What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-22 compared with 2021-02-24 · 443 added, 437 removed, 795 unchanged (53% of the section changed)

4 unchanged sentences

Our disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures.

As noted in Management’s Report on Internal Control Over Financial Reporting, management ’ s evaluation of, and conclusion on, the effectiveness of internal control over financial reporting did not include the internal controls of the entities acquired in the OneStim Acquisition, as defined herein, on December 31, 2020.

As noted in Management’s Report on Internal Control Over Financial Reporting, management’s evaluation of, and conclusion on, the effectiveness of internal control over financial reporting did not include the internal controls of the entities acquired in the PropX Acquisition, as defined herein, on October 26, 2021.

Under guidelines established by the SEC, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company.

The Company is in the process of integrating OneStim ’s and our internal controls over financial reporting.

The Company is in the process of integrating PropX’s and our internal controls over financial reporting.

As a result of these integration activities, certain controls will be evaluated and may be changed.

Except as noted above, there were no changes to our internal control over financial reporting during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Except as noted above, there were no changes to our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

See page F-1 for Management’s Report on Internal Control Over Financial Reporting and page F-4 for Report of Independent Registered Public Accounting Firm on its assessment of our internal control over financial reporting.

1 unchanged sentence

Directors, Executive Officers and Corporate Governance

The information required by this item concerning our executive officers, directors and corporate governance is incorporated herein by reference to our definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2020, under the captions “Proposal 1 — Election of Directors,” “The Board and its Committees,” “Executive Officers” and “Delinquent Section 16(a) Reports.”

The information required by this item concerning our executive officers, directors and corporate governance is incorporated herein by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, under the captions “Proposal 1 — Election of Directors,” “The Board and its Committees,” “Executive Officers” and “Delinquent Section 16(a) Reports.”

Executive Compensation

The information required by this item concerning executive compensation is incorporated herein by reference to our definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2020, under the captions “The Board and its Committees,” “Compensation Discussion & Analysis,” “Compensation Committee Report,” “Executive Compensation Tables,” “Director Compensation” and “CEO Pay Ratio.”

The information required by this item concerning executive compensation is incorporated herein by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, under the captions “The Board and its Committees,” “Compensation Discussion & Analysis,” “Compensation Committee Report,” “Executive Compensation Tables,” “Director Compensation” and “CEO Pay Ratio.”

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this item concerning the security ownership of certain beneficial owners and management and related stockholder matters are incorporated herein by reference to our definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2020, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

The information required by this item concerning the security ownership of certain beneficial owners and management and related stockholder matters are incorporated herein by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, under the captions “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information.”

Certain Relationships and Related Transactions, and Director Independence

The information required by this item concerning certain relationships and related person transactions and director independence is incorporated herein by reference to our definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2020, under the captions “Certain Relationships and Related Party Transactions” and “the Board and its Committees.”

The information required by this item concerning certain relationships and related person transactions and director independence is incorporated herein by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, under the captions “Certain Relationships and Related Party Transactions” and “the Board and its Committees.”

Principal Accountant Fees and Services

The information required by this item concerning principal accounting fees and services is incorporated herein by reference to our definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed with the SEC no later than 120 days after December 31, 2020, under the caption “Proposal 2 — Ratification of Appointment of the Company’s Independent Registered Public Accounting Firm.”

The information required by this item concerning principal accounting fees and services is incorporated herein by reference to our definitive proxy statement for our 2022 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2021, under the caption “Proposal 3 — Ratification of Appointment of the Company’s Independent Registered Public Accounting Firm.”

Exhibits and Financial Statement Schedules

1 unchanged sentence

Refer to Index to Financial Statements on page 49.

All schedules are omitted as information required is inapplicable or the information is presented in the consolidated and combined financial statements and the related notes.

The documents listed in the Index to Exhibits are filed, furnished or incorporated by reference as part of this Annual Report on Form 10-K, and such Index to Exhibits are incorporated herein by reference.

All schedules are omitted as information required is inapplicable or the information is presented in the consolidated financial statements and the related notes.

The documents listed in the Index to Exhibits are filed, furnished or incorporated by reference as part of this Annual Report, and such Index to Exhibits are incorporated herein by reference.

Form 10-K Summary

INDEX TO EXHIBITS

Underwriting Agreement, dated June 7, 2021, by and among Liberty Oilfield Services Inc., R/C Energy IV Direct Partnership, L.P., R/C IV Liberty Holdings, L.P.

and Morgan Stanley & Co.

2.1 Master Reorganization Agreement, dated as of January 11, 2018, by and among Liberty Oilfield Services Inc., Liberty Oilfield Services Holdings LLC, Liberty Oilfield Services New HoldCo LLC, and the other parties named therein (2)

6 unchanged sentences

10.1 Second Amended and Restated Limited Liability Company Operating Agreement of Liberty Oilfield Services New HoldCo LLC (2)

10.2 Form of Joinder Agreement to Second Amended and Restated Limited Liability Company Operating Agreement of Liberty Oilfield Services New HoldCo LLC (15)

10.3 Registration Rights Agreement, dated October 26, 2021, by and among Liberty Oilfield Services Inc.

and the other parties named therein (15)

10.4 Tax Receivable Agreement, dated January 17, 2018, by and among Liberty Oilfield Services Inc., R/C Energy IV Direct Partnership, L.P., and R/C Energy IV Direct Partnership, L.P., as agent (2)

3 unchanged sentences

Long Term Incentive Plan (2)†

10.6 Liberty Oilfield Services Inc.

Legacy Restricted Stock Plan (2)†

10.7 Form of Restricted Stock Grant Notice and Restricted Stock Agreement under the Legacy Restricted Stock Plan (1)†

10.8 Credit Agreement, dated September 19, 2017, by and among Wells Fargo Bank, National Association, as Administrative Agent, Wells Fargo Bank, National Association, JPMorgan Chase Bank, N.A.

10 unchanged sentences

LOS Corp, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders signatory thereto (13)

10.14 Sixth Amendment to Credit Agreement and Second Amendment to Guaranty and Security Agreement, dated October 22, 2021, by and among Liberty Oilfield Services LLC, Liberty Oilfield Services Inc., Liberty Oilfield Services New HoldCo LLC, R/C IV Non-U.S.

LOS Corp, LOS Solar Acquisition LLC, Freedom Proppant LLC, LOS Kermit LLC, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, Wells Fargo Bank, National Association, as Administrative Agent, and the lenders signatory thereto (15)

10.15 Joinder Agreement, dated December 31, 2021, by and among LOS Leasing Company LLC and Wells Fargo Bank, National Association, as Administrative Agent *

10.16 Credit Agreement, dated September 1 9 , 2017, by and among Liberty Oilfield Services LLC and LOS Acquisition CO I LLC, each as Borrower, Liberty Oilfield Services Holdings LLC, as Parent Guarantor and U.S.

11 unchanged sentences

Bank National Association, as Administrative Agent, and the lenders signatory thereto (13)

10.21 Fifth Amendment to Credit Agreement, Second Amendment to Guaranty and Security Agreement and Termination of Right of First Offer Letter, dated October 22, 2021, by and among Liberty Oilfield Services LLC, Liberty Oilfield Services Inc., Liberty Oilfield Services New HoldCo LLC, R/C IV Non-U.S.

LOS Corp, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, LOS Solar Acquisition LLC, Freedom Proppant LLC, LOS Kermit LLC, U.S.

Bank National Association, as Administrative Agent, and the lenders signatory thereto (15)

10.22 Liberty Oilfield Services 401(k) Savings Plan (13)†

28 unchanged sentences

(6) Incorporated by reference to the exhibits to the registrant’s Quarterly Report on Form 10-Q, filed on May 3, 2019.

(7) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on August 30, 2019.

(7) Incorporated by reference to the exhibits to the registrant’s Current Report on Form 8-K, filed on August 30, 2019.

(8) Incorporated by reference to the exhibits to the registrant’s Annual Report on Form 10-K, filed on February 27, 2020.

(9) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on June 3, 2020.

(10) Incorporated by reference to the registrant’s Quarterly Report on Form 8-K, filed on October 30, 2020.

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

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

(9) Incorporated by reference to the exhibits to the registrant’s Current Report on Form 8-K, filed on June 3, 2020.

(10) Incorporated by reference to the exhibits to the registrant’s Quarterly Report on Form 10-Q, filed on October 30, 2020.

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

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

(13) Incorporated by reference to the exhibits to the registrant’s Annual Report on Form 10-K, filed on February 24, 2021.

(14) Incorporated by reference to the exhibits to the registrant’s Current Report on Form 8-K, filed on June 10, 2021.

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

(15) Incorporated by reference to the exhibits to the registrant’s Quarterly Report on Form 10-Q, filed on October 28, 2021.

* Filed herewith.

27 unchanged sentences

Norton Director February 22, 2022

/s/ Brett Staffieri Director February 24, 2021

Brett Staffieri

/s/ Audrey Robertson Director February 22, 2022

Audrey Robertson

Steinbeck Director February 22, 2022

2 unchanged sentences

Management’s Report on Internal Control Over Financial Reporting

Reports of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 202 1 and 20 20

Consolidated and Combined Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018

Consolidated Statements of Operations for the Years Ended December 31, 202 1 , 20 20 , and 20 19

Consolidated Statements of Changes in Equity for the Years Ended December 31, 202 1 and 20 20

Consolidated and Combined Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018

Notes to Consolidated and Combined Financial Statements

Consolidated Statements of Cash Flows for the Years Ended December 31, 202 1 , 20 20 , and 20 19

Notes to Consolidated Financial Statements

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

6 unchanged sentences

Based on this evaluation, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.

Management ’ s evaluation of, and conclusion on, the effectiveness of internal control over financial reporting did not include the internal controls of the entities acquired in the OneStim Acquisition, as defined herein, on December 31, 2020.

Management’s evaluation of, and conclusion on, the effectiveness of internal control over financial reporting did not include the internal controls of the entity acquired in the PropX Acquisition, as defined herein, on October 26, 2021.

The acquired business’ financial statements constitute 9% and 6% of net and total assets as of December 31, 2021.

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of Liberty Oilfield Services Inc.

and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated and combined statements of operations, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company ’ s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2022, expressed an unqualified opinion on the Company ’ s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company changed its method of accounting for leases effective January 1, 2019 due to the adoption of Accounting Standards Codification Topic 842—Leases.

Basis for Opinion

15 unchanged sentences

The amounts payable, as well as the timing of such payments, under the tax receivable agreements (“TRA”) are dependent upon significant future events and assumptions, including among others:

basis (iv), the amount and timing of taxable income the Company generates in future periods until the TRA payable is settled, and (v) the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

During the year ended December 31, 2020, exchanges of Liberty Oilfield Services New HoldCo LLC class B units and shares of Class B Common Stock resulted in an increase of $13.1 million in amounts payable pursuant to tax receivable agreements (“TRA payable”), and a net increase of $15.5 million in deferred tax assets, all of which were recorded as equity transactions, with no impact to the statement of operations.

(i) the amount of the redeeming unit holder’s tax basis in its Liberty Oilfield Services New HoldCo LLC class B units at the time of the relevant redemption, (ii) the characterization of the tax basis step-up, (iii) the depreciation and amortization periods that apply to the increase in tax basis (iv), the amount and timing of taxable income the Company generates in future periods until the TRA payable is settled, and (v) the portion of the Company’s payments under the TRA that constitute imputed interest or give rise to depreciable or amortizable tax basis.

During the year ended December 31, 2021, exchanges of Liberty Oilfield Services New HoldCo LLC class B units and shares of Class B Common Stock resulted in an increase of $58.5 million in amounts payable pursuant to tax receivable

agreements (“TRA payable”), and a net increase of $68.8 million in deferred tax assets, all of which are subject to the valuation allowance and remeasurement of TRA liability.

At December 31, 2021, the Company's TRA payable was $37.6 million, all of which is presented as a component of long-term liabilities.

17 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 22, 2022, expressed an unqualified opinion on those financial statements.

As described in Management's Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Schlumberger ’ s OneStim® business (“OneStim”), which was acquired on December 31, 2020 and whose financial statements constitute 52% and 43% of net and total assets, respectively of the consolidated financial statement amounts as of and for the year ended December 31, 2020.

Accordingly, our audit did not include the internal control over financial reporting at OneStim.

