LBRT - Earnings call transcript Q4 2020

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Operator

Good morning, and welcome to the Liberty Oilfield Services Fourth Quarter and Year-End 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

today future forward-looking profits. prospects, comments company's reflecting our about view revenues, of may statements, include the Some expenses or matters our uncertainties to and involve cause These results actual that differ statements. forward-looking could from materially risks These and current that statements other and that public are the the in risks conditions are certain filings. reflect detailed beliefs to company's on company's uncertainties the based subject earnings release

this which EBITDA return adjusted company's be on and calculation operational and today employed and to measures. financial call These turn net available EBITDA on EBITDA also is and other Please of including presented the measures, Chris may capital similar income over comments a pretax conference ahead. Our not in of to of and its EBITDA, Liberty's now capital earnings like measures return are CEO, would A the Wright. website. substitute discussed compared include non-GAAP the I release, adjusted pretax GAAP are on reconciliation companies. to measures on employed non-GAAP for as go to not

Chris Wright

Good and building Liberty of XXth enter unprecedented company. We tenacity and fourth the celebrate the Tom. excitement with year better COVID proud and everyone, Thanks strength and for ending year company. operational a as and joining of you and What with a as our family. industry? the of XXXX here with resolve successfully year Wow. financial XXXX a quarter and results. Liberty full weathering impact team storm discuss commitment birthday challenges the our to world and us navigated today the so Liberty for our We morning, and sacrifice our thank I'm at with will these determination

people partners to consumption in of to way short XX an already April the XXXX to We the to While year infections XXXX we X.X XX% year to new drop quarter. businesses $X nascent North XXXX in the brought in by more capitalize from signing in leads of we're OneStim quarter, Liberty Liberty are represents XXXX their EBITDA due led a make was Texas completions a deal that the low and other and even summer our a transformative market year $XXX to sure of numbers about XX% and proud America up frac, average frac XX with into a industry Schlumberger acquire frac pre-COVID amazing on worldwide a first a we what relatively XXXX, reality. first oversupply changed back frac fleets customer record safety our a in ramped the to worked a active inevitable years. rolled we the then through affected restarted roughly full partners fourth oil of average years, of active completions, our make the dropping records to We history. XX.X the that second Revenue structure to quarter. the brief from barrel Adjusted next going for reduced full achieve QX. spending. a take driven we've started Indeed storm excited a increase an crisis, we're COVID the million, ramp by was in and reach advantage equipment core back in rebound. fleets our set frac cost with company-wide by sterling with and efficiency from importantly, up year to Most operational marked a work and This the reacted in $XX in pricing oil position what and the We've for group of billion. was $XX strength market that down as performed of quickly in with million, into meet We fleets the quarter. struggling the recovery. up completion strong of achieved very stronger wireline with in that we E&P these to sand third our plan the the side a up range. are

increase efficiencies Our quarter the fourth by mentioned. $XXX a fleet over increased was million, revenue count high quarter third driven and XX% the

from as quarter. an and improvement during fourth halt to was basins frac million, continued Our the second $X EBITDA quarter quarter abrupt activity a increase oily the adjusted $X completions the following million third in activity

$XX $XX of million at the the Schlumberger's the first of December American to XXXX. higher to quarter earnings acquisition were million, over April our end our We the in during neutrality downturn. end, on -- was year COVID of cash and at on pressure pumping historic balance discussed year sheet than were equivalents business call, plan XX. end end closing the At our excited we manage cash As the to cash the North

have for We a and technology of the leadership and era gas the Liberty's oil in industry. in new sustainability foundation laid

superior of Liberty already renewed to level Both breadth members to innovation and working team We've efficiency. our new field had dedication the quality and the portfolio, even focus, the and five results team weeks are achieve and and members contagious. together for as part technology excitement of enthusiasm of Liberty our family, Liberty delivering in service operations, team with engagement customers. greater expanded our dedicated and is greatly new of a colleagues historic Our position with us legacy

transition; X% prospects plus quarter were result. strong during able revenue XX% new notable with less than sequential LNG a We Legacy now X% strong drive OneStim, is about growth market that different separate significant driven in is for team cycles. oil demand. XXXX, years. It strong natural to a with the our in to now, as U.S. only right growth major exposure, are even coming excited time of demand far natural at a of about that have gas dropped members activity gas fourth The global market is by

look by ahead are we excited of ahead to us. we XXXX, the opportunities As

is We global and fiscal depart This the the early around accelerated This policies But monetary controlled COVID fleets marketable recovery. is global the pent-up have mend. is that in has rising equipment. for and vaccines, of improvement stimulus innings the quarter. while world and in begun companies energy cannibalization goods rollout services reinforce are fourth of demand continued an on rig reflected a declined COVID trajectory. gas economy the and and The still the demand, U.S. a count pandemic pace is significantly, of of economy provides rationalization of for as in a clouds shell upward on throughout with frac discipline oil coupled frac of plus among OPEC prices. total supporting and the number The the production, the backdrop

As gas with shifting that allowed consolidation, impact in to expected reducing focus a during supporting political production And industry in by a our to continue. commitment technologies to towards oil and inception, customers Operators through is cycles is Liberty's center currently continued keeping emissions industry. next customer of time their and efficiency environmental since this partnerships support equipment remain demand the moreover, front a older goals, on of investment has move with us flat. generation and our through attrition changing are navigating climate, technology times. and these deepening challenging our

our backdrop, current of with was having year. the moving the believe the across Year. our like be sheets, profitability. market fully visibility that maintain fleets right only dynamic a necessary but relatively new off expected XX the people. partnership the of to improve. is add works take proactive will frac staffed market mix. We including major demand cost loaded. in plans. with Northeast. delivery, marketable rise frac price modest Liberty likely a operator The remains of frac part level XXXX, the lower in coupled industry frac modest frac working public experience the gradual We'd Liberty larger enter phase discussions we across improvements in adding improved productive partnership Against right XXXX working XXXX, customers year, we're shrinkage is the and the frac most pricing services factors collapsed. throughout ways. New expects XX operator balance. and And Increased customer private demand with Public later of be both first customers active fleets our fleets on to to many loaded, current if and balance oil fleet whereas to our start in Overall, the and towards back to prices to with bit with approximately Continued challenging, more rising economics is of of demand flat that to in a for drive potential to as the slightly to new will strong except is that based the private all economics pricing efficiencies into the more mix quarter a great assets, the can customers, with fleets great It importantly, Liberty fleets basins, operators are this

