What changed in this filing

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Item 1. Financial Statements

2021-10-28 compared with 2021-07-30 · 275 added, 233 removed, 742 unchanged (41% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share data)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets:

34 unchanged sentences

Common Stock:

Class A, $ 0.01 par value, 400,000,000 shares authorized and 178,310,595 issued and outstanding as of June 30, 2021 and 157,952,213 issued and outstanding as of December 31, 2020

Class B, $ 0.01 par value, 400,000,000 shares authorized and 1,860,327 issued and outstanding as of June 30, 2021 and 21,550,282 issued and outstanding as of December 31, 2020

Class A, $ 0.01 par value, 400,000,000 shares authorized and 178,310,595 issued and outstanding as of September 30, 2021 and 157,952,213 issued and outstanding as of December 31, 2020

Class B, $ 0.01 par value, 400,000,000 shares authorized and 1,860,327 issued and outstanding as of September 30, 2021 and 21,550,282 issued and outstanding as of December 31, 2020

Additional paid in capital 1,278,073 1,125,554

10 unchanged sentences

(In thousands, except per share data)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

6 unchanged sentences

Transaction, severance and other costs 1,556 2,609 12,173 11,666

Depreciation and amortization 63,214 44,931 125,270 89,762

(Gain) loss on disposal of assets ( 277 ) 334 ( 997 ) 232

Depreciation, depletion, and amortization 65,852 44,496 191,122 134,258

Gain on disposal of assets ( 79 ) ( 752 ) ( 1,076 ) ( 520 )

Total operating costs and expenses 693,293 202,897 1,904,836 830,859

5 unchanged sentences

Interest expense 4,008 3,634 11,530 11,417

Total other expense 462 3,656 4,216 7,264

Total other (income) expense ( 940 ) 3,595 3,276 10,859

Net loss before income taxes ( 38,626 ) ( 58,997 ) ( 121,065 ) ( 133,517 )

15 unchanged sentences

(In thousands)

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

21 unchanged sentences

Net loss — — — — — ( 123,655 ) — ( 123,655 ) ( 6,812 ) ( 130,467 )

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

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 Retained Earnings Accumulated Other Comprehensive Income Total Stockholders ’ Equity

12 unchanged sentences

Net loss — — — — — ( 78,553 ) — ( 78,553 ) ( 33,890 ) ( 112,443 )

Balance—June 30, 2020 84,853 28,081 $ 848 $ 281 $ 435,885 $ 94,817 $ — $ 531,831 $ 188,126 $ 719,957

Balance—September 30, 2020 85,866 27,068 $ 859 $ 271 $ 446,155 $ 60,317 $ — $ 507,602 $ 168,693 $ 676,295

See Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(Dollars in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

2 unchanged sentences

Depreciation, depletion and amortization 191,122 134,258

Loss on disposal of assets ( 997 ) 232

Gain on disposal of assets ( 1,076 ) ( 520 )

Amortization of debt issuance costs 1,704 1,668

26 unchanged sentences

Restricted stock unit vesting ( 168 ) —

Payment of equity offering costs ( 854 ) —

Net cash used in financing activities ( 8,175 ) ( 14,820 )

Net (decrease) increase in cash and cash equivalents before translation effect ( 38,504 ) 11,814

Tax withholding on restricted stock units ( 3,585 ) ( 403 )

Payments of equity issuance costs ( 1,013 ) —

Net cash provided by (used in) financing activities 5,149 ( 16,606 )

Net decrease in cash and cash equivalents before translation effect ( 34,028 ) ( 27,871 )

Translation effect on cash ( 245 ) —

18 unchanged sentences

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 June 30, 2021 and December 31, 2020, and the results of operations, cash flows, and equity of the Company as of and for the three and six months ended June 30, 2021 and 2020.

The accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of September 30, 2021 and December 31, 2020, and the results of operations, cash flows, and equity of the Company as of and for the three and nine months ended September 30, 2021 and 2020.

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 six months ended June 30, 2021 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2021.

The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2021.

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.

32 unchanged sentences

The Company is currently assessing the impact of the LIBOR transition and this ASU on the Company’s financial statements.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified from general and administrative to transaction, severance and other costs in the accompanying unaudited condensed consolidated statements of operation to conform to the presentation of the current period financial statements.

These reclassifications had no effect on the previously reported net income.

Note 3— The OneStim Acquisition

12 unchanged sentences

Such measurement period ends on the earliest date that the acquirer (i) receives the information necessary or (ii) determines that it cannot obtain further information, and such period may not exceed one year.

As the OneStim Acquisition closed on December 31, 2020 the Company is in the process of completing the purchase price allocation, particularly as it relates to current assets and current liabilities, which are subject to certain minimum working capital contribution requirements under the Transaction Agreement.

As the OneStim Acquisition closed on December 31, 2020 the Company was in the process of completing the purchase price allocation, particularly as it relates to current assets and current liabilities, which are subject to certain minimum working capital contribution requirements under the Transaction Agreement.

Such minimum working capital contribution calculations are subject to review and adjustment in order to determine final settlement.

In addition, certain inventories are considered provisional until the Company has completed physical inventory counts at each warehouse.

During the three months ended September 30, 2021 the Company determined a final settlement amount related to the minimum working capital contribution requirements under the Transaction Agreement, however, certain inventories are considered provisional until the Company has completed physical inventory counts at each warehouse.

The following table summarizes the fair value of the consideration transferred in the OneStim Acquisition and the preliminary allocation of the purchase price to the fair value of the assets acquired and liabilities assumed (which are included within the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020) as of December 31, 2020, the date of the closing of the OneStim Acquisition:

19 unchanged sentences

Merger and integration costs are expensed as incurred, and equity offering costs were recorded as a reduction to additional paid in capital.

Transaction costs were $ 1.5 million and $ 9.1 million, for the three and six months ended June 30, 2021, respectively, and are recorded as a component of transaction, severance and other costs in the accompanying unaudited condensed consolidated statements of operations.

Transaction costs were $ 1.6 million and $ 10.7 million, for the three and nine months ended September 30, 2021, respectively, and are recorded as a component of transaction, severance and other costs in the accompanying unaudited condensed consolidated statements of operations.

Equity offering costs totaled $ 1.6 million for the year ended December 31, 2020 and are recorded as a reduction to additional paid in capital in the accompanying unaudited condensed consolidated balance sheets.

The Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2020 presented herein does not include any results from OneStim operations as the OneStim Acquisition closed on December 31, 2020.

The Company’s unaudited condensed consolidated financial statements include results from OneStim operations for full three and six months ended June 30, 2021.

The Company’s unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2020 presented herein does not include any results from OneStim operations as the OneStim Acquisition closed on December 31, 2020.

The Company’s unaudited condensed consolidated financial statements include results from OneStim operations for the full three and nine months ended September 30, 2021.

LIBERTY OILFIELD SERVICES INC.

3 unchanged sentences

The information is not necessarily indicative of results that would have been achieved had the Company controlled OneStim during the periods presented.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(unaudited, in thousands) 2020 2020

13 unchanged sentences

Inventories consist of the following:

June 30, December 31,

September 30, December 31,

($ in thousands) 2021 2020

3 unchanged sentences

$ 116,795 $ 118,568

The Company did no t record any write-down to the inventory carrying value during the three and six months ended June 30, 2021.

As of June 30, 2020, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to inventory carrying values of $ 0.1 million and $ 0.8 million during the three and six months ended June 30, 2020, respectively, which is included as a component in cost of services in the unaudited condensed consolidated statement of operations.

The Company did no t record any write-down to the inventory carrying value during the three and nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to inventory carrying values of $ 0.0 million and $ 0.8 million, respectively, which is included as a component in cost of services in the unaudited condensed consolidated statement of operations.

LIBERTY OILFIELD SERVICES INC.

2 unchanged sentences

Property and equipment consist of the following:

(in years) June 30, December 31,

(in years) September 30, December 31,

($ in thousands) 2021 2020

10 unchanged sentences

1,764,120 1,589,762

Less accumulated depreciation and amortization ( 734,875 ) ( 622,530 )

Less accumulated depreciation, depletion, and amortization ( 796,118 ) ( 622,530 )

968,002 967,232

1 unchanged sentence

$ 1,069,890 $ 1,120,950

Depreciation expense for the three months ended June 30, 2021 and 2020 was $ 58.1 million and $ 42.3 million, respectively.

During the six months ended June 30, 2021 and 2020, the Company recognized depreciation expense of $ 114.8 million and $ 83.9 million, respectively.

Depletion expense for the three and six months ended June 30, 2021 was $ 0.3 million and $ 0.6 million, respectively.

Depreciation expense for the three months ended September 30, 2021 and 2020 was $ 61.1 million and $ 42.4 million, respectively.

During the nine months ended September 30, 2021 and 2020, the Company recognized depreciation expense of $ 175.9 million and $ 126.3 million, respectively.

Depletion expense for the three and nine months ended September 30, 2021 was $ 0.3 million and $ 1.0 million, respectively.