As described in Management’s Report on Internal Control Over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Proppant Express Solutions, LLC (“PropX”), which was acquired on October 26, 2021 and whose financial statements constitute 9% and 6% of net and total assets, respectively of the consolidated financial statement amounts as of and for the year ended December 31, 2021.

Accordingly, our audit did not include the internal control over financial reporting at PropX.

Basis for Opinion

23 unchanged sentences

Cash and cash equivalents $ 19,998 $ 68,978

Accounts receivable—trade, net of provisions for credit losses of $ 773 and $ 1,053 , respectively

Accounts receivable—trade, net of allowances for credit losses of $ 884 and $ 773 , respectively

298,531 244,433

Accounts and notes receivable—related party — 9,629

Unbilled revenue 108,923 69,516

11 unchanged sentences

Current liabilities:

Accounts payable $ 193,338 $ 117,613

Accrued liabilities:

Accrued vendor invoices 61,210 42,753

Operational accruals 28,932 26,753

Accrued benefits and other (including payables to related parties of $ 0 and $ 1,329 , respectively)

Accounts payable (including payables to related parties of $ 2,732 and $ 0 , respectively)

$ 288,801 $ 193,338

Accrued liabilities (including amounts due to related parties of $ 1,142 and $ 0 , respectively)

235,115 118,383

Deferred revenue 4,552 —

Current portion of long-term debt, net of discount of $ 743 and $ 1,386 , respectively

12 unchanged sentences

Stockholders’ equity:

Preferred Stock, $ 0.01 par value, 10,000 shares authorized and no ne issued and outstanding

Preferred Stock, $ 0.01 par value, 10,000 shares authorized and none issued and outstanding

Common Stock:

2 unchanged sentences

Additional paid in capital 1,367,642 1,125,554

Retained earnings 23,288 143,105

(Accumulated deficit) retained earnings ( 155,954 ) 23,288

Accumulated other comprehensive (loss) ( 306 ) —

Total stockholders’ equity 1,213,242 1,150,637

2 unchanged sentences

Total liabilities and equity $ 2,040,660 $ 1,889,942

See Notes to Consolidated and Combined Financial Statements.

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Consolidated and Combined Statements of Operations

Consolidated Statements of Operations

For the Years Ended December 31, 2021, 2020, and 2019

5 unchanged sentences

Operating costs and expenses:

Cost of services (exclusive of depreciation and amortization shown separately below) 857,981 1,621,180 1,628,753

Cost of services (exclusive of depreciation, depletion, and amortization shown separately below) 2,249,926 857,981 1,621,180

General and administrative 123,406 84,098 97,589

Transaction, severance and other costs 15,138 21,061 —

Depreciation and amortization of intangible assets 180,084 165,379 125,110

(Gain) loss on disposal of assets ( 411 ) 2,601 ( 4,342 )

Depreciation, depletion, and amortization 262,757 180,084 165,379

Loss (gain) on disposal of assets 779 ( 411 ) 2,601

Total operating costs and expenses 2,652,006 1,142,813 1,886,749

1 unchanged sentence

Other (income) and expense:

Gain on remeasurement of liability under tax receivable agreement ( 19,039 ) — —

Interest income ( 2 ) ( 297 ) ( 983 )

Interest expense 15,065 17,485 17,527

Interest income—related party — ( 263 ) ( 1,821 )

Total interest expense 14,505 14,681 17,145

Interest expense 15,605 15,065 17,485

Total other (income) expense, net ( 3,436 ) 14,505 14,681

Net (loss) income before income taxes ( 177,788 ) ( 191,531 ) 88,916

Income tax (benefit) expense ( 30,857 ) 14,052 40,385

Income tax expense (benefit) 9,216 ( 30,857 ) 14,052

Net (loss) income ( 187,004 ) ( 160,674 ) 74,864

Net (loss) income attributable to Predecessor, prior to Corporate Reorganization — — 8,705

Net (loss) income attributable to non-controlling interests ( 7,760 ) ( 45,091 ) 35,861

8 unchanged sentences

Diluted 174,019 85,242 105,256

See Notes to Consolidated and Combined Financial Statements.

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Consolidated Statements of Comprehensive (Loss) Income

For the Years Ended December 31, 2021, 2020, and 2019

(In thousands)

2021 2020 2019

Net (loss) income $ ( 187,004 ) $ ( 160,674 ) $ 74,864

Other comprehensive loss

Foreign currency translation ( 102 ) — —

Comprehensive (loss) income $ ( 187,106 ) $ ( 160,674 ) $ 74,864

Comprehensive (loss) income attributable to non-controlling interest ( 7,556 ) ( 45,091 ) 35,861

Comprehensive (loss) income attributable to Liberty Oilfield Services, Inc.

$ ( 179,550 ) $ ( 115,583 ) $ 39,003

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Consolidated Statements of Changes in Equity

1 unchanged sentence

(In thousands, except share and per unit data)

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 Total Stockholders’ equity Non-controlling Interest Total Equity

Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital Retained Earnings Accumulated Other Comprehensive Income Total Stockholders’ equity Non-controlling Interest Total Equity

Balance—December 31, 2020 157,952 21,550 $ 1,579 $ 216 $ 1,125,554 $ 23,288 $ — $ 1,150,637 $ 159,406 $ 1,310,043

Exchange of Class B Common Stock for Class A Common Stock 21,359 ( 21,359 ) 214 ( 214 ) 153,641 — — 153,641 ( 153,641 ) —

Effect of exchange on deferred tax asset, net of liability under tax receivable agreements — — — — 2,430 — 2,430 — 2,430

Issuance of Class A Common Stock, net of issuance costs 66,326 — 663 — 599,618 — 600,281 81,900 682,181

Impact of ownership changes from issuance of Class A Common Stock — — — — 46,400 — 46,400 ( 46,400 ) —

Deferred tax impact of ownership changes from issuance of Class A Common Stock — — — — ( 6,337 ) — ( 6,337 ) — ( 6,337 )

$ 0.05 /share of Class A Common Stock dividend

— — — — — ( 4,244 ) ( 4,244 ) — ( 4,244 )

$ 0.05 /unit distribution to non-controlling unitholders

— — — — — — — ( 1,532 ) ( 1,532 )

Offering Costs — — — — ( 1,247 ) — — ( 1,247 ) ( 75 ) ( 1,322 )

Issuance of Class A and Class B Common Stock for the PropX Acquisition 3,406 2,441 34 24 88,979 — — 89,037 2,052 91,089

Impact of ownership changes from issuance of Class A and Class B Common Stock — — — — ( 15,325 ) — — ( 15,325 ) 15,325 —

Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 1,372 1,372

1 unchanged sentence

Vesting of restricted stock units 668 — 7 — ( 3,082 ) — — ( 3,075 ) ( 510 ) ( 3,585 )

Restricted stock forfeited ( 5 ) — ( 1 ) — ( 9 ) 10 — 8 8

Restricted stock and RSU forfeitures — — — — — 2 — 2 — 2

Currency translation adjustment — — — — — — ( 306 ) ( 306 ) 204 ( 102 )

Net loss — — — — — ( 179,244 ) — ( 179,244 ) ( 7,760 ) ( 187,004 )

Balance—December 31, 2021 183,385 2,632 $ 1,834 $ 26 $ 1,367,642 $ ( 155,954 ) $ ( 306 ) $ 1,213,242 $ 17,197 $ 1,230,439

Balance - December 31, 2019 81,885 30,639 $ 819 $ 307 $ 410,596 $ 143,105 $ — $ 554,827 $ 226,665 $ 781,492

Exchange of Class B Common Stock for Class A Common Stock 9,089 ( 9,089 ) 91 ( 91 ) 59,474 — — 59,474 ( 59,474 ) —

Offering Costs — — — — ( 1,012 ) — ( 1,012 ) ( 504 ) ( 1,516 )

Effect of exchange on deferred tax asset, net of liability under tax receivable agreements — — — — 2,430 — 2,430 — 2,430

Issuance of Class A Common Stock, net of issuance costs 66,326 — 663 — 599,618 — — 600,281 81,900 682,181

Impact of changes in ownership from the issuance of Class A Common Stock — — — — 46,400 — — 46,400 ( 46,400 ) —

Deferred tax impact of ownership changes from exchanges and repurchases — — — — ( 6,337 ) — — ( 6,337 ) — ( 6,337 )

4 unchanged sentences

Other distributions and advance payments to non-controlling interest unitholders — — — — ( 1 ) — — ( 1 ) 569 568

Share repurchases ( 1,303 ) — ( 13 ) — ( 13,017 ) — ( 13,030 ) ( 4,068 ) ( 17,098 )

Stock based compensation expense — — — 12,976 — 12,976 4,163 17,139

1 unchanged sentence

Restricted stock and RSU Forfeitures ( 5 ) — ( 1 ) — ( 9 ) 10 — — 8 8

Net income — — — — — 39,003 39,003 35,861 74,864

Net loss — — — — — ( 115,583 ) — ( 115,583 ) ( 45,091 ) ( 160,674 )

Balance - December 31, 2020 157,952 21,550 $ 1,579 $ 216 $ 1,125,554 $ 23,288 $ — $ 1,150,637 $ 159,406 $ 1,310,043

See Notes to Consolidated and Combined Financial Statements.

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Consolidated and Combined Statements of Cash Flows

Consolidated Statements of Cash Flows

For the Years Ended December 31, 2021, 2020, and 2019

4 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 180,084 165,379 125,110

(Gain) loss on disposal of assets ( 411 ) 2,601 ( 4,342 )

Loss (gain) on tax receivable agreements 543 ( 122 ) —

Depreciation, depletion, and amortization 262,757 180,084 165,379

Loss (gain) on disposal of assets 779 ( 411 ) 2,601

(Gain) loss on tax receivable agreements ( 19,039 ) 543 ( 122 )

Amortization of debt issuance costs 2,037 2,232 2,205

2 unchanged sentences

Stock based compensation expense 19,946 17,139 13,592

Deferred income tax (benefit) expense ( 25,546 ) 23,408 20,488

Bad debt provision 4,877 1,053 —

Deferred income tax expense (benefit) 5,079 ( 25,546 ) 23,408

Provision for credit losses 745 4,877 1,053

Changes in operating assets and liabilities:

3 unchanged sentences

Other assets ( 30,955 ) 13,780 ( 6,464 )

Prepaid and other current assets—related party 24,708 — —

Deferred revenue 3,452 — —

Accounts payable and accrued liabilities 160,584 ( 15,282 ) 22,386

3 unchanged sentences

Cash flows from investing activities:

Capital expenditures ( 103,637 ) ( 195,173 ) ( 258,835 )

Proceeds from disposal of assets 3,368 826 3,343

Purchases of property and equipment and construction in-progress ( 198,794 ) ( 103,637 ) ( 195,173 )

Investment in sand logistics ( 13,106 ) — —

Proceeds from sales of assets 25,406 3,368 826

Net cash used in investing activities ( 186,494 ) ( 100,269 ) ( 194,347 )

Cash flows from financing activities:

Proceeds from issuance of Class A Common Stock, net of underwriter discount — — 230,174

Redemption of LLC Units from Legacy Owners — — ( 25,897 )

Repayments of borrowings on term loan ( 1,750 ) ( 1,750 ) ( 1,750 )

Proceeds from borrowings on line-of-credit 274,000 — —

Repayments of borrowings on line-of-credit ( 256,000 ) — —

Proceeds from Liberty Oilfield Services Holdings LLC — — 2,115

Payments on finance lease obligations ( 7,363 ) ( 11,663 ) ( 12,143 )

Class A Common Stock dividends ( 4,431 ) ( 14,776 ) ( 6,907 )

Class A Common Stock dividends and dividend equivalents upon RSU vesting ( 168 ) ( 4,431 ) ( 14,776 )

Per unit distributions to non-controlling interest unitholders — ( 1,532 ) ( 7,747 )

Other distributions and advance payments to non-controlling interest unitholders 1,372 ( 6,800 ) ( 6 )

Tax withholding on restricted stock unit vesting ( 988 ) ( 1,039 ) —

Tax withholding on restricted stock units ( 3,585 ) ( 988 ) ( 1,039 )

Share repurchases — — ( 18,398 )

Payments of debt issuance costs ( 3,120 ) ( 63 ) —

Payment of equity offering costs ( 1,641 ) ( 1,516 ) ( 6,236 )

Net cash used in financing activities ( 28,868 ) ( 57,375 ) ( 8,775 )

Payment of equity issuance costs ( 1,330 ) ( 1,641 ) ( 1,516 )

Net cash provided by (used in) financing activities 2,056 ( 28,868 ) ( 57,375 )

Net (decrease) increase in cash and cash equivalents ( 48,971 ) ( 43,712 ) 9,378

Translation effect on cash ( 9 ) — —

Cash and cash equivalents—beginning of period 68,978 112,690 103,312

6 unchanged sentences

Equity issued in exchange for assets and liabilities $ 91,089 $ 683,822 $ —

See Notes to Consolidated and Combined Financial Statements.