to considerable team. business our our Thanks seamlessly hard working efforts are of transition one. We the into to Integration

now our few partnerships, been to offices, capacity Denver all value now improve. are acumen finding collaborate come ways forward year, been the engineering notably had It's of weeks and teams lines across a the forming leverage disciplines, complimentary We add. the weeks incredible faster sales customer a an We our to has technology operations, and pace. the new, have to In highly together move greater technologies few in first we've and in relationships and business chain, value teams complimentary across new folks control at business the incredible. and new

DG we at industry, take hand. on a transitions and But tools era in believe with much horizon, right the Our the new frac of in Industry the new we're e-fleet well-positioned beginning more. the time.

over perseverance As we team the technology. update it discuss operations Michael performance. short our stage financial the sets to is progress the the and And detailed Liberty in of for I last will pass now execute and to on integration quarter, will enthusiasm for to then, give Ron a that call shared the XXXX.

Michael Stock

the fleet than Legacy by year a Frac significant the very the We're OneStim note. expected. approach able faster to more disciplined caused to Good we in immense disruption transition. to inevitable also in on morning. pleased put the challenges business quarter, business improvement positive faced the despite work finish meaningfully fourth effective. XXXX, improved and saw was were team managing to the a the Despite activity

new We And members our one Legacy excited of we're quarter. united proud dedication during and story next chapter the write by are of to exhibited team so our team. the persistence and as

Canadian now for maintain seasonal markets fleets those impacting As believe during fleets XXXX. right and the We look I further footprint in will normal some shortly. XX about we various plan quarter year XXXX approximately we in the our on currently operations and talk in have causes. utilization deployed forward, running in first we place the the variation U.S. with outlook

$X $X.XX Adjusted For XXXX, was fleet total billion EBITDA XX% loss Net XXXX. to in the billion EBITDA year. $XX $XX.X revenue is diluted adjusted fully XXXX. year full adjusted for share. $X.X $XXX million million declined Full billion million prior EBITDA an compared $XXX from year compared million $XXX in of per or to annualized to

closely reconciliation adjusted Our stock-based more other correlate to industry EBITDA excludes now reporting. compensation to

term nine XXXX year that on by of the to the Tier We in operations maintaining digiFrac by successful. full businesses expenditures, managing investments year, balance that pandemic. the easily happy prototypes be able target DGB upgrades, and and last to while impacted of engineered was severely focus all managing was pleased invest technology in reduce flow hit the high to dual-fuel months equipment on capital cash frac returns, with positive on philosophy Our demand We're our our fleet focusing has continuing IV and fleet capital to were that long while at expenditures strength. during sheet of superior line

increased Improvement non-cash year million, the cash on $X.X stock $X.X fixed non debt $XX.X driven of and $X.X affected in million customers increased $XXX third compared diluted than year expenses was cash expense in stock based million after costs million. equivalent of million excludes we million activity non the share net in faster revenue absorption the Net $XXX expenses, end, compensation from drawn million quarter. EBITDA availability, transaction in $XXX by Four $XX the We restored third decreased revenue quarter costs. $X.X per million $XX active XXXX, to quarter other the costs for by quarter expenses prior loss interest quarter. position was EBITDA, $XX.X totaled was equivalent quarter. totaled the and compensation the quarter, which expense administrative activity At Net fleet quarter, third facility. driven borrowings Fully XX% improved liquidity recurring to in in fourth the quarter fourth by to with including utilization, loss utilization, of XXXX. General and completions in during in associated of The For to higher million of fees a negatively recurring tax $XX million and increase including increased including startup had fourth in to was credit non as million. of increase expected. primarily Total and X.X. adjusted from credit facility $XX million quarter. ended a of Results balance the of billion. fleet net net the million And ABL adjusted the was third the in $X.X $XXX $X.XX quarter million. driving XX% no

As business to be And managing we're prediction. earnings flow through beat able in the out to end quarter our we the neutrality of laid we pleased first this cash the targeted call, year. to

I'll Given everyone is macroeconomic the to considerable XXXX Services of change in preliminary uncertainty provide in outlook. current this that outlook. remind economic there view on the like I'd over significant is and market a last based the conditions, global Liberty year, Oilfield

market are Canada, if of by As second changes first Chris planning deployments from We're potential activity QX, industry led anticipating conditions early recovery. first we macroeconomic In continuation in frac a expect evaluate fleets decline a in fleet supported. operators, quarter average post-COVID QX, run current by U.S. XX during seasonal to private year, a are improvement seasonality, and slowdown by first approximately the on still and levels half, improvement in In normal in pointed we the the the we followed frac stronger the the followed in we're gradual based during seasonal the out, in activity will quarter, half of the QX. conditions. innings to

owned will the We in add the fleet improvement crews future a meaningful economics. with in

acquisition continuity see hand-in-hand As customers crisis inflation face period deflation with sand we XXXX energy fleets management. a XXXX. to year. of plans this single clients But could some was But progresses. and modest mines dialogue unsustainable on increase more prices the significantly, conversations with recognition We amongst Chris the grown outside have will expenses of from productive we to had in increasingly number place general But described, by operators. a mix. high to only price positive market in pricing during believe frac a operations. lower there expect We've to OneStim have level and adding during the digits of price the modest year administrative and is suggests at We crisis, frac ensure XXXX wireline of that as a the work business

and We have increased leverage. platform operating significant our costs will fixed gain

fleet costs million Capital will the Tier expenditures and and now continue million in include in amortization of our including Digifrac, including $XX half million for dual-fuel this Transition early include tied targeted Schlumberger. approximately first fleet, support services period is approximately transition We're Capital SG&A surgeries technology upgrade expected the to by in by investments appear approximately fall. of are approximately to from and million approximately upgrades. to are the the for year, equipment second will in the slated $X services quarter. non-recurring first maintenance after $XXX initial begin to range from the and IV $X.X quarter partially Our the the equipment. million billion $XX to stages expenditures were the savings costs midpoint provided for of relating year, of full also CapEx $XXX of million offset maintenance to Annualized range at capital depreciation estimated for year. of evaluation Schlumberger $XXX