During the year ended December 31, 2020, as a result of negative market indicators including the COVID-19 pandemic, the increased supply of low-priced oil, and customer cancellations, the Company concluded these triggering events could indicate possible impairment of property and equipment.

The Company performed a quantitative and qualitative impairment analysis and determined that no impairment had occurred as of June 30, 2020.

As of June 30, 2021, the Company concluded that no additional triggering events had occurred.

As of June 30, 2021, the Company classified $ 3.7 million of land and $ 14.8 million, net of accumulated depreciation, of buildings of two properties that it intends to sell within the next year, and that 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 carrying value of the assets approximates the fair value less the estimated costs, and therefore no adjustment to the carrying value of the assets was recorded during the three and six months ended June 30, 2021.

As of September 30, 2021 and 2020, the Company concluded that no additional triggering events had occurred.

As of September 30, 2021, the Company classified $ 3.7 million of land and $ 14.8 million, net of accumulated depreciation, of buildings of two properties that it intends to sell within the next year, and that 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.

Note 6— Leases

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

The components of lease expense for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

The components of lease expense for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

5 unchanged sentences

Short-term lease costs 1,479 — 3,483 —

Sublease income — ( 48 ) $ — ( 64 )

Total lease cost, net $ 17,181 $ 9,404 $ 42,184 $ 28,480

Sup plemental cash flow and other information related to leases for the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30, Six Months Ended June 30,

Sup plemental cash flow and other information related to leases for the three and nine months ended September 30, 2021 and 2020 were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

($ in thousands) 2021 2020 2021 2020

4 unchanged sentences

Operating leases 10,999 9,838 70,205 29,492

During the six months ended June 30, 2021, the Company amended certain finance leases, the change in terms of which caused the leases to be reclassified to operating leases.

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 and liabilities of $ 13.7 million and $ 10.6 million, respectively, and recognized operating lease right-of-use assets and liabilities of $ 11.8 million and $ 8.8 million, respectively.

There was no gain or loss recognized as a result of these amendments.

Lease terms and discount rates as of June 30, 2021 and December 31, 2020 were as follows:

June 30, 2021 December 31, 2020

Lease terms and discount rates as of September 30, 2021 and December 31, 2020 were as follows:

September 30, 2021 December 31, 2020

Weighted-average remaining lease term:

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

Future minimum lease commitments as of June 30, 2021 are as follows:

Future minimum lease commitments as of September 30, 2021 are as follows:

($ in thousands) Finance Operating

9 unchanged sentences

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 June 30, 2021 is $ 9.6 million;

For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of September 30, 2021 is $ 11.5 million;

the payment is not probable and therefore has not been included in the measurement of the lease liability and right-of-use asset.

2 unchanged sentences

Accrued liabilities consist of the following:

($ in thousands) June 30, 2021 December 31, 2020

($ in thousands) September 30, 2021 December 31, 2020

Accrued vendor invoices $ 118,632 $ 61,210

3 unchanged sentences

Debt consists of the following:

June 30, December 31,

September 30, December 31,

($ in thousands) 2021 2020

Term Loan outstanding $ 106,903 $ 108,215

Revolving Line of Credit 16,000 —

Deferred financing costs and original issue discount ( 1,399 ) ( 2,440 )

4 unchanged sentences

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

The weighted average interest rate on all borrowings outstanding as of September 30, 2021 and December 31, 2020 was 8.0 % and 8.6 %, respectively.

Under the terms of the ABL Facility, up to $ 250.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory.

As of June 30, 2021, the borrowing base was calculated to be $ 247.3 million, and the Company had no borrowings outstanding, except for a letter of credit in the amount of $ 0.8 million, with $ 246.5 million of remaining availability.

Borrowings under the ABL Facility bear interest at LIBOR or a base rate, plus an

As of September 30, 2021, the borrowing base was

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

applicable LIBOR margin of 1.5 % to 2 % or base rate margin of 0.5 % to 1 %, as defined in the ABL Facility credit agreement.

calculated to be $ 250.0 million, and the Company had $ 16.0 million outstanding in addition to a letter of credit in the amount of $ 0.8 million, with $ 233.2 million of remaining availability.

Borrowings under the ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR 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, 2021 incurred interest at a rate of 3.75 %.

The average monthly unused commitment is subject to an unused commitment fee of 0.375 % to 0.5 %.

3 unchanged sentences

(“R/C IV”), a Delaware corporation and a subsidiary of the Company, as parent guarantors.

During the subsequent period, on October 22, 2021 , the Company amended the ABL Facility and extended the terms through October 22, 2026.

Refer to Note 17 - Subsequent Events for further details.

As the maturity date was extended, the Company continues to report obligations under the ABL Facility as long-term.

Term Loan Facility

The Term Loan Facility provides for a $ 175.0 million term loan, of which $ 107.3 million remained outstanding as of June 30, 2021.

Amounts outstanding bear interest at LIBOR or a base rate, plus an applicable margin of 7.625 % or 6.625 %, respectively, and the weighted average on borrowings was 8.6 % as of June 30, 2021.

The Term Loan Facility provides for a $ 175.0 million term loan, of which $ 106.9 million remained outstanding as of September 30, 2021.

Amounts outstanding bear interest at LIBOR or a base rate, plus an applicable margin of 7.625 % or 6.625 %, respectively, and borrowings as of September 30, 2021 incurred interest at a rate of 8.625 %.

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, 2022.

The Term Loan Facility is collateralized by the fixed assets of Liberty Oilfield Services LLC (“LOS”) and its subsidiaries, and is further secured by the Company, Liberty LLC, and R/C IV, as parent guarantors.

During the subsequent period, on October 22, 2021 , the Company amended the Term Loan Facility and extended the terms through September 19, 2024.

Refer to Note 17—Subsequent Events for further details.

As the maturity date was extended, the Company continues to report obligations under the Term Loan Facility as long-term, with the exception of quarterly principal payments due in the 12-months from the balance sheet date.

The Credit Facilities include certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions.

4 unchanged sentences

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 June 30, 2021.

Maturities of debt are as follows:

The Company was in compliance with these covenants as of September 30, 2021.

Maturities of debt, reflecting the amendments described in Note 17—Subsequent Events, are as follows:

($ in thousands)

1 unchanged sentence

2024 $ 118,965

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Note 9— Fair Value Measurements and Financial Instruments

9 unchanged sentences

Unobservable inputs that are significant to the fair value of assets or liabilities.

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

The classification of an asset or liability is based on the lowest level of input significant to its fair value.

2 unchanged sentences

Transfers occur at the end of the reporting period.

There were no transfers into or out of Levels 1, 2, and 3 during the six months ended June 30, 2021 and 2020.

There were no transfers into or out of Levels 1, 2, and 3 during the nine months ended September 30, 2021 and 2020.

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 at June 30, 2021 and December 31, 2020.

• The carrying values of cash and cash equivalents, accounts receivable and accounts payable (including accrued liabilities) approximated fair value at June 30, 2021 and December 31, 2020, due to their short-term nature.

• The carrying value of amounts outstanding under long-term debt agreements with variable rates approximated fair value at June 30, 2021 and December 31, 2020, as the effective interest rates approximated market rates.

• The carrying values of cash and cash equivalents, accounts receivable and accounts payable (including accrued liabilities) approximated fair value at September 30, 2021 and December 31, 2020, due to their short-term nature.

• The carrying value of amounts outstanding under long-term debt agreements with variable rates approximated fair value at September 30, 2021 and December 31, 2020, as the effective interest rates approximated market rates.

Nonrecurring Measurements

11 unchanged sentences

Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts.

As of June 30, 2021 and December 31, 2020, the Company had cash equivalents, measured at fair value, of $ 0.3 million and $ 21.3 million, respectively.

As of September 30, 2021 and December 31, 2020, the Company had cash equivalents, measured at fair value, of $ 0.3 million and $ 21.3 million, respectively.

Nonfinancial assets

1 unchanged sentence

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.

Although a triggering event occurred during the six months ended June 30, 2020 (see Note 5—Property and Equipment), no such measurements were required as of June 30, 2021 and December 31, 2020.

Although a triggering event occurred during the nine months ended September 30, 2020 (see Note 5—Property and Equipment), no such measurements were required as of September 30, 2021 and December 31, 2020.

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

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 $ 30.7 million and $ 69.0 million as of June 30, 2021 and December 31, 2020, respectively, which exceeded FDIC insured limits.

The Company’s cash and cash equivalent balances on deposit with financial institutions total $ 34.7 million and $ 69.0 million as of September 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020, for the three and six months ended June 30, 2021 and June 30, 2020, customer A, customer B, customer C, customer D, customer E, and customer F accounted for the following percentages of the Company’s consolidated accounts receivable and unbilled revenue and consolidated revenues, respectively:

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Portion of total of consolidated accounts receivable and unbilled revenue as of Portion of consolidated revenues for the three months ended June 30, Portion of consolidated revenues for the six months ended June 30,

June 30, 2021 December 31, 2020 2021 2020 2021 2020

As of September 30, 2021 and December 31, 2020, and for the three and nine months ended September 30, 2021 and September 30, 2020, the below customers accounted for the following percentages of the Company’s consolidated accounts receivable and unbilled revenue and consolidated revenues, respectively:

Portion of consolidated accounts receivable and unbilled revenue as of Portion of consolidated revenues for the three months ended September 30, Portion of consolidated revenues for the nine months ended September 30,

September 30, 2021 December 31, 2020 2021 2020 2021 2020

Customer A 11 % — % — % — % — % — %

5 unchanged sentences

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

As of June 30, 2021 the Company had $ 1.5 million in allowance for credit losses.