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

Note 1— Organization and Basis of Presentation

1 unchanged sentence

(the “Company”) was incorporated as a Delaware corporation on December 21, 2016, to become a holding corporation for Liberty Oilfield Services New HoldCo LLC (“Liberty LLC”) and its subsidiaries upon completion of a corporate reorganization (the “Corporate Reorganization”) and planned initial public offering of the Company (“IPO”).

The Company has no material assets other than its ownership in Liberty LLC.

Prior to the Corporate Reorganization, Liberty Oilfield Services Holdings LLC (“Liberty Holdings”) wholly owned Liberty Oilfield Services LLC (“LOS”) and LOS Acquisition CO I LLC (“ACQI” and, together with LOS, the “Predecessor”).

The Company has no material assets other than its ownership of units in Liberty LLC (“Liberty LLC Units”).

The Company, together with its subsidiaries, is a multi-basin provider of hydraulic fracturing services and goods, with a focus on deploying the latest technologies in the technically demanding oil and gas reservoirs in which it operates, principally in North Dakota, Colorado, Louisiana, Oklahoma, New Mexico, Wyoming, Texas and the provinces of Alberta and British Columbia, Canada.

Basis of Presentation

The accompanying consolidated and combined financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) and the instructions to Form 10-K, Regulation S-X and the rules and regulations of the Securities and Exchange Commission.

The accompanying consolidated and combined financial statements and related notes present the consolidated financial position, results of operations, cash flows, and equity of the Company as of and for the years ended December 31, 2020 and 2019, and the combined results of operations and cash flows of the Predecessor for the year ended December 31, 2018.

All intercompany amounts have been eliminated in the presentation of the consolidated financial statements of the Company and the combined financial statements of the Predecessor.

Comprehensive income is not reported due to the absence of items of other comprehensive income or loss during the periods presented.

The consolidated and combined financial statements for periods prior to January 17, 2018, reflect the historical results of the Predecessor.

The consolidated and combined financial statements include the amounts of the Company and all majority owned subsidiaries where the Company has the ability to exercise control.

The Company’s operations are organized into a single reportable segment, which consists of hydraulic fracturing services and goods.

The accompanying consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) and the instructions to Form 10-K, Regulation S-X and the rules and regulations of the Securities and Exchange Commission.

The accompanying consolidated financial statements and related notes present the consolidated financial position of the Company, the results of operations, cash flows, and equity of the Company as of and for the years ended December 31, 2021, 2020 and 2019.

The consolidated financial statements include the amounts of the Company and all majority owned subsidiaries where the Company has the ability to exercise control.

All intercompany amounts have been eliminated in the presentation of the consolidated financial statements of the Company.

The Company’s operations are organized into a single reportable segment, which consists of hydraulic fracturing and related goods and services.

Note 2— Significant Accounting Policies

6 unchanged sentences

Operating results of an acquired business are included in our results of operations from the date of acquisition.

Refer to Note 3—The OneStim Acquisition.

Refer to Note 3—Acquisitions.

Use of Estimates

The preparation of consolidated and combined financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated and combined financial statements and the reported amounts of revenues and expenses during the reporting period.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

The consolidated and combined financial statements include certain amounts that are based on management’s best estimates and judgments.

The most significant estimates relate to the fair value of assets acquired and liabilities assumed, collectibility of accounts receivable and estimates of allowance for doubtful accounts, the useful lives and salvage values of

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

long-lived assets, future cash flows associated with long-lived assets, net realizable value of inventory, and equity unit valuation.

The consolidated financial statements include certain amounts that are based on management’s best estimates and judgments.

The most significant estimates relate to the fair value of assets acquired and liabilities assumed, collectability of accounts receivable and estimates of allowance for doubtful accounts, the useful lives and salvage values of long-lived assets, future cash flows associated with long-lived assets, net realizable value of inventory, and equity unit valuation.

These estimates may be adjusted as more current information becomes available.

1 unchanged sentence

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents.

The Company continually monitors its positions with, and the credit quality of, the financial institutions with which it has banking relationships.

The Company continually monitors its positions with, and the credit quality of, the financial institutions with

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

which it has banking relationships.

As of the balance sheet date, and periodically throughout the year, the Company has maintained balances in various operating accounts in excess of federally insured limits.

6 unchanged sentences

Due to the cyclical nature of the oil and gas industry, the Company often evaluates its customers’ estimated losses on a case-by-case basis.

While there was no impact to the financial statements as a result of adoption of ASU 2016-13, as a result of deteriorating economic conditions for the oil and gas industry brought on by the COVID-19 pandemic, during the year ended December 31, 2020 the Company recorded a provision for credit losses of $ 4.9 million.

During the year ended December 31, 2019 the Company recorded a provision for credit losses of $ 1.1 million related to one customer that filed for bankruptcy.

While there was no impact to the financial statements as a result of adoption of ASU 2016-13, as a result of two customers inability to pay, during the year ended December 31, 2021 the Company recorded a provision for credit losses of $ 0.7 million.

During the year ended December 31, 2020 the Company recorded a provision for credit losses of $ 4.9 million related to the deteriorating economic conditions for the oil and gas industry brought on by the COVID-19 pandemic.

Provisions for credit losses are included in general and administrative expenses in the accompanying consolidated statement of operations, in accordance with the new standard.

17 unchanged sentences

The expected future cash flows used for impairment reviews and related fair value calculations are based on judgmental assessments of projected revenue growth, fleet count, utilization, gross margin rates, selling, general and administrative rates, working capital fluctuations, capital expenditures, discount rates and terminal growth rates.

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 December 31, 2021 and 2020, the Company concluded that no additional triggering events had occurred, and no impairment was recognized during the years ended December 31, 2021 and 2020.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

During the first quarter of 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 March 31, 2020.

As of December 31, 2020, the Company concluded that no additional triggering events occurred and the conclusion reached at March 31, 2020 is still appropriate, and no impairment was recognized during the year ended December 31, 2020.

During 2019 and 2018, the Company did not test its long-lived assets for recoverability as there were no triggering events.

No impairment was recognized during the years ended December 31, 2019 and 2018 .

Notes to Consolidated Financial Statements

During 2019, the Company did not test its long-lived assets for recoverability as there were no triggering events.

No impairment was recognized during the years ended December 31, 2019.

Major Maintenance Activities

9 unchanged sentences

Lease terms may include options to renew, however, the Company typically cannot determine its intent to renew a lease with reasonable certainty at inception.

Additionally, the Company is a lessor in several operating leases in which the lease equipment is carried at amortized cost.

Depreciation expense is recorded on a straight-line basis over its useful life to the estimated residual value.

The lessee may not purchase the leased equipment and must return such equipment by the lease's scheduled maturity date.

Deferred Financing Costs

2 unchanged sentences

2015-03 and 2015-15, for all periods the Company has reflected deferred financing costs related to term loan debt as a direct deduction from the carrying amount, and costs associated with line-of-credit arrangements as other assets.

Following the IPO, the Company is a corporation and is subject to U.S.

federal, state and local income tax on its share of Liberty LLC’s taxable income.

As a result of the IPO and Corporate Reorganization, the Company recorded deferred tax assets and liabilities for the difference between the book value of assets and liabilities for financial reporting purposes and those amounts applicable for income tax purposes.

Deferred income taxes are computed using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements.

1 unchanged sentence

The Company classifies all deferred tax assets and liabilities as non-current.

The Company records Global Intangible Low Tax Income as a current period expense.

The Company evaluates its deferred tax assets quarterly and considers 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.

On June 30, 2021, in accordance with ASC 740, the objective negative evidence of entering into a three year cumulative pre-tax book loss position prevented the consideration of the Company’s subjective positive evidence of expected future profitability in evaluation the realizability of deferred tax assets.

As a result, the Company recorded a valuation allowance against U.S.

net deferred tax assets.

The Company recognizes the financial statement effects of a tax position when it is more-likely-than-not, based on the technical merits, that the position will be sustained upon examination.

3 unchanged sentences

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

Tax Receivable Agreements

11 unchanged sentences

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

Thereafter, any excess purchase price will be recorded as a reduction to retained earnings.

Thereafter, any excess purchase price will be recorded as an increase to accumulated deficit.

Revenue Recognition

Effective January 1, 2018, the Company adopted a comprehensive new revenue recognition standard, ASC Topic 606- Revenue from Contracts with Customers .

The Company adopted the standard using a modified retrospective method.

The adoption of this standard did not have a material impact to the consolidated financial position, reported revenue, results of operations or cash flows as of and for the year ended December 31, 2018.

Under ASC Topic 606, revenue recognition is based on the transfer of control, or the customer’s ability to benefit from the services and products in an amount that reflects the consideration expected to be received in exchange for those services and products.

Under ASC Topic 606- Revenue from Contracts with Customers , revenue recognition is based on the transfer of control, or the customer’s ability to benefit from the services and products in an amount that reflects the consideration expected to be received in exchange for those services and products.

In recognizing revenue for services and products, the transaction price is determined from sales orders or contracts with customers.

8 unchanged sentences

Therefore, the Company combines the lease and service component for certain of the Company’s service contracts and continues to account for the combined component under ASC Topic 606, Revenue from Contracts with Customers.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Deferred Revenue

From time to time, the Company may require partial payment in advance from new customers to secure credit or from existing customers in order to secure additional hydraulic fracturing services.

Initially, such payments are recorded in the accompanying consolidated and combined financial statements as deferred revenue, and upon performance of the agreed services, the Company recognizes revenue consistent with its revenue recognition policy described above.

As of December 31, 2020 and December 31, 2019, the Company had no amounts recorded as deferred revenue.

During the year ended December 31, 2018, the Company recognized to revenue $ 9.2 million of customer prepayments initially recorded as deferred revenue.

Fleet Start-up and Lay-down Costs

The Company incurs start-up costs to commission a new fleet or district.

These costs include hiring and training of personnel, and acquisition of consumable parts and tools.

During 2020, as a result of declining oil prices and reduced demand from the impact of global efforts to combat COVID-19, the Company also incurred lay-down costs between the time customer work was completed and prior to personnel lay-offs or furloughs.

Start-up and lay-down costs are expensed as incurred, and are reflected in general and administrative expense in the consolidated and combined statement of operations.

Start-up and lay-down costs incurred during the year ended December 31, 2020 of $ 12.2 million related to the temporary lay-down and subsequent reactivation of 16 fleets for various periods during 2020.

Start-up costs incurred during the years ended December 31, 2019 and 2018 of $ 4.5 million and $ 10.1 million, respectively, related to the establishment of one and three new fleets, respectively.

The terms and conditions of the Credit Facilities between the Company and its lenders provides for the add-back of costs or expenses incurred in connection with the acquisition, deployment and opening of any new hydraulic fracturing fleet or district in the computation of certain financial covenants.

(See Note 7—Debt).

Initially, such payments are recorded in the accompanying consolidated financial statements as deferred revenue, and upon performance of the agreed services, the

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Company recognizes revenue consistent with its revenue recognition policy described above.

As of December 31, 2021 and 2020, the Company had $ 4.6 million and $ 0.0 million recorded as deferred revenue, respectively.

Transaction, Severance and Other Costs

The Company incurred transaction related costs in connection with the OneStim Acquisition (as defined below).

During 2021, the Company incurred transaction and integration related costs in connection with the OneStim Acquisition (as defined below) and PropX Acquisition (as defined below).

Such costs include investment banking, legal, accounting and other professional services provided in connection with closing the transaction and are expensed as incurred .

The Company also incurred severance and other costs related to the reduction in workforce in April 2020 and the commencement of furlough schedules for remaining employees in May 2020.

The Company incurred transaction costs in 2020 related to the OneStim Acquisition and severance and other costs related to the reduction in workforce in April 2020 and the commencement of furlough schedules for remaining employees in May 2020.

