		745		(745)
Loss (gain) on remeasurement of liability under tax receivable agreements		28,900		(4,947)		33,847		33,233		(8,252)		41,485
Gain on investments		$	(2,525)	$	—	$	(2,525)	$	(2,525)	$	—	$	(2,525)
Transaction, severance, and other														Transaction, severance, and other	617		1,334		(717)
Loss (gain) on disposal of assets														Loss (gain) on disposal of assets	487		4,672		(4,185)

Loss on remeasurement of liability under tax receivable agreements														Loss on remeasurement of liability under tax receivable agreements	—		4,165		(4,165)

Adjusted EBITDA	Adjusted EBITDA	$	276,853	$	32,008	$	244,845	$	564,793	$	100,266	$	464,527	Adjusted EBITDA	$	329,885	$	91,831	$	238,054

EBITDA was $~~239.5~~319.5 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$31.2~~$74.3 million for the three months ended ~~September 30, 2021.~~March 31, 2022. Adjusted EBITDA was $~~276.9~~329.9 million for the three months ended ~~September 30, 2022~~March 31, 2023 compared to ~~$32.0~~$91.8 million for the three months ended ~~September 30, 2021.~~March 31, 2022. 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 Three Months Ended ~~September 30, 2022 compared~~March 31, 2023, Compared to the Three Months Ended ~~September 30, 2021~~March 31, 2022.

EBITDA was $501.5 million for the nine months ended September 30, 2022 compared to $81.6 million for the nine months ended September 30, 2021. Adjusted EBITDA was $564.8 million for the nine months ended September 30, 2022 compared to $100.3 million for the nine months ended September 30, 2021. The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity levels as described above under the captions ~~Revenue~~, ~~Cost of Services, and~~ ~~General and Administrative Expenses for the Nine months ended September 30, 2022 compared to the Nine months ended September 30, 2021~~.

~~Table of Contents~~

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 Credit Facilities. We expect to fund operations and organic growth with cash flows from operations and available borrowings under our ~~Credit Facilities.~~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 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.~~acquisition. Our primary uses of capital have been capital expenditures to support organic growth and funding ongoing operations, including maintenance and fleet upgrades.

Cash and cash equivalents ~~increased~~decreased by ~~$4.0~~$22.8 million to ~~$24.0~~$20.9 million as of ~~September 30, 2022~~March 31, 2023 compared to ~~$20.0~~$43.7 million as of December 31, ~~2021,~~2022, while working capital excluding cash and current liabilities under debt and lease arrangements increased ~~$224.1~~$28.5 million.

Table of Contents

We have ~~$425.0~~$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. As of ~~September 30, 2022,~~March 31, 2023, the borrowing base was calculated to be ~~$425.0~~$499.9 million, and the Company had ~~$150.0~~$210.0 million outstanding, in addition to a letter of credit in the amount of ~~$1.4~~$2.6 million, with ~~$273.6~~$287.3 million of remaining availability. ~~Additionally, we have $105.2 million borrowings remaining on the Term Loan Facility, which was originally $175.0 million.~~

The ABL Facility has a maturity date of the earlier of (a) October 22, 2026 and (b) to the extent the debt under the Term Loan Facility remains outstanding 90 days prior to the final maturity of the Term Loan Facility, which matures on September 19, 2024.

On ~~July 18, 2022,~~January 23, 2023, the Company entered into an ~~amendment~~Eighth Amendment to the ABL ~~Facility (the “Seventh ABL Amendment”).~~Facility. The ~~Seventh~~Eighth ABL Amendment ~~amended~~amends certain terms, provisions and covenants of the ABL Facility, including, among other things: (i) increasing the maximum ~~borrowing~~revolver amount byfrom $425.0 million to $525.0 million; (ii) increasing the amount of the accordion feature from $75.0 million to ~~$425.0 million, subject~~$100.0 million; (iii) extending the maturity date from October 22, 2026 to ~~certain borrowing base limitations based on percentage~~January 23, 2028; (iv) modifying the dollar amounts of ~~eligible accounts receivable~~various credit facility triggers and ~~inventory, (ii) modifying certain covenant and reporting-related baskets, and (iii) replacing LIBOR with~~tests proportionally to the ~~secured overnight financing rate (“SOFR”) as the interest rate benchmark.~~