As of September 30, 2021 the Company had $ 0.9 million in allowance for credit losses.

Subsequent to the adoption of ASU 2016-13 , Financial Instruments-Credit Losses (Topic 326):

8 unchanged sentences

Amounts written off, net of recoveries ( 634 )

Allowance for credit losses at June 30, 2021 $ 1,518

Allowance for credit losses at September 30, 2021

LIBERTY OILFIELD SERVICES INC.

4 unchanged sentences

RSUs were granted with vesting terms up to five years .

Changes in non-vested RSUs outstanding under the LTIP during the six months ended June 30, 2021 were as follows:

Changes in non-vested RSUs outstanding under the LTIP during the nine months ended September 30, 2021 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

3 unchanged sentences

Forfeited ( 32,348 ) 7.72

Outstanding at June 30, 2021 1,787,647 $ 10.67

Outstanding at September 30, 2021 1,780,987 $ 10.69

Performance Restricted Stock Units

3 unchanged sentences

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 six months ended June 30, 2021 were as follows:

Changes in non-vested PSUs outstanding under the LTIP during the nine months ended September 30, 2021 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

2 unchanged sentences

Forfeited — —

Outstanding at June 30, 2021 1,306,945 $ 12.45

Outstanding at September 30, 2021 1,306,945 $ 12.45

Stock based compensation is included in cost of services and general and administrative expenses in the Company’s condensed consolidated statements of operations.

The Company recognized stock based compensation expense of $ 5.9 million and $ 10.8 million for the three and six months ended June 30, 2021, respectively.

The Company recognized stock based compensation of $ 4.3 million and $ 8.4 million for the three and six months ended June 30, 2020, respectively.

There was approximately $ 25.3 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of June 30, 2021.

The Company recognized stock based compensation expense of $ 4.2 million and $ 15.1 million for the three and nine months ended September 30, 2021, respectively.

The Company recognized stock based compensation of $ 4.5 million and $ 12.9 million for the three and nine months ended September 30, 2020, respectively.

There was approximately $ 21.1 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of September 30, 2021.

The unrecognized compensation expense will be recognized on a straight-line basis over the weighted average remaining vesting period of two years .

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

During the six months ended June 30, 2021 and June 30, 2020 , no shares were repurchased under the share repurchase program.

As of June 30, 2021, no amounts remained authorized for future repurchases of Class A Common Stock under the share repurchase program.

During the nine months ended September 30, 2021 and September 30, 2020 , no shares were repurchased under the share repurchase program.

As of September 30, 2021, no amounts remained authorized for future repurchases of Class A Common Stock under the share repurchase program.

Note 11— Net Loss per Share

3 unchanged sentences

The following table reflects the allocation of net loss to common stockholders and net loss per share computations for the periods indicated based on a weighted average number of common stock outstanding:

Three Months Ended Six Months Ended

(In thousands) June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020

Three Months Ended Nine Months Ended

(In thousands) September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020

Basic Net Loss Per Share

17 unchanged sentences

stockholders $ ( 0.22 ) $ ( 0.41 ) $ ( 0.72 ) $ ( 0.94 )

In accordance with GAAP, diluted weighted average common shares outstanding for the three and six months ended June 30, 2021 exclude 7,641 and 11,963 , respectively, weighted average shares of Class B Common Stock, 4,107 and 3,700 , respectively, weighted average shares of restricted stock units.

Additionally, diluted weighted average common shares outstanding for the three and six months ended June 30, 2020 exclude 29,392 and 30,015 , respectively, weighted average shares of Class B Common Stock, 246 and 257 , respectively, weighted average shares of restricted stock, and 1,914 and 2,124 , respectively, weighted average shares of restricted stock units.

In accordance with GAAP, diluted weighted average common shares outstanding for the three and nine months ended September 30, 2021 exclude 1,860 and 8,558 , respectively, weighted average shares of Class B Common Stock and 3,256 and 3,470 , respectively, weighted average shares of restricted stock units.

Additionally, diluted weighted average common shares outstanding for the three and nine months ended September 30, 2020 exclude 27,763 and 29,259 , respectively, weighted average shares of Class B Common Stock, 235 and 250 , respectively, weighted average shares of restricted stock, and 2,458 and 2,276 , respectively, weighted average shares of restricted stock units.

Note 12— Income Taxes

6 unchanged sentences

Undistributed earnings of foreign subsidiaries are considered to be indefinitely reinvested, and no taxes have been accrued on these earnings.

The effective global combined income tax rate applicable to the Company for the six months ended June 30, 2021 was ( 10.5 )%, expense, compared to 14.9 %, benefit, for the period ended June 30, 2020.

During the six months ended June 30, 2021, the Company recorded a valuation allowance on its U.S.

The effective global combined income tax rate applicable to the Company for the nine months ended September 30, 2021 was ( 7.8 )%, expense, compared to 15.8 %, benefit, for the period ended September 30, 2020.

During the nine months ended September 30, 2021, the Company recorded a valuation allowance on its U.S.

net deferred tax assets as of December 31, 2020, as a result of entering into a three year cumulative pre-tax book loss position, primarily due to COVID-19 related losses, resulting in the Company’s effective tax rate for the quarter and year to date periods of 2021 being significantly less than the statutory federal tax rate of 21%.

The Company’s effective tax rate is also less than the statutory federal tax rate because of foreign operations and the non-controlling interest’s share of Liberty LLC’s pass-through results of federal, state, and local income tax reporting, upon which no taxes are payable by the Company.

The Company recognized an income tax expense of $ 16.0 million and $ 8.6 million during the three and six months ended June 30, 2021, respectively.

The Company recognized an income tax benefit of $ 11.4 million and $ 11.1 million during the three and six months ended June 30, 2020, respectively.

The Company recognized an income tax expense of $ 0.8 million and $ 9.4 million during the three and nine months ended September 30, 2021, respectively.

The Company recognized an income tax benefit of $ 10.0 million and $ 21.1 million during the three and nine months ended September 30, 2020, respectively.

Per the Coronavirus Aid, Relief and Economic Security (“CARES”) Act enacted on March 27, 2020, net operating losses (“NOL”) incurred in 2018, 2019, and 2020 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

In the period ended June 30, 2021, the Company 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 in the accompanying unaudited condensed consolidated balance sheets.

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 unaudited condensed consolidated balance sheets.

The Company recognized a net deferred tax asset in the amount of $ 5.4 million as of December 31, 2020.

Deferred tax 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.

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.

A valuation allowance is provided for the deferred tax assets that, based on available evidence, are not expected to be realized.

The Company evaluated its deferred tax assets as of June 30, 2021 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.

In accordance with ASC 740, the objective negative evidence of entering into a three year cumulative pre-tax book loss position, primarily due to COVID-19 related losses, prevented the consideration of the Company’s subjective positive evidence of expected future profitability in evaluating the realizability of its deferred tax assets.

As a result, during the three and six months ended June 30, 2021, the Company recorded a valuation allowance against its U.S.

net deferred tax assets as of December 31, 2020, reversed the U.S.

The Company evaluated its deferred tax assets as of September 30, 2021 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 entering into a three year cumulative pre-tax book loss position, primarily due to COVID-19 related losses, prevented the consideration of the Company’s subjective positive evidence of expected future profitability in evaluating the realizability of its deferred tax assets.

The Company continues to record a valuation allowance against its U.S.

net deferred tax assets as of December 31, 2020, reverses the U.S.

tax benefit recorded during the three months ended March 31, 2021, and did not record a U.S.

tax benefit of pre-tax net losses during the three months ended June 30, 2021.

In addition, the Company reversed through equity the impact of exchange transactions that had occurred during the three months ended March 31, 20201 and did not record any deferred tax assets for exchange transactions that occurred during the three months ended June 30, 2021.

tax benefit of pre-tax net losses during the nine months ended September 30, 2021.

In addition, the Company reversed through equity the impact of exchange transactions that had occurred during the three months ended March 31, 2021 and did not record any deferred tax assets for exchange transactions that occurred during the nine months ended September 30, 2021.

Tax Receivable Agreements

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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.

During the six months ended June 30, 2020, redemptions of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $ 2.6 million in amounts payable under the TRAs, and a net increase of $ 3.0 million in deferred tax assets, all of which were recorded through equity.

As of June 30, 2021 and December 31, 2020, the Company ’ s liability under the TRAs was $ 53.3 million and $ 56.6 million, respectively, all of which is presented as a component of long-term liabilities.