Payments made to employees leaving the Company, as well as benefits paid to employees while on furlough are recorded to transaction, severance and other costs in the accompanying consolidated statements of operations for the year ended December 31, 2020.

As of December 31, 2020, no employees were on furlough.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

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

Foreign Currency Translation

The Company records foreign currency translation adjustments from the process of translating the functional currency of the financial statements of its foreign subsidiary into the U.S.

dollar reporting currency.

The Canadian dollar is the functional currency of the Company’s foreign subsidiary as it is the primary currency within the economic environment in which the subsidiary operates.

Assets and liabilities of the subsidiary’s operations are translated into U.S.

dollars at the rate of exchange in effect on the balance sheet date and income and expenses are translated at the average exchange rate in effect during the reporting period.

Adjustments resulting from the translation of the subsidiary’s financial statements are reported in other comprehensive income.

Recently Adopted Accounting Standards

Credit Losses

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) :

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which changes the impairment model for most financial assets and certain other instruments.

Specifically, this new guidance requires using a forward looking, expected loss model for trade and other receivables, held-to-maturity debt securities, loans, and other instruments.

Under ASU 2016-13, a company recognizes, as an allowance, the estimate of lifetime expected credit losses, which is expected to result in more timely recognition of such losses.

Refer to “Credit Risk” within Note 8—Fair Value Measurements and Financial Instruments for additional disclosures required under ASU 2016-13.

Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain disclosure requirements for fair value measurements.

The Company adopted ASU 2018-13 on January 1, 2020 and determined the adoption of this standard did not impact the Company’s consolidated financial statements.

Refer to Note 8—Fair Value Measurements and Financial Instruments for the disclosures required under ASU 2018-13.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

In April 2020, the FASB issued FASB Staff Q&A Topic 842 and Topic 840:

Accounting for Lease Concessions Related to the Effects of the COVID-19 Pandemic (the “Q&A”), which allows companies to elect to recognize the impact of COVID-19 rent concessions, including rent deferrals, within the current period, rather than recognizing these concessions as a lease modification in accordance with lease guidance, ASU No.

2016-02, Leases (ASC Topic 842) , if the total lease payments of the modified lease are substantially the same as or less than the total original lease payments.

According to the Q&A, entities are to make an election to account for lease concessions related to the effects of the COVID-19 pandemic consistent with how those concessions would be accounted for under Topic 842 and ASC Topic 840, Leases as though enforceable rights and obligations for those concessions existed.

The adoption of the Q&A did not have a material impact on the accompanying consolidated financial statements.

Recently Issued Accounting Standards

Simplification of Accounting for Income Taxes

1 unchanged sentence

2019-12, Simplification of Accounting for Income Taxes , which simplifies the accounting for income taxes by providing new guidance to reduce complexity and eliminate certain exceptions to the general approach to the income tax accounting model.

The guidance is effective for annual periods beginning after December 15, 2020.

The Company plans to adopt the new rules in the first quarter of 2021 and does not expect it will have a material impact on the financial statements.

The Company adopted this guidance effective January 1, 2021, which did not have a material impact on the accompanying consolidated financial statements.

Codification Improvements

In October 2020, the FASB issued ASU No.

2020-10, Codification Improvements, which clarifies various topics, including the addition of existing disclosure requirements to the relevant disclosure sections.

This update does not change GAAP, and therefore, does not result in a significant change in the Company’s accounting practices.

The guidance is effective for fiscal periods beginning after December 15, 2020, as the amendment pertains to disclosure items only.

The Company adopted the new rules effective January 1, 2021 and the adoption did not have a material impact on the accompanying consolidated financial statements.

Reference Rate Reform

4 unchanged sentences

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

Codification Improvements

Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU No.

2020-10, Codification Improvements, which clarifies various topics, including the addition of existing disclosure requirements to the relevant disclosure sections.

This update does not change GAAP, and therefore, is not expected to result in a significant change in accounting practices.

The guidance is effective for fiscal periods beginning after December 15, 2020, as the amendment pertains to disclosure items only, the Company plans to adopt the new rules for the first quarter of 2021.

2021-08, Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which changes the accounting for the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606.

The update changes GAAP surrounding the recognition of contract assets and contract liabilities from fair value on the acquisition date to guidance under ASC 606.

The guidance is effective for fiscal periods beginning after December 15, 2022.

The Company adopted the new rules upon issuance and the adoption did not have a material impact on the accompanying consolidated 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 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 or loss.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Note 3— The OneStim Acquisition

Notes to Consolidated Financial Statements

Note 3— Acquisitions

PropX Acquisition

On October 26, 2021, the Company entered into the certain Master Transaction Agreement (the “Transaction Agreement”) with Proppant Express Investments, LLC to acquire the assets and liabilities of Proppant Express Solutions, LLC “PropX”, which provides last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America.

PropX was acquired in exchange for $ 11.9 million in cash and 3,405,526 shares of the Company’s Class A Common Stock, par value $ 0.01 per share (the “Class A Common Stock”) and 2,441,010 shares of the Company’s Class B Common Stock, par value $ 0.01 per share (the “Class B Common Stock”, and together with the Class A Common Stock, the “Common Stock”), for total consideration of $ 103.0 million based on the October 26, 2021 closing price of Class A Common Stock of $ 15.58 .

In connection with the issuance of 2,441,010 shares of Class B Common Stock, Liberty LLC also issued 2,441,010 Liberty LLC Units to the Company.

The Liberty LLC Units are redeemable for an equivalent number of shares of Class A Common Stock at anytime, at the election of the shareholder.

The Company accounted for the PropX Acquisition using the acquisition method of accounting.

The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair value at the date of the acquisition.

The estimated fair values of certain assets and liabilities require significant judgments and estimates.

The majority of the measurements of assets acquired and liabilities assumed, are based on inputs that are not observable in the market and thus represent Level 3 inputs.

In accordance with ASC Topic 805, an acquirer is allowed a period, referred to as the measurement period, in which to complete its accounting for the transaction.

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

As the PropX Acquisition closed on October 26, 2021 the Company is in the process of completing the initial purchase price allocation, particularly as it relates to current assets and current liabilities.

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

($ in thousands)

Total Purchase Consideration:

Consideration $ 103,023

Cash and cash equivalents $ 53

Accounts receivable and unbilled revenue 4,089

Prepaid and other current assets 1,722

Property and equipment (1)

Intangible assets (included in other assets in the accompanying consolidated balance sheet as of December 31, 2021) (2)

Total identifiable assets acquired 107,109

Accounts payable 2,152

Accrued liabilities 1,934

Total liabilities assumed 4,086

Total purchase consideration $ 103,023

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

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

Transaction costs, costs associated with issuing additional equity and integration costs were recognized separately from the acquisition of assets and assumptions of liabilities in the PropX Acquisition.

Transaction costs consist of legal and professional fees.

Integration costs consist of expenses incurred to integrate PropX’s operations, aligning accounting processes and procedures, and integrating its enterprise resource planning system with those of the Company.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

The Company’s consolidated statements of operations for the year ended December 31, 2021 includes 66 days of PropX operations as the PropX Acquisition closed on October 26, 2021.

The Company does not present pro forma financial information for the periods prior to the PropX Acquisition as such information, after elimination of PropX’s historical transactions with the Company, is not materially different than the results presented in the accompanying Consolidated Statements of Operations for years ended December 31, 2021 and 2020.

OneStim Acquisition

On August 31, 2020 the Company and certain of its subsidiaries entered into the certain Master Transaction Agreement (the “Transaction Agreement”) with Schlumberger Technology Corporation and Schlumberger Canada Limited (collectively “Schlumberger”), pursuant to which the Company acquired certain assets and liabilities of Schlumberger’s OneStim® business, which provides hydraulic fracturing pressure pumping services in onshore United States and Canada (such entire business of Schlumberger “OneStim,” and the portion of OneStim acquired pursuant to the Transaction Agreement the “Transferred Business”) in exchange for 57,377,232 shares of Class A Common Stock and a non-interest bearing demand promissory note (the “Canadian Buyer Note” and such acquisition, the “OneStim Acquisition”).

The Canadian Buyer Note was settled for 8,948,902 shares of Class A Common Stock, and a total of 66,326,134 shares of Class A Common Stock were issued in connection with the OneStim Acquisition.

Effective December 31, 2020, Schlumberger owns 37.0 % of the Company’s issued and outstanding shares of common stock, including Class A Common Stock and Class B Common Stock.

Effective December 31, 2020, Schlumberger owned approximately 37.0 % of the Company’s issued and outstanding shares of Common Stock.

In connection with the issuance of 66,326,134 shares of Class A Common Stock, Liberty LLC also issued 66,326,134 Liberty LLC Units to the Company.

The OneStim Acquisition was completed for total consideration of approximately $ 683.8 million based on the value of the Canadian Buyer Note and the closing price of Liberty’s Class A Common Stock on December 31, 2020.

The OneStim Acquisition was completed for total consideration of approximately $ 683.8 million based on the value of the Canadian Buyer Note and the closing price of the Class A Common Stock on December 31, 2020.

The Company accounted for the OneStim Acquisition using the acquisition method of accounting.

4 unchanged sentences

As the OneStim Acquisition closed on December 31, 2020 the Company is in the process of completing the initial 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.

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 as of December 31, 2020, the date of the closing of the OneStim Acquisition:

As the OneStim Acquisition closed on December 31, 2020 the Company completed the purchase price allocation, particularly as it relates to current assets and current liabilities, which were subject to certain minimum working capital contribution requirements under the Transaction Agreement during the year ended December 31, 2021.

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

($ in thousands)

14 unchanged sentences

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

3 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 $ 8.5 million, for the year ended December 31, 2020 and are recorded as a component of transaction, severance and other costs in the accompanying 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 consolidated balance sheets.

The following combined pro forma information assumes the OneStim Acquisition occurred on January 1, 2019.

The pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after December 31, 2020 or any operating efficiencies of inefficiencies that may result from the OneStim Acquisition.

Additionally, the pro forma information excludes acquisition related costs incurred by the Company of approximately $ 8.5 million for the year ended December 31, 2020.

The pro forma information presented below is for illustrative purposes only and does not reflect future events that occurred after December 31, 2020 or any operating efficiencies or inefficiencies that may result from the OneStim Acquisition.

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

14 unchanged sentences

The Company’s consolidated statements of operations for the year ended December 31, 2020 does not include any results from OneStim operations as the OneStim Acquisition closed on December 31, 2020.

Transaction and integration costs incurred related to both transactions were $ 13.6 million and $ 8.5 million, for the years ended December 31, 2021 and 2020, respectively, and are recorded as a component of transaction, severance and other costs in the accompanying consolidated statements of operations.

Equity offering costs totaled $ 1.3 million and $ 1.6 million, for the years ended December 31, 2021 and 2020, respectively, and are recorded as a reduction to additional paid in capital in the accompanying consolidated balance sheets.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

Note 4— Inventories

5 unchanged sentences

$ 134,593 $ 118,568

During the years ended December 31, 2020 and December 31, 2019, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to inventory carrying values of $ 1.1 million and $ 2.0 million, respectively, included as a component in cost of services in the consolidated statements of operations.

The Company did not record any write-down to the inventory carrying value during the year ended December 31, 2021.

During the year ended December 31, 2020, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to inventory carrying values of $ 1.1 million, which is included as a component in cost of services in the consolidated statements of operations.

Note 5— Property and Equipment

7 unchanged sentences

61,282 59,741

Lease Equipment 10 64,770 —

Buildings and facilities 5 - 30

1 unchanged sentence

Mineral reserves > 25

76,823 78,793

Office equipment and furniture 2 - 7

5 unchanged sentences

During the years ended December 31, 2021, 2020, and 2019, the Company recognized depreciation expense of $ 243.0 million, $ 169.9 million, and $ 153.6 million, respectively.

Depletion expense for the year ended December 31, 2021 was $ 1.2 million.

The Company performed a quantitative and qualitative impairment analysis and determined that no impairment had occurred as of March 31, 2020.

As of December 31, 2020, the Company concluded that no additional triggering events occurred and the conclusion reached at March 31, 2020 is still appropriate.

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

As of December 31, 2021, and 2020, the Company concluded that no additional triggering events occurred.

Such analysis required management to make estimates and assumptions based on historical data and consideration of future market conditions.