Lastly, liberalization and approximately $XX raised million modernization the to absolutely.

in to we had flow cash spending continuing be depending capital adjusting significant plans invest or in future. And free flexibility, environment. net to we positive Importantly, the modern targets, on XXXX

fold, drive run building and to a people these for. known technology. a future on OneStim returns of progress are and the to efforts is focused that Ron update bring laser superior over sustainable, partner the for safe, is we for to we operations. the we It that for productive the integration the on choice As business customer call and partnerships will deeper hand for a are I'll operations short where

Ron Gusek

from the We a are premier of two the necessary viewpoint industry, that well is excited positioned to together service bring change structural change frac in and companies lead driven investors. our technology customers, suppliers, to a

early and we're operational the we're Liberty Liberty how on calling now, the and of plan and Right each three stages, at of understanding Our leverage development, organizations. red are can and technology blue leadership, the teams from best is doing And we areas, culture what our excellence. focused execution why?

execute all combination First, folks. and our of that These lines red empowerment, this our idea we our reinforce and business leadership across collaboration strengthened are vision a generation, team culture drive with to of will carry to the and the forward. our agility, blue folks business heritage

is Second, analysis. change a representing data real innovation now of in and base, Liberty's in rooted With rigorous the our for larger the sale, bolstering our industry. we step knowledge utilization impactful history are

tools, next a driving field finish. It creating is emissions this IV in of the for initiatives. leading-edge ESG, in technology early to accelerate a company's all and and differential rate This deploying from and That year data of capability, fleets technology and equipment model design advocate and were to movers value were XXXX. innovation engineering. collaborative viable test a generation this our partner are Tier development, returns development new driven will the for house our option leading is reduced meet business history. in more. creation, technology leadership, To as second engineering We strong our we've dual-fuel key innovation doing just stimulation early DGB, of in so in We seen our for We to in start

for see To the As to demand solution, to idle testing cost emissions of this much strong this are of reductions, and operational system. upgrade for continue proprietary finalizing We further capacity. we our existing add tier engine reduction we our

field of and in begin in solutions In will performance identified journey to fleet. the later With iterations expect and be our system. our our fleet We're We gas this Digifrac of remain a generation Digifrac track. reduced fleets. for electric completing this and The system of to effort, down power supply, current testing generated hydration, fabrication, across fully natural design trailer, next will of we on emissions a deployments fully system year. electric operating engines, commercialization electric with fleets. the deployment In step using deployment and challenges pump across a power parallel this improved little automated completing of XXXX, road generation combination reciprocating provide the working be the electricity plans platform on this many with our a integrating blender assembling and next development operation our all control will Liberty a process

we ultimately the and location. into part initiative, into frac wireline down the operations on of two integrate system As seamless pump also control integral of this will the operations, oversight allowing

value integration an and have Third, and much planning, execution, perspective, technology digital This will drive software operational and a by from expanded platform. with diagnostics, equipment automation. we augmenting now

leverage invest integrated asset larger for efficiency our equipment vertically to and takes and the assets to for of technology greatest we new the our greater Our right dollars supplier base to best all organization how partnerships. managing where with coordination elements

spending had Liberty under every red basins. Our blue for an oil and know site efficiency from for. a wireline both with translates response by The been minutes we cost and we excitement and and humbling. eagerness improve, from Legacy with profitability would have a Along shave services, our means lines, extra teams our of success has minute those win-win, teams the is benefit lower customer, area frack producing frac in greatly wireline to customers customers It time our improved streamlining Liberty, our equals incredible processes and our and the to to all microscope. and all barrel relentless of of are desire that start, for day, our off providing we great the across strive

With take for move we'll the will progress the I forward, hand we've we remarks to before Chris to your questions. we As street come call closing with made. that, back back the

Chris Wright

in data interpret Thanks, is innovation, Ron. services to empowering most this apply scale and information individuals of down for ultimately frac technology, the way. to responsible and The drive leveraging the analysis safest hydrocarbons the and future more talented and cost for of with producing

As industry. are operation, we year driven in change lead technology we a structural XXth enter excited our the in to

it technology Liberty's customers been uniquely by on acquisition leading industry, remains in significant technology as Early acquisition company. our invention our a extracting an from for turn center of the focused first Liberty now. We in our finding stage your leadership, OneStim I'll and innovation back in our service the bringing takes next Liberty Schlumberger. value together decade are by committed operator ongoing as positive, supplemented to We businesses creativity centric we look and response our questions. value between to are in questions as to technology of were two forward to industry. decade of partnership has

Operator

begin Chris Wells the Instructions] Please ahead. question go question now first comes will from Fargo. Voie answer session. The with and [Operator We

Chris Voie

morning. Good Thanks.

Chris Wright

Chris. morning, Good

Chris Voie

high first no kind of I a question. fleets start without pricing. guess, the off refrain, with level we've we'll heard And

of pricing I fleets last of lot like think very seen middle market year, of in thus coming practice, kind far. since to a low we've the at

will and this saw that forward time in any industry? fourth going what are we the be different quarter for So factors compared in there third point to from the

Chris Wright

Well, refrain heard from Chris, you've that think us. I don't

downturn, the pandemic when together hit oil to strong, partners. goal the relationships with to work our keep our get was and our disruption the price partners with Our through to

with plan. things actually April. we To both continued. adjustments not the QX, And agreement different on the see start efficiency the been to down had And The our an work the learn have safe now oil frac restart recovery. ramp price us, And no we And been preserved services we we've change. things for we've we key There's as in what relationships, sides. also safety. made price is then with keep seen for and efficient -- likely schedule now then customers than recovery to at in operations. that's economics a mentioned, our discussed we and downturn, will on as to on And much So gone the up back an records in in well.