In relation to the deferred tax asset valuation allowance described above, the Company also remeasured the liability under the TRAs as of June 30, 2021 and recorded a gain on the remeasurement of liabilities subject to TRAs of $ 3.3 million as part of continuing operations during the three and six months ended June 30, 2021.

During the nine months ended September 30, 2020, redemptions of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $ 4.4 million in amounts payable under the TRAs, and a net increase of $ 5.2 million in deferred tax assets, all of which were recorded through equity.

As of September 30, 2021 and December 31, 2020, the Company ’ s liability under the TRAs was $ 48.3 million and $ 56.6 million, respectively, all of which is presented as a component of long-term liabilities.

In relation to the deferred tax asset valuation allowance described above, the Company also remeasured the liability under the TRAs as of September 30, 2021 and

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

recorded a gain on the remeasurement of liabilities subject to TRAs of $ 4.9 million and $ 8.3 million as part of continuing operations during the three and nine months ended September 30, 2021 , respectively.

Note 13— Defined Contribution Plan

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Effective January 1, 2021 the Company restored its 6 % matching contribution.

Contributions made by the Company wer e $ 4.1 million and $ 0 for the three months ended June 30, 2021 and 2020, respectively, and $ 7.9 million and $ 4.2 million for the six months ended June 30, 2021 and 2020, respectively.

Contributions made by the Company wer e $ 5.4 million and $ 0 for the three months ended September 30, 2021 and 2020, respectively, and $ 13.3 million and $ 4.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Note 14— Related Party Transactions

As of June 30, 2021 Schlumberger owned 66,326,134 shares of Class A Common Stock of the Company, or approximately 37.0 % of the issued and outstanding common stock of the Company, including Class A Common Stock and Class B Common Stock.

As of September 30, 2021 Schlumberger owned 66,326,134 shares of Class A Common Stock of the Company, or approximately 37.0 % of the issued and outstanding common stock of the Company, including Class A Common Stock and Class B Common Stock.

Under the Transaction Agreement, to the extent the net working capital, as defined in the Transaction Agreement, of the Transferred Business is less than $ 54.6 million, the difference shall be payable in cash to the Company.

Additionally, the Company and Schlumberger agreed to an $ 8.0 million true-up payment related to the estimated costs to bring certain assets to full working condition, which was collected during the three months ended March 31, 2021.

As of June 30, 2021 and December 31, 2020, the Company recorded an estimated receivable from Schlumberger of $ 16.7 million and $ 24.7 million related to these true-up payments, respectively.

Additionally, in conjunction with closing the OneStim Acquisition, the Company entered into a transition services agreement with Schlumberger under which Schlumberger provides certain administrative transition services until the Company fully integrates the acquired business.

During the three and six months ended June 30, 2021, the Company incurred $ 0.5 million and $ 5.7 million, respectively, of fees payable to Schlumberger for such transaction services, and expects any expenses incurred after June 30, 2021 to be immaterial.

During the three months ended June 30, 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 utilized with its existing operations.

As of December 31, 2020, the Company recorded a receivable from Schlumberger of $ 24.7 million for the working capital settlement and an agreed upon $ 8.0 million true-up payment related to the estimated costs to bring certain assets to full working condition, which was collected during the three months ended March 31, 2021.

As of September 30, 2021, the Company agreed on a working capital settlement from Schlumberger of $ 15.8 million, most of which was netted against transaction services costs and cash settlements during the transition services period.

In conjunction with closing the OneStim Acquisition, the Company entered into a transition services agreement with Schlumberger under which Schlumberger provides certain administrative transition services until the Company fully integrates the acquired business.

During the three and nine months ended September 30, 2021, the Company incurred $ 0.0 million and $ 5.7 million, respectively, of fees payable to Schlumberger for such transaction services, and expects any expenses incurred after September 30, 2021 to be immaterial.

As of September 30, 2021 $ 0.1 million due to Schlumberger for transition services was recorded in accounts payable.

During the nine months ended September 30, 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 the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries.

During the three and six months ended June 30, 2021, total purchases from Schlumberger were approximately $ 8.8 million and $ 19.9 million, respectively, and as of June 30, 2021 amounts due to Schlumberger were $ 3.9 million and $ 7.1 million included in accounts payable and accrued liabilities, respectively, in the unaudited condensed consolidated balance sheet.

One June 7, 2021 R/C Energy IV Direct Partnership, L.P., a Delaware limited partnership (“R/C Direct”) and R/C Liberty entered into an underwriting agreement, dated as of June 7, 2021, by and amount the Company, Liberty LLC, R/C Direct, R/C Liberty and Morgan Stanley & Co.

During the three and nine months ended September 30, 2021, total purchases from Schlumberger were approximately $ 6.5 million and $ 26.4 million, respectively, and as of September 30, 2021 amounts due to Schlumberger were $ 2.6 million and $ 2.2 million included in accounts payable and accrued liabilities, respectively, in the unaudited condensed consolidated balance sheet.

On June 7, 2021 R/C Energy IV Direct Partnership, L.P., a Delaware limited partnership (“R/C Direct”) and R/C Liberty entered into an underwriting agreement, dated as of June 7, 2021, by and amount the Company, Liberty LLC, R/C Direct, R/C Liberty and Morgan Stanley & Co.

LLC, pursuant to which R/C Direct sold 3,707,187 shares of Class A Common Stock and R/C Liberty sold 8,592,809 shares of Class A Common Stock, at a price of $ 15.20 per share, to the underwriter (the “Sale”).

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Prior to the Sale, during the three months ended March 31, 2021, R/C IV Liberty Holdings, L.P.

(“R/C Liberty”) exercised its redemption right and redeemed 10,269,457 shares of Class B Common Stock resulting in an increase in tax basis, as described under “Tax Receivable Agreements” in Note—12 Income Taxes, which was subsequently offset by an increase in valuation allowance during the three months ended June 30, 2021.

During the year ended December 31, 2020, R/C Liberty exercised its redemption right and redeemed 4,016,965 shares of Class B Common Stock resulting in the recognition of $ 6.1 million in amounts payable under the TRAs.

As of December 31, 2020, the Company ’ s liabilities under the TRAs payable to R/C Liberty and R/C IV were $ 27.2 million, included in the payable pursuant to tax receivable agreements in the accompanying unaudited condensed consolidated balance sheets.

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 June 30, 2021 and 2020 was $ 0 and $ 0 , respectively, and $ 1.2 million and $ 0 for the six months ended June 30, 2021 and 2020, respectively.

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

As of June 30, 2021 and December 31, 2020, $ 0 and $ 0 , respectively, of the Company’s accounts receivable—related party was with the Affiliate.

Effective on June 15, 2021, Audrey Robertson was appointed to the Board of Directors of Liberty Oilfield Services Inc.

Robertson serves as the Chief Financial Officer of Franklin Mountain Energy, LLC (“Franklin Mountain”).

During the three months ended September 30, 2021 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $ 7.0 million or 1.1 % of the Company’s revenues for such period.

Receivables from Franklin Mountain as of September 30, 2021 were $ 0.0 million .

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, 2021 and 2020 was $ 0 and $ 0 , respectively, and $ 1.2 million and $ 0 for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021 and December 31, 2020, $ 0 and $ 0 , respectively, of the Company’s accounts receivable—related party line item was attributable to the Affiliate.

On June 24, 2019 (the “Agreement Date”), the Company entered into an agreement with the Affiliate to amend payment terms for outstanding invoices due as of the Agreement Date to be due on July 31, 2020.

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The amount outstanding, including all accrued interest, was paid in full in January 2020.

As of June 30, 2021 and December 31, 2020, no amounts were outstanding under the amended payment terms from the Affiliate.

During the three and six months ended June 30, 2020, interest income from the Affiliate was $ 0 and $ 0.2 million, respectively, and accrued interest as of June 30, 2021 and December 31, 2020 was $ 0 .

As of September 30, 2021 and December 31, 2020, no amounts were outstanding under the amended payment terms from the Affiliate.

During the three and nine months ended September 30, 2020, interest income from the Affiliate was $ 0 and $ 0.3 million, respectively, and accrued interest as of September 30, 2021 and December 31, 2020 was $ 0 .

Receivables earned for services performed after the Agreement Date continue to be subject to normal 30-day payment terms, provided that any amount unpaid after 60 days will be subject to 13 % interest.

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The PropX Services Agreement was terminated on May 29, 2018, however, the Company continues to purchase and lease equipment from PropX under certain lease agreements.

For the three months ended June 30, 2021 and 2020, the Company leased proppant logistics equipment for $ 2.1 million and $ 1.9 million, respectively.

During the six months ended June 30, 2020 and 2019, the Company leased proppant logistics equipment for $ 4.1 million and $ 4.5 million, respectively.

Payables to PropX as of June 30, 2021 and December 31, 2020 were $ 2.6 million and $ 1.5 million, respectively.

For the three months ended September 30, 2021 and 2020, the Company leased proppant logistics equipment for $ 3.2 million and $ 2.0 million, respectively.