Given the uncertainty inherent in any projection, heightened by the possibility of unforeseen additional effects of COVID-19, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in impairment charges in the future.

In November 2018, one of the Company’s hydraulic frac fleets was involved in an accidental fire, which resulted in damage to a portion of the equipment in that fleet.

The Company accrued $ 15.7 million of insurance proceeds for replacement cost of the damaged equipment, which is presented in prepaid and other current assets on the accompanying consolidated balance sheets as of December 31, 2018.

The accrued insurance proceeds offset the $ 4.3 million loss recognized on the damaged equipment.

The resulting net gain of $ 11.5 million was recognized in (gain) loss on disposal of assets for the year ended December 31, 2018.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Note 6— Leases

Lessee Arrangements

The Company has operating and finance leases primarily for vehicles, equipment, railcars, office space, and facilities.

10 unchanged sentences

Variable lease cost 4,183 2,935

Short-term lease cost 5,026 —

Sublease (income) — ( 113 )

Total lease cost, net $ 56,662 $ 38,524

In accordance with prior guidance, ASC 840, Leases , total rent expense was $ 40.9 million for the year ended December, 31, 2018.

Supplemental cash flow and other information related to leases as of December 31, 2021 and 2020 were as follows:

3 unchanged sentences

Finance leases 8,598 13,433

Right-of-use assets upon adoption of ASC 842 and obtained in exchange for new lease liabilities:

Right-of-use assets obtained in exchange for new lease liabilities:

Operating leases 71,477 29,663

Finance leases 1,500 10,921

During the year ended December 31, 2020, 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 $ 22.5 million and $ 19.0 million, respectively, and recognized operating lease right-of-use assets and liabilities of $ 18.6 million and $ 15.1 million, respectively.

During the years ended December 31, 2021 and 2020, the Company amended certain finance leases, the change in terms of which caused the leases to be reclassified to operating leases.

In connection with the amendments, the Company wrote-off finance lease right-of-use assets of $ 16.6 million and $ 22.5 million, respectively, and liabilities of $ 12.8 million and $ 19.0 million, respectively.

Additionally, the Company recognized operating lease right-of-use assets of $ 14.3 million and $ 18.6 million and liabilities of $ 10.7 million and $ 15.1 million, respectively.

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

7 unchanged sentences

Finance leases 8.6 % 5.8 %

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Future minimum lease commitments as of December 31, 2021 are as follows:

3 unchanged sentences

2024 — 18,306

2025 — 15,975

Thereafter — 17,833

6 unchanged sentences

For vehicle leases that are classified as finance leases, the Company includes the residual value guarantee, estimated in the lease agreement, in the financing lease liability.

Lessor Arrangements

The Company leases dry and wet sand containers and conveyor belts to customers through PropX.

PropX leases to customers through operating leases, where the lessor for tax purposes is considered to be the owner of the equipment during the term of the lease.

The lease agreements do not include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value.

However, some of the leases contain a termination clause in which the customer can cancel the contract.

The leases can be subject to variable lease payments if the customer requests more units than what is agreed upon in the lease.

The Company does not record any lease assets or liabilities related to these variable items.

The carrying amount of equipment leased to others, included in property, plant and equipment, under operating leases as of December 31, 2021 and 2020 were as follows:

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

Equipment leased to others - at original cost $ 64,770 $ —

Accumulated depreciation ( 1,377 ) —

Equipment leased to others - net $ 63,393 $ —

Future payments receivable for operating leases commenced and committed but not delivered as of December 31, 2021 are as follows:

($ in thousands)

2022 $ 10,209

Total $ 25,305

Revenues from operating leases for the years ended December 31, 2021 and 2020 were $ 3.2 million and $ — million , respectively.

The Company had no lease revenue and no lease receivables with related parties for the year ended December 31, 2021 .

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Note 7— Accrued Liabilities

Accrued liabilities consist of the following:

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

Accrued vendor invoices $ 109,903 $ 61,210

Operations accruals 64,707 28,932

Accrued benefits and other 60,505 28,241

$ 235,115 $ 118,383

Debt consists of the following:

6 unchanged sentences

$ 122,452 $ 105,775

On September 19, 2017, the Company entered into two new credit agreements for 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”).

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”).

On October 22, 2021, the Company entered into an amendment to the ABL Facility (the “Revolving Credit Agreement Amendment”).

The Revolving Credit Agreement Amendment further amends the credit agreement and guaranty and security agreement originally entered into by the parties on September 19, 2017, which governs the Company’s ABL Facility.

Along with other revisions, the Revolving Credit Agreement Amendment (i) expanded the definition of borrowing base to include certain eligible US investment grade accounts, Canadian accounts solely after a specified event, and both chemical and spare parts inventory;

(ii) increased the maximum revolver amount from $ 250.0 million to $ 350.0 million (with the ability to request an increase in the size of the ABL Facility by $ 75.0 million);

(iii) increased certain indebtedness baskets;

(iv) provided additional flexibility for a potential future internal structuring;

(v) added new lenders to the facility;

and (vi) extended the maturity date to the earlier of (a) October 22, 2026 and (b) to the extent the debt under the Term Loan Facility remains outstanding 90 days prior to the final maturity of the Term Loan Facility.

The ABL Facility was initially scheduled to mature on the earlier to occur of (i) September 19, 2022 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.

Additionally, on October 22, 2021, the Company entered into a Fifth Amendment to Credit Agreement, Second Amendment to Guaranty and Security Agreement and Termination of Right of First Offer Letter.

The Term Loan Credit Agreement Amendment further amends the credit agreement and guaranty and security agreement and terminates the Right of First Offer Letter originally entered into by the parties on September 19, 2017, which governs the Company’s Term Loan Facility.

Along with other revisions, the Term Loan Credit Agreement Amendment (i) increased certain indebtedness baskets;

(ii) provided additional flexibility for a potential future internal structuring;

(iii) extended the maturity date through September 19, 2024;

and (iv) terminated a right of first offer in favor of the Term Loan Facility lenders.

The Term Loan Facility was initially scheduled to mature on September 19, 2022.

The weighted average interest rate on all borrowings outstanding as of December 31, 2021 and December 31, 2020 was 7.9 % and 8.6 %, respectively.

Under the terms of the ABL Facility, up to $ 350.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory.

On May 29, 2020 the Company amended the ABL Facility to allow accounts receivables that are more than 90 but less than 120 days past their original invoice date to be included in the determination of eligible accounts receivables, up to a limit of $ 37.5 million when combined with receivables that are more than 60 but less than 90 days past their due date to be included in the borrowing base.

The expanded borrowing base terms were in effect from May 1, 2020 through December 31, 2020.

As of December 31, 2020, the borrowing base was calculated to be $ 115.1 million, and the Company had no borrowings outstanding, except for a letter of credit in the amount of $ 0.8 million, with $ 114.3 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 2.0 % or base rate margin of 0.5 % to 1.0 %, as defined in the ABL Facility credit agreement.

As of December 31, 2021, the borrowing base was calculated to be $ 269.0 million, and the Company had $ 18.0 million outstanding in addition to a letter of credit in the amount of $ 1.5 million, with $ 249.5 million of remaining availability.

Borrowings under the ABL Facility bear interest at LIBOR or a

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

Interest and fees are payable in arrears at the end of each month, or, in the case of LIBOR loans, at the end of each interest period.

The ABL Facility matures on the earlier of (i) September 19, 2022, 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, 2022.

Borrowings under the ABL Facility are collateralized by accounts receivable

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

and inventory, and further secured by the Company, Liberty LLC and R/C IV Non-U.S.

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

Borrowings under the ABL Facility are collateralized by accounts receivable and inventory, and further secured by the Company, Liberty LLC and R/C IV Non-U.S.

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

1 unchanged sentence

The Term Loan Facility provides for a $ 175.0 million term loan, of which $ 106.5 million remained outstanding as of December 31, 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 rate on borrowings was 8.6 % as of December 31, 2020.

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 December 31, 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, 2024.

23 unchanged sentences

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

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

Those that are initially classified as Level 3 are subsequently reported as Level 2 when the fair value derived from unobservable inputs is inconsequential to the overall fair value, or if corroborated market data becomes available.

Assets and liabilities that are initially

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

reported as Level 2 are subsequently reported as Level 3 if corroborated market data is no longer available.

Notes to Consolidated Financial Statements

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

Assets and liabilities that are initially reported as Level 2 are subsequently reported as Level 3 if corroborated market data is no longer available.

Transfers occur at the end of the reporting period.

8 unchanged sentences

These items are not measured at fair value on an ongoing basis but may be subject to fair value adjustments in certain circumstances.

These assets and liabilities include those acquired through the OneStim Acquisition, which are required to be measured at fair value on the acquisition date in accordance with ASC Topic 805 .

See Note 3—The OneStim Acquisition.

Other assets measured at fair value on a nonrecurring basis consist of notes receivable—related party from the Affiliate, as defined and described in Note 13—Related Party Transactions.

The note was initially recorded for the trade receivables, created in the normal course of business, due from the Affiliate as of the Agreement Date, as defined in Note 13—Related Party Transactions.

There were no identified events or changes in circumstances that had a significant adverse effect on the fair value of the notes receivable.

These notes are classified as Level 3 in the fair value hierarchy as the inputs to the determination of fair value are based upon unobservable inputs.

As of December 31, 2020 and December 31, 2019, notes receivable—related party from the Affiliate totaled $ 0 and $ 2.5 million, respectively.

These assets and liabilities include those acquired through the PropX Acquisition and OneStim Acquisition, which are required to be measured at fair value on the acquisition date in accordance with ASC Topic 805 .

See Note 3 — Acquisitions.

Recurring Measurements

7 unchanged sentences

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 equivalents balance on deposit with financial institutions total $ 69.0 million and $ 112.7 million as of December 31, 2020 and 2019, respectively, which, as of certain dates, exceeded FDIC insured limits.

The Company’s cash and cash equivalents balance on deposit with financial institutions total $ 20.0 million and $ 69.0 million as of December 31, 2021 and 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.

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

Concentrations of receivables and revenues were as follows:

As of December 31, 2021 and 2020, the below customers 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 Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

Portion of total of consolidated accounts receivable and unbilled revenue as of December 31, Portion of consolidated revenues for the year ended December 31,

5 unchanged sentences

Customer E — % — % — % 10 % — %

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

As of December 31, 2021, the Company had $ 0.9 million in allowance for credit losses and recorded a provision related to two entities inability to pay.

As of December 31, 2020, the Company had $ 0.8 million in allowance for credit losses.

Subsequent to the adoption of ASU 2016-13 (see “Credit Losses” within Note 2—Significant Accounting Policies— Recently Adopted Accounting Standards ) on January 1, 2020, the Company recognized a $ 4.9 million allowance for credit losses, to the Company’s accounts receivables in consideration of both historic collection experience and the expected impact of deteriorating economic conditions for the oil and gas industry at the time, and one customer that entered bankruptcy proceedings during the year.

Subsequent to the adoption of ASU 2016-13 (see “Accounts Receivable” within Note 2—Significant Accounting Policies— Recently Adopted Accounting Standards ) on January 1, 2020, the Company recognized a $ 4.9 million allowance for credit losses, to the Company’s accounts receivables in consideration of both historic collection experience and the expected impact of deteriorating economic conditions for the oil and gas industry as of such date.

The Company applied historic loss factors to its receivable portfolio segments that were not expected to be further impacted by current economic developments, and an additional economic conditions factor to portfolio segments anticipated to experience greater losses in the current economic environment.

While the Company has not experienced significant credit losses in the past and did not see during 2020 material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the ongoing impacts of COVID-19, including the potential impact of periodically adjusted borrowing base limits, level of hedged production, or unforeseen well shut-ins may affect the ability of its customers to timely pay receivables when due.

While the Company has not experienced significant credit losses in the past and has not seen material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the ongoing impacts of COVID-19, including the potential impact of periodically adjusted borrowing base limits, level of hedged production, or unforeseen well shut-ins may affect the ability of its customers to timely pay receivables when due.

Accordingly, in future periods, the Company may revise its estimates of expected credit losses.

As of December 31, 2019 the Company recorded a provision related to one specific entity engaged in the business of oil and gas exploration and production that had filed for bankruptcy.

As of December 31, 2018 the Company had no provision for credit losses.