~~On August 12, 2022, the Company entered into an amendment to~~Upsized Revolver; (v) permitting repayment under the Term Loan Facility ~~(the “Sixth~~prior to February 10, 2023; and (vi) increasing certain indebtedness, intercompany advance, and investment baskets. 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 ~~Amendment”).The Sixth~~Facility, with such release to occur within 120 days after January 23, 2023.

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 ~~Amendment amended certain terms, provisions and covenants~~Facility. The amount paid included the balance of the Term Loan Facility ~~including among other things: (i)~~upon pay off of $104.7 million, $0.9 million of accrued interest, and a ~~waiver~~$1.1 million prepayment premium or 1% of the fixed charge coverage ratio requirements for up to $100.0 million of restricted payments made in connection with the Company’s 2022 stock repurchase program for its common stock; (ii) the addition of a minimum liquidity requirement of $150.0principal. Additionally, there were $0.2 million in ~~order to make selected restricted payments, including those made under the 2022 stock repurchase program; (iii) the modification of certain covenant~~bank and ~~reporting-related terms, including an increase~~legal fees included in the ~~allowance for permitted purchase money indebtedness from $50.0 million to $70.0 million; (iv)~~pay off. As such, the ~~addition of a prepayment premium of 1.0% through~~only outstanding debt facility after January 23, 2023 is the ~~first anniversary of the Sixth Term Loan Amendment effective date; and (v) the addition and modification of several provisions to replace LIBOR with SOFR as the interest rate benchmark.~~ABL Facility.

The ~~Credit Facilities contain~~ABL Facility contains covenants that restrict our ability to take certain actions. At ~~September 30, 2022, the Company was~~March 31, 2023, we were in compliance with all debt covenants.

See Note 87—Debt to the unaudited condensed consolidated financial statements included in “Item 1. Financial Statements ~~(unaudited)~~(Unaudited)” for further details.

We have no material off balance sheet arrangements as of ~~September 30, 2022,~~March 31, 2023, except for purchase commitments under supply agreements as disclosed above under “Item 1. Financial ~~Statements—~~Statements (Unaudited)—Note ~~15—~~14—Commitments & Contingencies.” As such, we are not materially exposed to any other financing, liquidity, market, or credit risk that could arise if we had engaged in such financing arrangements.

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. Shares may be repurchased from time to time for cash in the open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with applicable federal securities laws. The timing and the amount of repurchases will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors. The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended or terminated 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 over the next two years.

3025

Table of Contents

Cash Flows

The following table summarizes our cash flows for the periods indicated:


		Nine Months Ended September 30,							Three Months Ended March 31,
Description	Description	2022		2021		Change		Description	2023		2022		Change
		(in thousands)							(in thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	292,610	$	80,142	$	212,468	Net cash provided by operating activities	$	203,939	$	14,552	$	189,387
Net cash used in investing activities	Net cash used in investing activities	(333,875)		(119,319)		(214,556)		Net cash used in investing activities	(129,654)		(90,857)		(38,797)
Net cash provided by financing activities		45,642		5,149		40,493
Net cash (used in) provided by financing activities								Net cash (used in) provided by financing activities	(97,095)		88,958		(186,053)

Analysis of Cash Flow Changes Between the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and March 31, 2022 ~~and 2021~~

Operating Activities. Net cash provided by operating activities was ~~$292.6~~$203.9 million for the ~~nine month~~sthree months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$80.1~~$14.6 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The ~~$212.5~~$189.4 million increase in cash from operating activities is primarily attributable to a ~~$1.1 billion~~$469.3 million increase in revenues, offset by a ~~$679.6~~$232.4 million increase in cash operating expenses and a ~~$238.5~~$62.7 million decrease in cash from changes in working capital for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to a ~~$2.8~~$71.1 million ~~increase~~decrease in cash from changes in working capital for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

Investing Activities. Net cash used in investing activities was ~~$333.9~~$129.7 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$119.3~~$90.9 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. Cash used in investing activities was higher during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 as the Company continued to invest in equipment, including ~~building~~the new ~~digiFrac™ fleets and deploying additional fleets,~~digiTechnologies™ suite, to support increased customer demand in next generation equipment and technology.