During the nine months ended September 30, 2021 and 2020, the Company leased proppant logistics equipment for $ 7.3 million and $ 6.6 million, respectively.

Payables to PropX as of September 30, 2021 and December 31, 2020 were $ 3.4 million and $ 1.5 million, respectively.

Effective October 26, 2021, the Company completed the purchase of all membership interest in PropX, refer to Note 17—Subsequent Events for further discussion of the transaction.

Note 15— Commitments & Contingencies

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The Company enters into purchase and supply agreements to secure supply and pricing of proppants and chemicals.

As of June 30, 2021 and December 31, 2020, the agreements provide pricing and committed supply sources for the Company to purchas e 703,634 and 1,580,750 tons, respectively, of proppant through June 30, 2022.

As of September 30, 2021 and December 31, 2020, the agreements provide pricing and committed supply sources for the Company to purchas e 253,975 and 1,580,750 tons, respectively, of proppant through June 30, 2022.

Amounts above also include commitments to pay for transport fees on minimum amounts of proppants.

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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 purchases 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 such 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 $ 16.6 million, $ 16.7 million, $ 2.1 million, for the remainder of 2021 and years ended 2022 and 2023, 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 2021 are $ 9.6 million of payments expected to be made to Schlumberger, in conjunction with the transition services provided by Schlumberger, in the third quarter of 2021 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in OneStim’s 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

In circumstances where the Company does not make the minimum purchases required under the contract, the Company and its suppliers have a history of amending such

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

aforementioned vehicles and equipment, subject to agreement on terms and conditions.

minimum purchase contractual terms and in rare cases does the Company incur such 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 $ 7.7 million, $ 16.7 million, and $ 0.7 million for the remainder of 2021, year ended 2022 and 2023, 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 2021 are approximately $ 8.7 million of payments expected to be made to Schlumberger, in conjunction with the transition services provided by Schlumberger, in the third quarter of 2021 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in OneStim’s 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.

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Note 16— Selected Quarterly Financial Data

The following tables summarizes consolidated changes in equity for the three months ended June 30, 2021 and 2020:

The following tables summarizes consolidated changes in equity for the three months ended September 30, 2021 and 2020:

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—March 31, 2021 169,259 10,281 $ 1,692 $ 103 $ 1,212,354 $ ( 10,915 ) $ 1,318 $ 1,204,552 $ 73,183 $ 1,277,735

Exchanges of Class B Common Stock for Class A Common Stock 8,421 ( 8,421 ) 84 ( 84 ) 59,451 — — 59,451 ( 59,451 ) —

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 )

Recognition of valuation allowance on deferred tax asset, net of liability under tax receivable agreement — — — — ( 435 ) — — ( 435 ) — ( 435 )

Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 824 824

Stock based compensation expense 4,201 — — 4,201 44 4,245

RSU Vesting 630 — 7 ( 2,952 ) — — ( 2,945 ) ( 454 ) ( 3,399 )

Currency translation adjustment — — — — — — ( 2,263 ) ( 2,263 ) ( 24 ) ( 2,287 )

Net loss — — — — — ( 38,890 ) — ( 38,890 ) ( 489 ) ( 39,379 )

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

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

Noncontrolling Interest Total Equity

Balance—March 31, 2020 81,920 30,639 $ 819 $ 307 $ 413,664 $ 140,581 $ — $ 555,371 $ 226,082 $ 781,453

Balance—June 30, 2020 84,853 28,081 $ 848 $ 281 $ 435,885 $ 94,817 $ — $ 531,831 $ 188,126 $ 719,957

Exchange of Class B Common Stock for Class A Common Stock 1,013 ( 1,013 ) 10 ( 10 ) 6,561 — — 6,561 ( 6,561 ) —

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Net loss — — — — — ( 34,502 ) — ( 34,502 ) ( 14,523 ) ( 49,025 )

Balance—June 30, 2020 84,853 28,081 $ 848 $ 281 $ 435,885 $ 94,817 $ — $ 531,831 $ 188,126 $ 719,957

Balance—September 30, 2020 85,866 27,068 $ 859 $ 271 $ 446,155 $ 60,317 $ — $ 507,602 $ 168,693 $ 676,295

LIBERTY OILFIELD SERVICES INC.

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Note 17— Subsequent Events

The Company has evaluated events through the filing of this Quarterly Report and determined that no significant subsequent events have occurred that would require recognition or disclosure in the unaudited condensed consolidated financial statements.

On October 22, 2021, the Company entered into a debt amendment for the ABL Facility.

Under the terms of the amendment, the maximum borrowing amount was increased to $ 350.0 million, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory, additionally, limits under certain covenants related to allowable indebtedness and other activities were expanded.

Borrowings under the amended ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR 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.

The average monthly unused commitment is subject to an unused commitment fee of 0.25 % to 0.375 %.

The ABL Facility maturity was extended to 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.

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.

(“R/C IV”), a Delaware corporation and a subsidiary of the Company, as parent guarantors.

All other financial provisions under the original agreement are still applicable aside from the aforementioned changes to the borrowing base.

Term Loan Facility

During the subsequent period, on October 22, 2021, the Company entered into a debt amendment for the Term Loan Facility.

The Term Loan Facility maturity was extended to September 19, 2024.

In addition to extending the maturity, limits under certain covenants related to allowable indebtedness and other activities were expanded.

All other financial provisions, amounts, and covenants under the original agreement are still applicable to the agreement.

PropX Acquisition

On October 26, 2021, the Company acquired PropX in exchange for $ 13.5 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 (the total of the Class A and Class B shares issued as equity consideration was determined by dividing $ 76.5 million by the 30 -day average closing price of the Company’s Class A Common Stock immediately prior to closing), for total consideration of $ 104.0 million, based on the Class A Common Stock closing price of $ 15.48 on October 25, 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 anytime, at the election of the shareholder.

PropX is a leading provider of last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America.

The Company leases proppant handling equipment from PropX, as discussed in Note 14—Related Party Transactions.

The initial accounting for the business combination is incomplete at the time of this filing due to the 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.

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

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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 $13.5 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 (the total of the Class A and Class B shares issued as equity consideration was determined by dividing $76.5 million by the 30-day average closing price of the Company’s Class A Common Stock immediately prior to closing), for total consideration of $ 104.0 million, based on the Class A Common Stock closing price of $ 15.48 on October 25, 2021, for a total consideration of approximately $104.0 million, based on the Class A Common Stock closing price of $15.48 on October 25, 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 anytime, 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.

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.

PropX will continue to sell and deliver these solutions industry-wide.

For more information refer to Note 17—Subsequent Events.

We believe the following characteristics both distinguish us from our competitors and are the foundations of our business:

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Recent Trends and Outlook

Global economic growth outlook continues to improve, albeit at a moderating pace.

Sentiment is based upon improving positive economic data as countries reopen, partially offset by the impact of global supply chain constraints and virus variant concerns.

Commodity markets remain constructive as sustained economic expansion continues to drive rising energy demand while underinvestment in the energy sector constrains supply.

This is evidenced by global oil inventory draws, that demonstrate the growth in oil demand is higher than the increase in the oil supply.

Looking forward, the recent announcement by OPEC+ for a gradual reinstatement of prior oil supply cuts through 2021 is expected to be more than offset by projected increases in global oil demand.

This should support a continued increase in demand for North American completion services.

We expect E&P capital spending to increase in 2022 as they work towards attaining modest oil production growth, while they address both a decline in the inventory of drilled but uncompleted wells and the impact of decline curves on their production base.

As a result, we anticipate a modest increase in frac activity to support production growth in 2022.

The combined impact of improved E&P economics with greater potential for free cash flow generation, increased completion service activity demand and tightness in next generation frac equipment is expected to underpin a more disciplined frac market and an increase in service prices.

The economic rebound across North America has also led to a rise in inflation and wage growth.

It is important that service prices continue to rebound from extreme pandemic lows, and the basis for discussions

on service pricing with E&P operators have strengthened throughout the year.

It is noteworthy that service prices tend to lag broader inflationary increases across the value chain, but these increases are necessary to facilitate the next phase of growth and investment, especially as the service industry contends with inflationary increases.

During the second quarter of 2021, WTI oil prices averaged $66.19 and $73.04 from the end of the quarter through July 19, 2021, compared to $58.09 in the first quarter of 2021 and $41.70 in the second half of 2020.

The most recent domestic onshore rig count for North America averaged 437 in the second quarter of 2021, up from an average of 378 in the first quarter of 2021, according to a report by Baker Hughes, a GE company.

During the third quarter, worldwide economic activity continued to grow, despite supply chain disruptions, materials shortages, labor scarcity, rising costs, and Covid-related uncertainty.

The demand for energy continues to outpace the gradual return of supply, as evidenced by the energy crises in Europe and China and low inventories.

Global oil and gas supply remains constrained by underinvestment in oil and gas production and associated infrastructure.

Tightness in global commodity markets is bolstering demand for frac services in support of energy consumption.

Concurrently, there has been frac industry consolidation, equipment cannibalization and attrition.

Customers are in search of modern, environmentally friendly solutions.