($ in thousands) 2021 2020 2019

10 unchanged sentences

Class A Common Stock

The Company had a total of 157,952,213 shares of Class A Common Stock outstanding as of December 31, 2020, none of which were restricted.

As of December 31, 2019, the Company had a total of 81,885,384 shares of Class A Common Stock outstanding, which included 268,205 shares of restricted stock.

The Company had a total of 183,385,111 and 157,952,213 shares of Class A Common Stock outstanding as of December 31, 2021 and 2020, none of which were restricted.

Holders of Class A Common Stock are entitled to one vote per share on all matters to be voted upon by the stockholders and are entitled to ratably receive dividends when and if declared by the Company’s board of directors.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Notes to Consolidated Financial Statements

Class B Common Stock

8 unchanged sentences

In connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right, the corresponding number of shares of Class B Common Stock will be canceled.

Unit-Based Compensation

Prior to the IPO and Corporate Reorganization, Liberty Holdings issued Class B units of Liberty Holdings (“Legacy Units”) to certain eligible employees of the Company.

The Legacy Units were non-voting, except with respect to such matters that units are entitled to vote as a matter of law.

In such cases, each Legacy Unit entitled the holder to 1/1000 th of one vote.

Certain Legacy Units granted to eligible participants had an assigned benchmark value and were subject to vesting in accordance with the terms of each award letter.

Upon termination of the holder’s employment for any reason, Liberty Holdings had the right, but not the obligation, to repurchase from the recipient those vested Legacy Units at fair value.

The Company recognizes compensation expense for equity-based Legacy Units issued to employees based on the grant-date fair value of the awards and each award’s requisite service period.

With the assistance from a third-party valuation expert, the Predecessor determined that the Legacy Units issued to employees were deemed to have a de minimis grant-date fair value based on their assigned benchmark values.

In connection with the Corporate Reorganization, the unvested Legacy Units were exchanged for 1,258,514 shares of restricted stock with the same terms and requisite vesting conditions as the Legacy Units.

All shares of restricted stock were vested as of December 31, 2020.

Restricted Stock Awards

Restricted stock awards are awards of Class A Common Stock that are subject to restrictions on transfer and to a risk of forfeitures if the award recipient is no longer an employee or director of the Company for any reason prior to the lapse of the restrictions.

The following table summarizes the Company’s unvested restricted stock activity for the year ended December 31, 2020:

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Number of Shares Grant Date Fair Value per Share (1)

Restricted Shares as of December 31, 2019 268,205 —

Vested ( 263,818 ) —

Forfeited ( 4,387 ) —

Outstanding at December 31, 2020 — $ —

(1) As discussed above, the shares of restricted stock retain the grant date fair value of the Legacy Units.

Long Term Incentive Plan

13 unchanged sentences

Outstanding at December 31, 2021 2,741,061 $ 10.62

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Performance Restricted Stock Units

9 unchanged sentences

Outstanding at December 31, 2021 1,306,945 $ 12.45

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

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

The Company recognized stock based compensation expense of $ 19.9 million for the year ended December 31, 2021 and $ 17.1 million for the year ended December 31, 2020.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

approximately $ 18.9 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of December 31, 2020.

The unrecognized compensation expense will be recognized on a straight-line basis over the weighted average remaining vesting period of 2 years.

There was approximately $ 25.5 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of December 31, 2021.

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

On April 2, 2020, the Company suspended future quarterly dividends until business conditions warrant reinstatement.

The Company paid cash dividends of $ 0.05 per share of Class A Common Stock on March 20, 2020 to stockholders of record as of March 6, 2020.

Liberty LLC paid a distribution of total of $ 5.6 million, or $ 0.05 per Liberty LLC Unit, to all Liberty LLC unit holders during the year ended December 31, 2020, of which $ 4.1 million was paid to the Company.

Liberty LLC paid a distribution of total of $ 5.6 million, or $ 0.05 per Liberty LLC Unit, to all Liberty LLC unit holders as of March 6, 2020, $ 4.1 million of which was paid to the Company.

The Company used the proceeds of the distribution to pay the dividend to all holders of shares of Class A Common Stock as of March 6, 2020, which totaled $ 4.1 million.

For the year ended December 31, 2019, Liberty LLC paid quarterly distributions for a total of $ 22.5 million, or $ 0.05 per Liberty LLC Unit, to all Liberty LLC unit holders, of which $ 14.7 million was paid to the Company.

The Company used the proceeds of the distributions to pay quarterly dividends to all holders of Class A Common Stock, which totaled $ 14.7 million.

Additionally, as of December 31, 2020 and December 31, 2019, the Company had $ 0.4 million and $ 0.5 million of accrued dividends payable related to restricted stock and RSUs to be paid upon vesting, respectively.

Additionally, as of December 31, 2021 and 2020, the Company had $ 0.2 million and $ 0.4 million of accrued dividends payable related to restricted stock and RSUs to be paid upon vesting, respectively.

Dividends related to forfeited restricted stock and RSUs will be forfeited.

Share Repurchase Program

On September 10, 2018 the Company’s board of directors authorized a share repurchase plan to repurchase up to $ 100.0 million of the Company’s Class A Common Stock through September 30, 2019.

On January 22, 2019, the Company’s board of directors authorized an additional $ 100.0 million under the share repurchase plan through January 31, 2021.

During the year ended December 31, 2020, no shares were repurchased under the share repurchase program.

During the year ended December 31, 2019, Liberty LLC redeemed and retired 1,303,003 Liberty LLC Units from the Company for $ 18.4 million, and the Company repurchased and retired 1,303,003 shares of Class A Common Stock for $ 18.4 million, or $ 14.66 average price per share.

The repurchase in January 2019 completed the share repurchase amount authorized on September 10, 2018.

During the year ended December 31, 2019, of the total amount of Class A Common Stock repurchased, 117,647 shares were repurchased from R/C Energy IV Direct Partnership, L.P., R/C IV Liberty Holdings, L.P., and Riverstone/Carlyle Energy Partners IV, L.P.

(“R/C” and collectively, the “Riverstone Sellers”).

During the year ended December 31, 2018, of the total amount of Class A Common Stock repurchased, 2,491,160 shares were repurchased pursuant to a Stock Purchase and Sale Agreement, dated as of September 14, 2018, by the Riverstone Sellers.

For further details of this related party transaction, see Note 13—Related Party Transactions.

As of December 31, 2020 and 2019, $ 98.7 million remained authorized for future repurchases of Class A Common Stock under the share repurchase program, respectively.

Following the expiration of the most recent authorization on January 31, 2021, no amounts remain authorized under the share repurchase plan.

During the years ended December 31, 2021 and 2020, no shares were repurchased under the share repurchase program and, as of December 31, 2021, no amounts remained authorized for future repurchases of Class A Common Stock under the share repurchase program.

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

Thereafter, any excess purchase price will be recorded as a reduction to retained earnings.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Note 10— Net (Loss) Income per Share

Basic net (loss) income per share measures the performance of an entity over the reporting period.

Diluted net (loss) income per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period.

Note 11— Net Loss per Share

Basic net loss per share measures the performance of an entity over the reporting period.

Diluted net loss per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period.

The Company uses the “if-converted” method to determine the potential dilutive effect of its Class B Common Stock and the treasury stock method to determine the potential dilutive effect of outstanding restricted stock and RSUs.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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:

(In thousands, except per share data) Year Ended December 31, 2021 Year Ended December 31, 2020

Basic Net (Loss) Income Per Share

Net (loss) income attributable to Liberty Oilfield Services Inc.

Basic Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Stockholders $ ( 179,244 ) $ ( 115,583 )

Basic weighted average shares outstanding 174,019 85,242

Basic net (loss) income per share attributable to Liberty Oilfield Services Inc.

Basic net loss per share attributable to Liberty Oilfield Services Inc.

Stockholders $ ( 1.03 ) $ ( 1.36 )

Diluted Net (Loss) Income Per Share

Net (loss) income attributable to Liberty Oilfield Services Inc.

Diluted Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Stockholders $ ( 179,244 ) $ ( 115,583 )

Effect of exchange of the shares of Class B Common stock for shares of Class A Common Stock — —

Diluted net (loss) income attributable to Liberty Oilfield Services Inc.

Diluted net loss attributable to Liberty Oilfield Services Inc.

Stockholders $ ( 179,244 ) $ ( 115,583 )

1 unchanged sentence

Effect of dilutive securities:

Restricted stock — 512

Restricted stock units — —

1 unchanged sentence

Diluted weighted average shares outstanding 174,019 85,242

Diluted net (loss) income per share attributable to Liberty Oilfield Services Inc.

Diluted net loss per share attributable to Liberty Oilfield Services Inc.

Stockholders $ ( 1.03 ) $ ( 1.36 )

Diluted weighted average common shares outstanding for the year ended December 31, 2020 exclude 27,427 weighted average shares of Class B Common Stock, 207 weighted average shares of restricted stock, and 2,460 weighted average shares of restricted stock units.

Diluted weighted average common shares outstanding for the year ended December 31, 2019 exclude 9,057 weighted average shares of Class B Common Stock exchanged during the period (share counts presented in 000’s).

In accordance with GAAP, diluted weighted average common shares outstanding for the year ended December 31, 2021 exclude 7,052 weighted average shares of Class B Common Stock and 3,589 weighted average shares of restricted stock units.

Additionally, diluted weighted average common shares outstanding for the year ended December 31, 2020 exclude 27,427 weighted average shares of Class B Common Stock, 207 weighted average shares of restricted stock, and 2,460 weighted average shares of restricted stock units.

Note 12— Income Taxes

Prior to the IPO, the Predecessor was treated as a partnership for U.S.

federal, state and local income tax purposes.

As such, any liability for federal income tax was the responsibility of the members of the Predecessor.

Accordingly, no provision for U.S.

federal, state and local income tax has been provided in the combined financial statements of the Company for periods ending prior to the IPO.

Following the IPO, the Company is a corporation and is subject to U.S.

federal, state and local income tax on its share of Liberty LLC’s taxable income.

The Company is a corporation and is subject to taxation in the United States, Canada and various state, local and provincial jurisdictions.

Liberty LLC is treated as a partnership, and its income is passed through to its owners for income tax purposes.

Liberty LLC’s members, including the Company, are liable for federal, state and local income taxes based on their share of Liberty LLC’s pass-through taxable income.

As of December 31, 2020, tax reporting by the Company’s Predecessor for the years ended December 31, 2017 and 2018 is subject to examination by the tax authorities.

With few exceptions, as of December 31, 2020, the Company is no longer subject to U.S.

federal, state or local examinations by tax authorities for tax years ended before December 31, 2017.

As of December 31, 2021, tax reporting by the Company for the years ended December 31, 2018, 2019, and 2020 is subject to examination by the tax authorities.

With few exceptions, as

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Income tax (benefit) expense reflected in the consolidated statement of operations consisted of:

($ in thousands) Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018

Notes to Consolidated Financial Statements

of December 31, 2021, the Company is no longer subject to U.S.

federal, state or local examinations by tax authorities for tax years ended before December 31, 2017.

The components of the Company’s income (loss) from continuing operations before income taxes on which the provision for income taxes was computed consisted of the following:

Year Ended December 31,

($ in thousands) 2021 2020 2019

United States ( 191,774 ) ( 191,531 ) 88,916

Foreign 13,986 — —

Total $ ( 177,788 ) $ ( 191,531 ) $ 88,916

The components of the provision for incomes taxes from continuing operations are summarized as follows:

Year Ended December 31,

($ in thousands) 2021 2020 2019

Federal $ — $ ( 5,541 ) $ ( 9,907 )

State 29 230 551

Foreign 4,108 — —

Total Current $ 4,137 $ ( 5,311 ) $ ( 9,356 )

1 unchanged sentence

State ( 439 ) ( 2,443 ) ( 11 )

Foreign $ ( 607 ) $ — —

Total Deferred $ 5,079 $ ( 25,546 ) $ 23,408

Income tax (benefit) expense $ ( 30,857 ) $ 14,052 40,385

A reconciliation of the statutory U.S.

federal income tax rate of 21.0% to the Company’s effective income tax rate is as follows:

($ in thousands) Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018

Federal income tax (benefit) expense at statutory rate $ ( 40,222 ) $ 18,672 $ 60,778

Income tax expense (benefit) $ 9,216 $ ( 30,857 ) $ 14,052

Income tax expense (benefit) attributable to net loss before income taxes differed from the amounts computed by applying the statutory U.S.

federal income tax rate of 21.0% to pre-tax income as a result of the following:

Year Ended December 31,

($ in thousands) 2021 2020 2019

Computed tax (benefit) expense at the statutory rate $ ( 37,336 ) $ ( 40,222 ) $ 18,672

Increase (decrease) in tax expense resulting from:

State and local income tax (benefit) expense, net ( 5,204 ) ( 2,212 ) 1,525

Pre-IPO income before income taxes attributable to the Predecessor — — ( 1,958 )

Non-controlling interest 1,565 9,463 ( 7,531 )

Stock Compensation 2,157 227 —

Other ( 43 ) 1,159 1,715

Total income tax (benefit) expense $ ( 30,857 ) $ 14,052 $ 40,385

Effect of foreign tax rates 478 — —

Stock based compensation ( 535 ) 2,157 227

Change in valuation allowance 50,111 — —

Other, net 137 ( 43 ) 1,159

Total income tax expense (benefit) $ 9,216 $ ( 30,857 ) $ 14,052

The effective tax rate for the years ended December 31, 2021, 2020, and 2019 was (5.2)%, 16.1 %, and 15.8 %, respectively.