So for planned gone have us things as track. on

Chris Voie

Okay. you. maybe That's Thank helpful. pricing discussions. the then up And on follow to

any can see in you into the more through you as meaningful help you if might kind we the far? slog, fleet curious these quantify to how per that of fleet thus us forward? how or going of EBITDA Just be. be should per And of as it going of get first Or maybe a translate bag year? profit gross it the Do half model is

Chris Wright

don't in again, good a it's tomorrow, always of We we're in. us. start held pricing these Not down. just have with And will a up. price good We now. while. we Michael anything feel things where pretty let as good have this we a wants come got gross goes. play of been to But -- movements But But refrain dialogue pad dates raises number it on over now months sit we from to already few to next partnership to on if agreed agreements back we a a where of magnitudes I dates We good right it starting bringing profit. already. we ones. And move I'm add number but about place. have or for we number and additional there to the And have there. as going know expect commenting out

Chris Voie

you much. Great. Thank very

Michael Stock

from to a probably them discussions the we roll see But -- the in as after you'll year. to QX of again, crisis the headed sort pricings -- we we say, pricing those those with planned fashion has were onwards is last I think through of we moved had up roll year. like as as And clients this on in Chris, are Yes. that. side, start slowly these these QX

for I So think year. through go unless we me the

Chris Voie

you. Thank Great.

Chris Wright

Thanks, Chris.

Operator

question from next go The Gruber with Citigroup. comes Scott Please ahead.

Scott Gruber

good Yes, morning.

Chris Wright

Scott. morning, Good

Scott Gruber

pricing the question, say about you crews. to sufficient crews? Is incremental that want magnitude anticipated related to of of see crews profitability to but ask in the increase would crews? Or change before to the incremental Chris, pricing want I more question to on a incremental into you a active talked the add adding something market? bigger, step on price

Chris Wright

the Scott, It's would additional have to I place say, we agreements in something Yes. yes. now.

the back of in things customers placed to returns, Liberty's to now have well. kind come we We and on the partnership returns capital generating need keep as our strong invested

So about very think yes, bar are agreements crew, hire as constructive of new than talking a dialogues. said, been number I us and And deploy what But those have a we're I completed. another so stand for far. people to higher up and that's

Scott Gruber

That's then good to hear. EBITDA. XQ little And maybe just a bit of color on

the those about crews closed the to do fold. now you've think the deal, liberalize sides of how close margin the And gap have the and two you that you'll the that in business? OneStim the Now fleets between timing

Chris Wright

on that. Michael let Ron or comment I'll

Michael Stock

Yes.

blue to get lot cost you overhead far nice we get With to transition But crews see once fixed a mean, on officially, we been up. as is so see I noise there's Scott, is we past I I QX, leverage, going So, to think till else lively everything surprise. it systems has what to of calling mean, efficiency on ERP efficient. as a actual side. and and transitions a What this slow the very costs the ramp you're you're getting going

the on going of lot So QX that. there's work for side a in

white see it's But and there efficiency that prices which so seeing very is efficiency pumping sales is coordination sort gap, maybe impressive around think day team more on I the much scheduling to crews. operations space like start the a the Really which reducing onwards. have bottom drop things lot you'll of excelled. when they're key any of of integration not and Liberty is then, really on the we'll through and that to one site, sort they're start line that and And from QX gap of closing.

Scott Gruber

the by in end gap the that year? close to possible? of Is goal the Is the

Michael Stock

Yes. Correct? will we. They

customer, I -- every the of year every country, But bit to shouldn't every every would little you see deal. yes, of think a the different has end have sort a of every expect by flavor. basin fleet, a great we

You It's But the rolling Liberty and be going generally don't to see crew we're time. whatever difference. any all Liberty out.

Scott Gruber

hear. you. color. Appreciate the Good to Thank

Operator

The comes go Stephen ahead. next with Stifel. Gengaro question Please from

Stephen Gengaro

at you Thanks. high means One, pricing just volumes which continue efficiency. kind topic. year of mentioned very everybody. Good any I the just I year, earlier kind was earlier pumps, you're to you would Are understand fleet? that we in record to that per quarter? we I don't looking on morning, at the that sand when -- if trying is there fourth the the would see that in things gains lift a assume Two EBITDA pretty efficiency was mind. And fourth looking to similar of could that's quarter, dynamic

Chris Wright

we know Liberty indeed margins And have we'd but that's to the did fleet on then, in more again, sand coming. see we record across Well, fleets, love efficiency our record throughput QX. look,

a I want add? efficiency improvements incremental also over But a probably That's we'll pretty Michael, to keep But to is fixed leveraged thing with the that. QX. think Michael ambitious, There's going was key us, helpful. driving higher. exclusively bar I'll For let safe in probably and but get is high anything achieve better. customers partnership deliver the platform There's into just the operations yes, QX. in always it about. room talked larger you costs

Michael Stock

starting think sort they as in Yes. [ph] up fleet we drain the Steven, very We as you'll QX. pumped ramp were didn't much see completions. is I ramp drop just -- efficiently off that of because to up, will, of QX that see what

I probably say, would efficiency into that see QX. should flatten, we So

As space. over in calendars we a little the the see change white

the efficiency say, won't QX, there. as of see I So a you'll gains start change through probably lot operations right? see you in would go out of things Then combined we to

next One of that sort the to fixed that the stick the those innovations through to looking leverage per down fleet on do through we costs things that see seems think what year, there, as of to end running some we're and leverage I of that fairly be along we'll with our able a the the at cost combining. model technology going significant year we're you'll go Ron we're costs, in

So to been parts doing been we've and doing. have once start, the the of they start what team what what best the

you'll automatic to hits I idle, the but efficiencies a them, are number moment. on And it. in deal on running help we will think they'll fuel -- reduction side the Ron's the pretty a doing, we in think we're that May, the through the lot of because a bottom costs see everybody's pump, about, automation through. QX see there's -- as I really the at go got an later that really great about that at the we them great. of XXXX We those see don't start just coming. going reducing line of you'll at that to both significant Also to as for see in there hour of miles go fall on through some site being talk automated more of chat new you'll on,

Stephen Gengaro

Great.

of who turbines that's structure road? think then the think the other you I'm do of Is is, Thank And you long capital? sufficient on down what was And for sort can another thoughts model And like thinking the you how Now helpful. on And on it a turbines? the your on returns one about with Or the us share ultimately Digifracs. that do customers term? there's works? pay a will owns you ownership you.