Financing Activities. Net cash ~~provided by~~used in financing activities was ~~$45.6~~$97.1 million for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to net cash provided by financing activities of ~~$5.1~~$89.0 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The ~~$40.5~~$186.1 million ~~increase~~change in cash ~~provided by~~ financing activities was primarily due to ~~net borrowings~~$74.6 million of $132.0 million on the ABL Facility during the nine months ended September 30, 2022, compared to $16.0 million net borrowings on the ABL Facility for the nine months ended September 30, 2021. Additionally, there was a $1.4 million decrease in payments on finance lease liabilities as the asset value of finance leases active for the full period has decreased since September 30, 2021. These changes were offset by a $70.1 million increase in cash payments made in connection with share repurchases for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to none in the three months ended March 31, 2022 as the Company reinstated the share buyback program since the prior year period. Additionally, the Company reinstated quarterly dividends during the fourth quarter of 2022 resulting in a $8.8 million increase in dividends. A net repayment of $9.7 million on the Credit Facilities contributed to the cash ~~payments~~outflow due to the $104.7 million pay off of ~~$0.0~~the Term Loan Facility offset by net borrowings of $95.0 million on the ABL Facility during the three months ended March 31, 2023. There were $90.0 million of net borrowings on the ABL Facility for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

Cash Requirements

Our material cash commitments ~~consist~~consists 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. We have no material off balance sheet arrangements as of ~~September 30, 2022,~~March 31, 2023, except for obligations of ~~$44.5~~$192.2 million payable within ~~2022, $47.3 million in~~ 2023 and ~~$4.2~~$60.8 million payable thereafter. See Note 1514—Commitments & Contingencies to the unaudited condensed consolidated financial statements included in “Item 1. Financial Statements (Unaudited)” for information regarding scheduled contractual obligations. There have been no ~~other~~ material changes to cash requirements since the year ended December 31, ~~2021.~~2022.

Income Taxes

The Company is a corporation and is subject to U.S. federal, state, and local income ~~tax on its share of Liberty LLC’s taxable income.~~tax. The Company is also subject to Canada federal and provincial income tax on its foreign operations.

The ~~combined~~ effective global income tax rate applicable to the Company for the ~~nine~~three months ended ~~September 30, 2022 and 2021~~March 31, 2023 was ~~1.5% and (7.8)%~~25.1%, ~~respectively.~~compared to (17.8)% for the period ended March 31, 2022. The Company’s effective tax rate is ~~significantly less~~greater than the statutory federal ~~statutory~~ income tax rate of 21.0% due to the Company recording a valuation allowance on its U.S. net deferred tax assets as of September 30, 2022, due to entering into a three year cumulative pre-tax book loss position, primarily as a result of COVID-19 related lossesCompany’s Canadian operations, state income taxes in ~~2021. The Company’s effective tax rate is also less than~~ the statutory rate because of foreign operations for 2021, and the non-controlling interest’s share of Liberty LLC’s pass-through results for federal, state and local income tax reporting, upon which no taxes are payable bystates the Company ~~for the nine months ended September 30, 2022 and 2021.~~operates, as well as nondeductible executive compensation. The Company recognized an income tax expense of ~~$2.6~~$54.5 million ~~and $3.6~~and $0.8 million ~~for~~during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, respectively, and $0.8 million and $9.4 million for the three and nine months ended September 30, 2021, respectively, which included the impact of recording a valuation allowance on a portion of the Company’s net deferred tax assets.