The effective tax rate for the period commencing on January 17, 2018, the date of the Corporate Reorganization, through December 31, 2018 was 14.1 %.

The Company recognized income tax benefit of $ 9.2 million during the year ended December 31, 2021.

The Company’s effective tax rate is less than the statutory federal income tax rate of 21.0% because no taxes are payable by the Company for the non-controlling interest’s share of Liberty LLC’s pass-through income for federal, state and local income tax reporting.

During 2020, the non-controlling interest effect resulted in a $ 9.5 million reduction in income tax benefit.

The Company’s effective tax rate is less than the statutory federal income tax rate of 21.0% due to the Company recording a valuation allowance on its U.S.

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities are presented below:

Notes to Consolidated Financial Statements

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below:

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

3 unchanged sentences

Realized tax benefit - TRAs 91,312 52,561

Intangibles 301 —

Total deferred tax assets 149,501 70,890

Less valuation allowance ( 91,336 ) —

Net deferred tax assets 58,165 70,890

Deferred tax liabilities:

Investment in Liberty LLC $ ( 57,461 ) $ ( 64,765 )

Property and equipment ( 97 ) —

Other ( 563 ) ( 765 )

Total deferred tax liabilities ( 58,121 ) ( 65,530 )

Net deferred tax asset (liability) $ 5,360 $ ( 19,659 )

Net deferred tax asset $ 44 $ 5,360

During the quarter ended June 30, 2021 the Company established a valuation allowance resulting in the recognition of income tax expense on the Company’s beginning U.S.

net deferred tax assets of $ 6.1 million.

As of December 31, 2021, the Company had significant deferred tax assets and liabilities.

The deferred tax assets include U.S.

federal and state net operating losses and the step-up in basis of depreciable assets under Section 754 of the Internal Revenue Code of 1986, as amended.

As a result of the IPO and Corporate Reorganization, the Company recorded a deferred tax asset and liability for the difference between the book value and the tax value of the Company's investment in Liberty LLC.

The deferred tax assets have been recorded for tax attributes contributed to the Company as part of the Corporate Reorganization.

Deferred tax liabilities of $ 29.3 million were recorded relating to Liberty LLC Units acquired through the reorganization.

The initial deferred tax liability is recorded as a long term liability and additional paid in capital on the consolidated balance sheet as of December 31, 2020.

federal and state net operating losses and the step-up in basis of depreciable assets under Section 754 (“Section 754”) of the Internal Revenue Code of 1986, as amended, subject to the valuation allowance.

In addition, the Company recorded a deferred tax asset and liability for the difference between the book value and the tax value of the Company's investment in Liberty LLC, in which a valuation allowance has been recorded against the net US deferred tax assets.

The Company also has deferred tax assets for foreign operations driven by net deductible reversing temporary differences related to differences between book and taxable income.

Since the Company’s establishment of the valuation allowance, increased deferred tax benefit and deferred tax assets related to the step-up in basis of depreciation assets under Section 754 resulted in a change in valuation allowance of $ 85.2 million.

As of December 31, 2021, the Company has available U.S.

1 unchanged sentence

Per the Coronavirus Aid, Relief and Economic Security (“CARES”) Act enacted 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.

The Company will apply for and expects to receive a NOL carryback refund to recover $ 5.5 million of cash taxes paid by the Company in 2018.

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.

On December 31, 2020, the Company completed the OneStim Acquisition in a taxable exchange for 66,326,134 shares of Class A Common Stock.

The Transferred Business was operated by a limited liability company that was treated as a disregarded entity for federal tax purposes prior to the acquisition date.

Upon acquisition the fair market value of assets were recorded for federal tax purposes.

Therefore, no goodwill and deferred taxes have been recorded related to the acquisition.

See Note 3—The OneStim Acquisition for additional information regarding the OneStim Acquisition.

The remaining deferred tax asset for net operating losses available for carryforward are presented net of the Company’s valuation allowance.

The Company may distribute cash from foreign subsidiaries to its U.S.

parent as business needs arise.

The Company has not provided for deferred income taxes on the undistributed earnings from certain foreign subsidiaries earnings as such earnings are considered to be indefinitely reinvested.

If such earnings were to be distributed, any income and/or withholding tax would not be significant.

Uncertain Tax Positions

2 unchanged sentences

In addition, the Company does not believe that it has any tax positions for which it is reasonably possible that it will be required to record a significant liability for unrecognized tax benefits within the next twelve months.

If the Company were to record an unrecognized tax benefit, the Company will recognize applicable interest and penalties related to income tax matters in income tax expense.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

the Company were to record an unrecognized tax benefit, the Company will recognize applicable interest and penalties related to income tax matters in income tax expense.

Tax Distributions

1 unchanged sentence

Federal, state and local taxes resulting from the pass-through taxable income of Liberty LLC are obligations of its members.

Net profits and losses are generally allocated to the

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

members of Liberty LLC (including the Company) in accordance with the number of Liberty LLC Units held by each member for tax purposes.

Net profits and losses are generally allocated to the members of Liberty LLC (including the Company) in accordance with the number of Liberty LLC Units held by each member for tax purposes.

The Liberty LLC Agreement provides for pro rata cash distributions, and in certain cases non-pro rata cash advances, to assist members (including the Company) in paying their income tax liabilities.

The Liberty LLC Agreement requires any tax advances to be proportionally repaid in connection with any redemption of Liberty LLC Units pursuant to the Redemption Right or the Call Right.

Net advances received by Liberty LLC from non-controlling interest holders were $ 1.4 million and de minimis, respectively, for the years ended December 31, 2020 and 2019.

Net advances received by Liberty LLC from non-controlling interest holders were $ 1.4 million and $ 1.4 million, respectively, for the years ended December 31, 2021 and 2020.

Tax Receivable Agreements

8 unchanged sentences

As a result, the Company has remaining $ 0.8 million of deferred tax asset and a corresponding $ 0.7 million liability pursuant to the TRAs.

At December 31, 2021, the Company’s liability under the TRAs was $ 37.6 million, all of which is presented as a component of long term liabilities, and the related deferred tax assets totaled $ 91.3 million of which a valuation allowance on the net deferred tax asset has been recorded.

The Company also remeasured the liability under the TRAs as of December 31, 2021 as it relates to the recording of a valuation allowance and recorded a gain on remeasurement of liabilities subject to the TRAs of $ 19.0 million recorded as part of continuing operations.

The reduction in the liability under the TRA is primarily driven by current generated net operating losses and amortization of expected tax benefits that is subject to the valuation allowance and not expected to be realized in the foreseeable future.

During the year ended December 31, 2021, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $ 58.5 million in amounts payable under the TRAs, and a net increase of $ 68.8 million in deferred tax assets, all of which are subject to the valuation allowance and remeasurement of TRA liability discussed above.

The Company did not make any TRA payments for the year ended December 31, 2021.

During the year ended December 31, 2020, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $13.1 million in amounts payable under the TRAs, and a net increase of $ 15.5 million in deferred tax assets, all of which were recorded through equity.

1 unchanged sentence

The TRA payments were related to tax benefits realized in prior years and for the Company’s NOL carryback of 2019 NOL to 2018 taxable income under the CARES Act.

During the year ended December 31, 2019, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $ 34.0 million in amounts payable under the TRAs, and a net increase of $ 40.0 million in deferred tax assets, all of which were recorded through equity.

At December 31, 2020, the Company’s liability under the TRAs was $ 56.6 million, all of which is presented as a component of long term liabilities, and the related deferred tax assets totaled $ 54.0 million.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Note 13— Defined Contribution Plan

The Company sponsors a 401(k) defined contribution retirement plan covering eligible employees.

However, effective April 1, 2020, in connection with other cost savings measures undertaken in response to declining demand for frac services as a result of the impacts of the COVID-19 pandemic, the Company suspended its 6 % matching contribution.

Prior to April 1, 2020, the Company made matching contributions at a rate of $ 1.00 for each $1.00 of employee contribution, subject to a cap of 6 % of the employee’s salary and federal limits.

During 2020, in connection with other cost savings measures undertaken in response to declining demand for frac services as a result of the impacts of the COVID-19 pandemic, employer matching contributions were temporarily suspended from April 1, 2020 through December 31, 2020.

The Company makes a matching contribution at a rate of $ 1.00 for each $1.00 of employee contribution, subject to a cap of 6 % of the employee’s salary and federal limits.

Contributions made by the Company were $ 19.0 million, $ 4.2 million, and $ 15.7 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

Note 14— Related Party Transactions

As of December 31, 2020 Schlumberger owns 66,326,134 shares of Class A Common Stock of the Company, or 37.0 % of the issued and outstanding shares of 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, 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.

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

The Company collected $ 8.0 million in January 2021.

Additionally, in conjunction with closing the OneStim Acquisition, the Company entered unto a transition services agreement with Schlumberger, under which Schlumberger will provide certain administrative transition services for a rate of approximately $ 2.5 million per month, until the Company fully integrates the acquired business.

Prior to the Corporate Reorganization, one of the members of Liberty Holdings contributed a portion of its member interest in Liberty Holdings to R/C IV Non-U.S.

LOS Corp (“R/C IV”).

Subsequently, in conjunction with the Corporate Reorganization, R/C IV was contributed to Liberty LLC.

R/C IV had net operating loss carryforwards for federal and state income tax purposes which resulted in the recognition of a $ 2.9 million payable pursuant to the TRAs.

During the years ended December 31, 2020 and December 31, 2019, R/C IV Liberty Holdings, L.P.

exercised its redemption right and redeemed 4,016,965 and 9,605,786 shares of Class B Common Stock resulting in an increase in tax basis, as described in Note—11 Income Taxes— Tax Receivable Agreements , and recognition of $ 6.1 million and $ 22.3 million in amounts payable under the TRAs, respectively.

As of December 31, 2020 and 2019, the Company’s current liabilities under the TRAs payable to R/C IV Liberty Holdings, L.P.

and R/C IV Non-US were $ 0 and $ 1.3 million, respectively, included in accrued interest and other and non-current liabilities were $ 27.2 million and $ 23.8 million, respectively, in payable pursuant to tax receivable agreements in the accompanying condensed consolidated balance sheets.

In September 2011, Liberty Resources LLC, an oil and gas exploration and production company, and its successor entity (collectively, the “Affiliate”) and LOS, companies with common ownership and management, entered into a services agreement (the “Services Agreement”) whereby the Affiliate is to provide certain administrative support functions to LOS and a master service agreement whereby LOS provides hydraulic fracturing services to the Affiliate at market service rates.

The amounts incurred under the Services Agreement by LOS during the years ended December 31, 2020, 2019 and 2018, were $ 0 , $ 0 million, and $ 0.2 million, respectively.

The Services Agreement was terminated during June 2018.

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the years ended December 31, 2020, 2019 and 2018, were $ 0.0 million, $ 18.3 million and $ 23.1 million, respectively.

As of December 31, 2020 and 2019, $ 0.0 million and $ 7.1 million, respectively, of the Company’s accounts receivable—related party was with the Affiliate.

As of December 31, 2021 Schlumberger owns 56,826,134 shares of Class A Common Stock of the Company, or approximately 30.5 % of the issued and outstanding shares of 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.

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.