While the third quarter benefited from the tight markets and demand for modern equipment, reflected in increased activity and service pricing, we were not immune to the serious supply chain issues that the world faces today as faster cost increases more than offset higher prices during the period.

Increased transportation costs and driver shortages, maintenance personnel and supply chain constraints and integration costs hurt margins in the period.

While we expect the supply chain, logistics and integration challenges to continue into the fourth quarter, we are actively working to moderate their effect on margins.

During the third quarter of 2021, WTI oil prices averaged $70.58 and $80.97 from the end of the quarter through October 25, 2021, compared to $66.19 in the second quarter of 2021, and $40.89 in the third quarter of 2020.

The domestic onshore rig count for North America averaged 484 rigs in the third quarter of 2021, up from an average of 437 in the second quarter of 2021, according to a report by Baker Hughes, a GE company.

Results of Operations

Three months ended June 30, 2021 compared to three months ended June 30, 2020

Three months ended June 30,

Three months ended September 30, 2021 compared to three months ended September 30, 2020

Three months ended September 30,

Description 2021 2020 Change

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Depreciation, depletion and amortization 65,852 44,496 21,356

(Gain) loss on disposal of assets (277) 334 (611)

Gain on disposal of assets (79) (752) 673

Operating loss (39,566) (55,402) 15,836

Other expense, net 462 3,656 (3,194)

Other (income) expense, net (940) 3,595 (4,535)

Net loss before income taxes (38,626) (58,997) 20,371

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stockholders $ (38,890) $ (34,502) $ (4,388)

Our revenue increased $492.9 million , or 558% , to $581.3 million for the three months ended June 30, 2021 compared to $88.4 million for the three months ended June 30, 2020.

In April 2020, we reduced our staffed fleet count by approximately 50%, and furloughed additional fleets, in response to the market imbalance resulting from the COVID-19 pandemic.

The continued ramp up in activity since May 2020 lows commensurate with energy demand recovery to pre-pandemic levels, as well as additional fleets and service lines obtained through the OneStim Acquisition (see “Recent Trends and Outlook”), has driven higher fleet utilization and revenue.

Our revenue increased $506.2 million , or 343% , to $653.7 million for the three months ended September 30, 2021 compared to $147.5 million for the three months ended September 30, 2020.

Higher fleet utilization and service prices, as well as additional fleets and service lines obtained through the OneStim Acquisition (see “Recent Trends and Outlook”), drove higher revenue, commensurate with the energy demand recovery.

Cost of Services

Cost of services (excluding depreciation and amortization) in creased $432.4 million , or 483% , to $522.0 million for the three months ended June 30, 2021 compared to $89.5 million for the three months ended June 30, 2020, which is consistent with the increase in activity discussed above.

Cost of services (excluding depreciation and amortization) in creased $454.4 million , or 326% , to $593.7 million for the three months ended September 30, 2021 compared to $139.2 million for the three months ended September 30, 2020.

The increase in costs is driven by the increase in activity, as discussed above, as well as increases in material, personnel, and repairs and maintenance costs related to global supply chain challenges, acquisition integration and Covid related disruptions and inflationary pressure.

General and Administrative

General and administrative expense s incre ased $11.3 million , or 63% , to $29.4 million for the three months ended June 30, 2021 compared to $18.1 million for the three months ended June 30, 2020 primarily related to an increase in personnel costs due to the restoration of certain temporarily suspended employee benefits and additional headcount commensurate with the OneStim Acquisition.

During the three months ended June 30, 2020 we applied a flexible cost structure, including employee furloughs as well as the temporary suspension of bonus and 401(k) match programs, which have since been reinstated.

General and administrative expense s incre ased $15.0 million , or 87% , to $32.3 million for the three months ended September 30, 2021 compared to $17.3 million for the three months ended September 30, 2020 primarily related to an increase in personnel costs due to the restoration of certain temporarily suspended employee benefits and additional headcount

commensurate with the OneStim Acquisition.

During the three months ended September 30, 2020 we applied a flexible cost structure, including employee furloughs as well as the temporary suspension of bonus and 401(k) match programs, which have since been reinstated.

Transaction, Severance and Other Costs

Transaction, severance and other costs decreased $6.1 million, or 67%, to $3.0 million for the three months ended June 30, 2021 compared to $9.1 million for the three months ended June 30, 2020.

Such costs incurred during the three months ended June 30, 2021 include transaction costs associated with the OneStim Acquisition.

During the three months ended June 30, 2020.

the Company reduced its workforce and commenced furlough schedules for remaining employees in May 2020.

The Company recorded $7.4 million in severance costs in the three months ended June 30, 2020.

Additionally, the Company paid

insurance and other benefits of $1.7 million for employees while they were on furlough.

The Company did not lay-off or furlough any employees in during 2021.

Transaction, severance and other costs decreased $1.1 million, or 40%, to $1.6 million for the three months ended September 30, 2021 compared to $2.6 million for the three months ended September 30, 2020.

Such costs incurred during the three months ended September 30, 2021 include transaction and other costs associated with integration of assets acquired in the OneStim Acquisition.

During the three months ended September 30, 2020 the Company recorded $1.1 million in severance costs related to insurance and other benefits for employees while they were on furlough.

The Company did not lay-off or furlough any employees during 2021.

The remaining costs incurred during the three months ended September 30, 2020 relate to initial costs incurred related to the OneStim Acquisition.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense increased $18.3 million , or 41% , to $63.2 million for the three months ended June 30, 2021 compared to $44.9 million for the three months ended June 30, 2020.

Depreciation, depletion and amortization expense increased $21.4 million , or 48% , to $65.9 million for the three months ended September 30, 2021 compared to $44.5 million for the three months ended September 30, 2020.

The increase in 2021 was due to the addition of active fleets and other property acquired in the OneStim Acquisition.

(Gain) Loss on disposal of assets

The Company recognized a gain on disposal of assets of $0.3 million during the three months ended June 30, 2021 compared to a loss of $0.3 million for the three months ended June 30, 2020.

Gain on disposal of assets

The Company recognized a gain on disposal of assets of $0.1 million during the three months ended September 30, 2021 compared to $0.8 million for the three months ended September 30, 2020.

The Company regularly sells equipment that is no longer in use as part of normal course fleet and equipment management.

Operating Loss

We realized an operating loss of $36.0 million for the three months ended June 30, 2021 compared to an operating loss of $73.5 million for the three months ended June 30, 2020, a decrease in loss of $37.5 million, or 51%.

The decrease in loss is primarily due to the $492.9 million, or 558%, increase in total revenue only partially offset by a $455.4 million increase in total operating expenses, the significant components of which are discussed above.

We realized an operating loss of $39.6 million for the three months ended September 30, 2021 compared to $55.4 million for the three months ended September 30, 2020, a decrease in loss of $15.8 million, or 29%.

The decrease in loss is primarily due to the $506.2 million, or 343%, increase in total revenue partially offset by a $490.4 million increase in total operating expenses, the significant components of which are discussed above.

The improvement in operating results is primarily attributable to the rebound in market conditions and ongoing recovery from the COVID-19 pandemic.

Other Expense, net

Other expense, net, decreased $3.2 million to $0.5 million for the three months ended June 30, 2021 compared to $3.7 million for the three months ended June 30, 2020.

Other expense, net, is comprised of gain on remeasurement of liability under tax receivable agreement and interest expense, net.

Other (Income) Expense, net

Other (income) expense, net, changed $4.5 million to $0.9 million of income for the three months ended September 30, 2021 compared to $3.6 million of expense for the three months ended September 30, 2020.

Other (income) expense, net, is comprised of gain on remeasurement of liability under tax receivable agreement and interest expense, net.

During the second quarter of 2021, the Company entered into a three-year cumulative pre-tax book loss primarily due to COVID-19 related losses and recognized a valuation allowance on a portion of its deferred tax assets in accordance with ASC 740.

In connection with the recognition of a valuation allowance, the Company also remeasured the liability under the tax receivable agreement resulting in a gain of $3.3 million.

Interest expense, net was consistent between periods, increasing only slightly during the three months ended June 30, 2021 compared to the three months ended June 30, 2020.

In connection with the recognition of a valuation allowance, the Company also remeasured the liability under the tax receivable agreement in the third quarter resulting in a gain of $4.9 million.

Interest expense, net was consistent between periods, increasing only slightly during the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

Net Loss before Income Taxes

We realized net loss before income taxes of $36.5 million for the three months ended June 30, 2021 compared to $77.2 million for the three months ended June 30, 2020.

We realized a net loss before income taxes of $38.6 million for the three months ended September 30, 2021 compared to $59.0 million for the three months ended September 30, 2020.

The decrease in loss is primarily attributable to an increase in revenue, as discussed above, related to the increase in activity following the rebound in market conditions and recovery from the COVID-19 pandemic.

Income Tax Expense (Benefit)

We recognized tax expense of $16.0 million for the three months ended June 30, 2021, at an effective rate of (44)%, compared to a tax benefit of $11.4 million, at an effective rate of 15%, recognized during the three months ended June 30, 2020.