Per the Coronavirus Aid, Relief and Economic Security (“CARES”) Act enacted on March 27, 2020, net operating losses (“NOL”) incurred in 2019, and 2020 may be carried back to each of the five preceding taxable years to generate a refund of

respectively.

~~Table of Contents~~

previously paid income taxes. The Company has previously applied for and expects to receive a NOL carryback refund to recover $5.5 million of cash taxes paid by the Company in 2018. This amount has been reflected as a receivable in the prepaids and other current assets line item in the accompanying audited consolidated balance sheets.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. ~~We recorded a valuation allowance in~~In the ~~second quarter of 2021, against all of our deferred tax assets as of~~year ended December 31, ~~2020 and continue to record~~2022, we released a ~~valuation allowance for the quarter ended September 30, 2022. We intend to continue to maintain a full~~ valuation allowance on our U.S. net deferred tax assets. As of March 31, 2023, the Company’s net deferred tax assets ~~until there is sufficient evidence to support the reversal~~were primarily comprised of ~~all or some portion~~federal and state U.S. Net Operating Losses (“NOLs”) and TRA tax attributes, net of ~~these allowances. However, given our current earnings~~Property and anticipated future earnings, we believe that there is a reasonable possibility that within the next few quarters, including as soon as the fourth quarter of 2022, sufficient positive evidence may become available to allow us to reach a conclusion that a significant portion or all of the valuation allowance will no longer be needed. Release of the valuation allowance would result in the recognition of certainequipment deferred tax ~~assets and a decrease to the income tax expense for the period the release is recorded. In addition, release~~liabilities.

Table of the valuation allowance would result in an increase in the tax receivable agreement liability and an increase in the tax receivable agreement loss for the period the release is recorded. For the quarter ended September 30, 2022, the unrecognized TRA liability is approximately $50 million. The valuation allowance as of December 31, 2021 was $91.3 million and no additional income tax benefit or expense has been recorded as a result of the valuation allowance through the quarter ended September 30, 2022.Contents

Refer to Note ~~12—~~ 11—Income Taxes to the unaudited condensed consolidated financial statements for additional information related to income tax expense.

Tax Receivable Agreements

Refer to Note ~~12—~~ 11—Income Taxes to the unaudited condensed consolidated financial statements for additional information related to tax receivable agreements.

Critical Accounting Policies and Estimates

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see ~~Note 2—Significant Accounting Policies to the unaudited consolidated financial statements in this Form 10-Q and~~ Note 2—Significant Accounting Policies and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report). 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. We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

There have been no material changes in our evaluation of our critical accounting policies and estimates since our Annual Report.

3227

Table of Contents

Item 3. Quantitative and Qualitative Disclosure about Market Risk

Our consolidated financial statements are expressed in U.S. dollars, but, effective January 1, 2021, a portion of our operations is conducted in a currency other than U.S. dollars. The Canadian dollar is the functional currency of the Company’s foreign subsidiary as it is the primary currency within the economic environment in which the subsidiary operates. Changes in the exchange rate can affect our revenues, earnings, and the carrying value of our assets and liabilities in our consolidated balance sheet, either positively or negatively. Adjustments resulting from the translation of the subsidiary’s financial statements are reported in other comprehensive income (loss). For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, the Company recorded foreign currency translation ~~losses to comprehensive income~~loss of ~~$6.3~~$0.5 million and ~~$8.3 million, respectively. For the three and nine months ended September 30, 2021, the Company recorded a foreign currency translation loss of $2.3 million and a foreign currency translation~~ gain of ~~$0.4~~$1.1 million, respectively, to comprehensive ~~loss.~~income (loss).

Other exposures to market risk have not changed materially since December 31, ~~2021.~~2022. For quantitative and qualitative disclosures about market risk, in addition to foreign currency translation, see Part II, Item 7(a), “Quantitative and Qualitative Disclosures About Market Risk,” in the Annual Report.