During the three months ended 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 and other transition services until the Company fully integrates the acquired business.

During the year ended December 31, 2021, the Company incurred $ 5.7 million of fees for such transaction services.

The Company does not expect to incur any additional transition services related fees in future periods.

During the year ended December 31, 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.

In a separate transaction, the Company sold equipment to Schlumberger for $ 1.3 million and recognized a gain on the sale of equipment of $ 0.9 million.

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 year ended December 31, 2021, total purchases from Schlumberger were approximately $ 28.2 million, and as of December 31, 2021 amounts due to Schlumberger were $ 2.7 million and $ 1.1 million included in accounts payable and accrued liabilities, respectively, in the 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 among 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”).

In connection with the Sale, 6,918,142 shares of Class B Common Stock held by R/C Liberty were redeemed by the Company for an equal amount of Class A Common Stock.

On June 10, 2021, the Sale closed.

Following the Sale, R/C Direct and R/C Liberty no longer hold any Class A Common Stock or Class B Common Stock and are no longer considered related parties of the Company.

Prior to the Sale, 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 year ended December 31, 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.

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 year ended December 31, 2021 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $ 20.5 million or 0.8 % of the Company’s revenues for such period.

Receivables from Franklin Mountain as of December 31, 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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

related to hydraulic fracturing services provided to the Affiliate for the years ended December 31, 2021, 2020 and 2019, were $ 2.8 million, $ 0.0 million and $ 18.3 million, respectively.

As of December 31, 2021 and 2020, there were no receivables within the Company’s accounts receivable—related party line item 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.

2 unchanged sentences

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

As of December 31, 2020 and December 31, 2019, amounts outstanding under the amended payment terms from the Affiliate were $ 0 and $ 2.5 million, all of which is presented in accounts and notes receivable—related party in the accompanying consolidated balance sheet.

The balance outstanding is subject to interest at 13 % annual percent yield, retroactively applied to the respective invoice date.

During the year ended December 31, 2020 and 2019, interest income from the Affiliate was $ 0.3 million and $ 1.8 million, respectively, and accrued interest as of December 31, 2020 and 2019 was $ 0 .

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

During the years ended December 31, 2021, 2020 and 2019, interest income from the Affiliate was $ 0.0 million , $ 0.3 million and $ 1.8 million, respectively.

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 is subject to 13 % interest.

Liberty Holdings entered into an advisory agreement, dated December 30, 2011, with Riverstone/Carlyle Energy Partners IV, L.P.

(“R/C”), in which R/C agreed to provide certain administrative advisory services to Liberty Holdings.

The advisory services agreement was terminated pursuant to an agreement effective as of January 11, 2018.

On January 11, 2018, Liberty Holdings, R/C and other parties entered into a Master Reorganization Agreement that, among other things, crystallized the “waterfall” provisions of Article VI of the Third Amended and Restated Limited Liability Agreement of Liberty Holdings, dated October 11, 2016 (the “Holdings LLC Agreement”), in connection with the initial public offering of shares of Class A Common Stock.

As part of this crystallization, R/C and affiliated entities (collectively, the “R/C Affiliates”) received shares of Class A Common Stock, including 117,647 shares of Class A Common Stock (such 117,647 referred to as the “Issued Shares”) to compensate R/C Affiliates for certain accrued preferred returns but which would not have been issued had the $ 2.0 million in fees owing under the advisory agreement been paid in cash.

Had this fee been paid in cash on or prior to January 11, 2018, R/C and Liberty Holdings acknowledge that R/C Affiliates would not have received the Issued Shares in the crystallization pursuant

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

to the provisions of the Holdings LLC Agreement.

Subsequently, during the fourth quarter of 2018, R/C asserted that certain provisions of the termination of services agreement provided for R/C to receive $ 2.0 million in cash as payment of those accrued fees.

To resolve this matter, the Company agreed to pay R/C Affiliates $ 2.0 million in cash in exchange for the return, at the IPO price, of the Issued Shares and $ 0.3 million for interest and the settlement of the matter.

Accordingly, $ 2.3 million was recorded as accrued liabilities—related party in the consolidated balance sheet as of December 31, 2018 and subsequently paid in January 2019.

The returned shares of Class A Common Stock were canceled and retired, and the Company does not expect to incur future expense related to the advisory agreement or termination thereof.

During 2016, Liberty Holdings entered into a future commitment to invest and become a non-controlling minority member in Proppant Express Investments, LLC, the owner of Proppant Express Solutions, LLC (“PropX”), a provider of proppant logistics equipment.

2 unchanged sentences

however, the Company continues to lease equipment from PropX.

During the years ended December 31, 2020, 2019 and 2018 for $ 8.7 million, $ 9.8 million and $ 4.4 million, respectively.

Payables to PropX as of December 31, 2020 and 2019 were $ 1.5 million and $ 0.8 million, respectively.

Effective October 26, 2021, the Company completed the purchase of all membership interest in PropX, refer to Note 3—Acquisitions for further discussion of the transaction.

During the period from January 1, 2021 until October 26, 2021, the Company leased proppant logistics equipment from PropX for $ 7.3 million.

During the years ended December 31, 2020 and 2019 the Company leased proppant logistics equipment from PropX for $ 8.7 million and $ 9.8 million, respectively.

Payables to PropX as of December 31, 2020 were $ 1.5 million.

R/C IV Liberty Big Box Holdings, L.P., a Riverstone Holdings LLC (“Riverstone”) fund and a former significant stockholder of the Company, held a greater than 10 % equity interest in PropX.

Christopher Wright, the Chief Executive Officer, Michael Stock, the Chief Financial Officer and Ron Gusek, the President of the Company, held a less than 5 % equity interest in PropX through Big Box Proppant Investments LLC.

Cary Steinbeck, a director of the Company, served on the PropX board of the directors and held a less than 5 % indirect equity interest in PropX.

In addition, Brett Staffieri, a Riverstone appointed director, served on the board of the directors of the Company until June 15, 2021 and on the PropX board of directors until the acquisition date.

The PropX Acquisition was reviewed and approved by the disinterested members of the Board and pursuant to the Company’s related party transactions policy.

Note 15— Commitments & Contingencies

Purchase Commitments (tons are not in thousands)

The Company enters into purchase and supply agreements to secure supply and pricing of proppants, and related proppant transportation, as well as chemicals.

As of December 31, 2020 and 2019, the agreements commit the Company to purchase 1,580,750 and 7,978,300 tons, respectively, of proppant through February 1, 2022.

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

As of December 31, 2021 and 2020, the agreements provide pricing and committed supply sources for the Company to purchase 89,317 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.

Certain proppant 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.

Additionally, related proppant transload service commitments extend through 2024.

Future proppant, transload and mancamp commitments are as follows:

Year ending December 31,

Additionally, related proppant transload service commitments extend into 2023.

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

($ in thousands)

2022 $ 24,605

1 unchanged sentence

In circumstances where the Company does not make the minimum purchase required under the contract, the Company and its suppliers have a history of amending such minimum purchase contractual terms and in rare cases does the Company incur shortfall fees.

In 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 $ 51.8 million, $ 17.9 million, $ 9.5 million, $ 10.3 million, and $ 7.7 million for the years ended 2021, 2022, 2023, 2024, and 2025, respectively.

Based on forecasted levels of activity, the Company does not currently expect to incur significant shortfall fees.

Included in the commitments for the year ending December 31, 2021 are $ 12.3 million of payments expected to be due to Schlumberger, in conjunction with transition services provided by Schlumberger, in the first 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

If the Company were unable to

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

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

Notes to Consolidated Financial Statements

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 $ 16.1 million and $ 1.4 million for the 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 year ending December 31, 2021 are approximately $ 8.5 million of payments expected to be made to Schlumberger, in conjunction with a permissive use agreement provided by Schlumberger, in the first quarter of 2022 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.

12 unchanged sentences

The Company cannot predict the ultimate outcome or duration of any lawsuit described in this report.

Note 15— Selected Quarterly Financial Data (unaudited)

The following table sets forth certain unaudited financial and operating information for each quarter of the years ended December 31, 2020 and 2019.

The unaudited quarterly information includes all adjustments that, in the opinion of management, are necessary for the fair presentation of information presented.

Operating results for interim periods are not necessarily indicative of the results that may be expected for the full fiscal year.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

($ in thousands) Year Ended December 31, 2020

Selected Financial Data:

First Quarter Second Quarter Third Quarter Fourth Quarter

Revenue $ 472,344 $ 88,362 $ 147,495 $ 257,586

Operating costs and expenses:

Cost of services (exclusive of depreciation and amortization shown separately below) 392,716 89,518 139,237 236,510

General and administrative 28,613 18,064 17,307 20,114

Transaction, severance and other costs — 9,057 2,609 9,395

Depreciation and amortization 44,831 44,931 44,496 45,826

(Gain) loss on disposal of assets ( 102 ) 334 ( 752 ) 109

Total operating costs and expenses 466,058 161,904 202,897 311,954

Operating income (loss) 6,286 ( 73,542 ) ( 55,402 ) ( 54,368 )

Other expense:

Interest expense, net 3,608 3,656 3,595 3,646

Net income (loss) before income taxes 2,678 ( 77,198 ) ( 58,997 ) ( 58,014 )

Income tax expense (benefit) 261 ( 11,363 ) ( 9,972 ) ( 9,783 )

Net income (loss) 2,417 ( 65,835 ) ( 49,025 ) ( 48,231 )

Net income (loss) attributable to non-controlling interests 697 ( 20,064 ) ( 14,523 ) ( 11,201 )

Net income (loss) attributable to Liberty Oilfield Services Inc.

stockholders $ 1,720 $ ( 45,771 ) $ ( 34,502 ) $ ( 37,030 )

Net income (loss) attributable to Liberty Oilfield Services Inc.

stockholders per common share:

Basic $ 0.02 $ ( 0.55 ) $ ( 0.41 ) $ ( 0.41 )

Diluted $ 0.02 $ ( 0.55 ) $ ( 0.41 ) $ ( 0.41 )

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated and Combined Financial Statements

($ in thousands) Year ended December 31, 2019

Selected Financial Data:

First Quarter Second Quarter Third Quarter Fourth Quarter

Revenue $ 535,148 $ 542,147 $ 515,079 $ 397,971

Operating costs and expenses:

Cost of services (exclusive of depreciation and amortization shown separately below) 429,299 426,444 421,007 344,430

General and administrative 22,088 23,989 25,302 26,210

Depreciation and amortization 38,387 40,368 42,324 44,299

Loss (gain) on disposal of assets 1,223 143 ( 124 ) 1,359

Total operating costs and expenses 490,997 490,944 488,509 416,298

Operating income (loss) 44,151 51,203 26,570 ( 18,327 )

Other expense:

Interest expense, net 4,182 3,597 3,726 3,176

Net income (loss) before income taxes 39,969 47,606 22,844 ( 21,503 )

Income tax expense (benefit) 6,060 7,083 4,004 ( 3,095 )

Net income (loss) 33,909 40,523 18,840 ( 18,408 )

Net income (loss) attributable to non-controlling interests 15,788 18,491 7,842 ( 6,260 )

Net income (loss) attributable to Liberty Oilfield Services Inc.

stockholders $ 18,121 $ 22,032 $ 10,998 $ ( 12,148 )

Net income (loss) attributable to Liberty Oilfield Services Inc.

stockholders per common share:

Basic $ 0.27 $ 0.32 $ 0.15 $ ( 0.15 )

Diluted $ 0.26 $ 0.32 $ 0.15 $ ( 0.15 )

Note 16— Subsequent Events

On February 8, 2021, certain Liberty LLC Unitholders exercised their redemption rights and redeemed 6.1 million (or up to 7.0 million if the underwriters exercise the option to purchase additional shares) Liberty LLC Units (and an equivalent number of shares of Class B Common Stock) for an equivalent numbers of shares of Class A Common Stock of the Company.

This exchange resulted in an increase to the ownership percentage of Liberty LLC owned by the Company.

The Company expects to record an increase to the Company’s deferred tax asset as a result.

In addition, the Company expects to record an increase to the payable pursuant to the TRAs.

There were no other significant subsequent events requiring disclosure or recognition other than those disclosed in these notes to the consolidated financial statements.

As of the date of these financial statements, there were no significant subsequent events requiring disclosure or recognition in the consolidated financial statements and notes thereto.

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-K

Item 9A. Controls and Procedures