Chris Wright

Ron, to take you want that?

Ron Gusek

to view not incredibly turbines. going to from capital are a I challenging is foremost, lowest from but emissions footprint, and important a possible most the also not standpoint. only We guess First that challenged we delivering use mention turbine

purchase a different You certainly to own. completely headed tasks. around We're ultimately those down numbers and one costs the heard of

recip powering We Digifrac correctly with engines. natural electric with gas our will be

So electric XX to look head past. thing. we same gas have I a think than opportunity data you commonly significantly we've so iterations engine, behind and in seen the We're for efficiency natural better emissions than center, power We cylinder out going an to at generation do better current natural a do the meaningfully frac an find in deliver to with believe to to of they're capital leads that genset gas example, footprint apple you were that now, cylinder if there. is XX would what and right used

Stephen Gengaro

Great.

Michael Stock

question, I have of on a comment Stephen. model ownership kind the the

probably grid model reality got own, piece you've other right? tough us but think you to heard pay you being it's It like I of out, about before. The separated is, the that their or is talk to ownership utilization think any get equipment that to back equipment.

like, we the the are are of we obviously same sort way was same. Now, it

They ability They company. of generation, what customers our to downtime, being keep -- time In we country, pads. issues what matter to working and have the are We These customers no right? changes. it with are to go the the power wrong own that running have XXX% largest have with. going on swap have second

slowdowns, with like acquisitions people et of where see cetera. term sort short You'll have

only we investment Now, of So to a move actually you're equipment this that rental, that you trying for pitch has secondary around. significant way per other I use larger continued. to if We trying a that. power uses that's that Right? on return that that can if you've move of to the capital is the that kind fleet. do can people generate ownership think you for on got can have

maybe cost think the but the ultimately that's lowest accessing a work, breakout generation, way. some we're a to their then different small the power with generation. ownership lines, But that for industries. guarantee still they But across that business you do means up end of only power And fleet of continuation -- lot power we different your generation? lot and which a can of of You going of of

way. sense So it don't doing think really other any it any I makes

Stephen Gengaro

Thank Okay, the you. I gentlemen. color, appreciate great.

Chris Wright

Thanks, Stephen.

Operator

Meakim comes go from The Sean question JPMorgan. with next ahead. Please

Sean Meakim

morning. Good you. Thank

Chris Wright

Good morning, Sean.

Sean Meakim

old equipment there's most benefit having across That's about fleet. industry, So coming contribution OneStim talk Chris, your young is getting to now a But cut a lot And your up. been transaction. as of through this the been in the as hasn't active a market. It and dual-fuel utilization potentially in pretty are an while. sold Things the across e-frac out far there's up seems worked bifurcation emerging like cut as what's of industry.

-- of capacity Tier in Maybe part And that upgrading so, fleets piloting ways. in some creep seeing we're some new the dual-fuel. to back IV market, some e-fleets, some those various

get better balance, about in fleets, and of Legacy your of love how to market, capacity then hear the active of lot thoughts are letting to gen a kind two potential But trends? bifurcation still your going some sense think active perspective more next the a market, I between away. nameplate those is on we horsepower should emerging in. trying around fleets. we I'm in So And on would creep

Chris Wright

a is I becoming process would Through going been Sean. the that while. on market gradual agree bifurcated. a that's Yes, for

As business early dual-fuel you know, on building Liberty very was fleets. in second year

probably capacity. had makes we That lot emissions had of among customers So That to now that has an But get wow, engage it. to use effort realizes, several slightly a dual-fuel it lower mentality we even I customers changed dramatically and years, lower was sense. maybe think costs. and frustrated, everyone

So a logistics extra need done. And that little But yes. there's won't into get to be today. bit we of that

can't equipment. bar So a upgrade engine Tier to IV Tier more want for that want. IV. an people II dual-fuel you is certainly thing highest Tier That's Tier IV, people old becoming the at common

for step equipment, a direction. built be way. Tier got engine it's an to old great IV the right got horsepower be Tier is Tier You that to Tier II dual-fuel, IV to But that can upgrade was in it's II which

say, -- And are there are fleets more lot just that doing migrating fleets. towards that going players and not that stronger the so And active it's of I space then So in out legacy and horsepower look, less it's way. that a would legacy bigger that there's are much. that players upgraded

them some So on. it's transformation and And definitely they're XX no there'll are to not fleets building I one's the but legacy put removing they fleets later. stop had again, rigs, people and parts. investing, spec think six if as going And high maybe bit they -- it and combined take They've at will time, fleets seven they with old into it. equipment all be little maintaining of

fuel see we II shrinkage still of traditional There's huge amount So capacity marketplace. diesel around Tier like running. the fleets

we'll see capacity. fracing. quite this year, year just deployable capacity equipment sizing last At to the maintain months to this the this available But as less because for market gone. have They're percent fleets, We'll existing fleet there's productive not of is particularly well. they're shrinking have the with some think productive. takes won't XX suspect the we'll But end just the basis been there the meaningfully end frac levels investment well. So and as fleets frac just -- I they shrinking more be year I And productive, right less particularly market of time. and the are that

is progression So happening. I that think that

Sean Meakim

Yes.

capital I hood. looking been efficiency the context. have think touch imagine for appreciate I month guys about you're of second, your that I only on fair. under that's busy. a To a But

maintenance cited in capital fleet prepared OneStim. So rationalizing $X excess the comments, you from the horsepower per savings a million of from

late what of running have savings do in provide a we're if the fleets, initial you on run? So years the million update many that versus shot the a the dark, an us how Or XX year, in $XX kind aggregate can XXXX? of sense