Item 4. Controls and Procedures

In accordance with Rules 13a-15 and 15d-15 of the Exchange Act, we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of ~~September 30, 2022~~March 31, 2023 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control over Financial Reporting

During the quarter ended September 30, 2022, we integrated accounting functions of the entities acquired in the PropX Acquisition on October 26, 2021. In connection with the integration, we updated documentation of our internal controls over financial reporting, as necessary, to reflect modifications to business processes and accounting procedures impacted.

There were no ~~other~~ changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

3328

Table of Contents

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

Information relating to legal proceedings is described in Note 1514 to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report, and the information discussed therein is incorporated by reference into this Part II, Item 1.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in the Annual Report and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results.

~~The~~No other risk factors ~~below are~~were identified in addition to the risk factors set forth in the Annual Report. There have been no ~~other~~ material changes to the risk factors in the Annual Report.

~~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, and sustained conflict and disruption in the region is likely. Although the length, impact and outcome of the ongoing military conflict in Ukraine is highly unpredictable, this conflict could lead to significant market and other disruptions, including significant volatility in commodity prices and supply of energy resources, instability in financial markets, higher inflation, supply chain interruptions, political and social instability, changes in consumer or purchaser preferences as well as increase in cyberattacks and espionage. As a result of the invasion and ongoing military conflict, governments in the European Union, the United States, the United Kingdom, Switzerland and other countries have implemented and may implement additional sanctions, export controls or other measures against Russia, Belarus and other countries, regions, officials, individuals or industries in the respective territories. Such sanctions, and other measures, as well as the existing and potential further responses from Russia or other countries to such sanctions, supply chain disruptions, tensions and military actions, could adversely affect the global economy and financial markets and could adversely affect our business, financial condition and results of operations, and could also aggravate the other risk factors that we identify herein.

~~The choice of forum provisions in our charter and bylaws could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.~~

Our Amended and Restated Certificate of Incorporation (as amended, the “Charter”) provides that unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim against the Company or any director or officer or other employee of the Company arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Charter or the Company’s bylaws, or (iv) any action asserting a claim against the Company or any director or officer or other employee of the Company governed by the internal affairs doctrine, in each such case subject to Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. 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”). 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. Accordingly, there is uncertainty as to whether a court would enforce such a forum selection provision as written in connection with claims arising under the Securities Act. Any person or entity purchasing or otherwise acquiring any interest in shares of common stock of the Company will be deemed to have notice of and have consented to the provisions of our Charter and Bylaws related to choice of forum. The choice of forum provisions in our Charter and Bylaws may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us. Additionally, the enforceability of choice of forum provisions in other companies’ governing documents has been challenged in legal proceedings, and it is possible that, in connection with any applicable action brought against us, a court could find the choice of forum provisions contained in our Charter and Bylaws to be inapplicable or unenforceable in such action. If so, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations, and financial condition.

~~Table of Contents~~

~~There can be no assurance that we will repurchase shares of our Class A Common Stock in any particular amounts.~~

The stock markets in general have experienced substantial price and trading fluctuations, which have resulted in volatility in the market prices of securities that often are unrelated or disproportionate to changes in operating performance. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. Price volatility over a given period may also cause the average price at which we repurchase our own Class A Common Stock to exceed the stock’s price at a given point in time. In addition, significant changes in the trading price of our Class A Common Stock and our ability to access capital on terms favorable to us could impact our ability to repurchase shares of our Class A Common Stock. 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 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 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. 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. 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 October 2022, OPEC+ again determined to reduce production of oil, by approximately 2 million barrels per day. OPEC+ will hold its next meeting on December 4, 2022, and future steps to be taken by OPEC+ with respect to the supply of oil are uncertain. 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. 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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share Repurchase Program

The following sets forth information with respect to our repurchases of shares of Class A Common Stock during the three months ended March 31, 2023:~~September 30, 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
July 1 - July 31 — — — 250,000,000
August 1 - August 31 3,196,002 15.08 3,196,002 201,792,691
September 1 - September 31 1,506,164 14.47 1,506,164 180,000,041
Total 4,702,166 14.89 4,702,166 180,000,041


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)
January 1, 2023 - January 31, 2023	3,000,000	$	15.00	3,000,000	$	329,816,890
February 1, 2023 - February 28, 2023	664,577	$	15.05	664,577	$	319,816,867
March 1, 2023 - March 31, 2023	1,502,153	$	13.05	1,502,153	$	300,212,224
Total	5,166,730	$	14.44	5,166,730	$	300,212,224

(1) On July 25, 2022, the ~~Company’s~~ Board ~~of Directors~~ 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. 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. All amounts give effect to such increase. 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.

(2) The average price paid per share of ~~$14.89~~$14.44 was calculated excluding commissions.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Our mining operations are subject to regulation by the federal Mine Safety and Health Administration under the Federal Mine Safety and Health Act of 1977. 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 report.

~~Table of Contents~~

Item 5. Other Information

None.

3629

Table of Contents

Item 6. Exhibits

The exhibits required to be filed by Item 6 are set forth in the Exhibit Index included below.

INDEX TO EXHIBITS


Exhibit Number		Description

2.1		Master Transaction Agreement, dated as of August 31, 2020, by and among Schlumberger Technology Corporation Limited, Liberty Oilfield Services New HoldCo LLC, LOS Canada Operations Inc. and Liberty Oilfield Services Inc. (1)

3.1		Amended and Restated Certificate of Incorporation of Liberty Oilfield Services Inc. (2)

3.2		Certificate of Amendment to Amended and Restated Certificate of Incorporation (3)

3.3		Second Amended and Restated Bylaws of Liberty Energy Inc., as amended e ffective January 24, 2023 ~~(3)~~(4)

4.1		Amended and Restated Stockholders Agreement, dated as of December 31, 2020, by and among Liberty Oilfield Services Inc., R/C IV Liberty ~~Oilfield Services~~ Holdings, L.P., R/C Energy IV Direct Partnership, L.P. and ~~Schlumberger~~Schlumberger. ~~(4)~~(5)

10.1		~~Increase Joinder and Seventh~~Eighth Amendment to Credit Agreement, dated ~~July 18, 2022,~~January 23, 2023, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S. LOS Corp, Freedom Proppant LLC, LOS Kermit LLC, LOS Leasing Company LLC, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, Proppant Express Solutions, LLC, ST9 Gas and Oil LLC, Well Fargo Bank, National Association, as Administrative Agent, and the lenders signatory thereto. *

~~10.2~~		Sixth Amendment to Credit Agreement, dated August 12, 2022, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S. LOS Corp, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, Freedom Proppant LLC, LOS Kermit LLC, LOS Leasing Company LLC, Proppant Express Solutions, LLC, U.S. Bank National Association, as Administrative Agent, and the lenders signatory thereto. * (4)

31.1		Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a) *

31.2		Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) *

32.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

32.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 **

95		Mine Safety ~~Disclosure~~Disclosures *

101.INS		XBRL Instance Document *

101.SCH		XBRL Taxonomy Extension Schema Document *

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document *

101.LAB		XBRL Taxonomy Extension Label Linkbase Document *

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document *

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document *

(1)	Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on September 1, 2020.

(2)	Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 18, 2018.

(3)	Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on April 21, 2022.

(4)	Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 26, 2023.

(5)	Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 4, 2021.

*	Filed herewith.

**	Furnished herewith.

3730

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


			Signature
			/s/ Christopher A. Wright
Date:	~~October 20, 2022~~April 21, 2023	By:	Christopher A. Wright
			Chief Executive Officer (Principal Executive Officer)

			/s/ Michael Stock
Date:	~~October 20, 2022~~April 21, 2023	By:	Michael Stock
			Chief Financial Officer (Principal Financial Officer)

			/s/ Ryan T. Gosney
Date:	~~October 20, 2022~~April 21, 2023	By:	Ryan T. Gosney
			Chief Accounting Officer (Principal Accounting Officer)

3831


($ in thousands)
Remainder of 2022	$	4,126
2023	16,704
2024	9,218
2025	1,051
2026	—
Thereafter	—
Total	$	31,099