This increase in income tax expense is primarily attributable to the valuation allowance recorded on a portion of our net deferred tax assets as of June 30, 2021 as a result of the Company entering into a three year cumulative pre-tax book loss position primarily due to COVID-19 related losses.

Six months ended June 30, 2021 compared to six months ended June 30, 2020

Six months ended June 30,

We recognized tax expense of $0.8 million for the three months ended September 30, 2021, at an effective rate of (1.9)%, compared to a tax benefit of $10.0 million, at an effective rate of 16.9%, recognized during the three months ended September 30, 2020.

This increase in income tax expense is primarily attributable to the valuation allowance recorded on a portion of our net deferred tax assets as of September 30, 2021, as a result of the Company entering into a three year cumulative pre-tax book loss position primarily due to COVID-19 related losses.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020

Nine Months Ended September 30,

Description 2021 2020 Change

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Depreciation, depletion and amortization 191,122 134,258 56,864

(Gain) loss on disposal of assets (997) 232 (1,229)

Gain on disposal of assets (1,076) (520) (556)

Operating loss (117,789) (122,658) 4,869

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stockholders $ (123,655) $ (78,553) $ (45,102)

Our revenue increased $572.6 million, or 102%, to $1.1 billion for the six months ended June 30, 2021 compared to $560.7 million for the six months ended June 30, 2020.

In April 2020, we reduced our staffed fleet count by approximately 50%, and furloughed additional fleets, in response to the market imbalance resulting from the COVID-19 pandemic.

The continued ramp up in activity since May 2020 lows, commensurate with energy demand recovery to pre-pandemic levels, as well as additional fleets and service lines obtained through the OneStim Acquisition (see “Recent Trends and Outlook”), has driven higher fleet utilization and revenue.

Our revenue increased $1.1 billion, or 152%, to $1.8 billion for the nine months ended September 30, 2021 compared to $708.2 million for the nine months ended September 30, 2020.

Cost of Services

Cost of services (excluding depreciation and amortization) increased $538.7 million, or 112%, to $1.0 billion for the six months ended June 30, 2021 compared to $482.2 million for the six months ended June 30, 2020.

The increase is consistent with the increase in activity discussed above.

Cost of services (excluding depreciation and amortization) increased $993.1 million, or 160%, to $1.6 billion for the nine months ended September 30, 2021 compared to $621.5 million for the nine months ended September 30, 2020.

General and Administrative

General and administrative expenses increased $9.1 million, or 19%, to $55.8 million for the six months ended June 30, 2021 compared to $46.7 million for the six months ended June 30, 2020 primarily related to personnel costs due to additional headcount commensurate with the OneStim Acquisition.

General and administrative expenses increased $24.1 million, or 38%, to $88.0 million for the nine months ended September 30, 2021 compared to $64.0 million for the nine months ended September 30, 2020 primarily related to personnel costs due to additional headcount commensurate with the OneStim Acquisition.

Additionally, during the second quarter of 2020 we applied a flexible cost structure, including employee furloughs as well as the temporary suspension of bonus and 401(k) match programs, which have since been reinstated.

Transaction, Severance and Other Costs

Transaction, severance and other costs increased $1.6 million, or 17%, to $10.6 million for the six months ended June 30, 2021 compared to $9.1 million for the six months ended June 30, 2020.

Such costs incurred during the six months ended June 30, 2021 primarily relate to the OneStim Acquisition, while costs incurred during the six months ended June 30, 2020 related to one time severance costs and insurance for furloughed employees.

The Company did no lay-off of furlough any employees during 2021.

Transaction, severance and other costs increased $0.5 million, or 4%, to $12.2 for the nine months ended September 30, 2021 compared to $11.7 million for the nine months ended September 30, 2020.

Such costs incurred during the nine months ended September 30, 2021 primarily relate to the OneStim Acquisition, while costs incurred during the nine months ended September 30, 2020 primarily related to one time severance costs and insurance and benefits for furloughed employees.

The Company did not lay-off or furlough any employees during 2021.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense increased $35.5 million, or 40%, to $125.3 million for the six months ended June 30, 2021 compared to $89.8 million for the six months ended June 30, 2020.

Depreciation, depletion and amortization expense increased $56.9 million, or 42%, to $191.1 million for the nine months ended September 30, 2021 compared to $134.3 million for the nine months ended September 30, 2020.

The increase in 2021 was due to the addition of active fleets and other property acquired in the OneStim Acquisition.

(Gain) loss on disposal of assets

The Company recognized a gain on disposal of assets of $1.0 million during the six months ended June 30, 2021 compared to a loss of $0.2 million for the six months ended June 30, 2020.

Gain on disposal of assets

The Company recognized a gain on disposal of assets of $1.1 million during the nine months ended September 30, 2021 compared to $0.5 million for the nine months ended September 30, 2020.

The Company regularly sells equipment that is no longer in use as part of normal course fleet and equipment management.

Operating Loss

We realized an operating loss of $78.2 million for the six months ended June 30, 2021 compared to $67.3 million for the six months ended June 30, 2020, an increase in loss of $11.0 million, or 16%.

The increase in loss is primarily due to lower gross margins during the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 as the prior year period included three months of pre-pandemic results.

In addition, emergency cost savings measure to reduce personnel costs implemented in April 2020 were restored at various times during 2021.

We realized an operating loss of $117.8 million for the nine months ended September 30, 2021 compared to $122.7 million for the nine months ended September 30, 2020, a decrease in loss of $4.9 million, or 4%.

The decrease in loss is primarily due to higher revenues during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

However, the cost of services increased due to inflation of proppant, chemicals, and repair and maintenance costs.

Additionally, any emergency cost savings measures to reduce personnel costs implemented in April 2020 were restored at various times during 2021.

Other Expense, net

Other expense, net, decreased $3.0 million to $4.2 million for the six months ended June 30, 2021 compared to $7.3 million for the six months ended June 30, 2020.

Other expense, net, decreased $7.6 million to $3.3 million for the nine months ended September 30, 2021 compared to $10.9 million for the nine months ended September 30, 2020.

Other expense, net, is comprised of gain on remeasurement of liability under tax receivable agreement and interest expense, net.

In connection with the recognition of a valuation allowance, the Company also remeasured the liability under the tax receivable agreement resulting in a gain of $3.3 million.

Interest expense, net was consistent between periods, decreasing only slightly during the six months ended June 30, 2021 compared to the six months ended June 30, 2020.

In connection with the recognition of a valuation allowance, the Company also remeasured the liability under the tax receivable agreement resulting in a gain of $8.3 million during the nine months ended September 30, 2021.

Interest expense, net was consistent between periods, increasing only slightly during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Net Loss before Income Taxes

We realized net loss before income taxes of $82.4 million for the six months ended June 30, 2021 compared to $74.5 million for the six months ended June 30, 2020.

The decrease is primarily attributable to a decrease in revenue, as discussed above, related to the decrease in pricing and activity.

We realized net loss before income taxes of $121.1 million for the nine months ended September 30, 2021 compared to $133.5 million for the nine months ended September 30, 2020.

The decrease in loss is primarily due to higher revenues and the gain recognized upon remeasurement of the tax receivable agreement during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

However, the cost of services increased due to inflation of proppant, chemicals, and repair and maintenance costs.

Additionally, any emergency cost savings measures to reduce personnel costs implemented in April 2020 were restored at various times during 2021.

Income Tax (Benefit) Expense

We recognized income tax expense of $8.6 million for the six months ended June 30, 2021, at an effective rate of (10)%, expense, compared to an income tax benefit of $11.1 million, at an effective rate of 15%, recognized during the six months ended June 30, 2020.

This increase in income tax expense is primarily attributable to the full valuation allowance recorded on the net deferred tax assets as of June 30, 2021 as a result of the Company entering into a three year cumulative pre-tax book loss position.

We recognized income tax expense of $9.4 million for the nine months ended September 30, 2021, at an effective rate of (8)%, expense, compared to an income tax benefit of $21.1 million, at an effective rate of 16%, recognized during the nine months ended September 30, 2020.

This increase in income tax expense is primarily attributable to the full valuation allowance recorded on the net deferred tax assets as of June 30, 2021, as a result of the Company entering into a three year cumulative pre-tax book loss position primarily due to COVID-19 related losses.

Comparison of Non-GAAP Financial Measures

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

Three and six months ended June 30, 2021 compared to three and six months ended June 30, 2020:

Three and nine months ended September 30, 2021 compared to three and nine months ended September 30, 2020:

EBITDA and Adjusted EBITDA

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Description 2021 2020 Change 2021 2020 Change

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Transaction, severance and other costs 1,556 2,609 (1,053) 12,173 11,666 507

(Gain) loss on disposal of assets (277) 334 (611) (997) 232 (1,229)

Gain on disposal of assets (79) (752) 673 (1,076) (520) (556)

Provision for credit losses — — — 745 4,678 (3,933)

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Adjusted EBITDA $ 32,008 $ 1,396 $ 30,612 $ 100,266 $ 50,775 $ 49,491

EBITDA was $30.5 million for the three months ended June 30, 2021 compared to $(28.6) million for the three months ended June 30, 2020.