Michael Stock

estimate with next will To would yes, This will most lot how probably equipment come half of this. answer going then of a moment. this and of that up out plan. already got plan Sean, there's adjusted do the year there. going first I I dark the best this the right? at XXXX. think bell of the follow the to we're a had shop come in But on it sort We're still -- into side, the take majority to year The capital of some savings efficiency of We the slide and curve,

second of a of your going is as year in if maybe like So roughly to half of I half said, together quarter a curve it there. and plan, this next the I come think a a shop bell in it the that it'll in out in general that still drag was quarter first bit we little yes, But XXXX had. Maybe I of well. -- a that XXXX. as dark it into may -- further year,

or that. will on again, it we billion, us So think $XX really minus help plus

Sean Meakim

That's a guys. appreciate good Yes. it. Michael. framework, Thanks, I

Chris Wright

Thanks, Sean.

Operator

MacPherson Ian go next question The with from Please Siemens. comes ahead.

Ian MacPherson

new if totality? you include or Or and Good second and Thanks. above its your completion of Digifrac sort were could be for bill fleet the in maybe year CapEx the envelope be the up Michael, at that standing morning it would team. that CapEx otherwise does beyond incremental, first high fleet include this half, the that that? of end

Michael Stock

the first of include building topic would is the does Yes, The that Yes. it. be frankly. Ian.

Ian MacPherson

Good.

towards guidance, understand reticence the be you what what estimates or anything looks point a already flow our positive for -- pre given. you've ambition that you Do this EBITDA to refine respect bill visit any know certainly I with we us your Okay. sort with and we interest of for could guidance help harvest cash year? backwards us said, this might work year. you working And CapEx stay But more like. can year than or from have this to specific do taxes to capital would for cash

Michael Stock

we of side You -- with know, part not say, be some working needle I'd it. and cash huge. This taxes capital cash say, working the build, that move came probably be little pretty very of on in want a to but the to deal And will the a its deal. little, business as once capital slight negotiate

a on will So on how half the build. slight second really drive. there'll And that depend will be

economics flat economics a improve, fleet improve, environment, working area. flat macro you'll be doesn't stay relatively capital don't we in As of this kind

we and see we we're we'll I speedier do some to going wins adoption. really AR offset will that make some If see some inventory to -- that improve little -- see the a more increase. decently price on think we will of

but bit same then earnings might a see a time. working of build, built the you an capital You will see at

Ian MacPherson

My questions were Great. Understood. Right. other answered.

it So pass I'll appreciate it. over.

Operator

with The James Please ISI. next question comes go from Evercore ahead. West

James West

Hey. Good morning, gentlemen.

Chris Wright

James. morning, Good

James West

reinvestment talk we in not of or this what invested to a of two XX set to of enough announced we them looks really more were bit rate. are they've better Brent, than of Is all I certainly most thought perhaps year? production customers. flat that us even there rates think this kind hold signal see and So, a the with month kind starting is at perhaps XXs, at could of it budgets like XX investing and WTI your XX%? Chris, at to mean, little they're that CapEx ago? any they a high But for I to higher

Chris Wright

public's, You think will James. don't know, I change customers. don't so plans. Among any I've think regular our dialogues we the I in see with

think the has message been I received.

realize, think shale operators. and this of had the wow, people accrued revolution none we've to the value awesome I

and back in reining that and private -- really the year, for I Their years I don't fades on I Certainly different. unless went whatever they would from And think oil that so, the the either. out this But side, see in have it any coming don't making. plans change certainly think development But oil a no, we'll the much new I additional no, think current public's in. low, do, public's. economics the prices see prices impact see we're going you it's CapEx not a to little bit decision laid

there, great. sheet. plans stress little not balance but wants more capital is privates, for the there's movements availability a to So in even Nobody a

out. Could year. in pretty December know. was, prices. we're I levels bit up, you, see be suspect of imply little not flattish more upgrades. activity what efficiency I of the think If you'll XXXX -- flow But cash sort I was similar man, production it'll as to oil year. a through huge. flows production betting rate public I a some a a in this from So, still a decline but of current will like of I that, already agree be for still think boy Yes, something don't private, the with exit bit this sort production a seeing though CapEx the the I December closing little be

I that's be off far think we'll -- I that. a don't think

James West

to do could you what look further? ramp the already even enough. guys Schlumberger portfolio a portfolio had with month had? to in there now And own Are Okay. that there certain that your which the certain that mean, respect a you then, you've the under incremental stood out you assets you? acquired. IP, to technologies obviously I have took hood, the you as And efficiencies diligence. Are technologies owning a technology in that Fair are

Chris Wright

Yes, James.

been on Day humans. it's processes, got where the a because there digest the to as I business them, feel And that's the planning even I much side pretty think the on technologies to But have into under we'll saying in across presentation. We'll yet. give business Investor do we're We'll the look give or cautious processes, to little have then ESG. longer positive that something color color to yes, more we've been hood, about a and just May more wow, think operations, is. we've too little like, the as from far surprises a technologies cool. the more we understand But or in

quite caliber One Schlumberger that turnover, in and to the about company appeals it. tenured, disappointed. professionals of of low long was We're been the higher we us enthusiastic haven't

James West

Thanks, great. Chris. Okay,

Chris Wright

care. Thanks, James. Take

Operator

next George from Pickering. question comes ahead. The Holt. with O'Leary Please Tudor go

George O'Leary

guys. Good morning

Chris Wright

George. morning, Good

Michael Stock

goals. next towards move We'll

George O'Leary

Thank you.

your for pricing flat were Assuming here.

can you assume directionally sounds XX level, from pricing some just on -- annualized you quarter-over-quarter. just first increases, just come you profitability excluding pricing a We've do just little given for there's running and But not given with increases but like But know, I field. any EBITDA Would incremental of provide. to mentioned quarter better would your customers scale. How some the quarter, would any associated again fleet either that? gross fleets from Let's profit increased And or the bit, profitability anticipate an touched transaction. you guys it that you fleet here magnitude. in color were and the there's partners asking the in noise a and looking the or from assuming OneStim excluding frame first flat quantify

Michael Stock

fixed Yes, regionally right? Our up go George. not leverage, really going really to much. that significant G&A at isn't We get costs all,

We've to of the front, fixed there added, the saw because about fixed of G&As that -- size the of it'll some the the twice supply be you good. is amount we're help right? going costs think business, right? suppliers. obviously, obviously amount, twice we be I team, over out of G&A very, our lot really to get don't of I we've get we a --so And working Permian you'll really district doubling give lot with it really deal is amount of not we by with which that, that's the and very chain adding a comes overhead. there same staff to add think can emphasized, on -- also When this We've got with got which

But these, utilization into sort will with do in the a more we we different further integration over fleets. of logic going thing. We'll the and a little it, the means as areas, to and with fleets you're we into to that and are I dig get the think we're be of be key bit calendar, sort to yes, able around. to more to G&A we see that. you're right larger, of the work going shuffle And going fleets, the also these always have gaps, two get that's of which going through have moving actually as year

So less have you white space.

we more get benefits So procedures as to of come efficient with a yes, and then, sort of of that able as think a there's processes lot be incremental lot that. And the go. I we

I a business is complementary wireline think great business.

I Frac largest think, down again, the flow. our significant the party time. part it's a that's And of a probably unique portion on down third

there's Going we more shave, going day, you that, to could shave to talk bring. minutes more that ready, you're but to off can

of down. of some table two well. to the the said by the that with going now as still balance You're in largest, only we -- we bring mines largest largest us understanding better we're far, help the -- Texas have to going pumped to buyer we country, probably We're second or have we're

to help, things So pricing in any that all going even are these that fleet. come without increase together or any

as improvements go through see the will year. we So, we

George O'Leary

privates just in it Okay. December. It's very was Activities At tendering month-over-month then tell. that activity in half, the back you like helpful, in from perspective, can Mike. up least best we January. some seems And mentioned up mad.

Where and you side, are you to through you're -- lion's higher. to share goal is some it spreads. activity Permian Clearly But as looking clearly progress the people potentially just geographic from shots of on completion a a increases, pricing increases activating the incremental your not activity is see add tendering perspective On can some continues the the seeing count on and are that discipline perspective, Haynesville. year? in drilling or part the where rig we seeing grind

Chris Wright

certainly the pond. know, Permian the You biggest

-- nearly it you'll it certainly drop you yes. that's of as upside biggest levels. activity So There's probably That the extra the the -- much. didn't never know, was place Haynesville, see Haynesville

we advantage throughout The the exports. as So geographically awesome of a it. last year's stayed the they're can new LNG reasonably a in about year. set gas not this It's up. we'll those for beating And thing a produce huge record see Haynesville activity is strong definitely there. lot record, increase But shale we year,

I activity is in no, don't -- going and So see that the more to going swings flexibility think wild is I we're in to there. the say more would oil the basins. be

Michael Stock

to Just second. Chris, to if have add some you there color comments, one

you out So efficiency, in OneStim customers interesting bring really is started engineering years we've base this et done cetera. approached think technology like expand Wright our the We and said basin, always right? with deal. to that where Liberty into us been hey, country, the your enough, I over the to geographic our revenue. Haynesville. sold basins was we'd to technology What focus have had

large We're the a got Mid-Con. doing we've in regency. Now

operations have the We northeast. firth in

in do us Canada. do operations have We come who've [ph] model within some for been the in work help, and years approached Canada. to People the

little like across some sort there, we once have a for special that bit, can a wanted, I had people taking just basins. got here back, we get additional to of border. actually going that especially the potential we of people by in us that, having to to sort like, they're you're and can some over think, to different you're once we've take source market base Liberty COVID things where gets the access see of the see But like Liberty comes George what pricing Now do going

George O'Leary

Thanks, Michael. Thanks, Chris.

Chris Wright

Thank George. you,

Operator

Please question with Connor go ahead. next comes Morgan Lynagh from The Stanley.

Connor Lynagh

it I top Yes, me Since hour brief. the guys I'll you appreciate thanks. and we're the keep here. at of squeezing

efficiency There's sort relative referencing minimal. But you've affiliated framework, your to the but at How high contribution the from per to both or can on having were there's the framework to talking of it? incremental assets also gains or per could get but much super however would basis, say, be fleet just Just XXXX a wireline. at your thoughts about a mines fleet any us imagine obviously, side, you able think on to earnings should I about? I on incremental how specific frame today's sand you're that we pretty it, you just EBITDA the about love level might would you you the pricing Michael, businesses, you but is to appreciate pumping, pressure not think add earnings power working, added a give want that? well. the then as efficiency

Ron Gusek

it's Connor, hard Yes. really in this at come to point.

too bit early. little a Just

ideally, all lot probably Schlumberger. of specifics of by Its sort the will probably to cost I quarter is get to mean down like structure, see historical, we we've once in that, say able got to those belt, under still of better for our accounted next going being really -- a some. year clear. that think can for think, And school, But give we I the off it. I I think would this becoming a under sort they're that be

little for put too off be So additional will bit. that much at moment, positive. let's a Not year it the but

Connor Lynagh

right, fair. All

help then. you were an Just would reasonable, pad? of How then to us win wireline to that guys you talking quote, is significant big outage that where think of efficiency is uplift? one last quick that question if an think related your how average Can on be? you how through big of get able And much gains a maybe that The being on a portion downtime. you're on about

Michael Stock

frac about course, across The averages of for that today our we of per time. we've past fleet. our two, the this over work three, entire So, on our beginning six tracked stage minutes since

that So, year. what time the start basin if to a little of be kind of able to some number we of a roll high a course varies you will think give of if bump. it might add you about level, at in terms sense we over standpoint that up, that bit obviously, that But you that by from of stages

Connor Lynagh

Alright. Thank Got I'll it. leave there. it you.

Chris Wright

Thanks, Conner.

Operator

with ahead. John next comes from go Partners. The question Daniel Energy Please Daniel

John Daniel

ask industry. actually looking them Hi, you the we're just guys. Good E&P Sean's for follow But pay percent lower to question. on of question But them percent of one to to a lower about morning. emissions? at customers, willing what I as just have Chris. for look called guess really wild on your What your care part, actually emissions? And are

Chris Wright

areas would say, industry. that I I our for the misunderstood have The know on the great dominantly That's land. environment John, been I people you and thing the question. lived say from and always that's thing has one a one would I concern in say I there I know, rural is about this. But industry. our Look, think industry would mean,

are that does And the on all that above Where You're definitely by tough. so definitely cost needle the right, is that behavior? a marketplace for -- where the it's hampered swing gets right in is drive else. E&P but And that investors. now hated incentives? companies are

more any players few there to trade I would the reluctant small for are bigger today's it. for still it. players world, the make percent. a But willing a the cost Everyone say of of to meaningful But in else So pay it. off it's they're wants embrace and

of I'd want all boat money. we're that's to to a in do to lot upgrade. But we And and edge love -- that's the the same fleets. -- want leading so too, sort have We of right?

why that's this, it's I are direction. right say not things trending so, the But And thing. overnight an

any So point. it. today And John, I good don't talks talk. a it's that'll pay estimate very a an better than the small have you Everyone make minority for But still yours.

John Daniel

But you it's characterize there this later idea. have eventually it. How know, to I pay -- thoughts? thing mean, Eventually we're step for the there, Chris? we you to no a to transition, the is right right? going your just mean, And next I do. get just change then year? would have just I But year,

Chris Wright

from exactly The discipline I that oil XX%, And with really world to their that's efficient oil to great less, think prices. oil in it's people set John, thing that private the and be with you oil hold budgets. Because don't fact enables nobody truly in we're so industry even going and driven that where see coming the know, I change and returns. on you and right? we're view people You dramatic, what's boy, investment, spending prices My everything people to public to take thing, having move tough opposite. are lot needle back to me, they're for say they you since that's see is have We think this less. our We're And isn't now. else. that belief back, respect in that customers. the everything their people by if Look, going today, on on a capital and by world, right else, guys, that some risen budgets, the strong want prices must invest the moves of on those And a that think operations, customers that and returns. returns prices our

a First, price on sustainable no get more We need assets. industry. more necessary that think, say. getting better. me and heard on to to that. just But And We A, partnerships need little I a assets. one again, our you've existing wants return new keep price for invest higher But that to we need actually can of in prices. top us is

You for to actually know, think look, pretty the decade, good. we've going I rough several are next had industry a years be

once commodity it's supported by value lower I prices think better the base. investment, the that and better returns, payment lead that's I But it. you have better that with operations returns to think the across for follows emissions going chain. to And

emissions be attitude couldn't wrong. for we've a So yes, months. last different than now lower That's very XX seen see paying the from for I think John. we'll belief, XX months I my

Ron Gusek

seems John, be making my changes. technology well, of the meaningful here to is, editorial comment

see So up on the cost adoption. industry. great the Northwest video by way, And rapid hopefully, a lift we'll

Chris Wright

I appreciate that. john. Thanks,

John Daniel

Okay.

Chris Wright

care. Take

Operator

Riley B with go from Securities. comes Curran question next Please The Tom ahead.

Tom Curran

currently guys. Ron, in such for and a hole. my any slurry real the technology Curious, involved time the image, question question taking in at had your with frac all left. morning. or Thanks Good in just you dedication, to I down and late the fluids still provide whether customers track point call. one ability monitor That's Chris

the And job frac ability executed, to currently in-house? So a subsurface? that? Or in use it you for monitor is that words, third other being an you do party imaging as the ability is provide different fluids if so,

Chris Wright

as is our piece of to team fractures know, ways what probably Liberty Ron, that spent developing number question. interesting they're diagnostics, measure largest the and and grow an how a at others career Tom, I fracture Michael, and you doing. And of

We and not our real we models of measurements technologies to of frac some going. we're our diagnostic those fluids is, at us where is looking away fracture been the from is far how where fluid where about we technologies, one have We a sand indirect Well transmitting give from model a are that obviously customers run satellite talked fractures about are in predictions lot, wellbores but standard. in-house. so time the watch growing dishes, think it we've We've is.

on a basis. it do predictive we So

measurements that that We more could may of pressure future. value there's with from I see have infer some there. right more big picture right And that. you in But Liberty think proposition technologies far-field to the the certainly, the and done be

Tom Curran

would provide involve of currently would as be your to in-house. to Chris, up. And What it? use clear, percentage And just jobs a follow then of just estimate you that expect you some

Chris Wright

all essentially rapid. is modeling, of of watch the the Well, that adoption Well them. pretty

not So developed you that it's pretty XX a that years that's at up But jobs. is we That's then But -- we know, those on until clip. third that's still party. a of up that's good percent. microseismic a small And jobs. ramping some quickly. -- ramping do ago It's half have

Tom Curran

lose Thank I'll go Great. your you before you. you let voice.

Chris Wright

I don't ruin Tom. But appreciate everyone's Yes. Friday we everyone's interest. take want up to Thanks, morning.

Operator

session. concludes question I would like This the closing remarks. over turn and any to Wright now conference our answer back Chris for to

Chris Wright

around And your resources up in one hour. ability to everyone with expanded But interest wouldn't remarks we the had we world. today. Thanks, to We of apologize COVID We if gas, completed and and had and the Liberty. vaccines struck as nature communicate over frankly, transaction you time industry. energized Imagine ramp thank have all the opening for your running I time due this to a all world the wouldn't for have oil not for send by now. interest PP&E in and the your Schlumberger.

this look we respond And that oil got Have So after forward we the gas to tremendous energized big the thank great forward And quarter. continuing world we and blow. talking But you first had look year. day an a God world to hit to progress a everyone. quickly. on to

Operator

conference today's now is Thank presentation. concluded. for The you attending

You disconnect. may now

Liberty Energy (LBRT) 5 Feb 212020 Q4 Earnings call transcript