Adjusted EBITDA was $36.6 million for the three months ended June 30, 2021 compared to $(8.3) million for the three months ended June 30, 2020.

The in creases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity resulting in increased revenue offset by a lesser increase in operating costs.

EBITDA was $50.4 million for the six months ended June 30, 2021 compared to $22.5 million for the six months ended June 30, 2020.

Adjusted EBITDA was $68.3 million for the six months ended June 30, 2021 compared to $49.4 million for the six months ended June 30, 2020.

The in creases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity resulting in increased revenue offset by a lesser increase in operating costs.

EBITDA was $31.2 million for the three months ended September 30, 2021 compared to $(10.9) million for the three months ended September 30, 2020.

Adjusted EBITDA was $32.0 million for the three months ended September 30, 2021 compared to $1.4 million for the three months ended September 30, 2020.

The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity resulting in increased revenue offset by a lesser increase in operating costs.

EBITDA was $81.6 million for the nine months ended September 30, 2021 compared to $11.6 million for the nine months ended September 30, 2020.

Adjusted EBITDA was $100.3 million for the nine months ended September 30, 2021 compared to $50.8 million for the nine months ended September 30, 2020.

The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity resulting in increased revenue offset by a lesser increase in operating costs.

Liquidity and Capital Resources

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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 decreased by $38.3 million to $30.7 million as of June 30, 2021 compared to $69.0 million as of December 31, 2020, while working capital excluding cash and current liabilities under debt and lease arrangements increased $12.0 million.

Cash and cash equivalents decreased by $34.3 million to $34.7 million as of September 30, 2021 compared to $69.0 million as of December 31, 2020, while working capital excluding cash and current liabilities under debt and lease arrangements increased $(9.4) million.

We believe that our operating cash flow and available borrowings under our Credit Facilities will be sufficient to fund our operations for at least the next twelve months.

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

Six Months Ended June 30,

Nine Months Ended September 30,

Description 2021 2020 Change

3 unchanged sentences

Net cash used in financing activities 5,149 (16,606) 21,755

Analysis of Cash Flow Changes Between the Six Months Ended June 30, 2021 and 2020

Analysis of Cash Flow Changes Between the Nine Months Ended September 30, 2021 and 2020

Operating Activities .

Net cash provided by operating activities was $35.6 million for the six month s ended June 30, 2021, compared to $96.6 million for the six months ended June 30, 2020.

The $61.1 million decrease in cash from operating activities is primarily attributable to a $14.6 million decrease in cash due to increases in net working capital for the six months ended June 30, 2021, compared to a $64.2 million increase in cash due to decreases in net working capital for the six months ended June 30, 2020.

This decrease was partially offset by a $17.7 million increase in cash flows from operating activities, excluding changes in working capital, as a result of increased activity levels in 2021.

Net cash provided by operating activities was $80.1 million for the nine month s ended September 30, 2021, compared to $70.0 million for the nine months ended September 30, 2020.

The $10.1 million increase in cash from operating activities is primarily attributable to a $1.1 billion increase in revenues offset by a $1.0 billion increase in operating expense, offset by a $2.8 million increase in cash due to decreases in net working capital for the nine months ended September 30, 2021, compared to a $48.1 million increase in cash due to decreases in net working capital for the nine months ended September 30, 2020.

Investing Activities .

Net cash used in investing activities was $65.9 million for the six months ended June 30, 2021, compared to $70.0 million for the six months ended June 30, 2020.

Net cash used in investing activities was $119.3 million for the nine months ended September 30, 2021, compared to $81.3 million for the nine months ended September 30, 2020.

Cash used in investment activities was higher during the first quarter of 2020 in line with the expected annual spend for pre-pandemic activity levels, including growth capital planned at the time.

Spend decreased during the second quarter of 2020 and remains limited in the current period.

Although the Company operates more fleets following the OneStim acquisition, such acquired fleets were delivered in fully maintained condition pursuant to the term of the acquisition agreement, thus initially limited maintenance capital expenditures for a portion of the Company’s fleets.

Spend decreased during the second quarter of 2020 and remained limited in the third quarter of 2020.

The Company has increased operations during 2021 leading to the purchase of more equipment and capitalized maintenance expenditures.

Financing Activities .

Ne t cash used in financing activities was $8.2 million for the six months ended June 30, 2021, compared to net cash used in financing activities of $14.8 million for the six months ended June 30, 2020.

The $6.6 million decrease in cash used in financing activities was primarily due to a $5.6 million decrease in dividends and per unit distributions to non-controlling interest unitholders as a result of the suspension of the dividend in April 2020.

Additionally, other distributions and advance payments to non-controlling interest unitholders was a net receipt of $1.4 million during the six months ended June 30, 2021, compared to net payment of $2.8 million during the six months ended June 30, 2020 due to a decrease in payments made under the TRAs.

These decreases were offset by a $3.2 million increase in payments made for tax withholdings on restricted stock unit vesting as a larger number of units vested at a higher stock price in 2021 compared to 2020.

Ne t cash received in financing activities was $5.1 million for the nine months ended September 30, 2021, compared to net cash used in financing activities of $16.6 million for the nine months ended September 30, 2020.

The $ 21.8 million change in financing activities was primarily due to net borrowings of $16.0 million on the ABL Facility.

There were no borrowings on the ABL Facility for the nine months ended September 30, 2020.

Additionally, there was a $5.8 million decrease in dividends and per unit distributions to non-controlling interest unitholders as a result of the suspension of the dividend in April 2020.

Other distributions and advance payments to non-controlling interest unitholders was a net receipt of $1.4 million during the nine months ended September 30, 2021, compared to net payment of $2.3 million during the nine months ended September 30, 2020 due to a decrease in payments made under the TRAs.

These decreases were offset by a $3.2 million increase in payments made for tax withholding on restricted stock unit vesting as a larger number of units vested at a higher stock price in 2021 compared to 2020.

The Company’s ABL Facility provides for a line of credit up to $250.0 million, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory.

We periodically utilize the ABL Facility to provide short-term flexibility for working capital fluctuations.

As of June 30, 2021, the borrowing base was calculated to be $247.3 million, and the Company had no borrowings outstanding, except for letter of credit in the amount of $0.8 million, resulting in $246.5 million of availability.

As of September 30, 2021, the borrowing base was calculated to be $250.0 million, and the Company had $16.0 million outstanding, in addition to a letter of credit in the amount of $0.8 million, resulting in $233.2 million of availability.

Borrowings under the ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR 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.

As of September 30, 2021, borrowings outstanding under the ABL Facility incurred interest at a rate of 3.75%.

The average monthly unused commitment is subject to an unused commitment fee of 0.375% to 0.5%.

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LOS Corp., a Delaware corporation and a subsidiary of the Company, as parent guarantors.

During the subsequent period, on October 22, 2021 , the Company amended the ABL Facility which included increasing the maximum borrowing amount to $350.0 million and extended the terms through October 22, 2026.

The Company is a corporation and is subject to U.S.

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The Company is also subject to Canadian federal and provincial income tax on its foreign operations.

The Company recognized an income tax expense of $8.6 million, effective global income tax rate applicable to the Company of (10)%, expense, for the six months ended June 30, 2021 compared to income tax benefit of $11.1 million, combined effective rate of 15%, for the six months ended June 30, 2020.

The Company’s effective tax rate for the six months

ended June 30, 2021 is significantly less than the statutory federal tax rate of 21.0% primarily because of the valuation allowance recorded on its U.S.

The Company recognized an income tax expense of $9.4 million, and a combined effective global income tax rate of (8)%, for the nine months ended September 30, 2021 compared to income tax benefit of $21.1 million, and a combined effective global tax rate of 16%, for the nine months ended September 30, 2020.

The Company’s effective tax rate for the nine months ended September 30, 2021 is significantly less than the statutory federal tax rate of 21.0% primarily because of the valuation allowance recorded on its U.S.

net deferred tax assets as of December 31, 2020 as a result of entering into a three year cumulative pre-tax book loss position primarily due to COVID-19 related losses.

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Per the CARES Act, net operating losses (“NOL”) incurred in 2018, 2019 and 2020 may be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

During the six months ended June 30, 2021, 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.

During the nine months ended September 30, 2021, 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 assets in the accompanying unaudited condensed consolidated financial statements.

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There can be no assurance that we will be able to finance our obligations under the TRAs.

During the six months ended June 30, 2020, redemptions of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $2.6 million in amounts payable under the TRAs, and a net increase of $3.0 million in deferred tax assets, all of which were recorded through equity.

Critical Accounting Policies and Estimates

6 unchanged sentences

Off Balance Sheet Arrangements

We have no material off balance sheet arrangements as of June 30, 2021, except for purchase commitments under supply agreements as disclosed above under “Item 1.

We have no material off balance sheet arrangements as of September 30, 2021, except for purchase commitments under supply agreements as disclosed above under “Item 1.

Financial Statements—Note 15—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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements