What changed in this filing

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Item 1. Financial Statements

2022-04-25 compared with 2021-10-28 · 419 added, 599 removed, 418 unchanged (71% of the section changed)

Financial Statements (Unaudited)

LIBERTY OILFIELD SERVICES INC.

Financial Statements

LIBERTY ENERGY INC.

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share data)

September 30, 2021 December 31, 2020

(In thousands, except share data)

March 31, 2022 December 31, 2021

Current assets:

Cash and cash equivalents $ 32,925 $ 19,998

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

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

360,396 298,531

Accounts receivable—related party 11,183 —

Unbilled revenue 143,034 108,923

Inventories 139,721 134,593

Prepaid and other current assets (including receivables from related parties of $ 0 and $ 24,708 , respectively)

85,567 65,638

Prepaid and other current assets 74,302 68,332

Total current assets 761,561 630,377

3 unchanged sentences

Other assets 82,767 82,289

Deferred tax assets 616 607

Total assets $ 2,190,880 $ 2,040,660

5 unchanged sentences

247,087 235,115

Deferred revenue 1,670 4,552

Current portion of long-term debt, net of discount of $ 740 and $ 743 , respectively

5 unchanged sentences

Deferred tax liability 563 563

Payable pursuant to tax receivable agreements, including payables to related parties of $ 0 and $ 27,173 , respectively

48,342 56,594

Payable pursuant to tax receivable agreements 41,720 37,555

Noncurrent portion of finance lease liabilities 3,388 4,445

5 unchanged sentences

Common Stock:

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

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

Class A, $ 0.01 par value, 400,000,000 shares authorized and 185,760,999 issued and outstanding as of March 31, 2022 and 183,385,111 issued and outstanding as of December 31, 2021

Class B, $ 0.01 par value, 400,000,000 shares authorized and 340,420 issued and outstanding as of March 31, 2022 and 2,632,347 issued and outstanding as of December 31, 2021

Additional paid in capital 1,389,987 1,367,642

(Accumulated deficit) retained earnings ( 100,365 ) 23,288

Accumulated other comprehensive income 191 —

Accumulated deficit ( 161,330 ) ( 155,954 )

Accumulated other comprehensive income (loss) 743 ( 306 )

Total stockholders’ equity

4 unchanged sentences

See Notes to Condensed Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

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

2021 2020 2021 2020

Three Months Ended March 31,

Revenue $ 770,481 $ 550,852

2 unchanged sentences

Operating costs and expenses:

Cost of services (exclusive of depreciation and amortization shown separately below) 593,683 139,237 1,614,574 621,471

Cost of services (exclusive of depreciation, depletion, and amortization shown separately below) 670,019 498,935

General and administrative 38,318 26,359

1 unchanged sentence

Depreciation, depletion, and amortization 74,588 62,056

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

Loss (gain) on disposal of assets 4,672 ( 720 )

Total operating costs and expenses 788,931 594,251

Operating loss ( 39,566 ) ( 55,402 ) ( 117,789 ) ( 122,658 )

Other (income) expense:

Gain on remeasurement of liability under tax receivable agreement ( 4,947 ) — ( 8,252 ) —

Interest income ( 1 ) ( 10 ) ( 2 ) ( 297 )

Interest income—related party — ( 29 ) — ( 261 )

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

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

Operating income (loss) 3,839 ( 42,219 )

Other expense:

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

Interest expense, net 4,324 3,754

Total other expense 8,489 3,754

Net loss before income taxes ( 4,650 ) ( 45,973 )

2 unchanged sentences

Net loss attributable to non-controlling interests ( 104 ) ( 4,411 )

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders $ ( 5,376 ) $ ( 34,205 )

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders per common share:

5 unchanged sentences

See Notes to Condensed Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

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

2021 2020 2021 2020

Three Months Ended March 31,

Net loss $ ( 5,480 ) $ ( 38,616 )

3 unchanged sentences

Comprehensive loss attributable to non-controlling interest ( 97 ) ( 4,319 )

Comprehensive loss attributable to Liberty Oilfield Services, Inc.

Comprehensive loss attributable to Liberty Energy Inc.

$ ( 4,327 ) $ ( 32,887 )

See Notes to Condensed Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Changes in Equity

(Amounts in thousands)

Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital (Accumulated Deficit) Retained Earnings Accumulated Other Comprehensive Income Total Stockholders ’ Equity

(In thousands, except per unit and per share 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 Accumulated Deficit Accumulated Other Comprehensive (Loss) Income Total Stockholders ’ Equity

Non-controlling Interest Total Equity

5 unchanged sentences

Vesting of restricted stock units 84 — 1 — 7 — — 8 ( 8 ) —

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

Tax withheld on vesting of restricted stock units — — — — ( 24 ) — ( 24 ) — ( 24 )

Currency translation adjustment — — — — — — 1,049 1,049 7 1,056

Net loss — — — — — ( 5,376 ) — ( 5,376 ) ( 104 ) ( 5,480 )

Balance—September 30, 2021 178,310 1,860 $ 1,783 $ 19 $ 1,278,073 $ ( 100,365 ) $ 191 $ 1,179,701 $ 12,153 $ 1,191,854

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

Balance—March 31, 2022 185,761 340 $ 1,858 $ 3 $ 1,389,987 $ ( 161,330 ) $ 743 $ 1,231,261 $ 2,405 $ 1,233,666

Shares of Class A Common Stock Shares of Class B Common Stock Class A Common Stock, Par Value Class B Common Stock, Par Value Additional Paid in Capital Retained Earnings

(Accumulated Deficit) Accumulated Other Comprehensive (Loss) Income Total Stockholders ’ Equity

Non-controlling Interest Total Equity

1 unchanged sentence

Exchange of Class B Common Stock for Class A Common Stock 11,269 ( 11,269 ) 113 ( 113 ) 82,753 — — 82,753 ( 82,753 ) —

Offering Costs — — — — ( 773 ) — — ( 773 ) ( 75 ) ( 848 )

Effect of exchange on deferred tax asset, net of liability under tax receivable agreements — — — — 4,954 — — 4,954 — 4,954

$ 0.05 /share of Class A Common Stock Dividend

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

$ 0.05 /unit distributions to non-controlling unitholders

— — — — — — — — ( 1,532 ) ( 1,532 )

Deferred tax impact of ownership changes from issuance of Class A Common Stock — — — — ( 4,519 ) — — ( 4,519 ) — ( 4,519 )

Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 548 548

2 unchanged sentences

Restricted Stock and RSU forfeitures — — — — — 2 2 — 2

Currency translation adjustment — — — — — — 1,318 1,318 92 1,410

Net loss — — — — — ( 34,205 ) — ( 34,205 ) ( 4,411 ) ( 38,616 )

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

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

See Notes to Condensed Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Cash Flows

(Dollars in thousands)

Nine Months Ended September 30,

(In thousands)

Three Months Ended March 31,

Cash flows from operating activities:

Net loss $ ( 5,480 ) $ ( 38,616 )

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

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

Depreciation, depletion, and amortization 74,588 62,045

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

Loss (gain) on disposal of assets 4,672 ( 720 )

Amortization of debt issuance costs 336 569

Inventory write-down — 770

Non-cash lease expense 1,034 981

Stock based compensation expense 6,813 4,947

Deferred income tax expense (benefit) 6,124 ( 21,324 )

(Gain) loss on tax receivable agreements ( 8,252 ) 169

Provision for credit losses 745 4,678

Deferred income tax benefit — ( 9,645 )

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

Changes in operating assets and liabilities:

3 unchanged sentences

Other assets ( 2,599 ) 17,375

Deferred revenue ( 2,782 ) —

Accounts payable and accrued liabilities 47,582 22,166

Payment of operating lease liability ( 503 ) ( 895 )

Accounts payable and accrued liabilities—related party ( 1,857 ) —

Initial payment of operating lease liability ( 501 ) —

Net cash provided by operating activities 14,552 27,528

1 unchanged sentence

Purchases of property and equipment and construction in-progress ( 90,989 ) ( 25,361 )

Investment in sand logistics ( 795 ) —

Proceeds from sale of assets 927 1,574

1 unchanged sentence

Cash flows from financing activities:

Proceeds from borrowings on line-of-credit 100,000 —

Repayments of borrowings on line-of-credit ( 84,000 ) —

Repayments of borrowings on term loan ( 438 ) ( 438 )

Proceeds from borrowing on line-of-credit 185,000 —

Repayments on borrowings on line-of-credit ( 95,000 ) —

Payments on finance lease obligations ( 1,218 ) ( 2,326 )

Class A Common Stock dividends and dividend equivalents upon RSU vesting — ( 4,262 )

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

Class A Common Stock dividends and dividend equivalents upon restricted stock vesting — ( 202 )

Other distributions and advance payments to non-controlling interest unitholders 924 548

Restricted stock unit vesting ( 168 ) —

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

Tax withholding on restricted stock unit vesting ( 24 ) —

Payments of debt issuance costs ( 224 ) —

Payments of equity issuance costs ( 62 ) ( 848 )

Net cash provided by (used in) financing activities 88,958 ( 3,266 )

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

Net increase in cash and cash equivalents before translation effect 12,653 475

Translation effect on cash 274 81

1 unchanged sentence

Cash and cash equivalents—end of period $ 32,925 $ 69,534

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Cash Flows cont.

(In thousands)

Three Months Ended March 31,

Supplemental disclosure of cash flow information:

Cash paid for income taxes $ — $ 658

Net cash paid for income taxes $ 4,828 $ —

Cash paid for interest $ 3,847 $ 2,642

1 unchanged sentence

Capital expenditures included in accounts payable and accrued liabilities $ 71,702 $ 27,494

Capital expenditures reclassified from prepaid and other current assets $ 1,190 $ —

See Notes to Condensed Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 1— Organization and Basis of Presentation

Liberty Oilfield Services Inc.

Liberty Energy Inc., formerly known as Liberty Oilfield Services Inc.

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

On April 19, 2022, the stockholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation for the purpose of changing the Company’s name from “Liberty Oilfield Services Inc.” to “Liberty Energy Inc.” and thereafter, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect the new name, effective April 25, 2022.

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

4 unchanged sentences

Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the annual financial statements and notes thereto included in the Annual Report.

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

The accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of March 31, 2022 and December 31, 2021, and the results of operations, cash flows, and equity of the Company as of and for the three months ended March 31, 2022 and 2021.

The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim period.

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

The results of operations for the three months ended March 31, 2022 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2022.

Further, these estimates and other factors, including those outside the Company’s control, such as the impact of sustained lower commodity prices, could have a significant adverse impact to the Company’s financial condition, results of operations and cash flows.

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

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

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

Transaction, Severance and Other Costs

The Company incurred transaction related costs in connection with the OneStim 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 .

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.

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Recently Adopted Accounting Standards

Simplification of Accounting for Income Taxes

In December 2019, the FASB issued ASU No.

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

Recently Issued Accounting Standards

Reference Rate Reform

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform, which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”).

The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified.

This guidance is effective upon issuance and expires on December 31, 2022.

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

Reclassifications

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

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

Note 3— The OneStim Acquisition

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 the Company’s Class A Common Stock, par value $ 0.01 per share (the “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 owned approximately 37.0 % of the Company’s issued and outstanding shares of common stock, including Class A Common Stock and 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”).

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 the Class A Common Stock on December 31, 2020.

The Company accounted for the OneStim 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 on the date of the acquisition.

The estimated fair values of certain assets and liabilities, including accounts receivable, 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.

LIBERTY OILFIELD SERVICES INC.

Certain amounts in the prior period financial statements have been reclassified from interest income to interest expense, net in the accompanying unaudited condensed consolidated statements of operation to conform to the presentation of the current period financial statements.

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

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 3— The 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 (the “PropX Acquisition”).

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

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

The Liberty LLC Units are redeemable for an equivalent number of shares of Class A Common Stock at 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 on the earliest date that the acquirer (i) receives the information necessary or (ii) determines that it cannot obtain further information, and such period may not exceed one year.

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

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

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

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

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)

1 unchanged sentence

Consideration $ 103,023

Cash and cash equivalents $ 53

Accounts receivable and unbilled revenue 4,089

Inventories 33,245

Prepaid and other current assets 1,722

Property and equipment (1)

Intangible assets (included in other assets in the accompanying unaudited condensed consolidated balance sheet as of December 31, 2020) (2)

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

Total identifiable assets acquired 107,109

3 unchanged sentences

Total purchase consideration $ 103,023

(1) Useful lives ranging from two to greater than 25 years, see Note 5—Property and Equipment

(2) Definite lived intangibles with an average amortization period of five 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 OneStim Acquisition.

Transaction costs consist of legal and professional fees and pre-merger notification fees.

Equity offering costs consist of expenses incurred related to the Special Meeting of Stockholders, including the costs to prepare the required filings associated with such meeting, held on November 30, 2020.

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

(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 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.

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

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

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

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

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

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

(unaudited, in thousands) 2020 2020

Revenue $ 364,748 $ 1,660,201

Net loss ( 78,208 ) ( 963,070 )

Net loss attributable to non-controlling interests ( 6,037 ) ( 193,269 )

Net loss attributable to Liberty Oilfield Services Inc.

stockholders $ ( 72,171 ) $ ( 769,801 )

Net loss attributable to Liberty Oilfield Services Inc.

stockholders per common share:

Basic $ ( 0.48 ) $ ( 5.14 )

Diluted $ ( 0.48 ) $ ( 5.14 )

Weighted average common shares outstanding:

Basic 151,263 149,625

Diluted 151,263 149,625

The Company’s condensed consolidated statements of operations for the three months ended March 31, 2021 does not include any results from PropX operations as the PropX Acquisition closed on October 26, 2021.

The Company does not present pro forma financial information for the periods prior to the PropX Acquisition as such information, after elimination of PropX’s historical transactions with the Company, is not materially different than the results presented in the accompanying condensed consolidated statements of operations for three months ended March 31, 2021.

Note 4— Inventories

Inventories consist of the following:

September 30, December 31,

March 31, December 31,

($ in thousands) 2022 2021

1 unchanged sentence

Chemicals 16,163 17,996

Maintenance parts 82,781 88,476

Maintenance parts and other 103,206 93,184

$ 139,721 $ 134,593

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

The Company did not record any write-down to the inventory carrying value during the three months ended March 31, 2022 or the year ended December 31, 2021.

Note 5— Property and Equipment

Property and equipment consist of the following:

(in years) September 30, December 31,

(in years) March 31, December 31,

($ in thousands) 2022 2021

4 unchanged sentences

61,448 61,282

Lease Equipment 10 65,395 64,770

Buildings and facilities 5 - 30

2 unchanged sentences

76,823 76,823

Office equipment, furniture, and software 2 - 7

Office equipment and furniture 2 - 7

2,033,670 1,972,880

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

Less accumulated depreciation and depletion ( 931,553 ) ( 863,194 )

1,102,117 1,109,686

1 unchanged sentence

$ 1,218,959 $ 1,199,287

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

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

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

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

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

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

As of September 30, 2021, the Company classified $ 3.7 million of land and $ 14.8 million, net of accumulated depreciation, of buildings of two properties that it intends to sell within the next year, and that meet the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet.

The Company estimates that carrying value of the assets approximates the fair value less the estimated costs, and therefore no adjustment to the carrying value of the assets was recorded during the three and nine months ended September 30, 2021.

Depreciation expense for the three months ended March 31, 2022 and 2021 was $ 69.9 million and $ 56.7 million, respectively.

Depletion expense for the three months ended March 31, 2022 and 2021 was $ 0.3 million and $ 0.3 million, respectively.

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

As of March 31, 2022, the Company classified $ 3.4 million of land and $ 8.4 million of buildings, net of accumulated depreciation, of two properties that it intends to sell within the next year, and that meet the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet.

The Company estimates that carrying value of the assets was greater than the fair value less the estimated costs to sell, and therefore recorded a $ 4.4 million loss during the three months ended March 31, 2022, included as a component of loss (gain) on disposal of assets in the accompanying unaudited condensed consolidated statements of operations.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 6— Leases

4 unchanged sentences

All other variable lease payments are excluded from the measurement of lease assets and liabilities, and are recognized in the period in which the obligation for those payments is incurred.

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

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

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

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

Three Months Ended March 31,

($ in thousands) 2022 2021

4 unchanged sentences

Variable lease cost 1,091 557

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

Sublease income — ( 48 ) $ — ( 64 )

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

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

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

Short-term lease cost 1,546 309

Total lease cost $ 13,374 $ 10,465

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

Three Months Ended March 31,

($ in thousands) 2022 2021

4 unchanged sentences

Operating leases 9,461 31

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

In connection with the amendments the Company wrote-off finance lease right-of-use assets and liabilities of $ 13.7 million and $ 10.6 million, respectively, and recognized operating lease right-of-use assets and liabilities of $ 11.8 million and $ 8.8 million, respectively.

During the three months ended March 31, 2021, the Company amended certain finance leases, the change in terms of which caused the leases to be reclassified to operating leases.

In connection with the amendments, the Company wrote-off finance lease right-of-use assets of $ 0.8 million and liabilities of $ 0.6 million.

Additionally, the Company recognized operating lease right-of-use assets of $ 0.7 million and liabilities of $ 0.5 million.

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

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

September 30, 2021 December 31, 2020

Lease terms and discount rates as of March 31, 2022 and December 31, 2021 were as follows:

March 31, 2022 December 31, 2021

Weighted-average remaining lease term:

4 unchanged sentences

Finance leases 8.5 % 8.6 %

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

Future minimum lease commitments as of March 31, 2022 are as follows:

($ in thousands) Finance Operating

3 unchanged sentences

2025 — 18,110

2025 — 17,571

Thereafter — 19,085

3 unchanged sentences

The Company’s vehicle leases typically include a residual value guarantee.

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

For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of March 31, 2022 is $ 12.8 million;

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

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

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 March 31, 2022 and December 31, 2021 were as follows:

($ in thousands) March 31, 2022 December 31, 2021

Equipment leased to others - at original cost $ 65,395 $ 64,770

Accumulated depreciation ( 3,280 ) ( 1,377 )

Equipment leased to others - net $ 62,115 $ 63,393

Future payments receivable for operating leases commenced and committed but not delivered as of March 31, 2022 are as follows:

($ in thousands)

Remainder of 2022 $ 8,261

Total $ 22,725

Revenues from operating leases for the three months ended March 31, 2022 and 2021 were $ 5.9 million and $ 0.0 million , respectively.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 7— Accrued Liabilities

Accrued liabilities consist of the following:

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

($ in thousands) March 31, 2022 December 31, 2021

Accrued vendor invoices $ 127,117 $ 109,903

3 unchanged sentences

Debt consists of the following:

September 30, December 31,

March 31, December 31,

($ in thousands) 2022 2021

5 unchanged sentences

Long-term debt, net of discount and current portion 211,192 121,445

$ 121,504 $ 105,775

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

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

Total debt, net of deferred financing costs and original issue discount $ 212,202 $ 122,452

On September 19, 2017, the Company entered into two credit agreements for a revolving line of credit up to $ 250.0 million, subsequently increased to $ 350.0 million, see below, (the “ABL Facility”) and a $ 175.0 million term loan (the “Term Loan Facility”, and together with the ABL Facility the “Credit Facilities”).

On 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 March 31, 2022 and December 31, 2021 was 6.5 % and 7.9 %, 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.

As of September 30, 2021, the borrowing base was

LIBERTY OILFIELD SERVICES INC.

As of March 31, 2022, the borrowing base was calculated to be $ 298.3 million, and the Company had $ 108.0 million outstanding in addition to a letter of credit in the amount of $ 1.4

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

million, with $ 189.0 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.

Additionally, borrowings as of September 30, 2021 incurred interest at a rate of 3.75 %.

Additionally, borrowings as of March 31, 2022 incurred interest at a rate of 4.5 %.

The average monthly 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.

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.

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

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

Refer to Note 17 - Subsequent Events for further details.

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

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

Term Loan Facility

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

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

The Term Loan Facility provides for a $ 175.0 million term loan, of which $ 106.0 million remained outstanding as of March 31, 2022.

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 March 31, 2022 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.

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

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

Refer to Note 17—Subsequent Events for further details.

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

The Term Loan Facility is collateralized by the fixed assets of LOS and its subsidiaries, and is further secured by the Company, Liberty LLC, and R/C IV Non-U.S.

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

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

1 unchanged sentence

The Term Loan Facility requires mandatory prepayments upon certain dispositions of property or issuance of other indebtedness, as defined, and annually a percentage of excess cash flow ( 25 % to 50 %, depending on leverage ratio, of consolidated net income less capital expenditures and other permitted payments, commencing with the year ending December 31, 2018).

The Credit Facilities are not subject to financial covenants unless liquidity, as defined in the respective credit agreements, falls below a specific level.

Certain mandatory prepayments and optional prepayments are subject to a prepayment premium of 3% of the prepaid principal declining annually to 1% during the first three years of the term of the Term Loan Facility.

The Credit Facilities are not subject to financial covenants unless liquidity, as defined in the respective credit agreements, drops below a specific level.

Under the ABL Facility, the Company is required to maintain a minimum fixed charge coverage ratio, as defined in the credit agreement governing the ABL Facility, of 1.0 to 1.0 for each period if excess availability is less than 10 % of the borrowing base or $ 12.5 million, whichever is greater.

Under the Term Loan Facility, the Company is required to maintain a minimum fixed charge coverage ratio, as defined, of 1.2 to 1.0 for each trailing twelve-month period if the Company’s liquidity, as defined, is less than $ 25.0 million for at least five consecutive business days.

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

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

The Company was in compliance with these covenants as of March 31, 2022.

Maturities of debt are as follows:

($ in thousands)

Remainder of 2022 $ 1,313

2024 $ 118,965

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Note 9— Fair Value Measurements and Financial Instruments

The fair values of the Company’s assets and liabilities represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction at the reporting date.

These fair value measurements maximize the use of observable inputs.

However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability.

However, in situations where there is little, if any, market activity for the asset or liability on the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability.

The Company discloses the fair values of its assets and liabilities according to the quality of valuation inputs under the following hierarchy:

1 unchanged sentence

Quoted prices (unadjusted) in an active market for identical assets or liabilities.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

• Level 2 Inputs:

6 unchanged sentences

Transfers occur at the end of the reporting period.

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

There were no transfers into or out of Levels 1, 2, and 3 during the three months ended March 31, 2022 and 2021.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, notes receivable, accounts payable, accrued liabilities, long-term debt, and finance and operating lease obligations.

These financial instruments do not require disclosure by level.

The carrying values of all of the Company’s financial instruments included in the accompanying unaudited condensed consolidated balance sheets approximated or equaled their fair values at September 30, 2021 and December 31, 2020.

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

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

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

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

Nonrecurring Measurements

Certain assets are measured at fair value on a nonrecurring basis.

These assets are not measured at fair value on an ongoing basis but are 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 a note receivable from the Affiliate, as defined and described in Note 14—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 14—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.

The note was paid in full in January 2020.

Certain assets and liabilities are measured at fair value on a nonrecurring basis.

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

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

See Note 3—The PropX Acquisition.

As of March 31, 2022, the Company recorded $ 3.4 million of land and $ 8.4 million of buildings of two properties that meet the held for sale criteria, to assets held for sale at a total fair value of $ 7.5 million, which are included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet.

The Company estimated the fair value of the properties based on a purchase and sale agreement for one property and a letter of intent from a potential buyer for the other, which are Level 3 inputs.

Recurring Measurements

1 unchanged sentence

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

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

As of March 31, 2022 and December 31, 2021, the Company had cash equivalents, measured at fair value, of $ 0.3 million and $ 0.3 million, respectively.

Nonfinancial assets

1 unchanged sentence

The inputs used to determine such fair value are primarily based upon internally developed cash flow models and would generally be classified within Level 3 in the event that such assets were required to be measured and recorded at fair value within the unaudited condensed consolidated financial statements.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

No such measurements were required as of March 31, 2022 and December 31, 2021 as no triggering event was identified.

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

The Company’s cash and cash equivalent balances on deposit with financial institutions total $ 34.7 million and $ 69.0 million as of September 30, 2021 and December 31, 2020, respectively, which exceeded FDIC insured limits.

The Company’s cash and cash equivalent balances on deposit with financial institutions total $ 32.9 million and $ 20.0 million as of March 31, 2022 and December 31, 2021, respectively, which exceeded FDIC insured limits.

The Company regularly monitors these institutions’ financial condition.

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

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

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

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

As of March 31, 2022 and December 31, 2021, and for the three months ended March 31, 2022 and March 31, 2021, the below customers accounted for the following percentages of the Company’s consolidated accounts receivable and unbilled

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

revenue and consolidated revenues, respectively:

Portion of total of consolidated accounts receivable and unbilled revenue as of Portion of consolidated revenues for the three months ended March 31,

March 31, 2022 December 31, 2021 2022 2021

Customer A — % 12 % 10 % — %

Customer B — % — % — % 10 %

Customer C — % 11 % — % 23 % — % — %

Customer D — % — % — % 20 % — % 10 %

Customer E — % — % — % 11 % — % — %

Customer F — % — % — % — % — % 13 %

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

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

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

Measurement of Credit Losses on Financial Instruments 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 has not yet seen material changes to the payment patterns of its customers, the Company cannot predict with any certainty the degree to which the 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 March 31, 2022 and December 31, 2021, the Company had $ 0.9 million in allowance for credit losses as follows:

($ in thousands)

Allowance for credit losses at December 31, 2020 $ 773

Provision for credit losses on December 31, 2021 $ 884

Credit Losses:

Current period provision —

Amounts written off, net of recoveries ( 634 )

Allowance for credit losses at September 30, 2021

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Amounts written off —

Provision for credit losses on March 31, 2022 $ 884

Note 10— Equity

2 unchanged sentences

RSUs were granted with vesting terms up to five years .

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

Changes in non-vested RSUs outstanding under the LTIP during the three months ended March 31, 2022 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

3 unchanged sentences

Forfeited ( 48,742 ) 9.87

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

Outstanding as of March 31, 2022 3,218,252 $ 11.24

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Performance Restricted Stock Units

3 unchanged sentences

If such performance targets are not met, or are not expected to be met, no compensation expense is recognized and any recognized compensation expense is reversed.

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

Changes in non-vested PSUs outstanding under the LTIP during the three months ended March 31, 2022 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

2 unchanged sentences

Forfeited — —

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

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

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

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

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

Outstanding as of March 31, 2022 1,685,424 $ 12.35

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

The Company recognized stock based compensation expense of $ 6.8 million and $ 4.9 million for the three months ended March 31, 2022 and 2021, respectively.

There was approximately $ 29.5 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of March 31, 2022.

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 $ 5.6 million, or $ 0.05 per Liberty LLC Unit, to all holders of Liberty LLC Units 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.

Additionally, the Company accrued $ 0.2 million of dividends payable related to restricted stock and RSUs to be paid upon vesting.

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.

LIBERTY OILFIELD SERVICES INC.

As of March 31, 2022 dividends have not been reinstated by the Company.

As of March 31, 2022 and December 31, 2021, the Company had $ 0.2 million and $ 0.2 million of dividends payable related to RSUs to be paid upon vesting, respectively.

Dividends related to forfeited RSUs will be forfeited.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

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

Note 11— Net Loss per Share

1 unchanged sentence

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 restricted stock units.

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

Three Months Ended Nine Months Ended

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

Three Months Ended

(In thousands) March 31, 2022 March 31, 2021

Basic Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders $ ( 5,376 ) $ ( 34,205 )

Basic weighted average common shares outstanding 183,999 163,207

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

Basic net loss per share attributable to Liberty Energy Inc.

stockholders $ ( 0.03 ) $ ( 0.21 )

Diluted Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders $ ( 5,376 ) $ ( 34,205 )

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

Diluted net loss attributable to Liberty Oilfield Services Inc.

Diluted net loss attributable to Liberty Energy Inc.

stockholders $ ( 5,376 ) $ ( 34,205 )

4 unchanged sentences

Diluted weighted average shares outstanding 183,999 163,207

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

Diluted net loss per share attributable to Liberty Energy Inc.

stockholders $ ( 0.03 ) $ ( 0.21 )

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

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

In accordance with GAAP, diluted weighted average common shares outstanding for the three months ended March 31, 2022 exclude 2,092 weighted average shares of Class B Common Stock, and 4,745 weighted average shares of restricted stock units.

Additionally, diluted weighted average common shares outstanding for the three months ended March 31, 2021 exclude 16,333 weighted average shares of Class B Common Stock and 3,326 weighted average shares of restricted stock units.

Note 12— Income Taxes

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

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

Beginning in January 2021, as a result of the OneStim Acquisition (see Note 3), the Company is also subject to

LIBERTY OILFIELD SERVICES INC.

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.

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 are considered to be indefinitely reinvested.

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

The effective global income tax rate applicable to the Company for the three months ended March 31, 2022 was ( 17.8 )% , compared to 16.0 % for the period ended March 31, 2021.

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 and excluding any U.S.

tax benefit on U.S.

losses while calculating income tax expense on Canada operations that are not subject to a

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Canada federal and provincial income tax on its foreign operations.

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

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

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

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

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

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

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

valuation allowance.

The Company’s effective tax rate is also less than the statutory rate because of 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.

The Company recognized an income tax expense of $ 0.8 million an d an income tax benefit of $ 7.4 million during the three months ended March 31, 2022 and 2021, respectively.

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

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

This amount has been reflected as a receivable in the prepaids and other current assets line item in the accompanying unaudited condensed consolidated balance sheets.

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

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

This amount has been reflected as a receivable in prepaids and other current assets line item in the accompanying unaudited condensed consolidated balance sheets.

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

The Company recognized a deferred tax asset and liability in the amount of $ 0.6 million as of March 31, 2022 and December 31, 2021.

Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled.

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

The Company evaluated its deferred tax assets as of September 30, 2021 and considered both positive and negative evidence in applying the guidance of ASC 740 Income Taxes (“ASC 740”) related to the realizability of its deferred tax assets.

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

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

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

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

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

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

The Company evaluated its deferred tax assets as of March 31, 2022 and considered both positive and negative evidence in applying the guidance of ASC 740 Income Taxes (“ASC 740”) related to the realizability of its deferred tax assets.

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

Tax Receivable Agreements

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federal income tax purposes) of all or a portion of such TRA Holder’s Liberty LLC Units in connection with the IPO or pursuant to the exercise of redemption or call rights, (ii) any net operating losses available to the Company as a result of the Corporate Reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs.

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

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

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

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Notes to Condensed Consolidated Financial Statements

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

During the three months ended March 31, 2022, exchanges of Liberty LLC Units and shares of Class B Common Stock initially resulted in a net increase of $ 6.5 million in deferred tax assets, and an increase of $ 5.5 million in amounts payable under the TRAs, all of which are subject to the valuation allowance and remeasurement of TRA liability discussed below, and which are recorded through equity.

The Company did not make any TRA payments for the three months ended March 31, 2022.

During the three months ended March 31, 2021, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in a net increase of $ 33.0 million in deferred tax assets, and an increase of $ 28.1 million in amounts payable under the TRAs, all of which were recorded through equity.

The Company did not make any TRA payments for the three months ended March 31, 2021.

At March 31, 2022 and December 31, 2021, the Company ’ s liability under the TRAs was $ 41.7 million and $ 37.6 million, respectively, all of which is presented as a component of long term liabilities, and the related deferred tax assets totaled $ 97.8 million and $ 91.3 million, respectively, of which a valuation allowance on the net deferred tax asset has been recorded.

The Company also remeasured the liability under the TRAs as of March 31, 2022 and recorded a loss on remeasurement of liabilities subject to the TRAs of $ 4.2 million recorded as part of continuing operations.

The increase in the liability under the TRA is primarily driven by current additions of property and equipment and amortization of expected tax benefits that are subject to the valuation allowance, which are expected to be realized in the foreseeable future.

Note 13— Defined Contribution Plan

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

The Company historically 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.

However, on 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 matching contribution.

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

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

The Company has historically 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.

Contributions made by the Company w ere $ 6.0 million an d $ 3.9 million f or the three months ended March 31, 2022 and 2021, respectively.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 14— Related Party Transactions

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

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

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

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

On August 31, 2020 the Company acquired certain assets and liabilities of Schlumberger Technology Corporation and Schlumberger Canada Limited (“Schlumberger”) OneStim® business (“OneStim”), which provides hydraulic fracturing pressure pumping services in onshore United States and Canada (the “OneStim Acquisition”).

As of March 31, 2022 Schlumberger owns 49,601,961 shares of Class A Common Stock of the Company, or approximately 26.7 % of the issued and outstanding shares of common stock of the Company, including Class A Common Stock and Class B Common Stock.

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

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

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

During the nine months ended September 30, 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $ 4.9 million in cash for a separate property that the Company will utilize with its existing operations.

The Company incurred $ 5.2 million of fees payable to Schlumberger for such transaction services during the three months ended March 31, 2021.

No fees were incurred during the three months ended March 31, 2022.

During 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $ 4.9 million in cash for a separate property that the Company will utilize with its existing operations.

The Company did not recognize any gain or loss on the transaction.

Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries.

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

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

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

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

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

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

During the three months ended March 31, 2022 and March 31, 2021 total purchases from Schlumberger were approximately $ 3.6 million and $ 11.1 million, respectively.

As of March 31, 2022 amounts due to Schlumberger were $ 1.4 million and $ 0.8 million included in accounts payable and accrued liabilities, respectively.

As of December 31, 2021 amounts due to Schlumberger were $ 2.7 million and $ 1.1 million, included in accounts payable and accrued liabilities, respectively, in the unaudited condensed consolidated balance sheet.

Effective on June 15, 2021, Audrey Robertson was appointed to the board of directors of the Company.

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

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

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

During the three months ended March 31, 2022 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $ 22.3 million or 2.8 % of the Company’s revenues for such period.

Receivables from Franklin Mountain as of March 31, 2022 and December 31, 2021 were $ 11.2 million and $ 0.0 million , respectively.

Liberty Resources LLC, an oil and gas exploration and production company, and its successor entity (collectively, the “Affiliate”) has certain common ownership and management with the Company.

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended September 30, 2021 and 2020 was $ 0 and $ 0 , respectively, and $ 1.2 million and $ 0 for the nine months ended September 30, 2021 and 2020, respectively.

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

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

On September 30, 2019, the agreement was amended to extend the due date for remaining amounts outstanding to October 31, 2020.

Amounts outstanding from the Affiliate as of the Agreement Date were $ 15.6 million.

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

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

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

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

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

LOS was party to a services agreement (the “PropX Services Agreement”) whereby LOS was to provide certain administrative support functions to PropX, and LOS was to purchase and lease proppant logistics equipment from PropX.

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

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

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

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

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

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended March 31, 2022 and 2021 was $ 0.0 million and $ 1.2 million, respectively.

As of March 31, 2022 and December 31, 2021, the Company had no accounts receivable due from the Affiliate.

During 2016, Liberty Holdings entered into a future commitment to invest and become a non-controlling minority member in PropX, the provider of proppant logistics equipment.

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

Prior to the PropX Acquisition the Company leased equipment from PropX, during the three months ended March 31, 2021, the Company leased proppant logistics equipment from PropX for $ 2.0 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 and gallons are not in thousands)

Purchase Commitments (tons are not in thousands)

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

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

As of March 31, 2022 and December 31, 2021, the agreements commit the Company to purchas e 44,658 and 89,317 tons, respectively, of proppant through June 30, 2022.

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

Additionally, related proppant transload service commitments extend into 2023.

Future proppant, transload and mancamp commitments are as follows:

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

($ in thousands)

1 unchanged sentence

Certain supply agreements contain a clause whereby in the event that the Company fails to purchase minimum volumes, as defined in the agreement, during a specific time period, a shortfall fee may apply.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

minimum purchase contractual terms and in rare cases does the Company incur such shortfall fees.

If the Company were unable to make any of the minimum purchases and the Company and its suppliers cannot come to an agreement to avoid such fees, the Company could incur shortfall fees in the amounts of $ 7.7 million, $ 16.7 million, and $ 0.7 million for the remainder of 2021, year ended 2022 and 2023, respectively.

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

If the Company were unable to make any of the minimum purchases and the Company and its suppliers cannot come to an agreement to avoid such fees, the Company could incur shortfall fees in the amounts of $ 11.1 million and $ 1.4 million for the remainder of 2022 and year ended 2023, respectively.

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

Included in the commitments for the remainder of 2021 are approximately $ 8.7 million of payments expected to be made to Schlumberger, in conjunction with the transition services provided by Schlumberger, in the third quarter of 2021 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in OneStim’s frac and wireline operations.

Included in the commitments for the remainder of 2022 are $ 8.5 million of payments expected to be made to Schlumberger, in conjunction with a permissive use agreement provided by Schlumberger, in the second 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.

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Securities Class Actions

On March 11, 2020, Marshall Cobb, on behalf of himself and all other persons similarly situated, filed a putative class action lawsuit in the state District Court of Denver County, Colorado against the Company and certain officers and board members of the Company along with other defendants in connection with the IPO (the “Cobb Complaint”).

The Cobb Complaint alleges that the Company and certain officers and board members of the Company violated Section 11 of the Securities Act of 1933 by virtue of inaccurate or misleading statements allegedly contained in the registration statement filed in connection with the IPO and requests unspecified damages and costs.

The Cobb Lawsuit alleges that the Company and certain officers and board members of the Company violated Section 11 of the Securities Act of 1933 by virtue of inaccurate or misleading statements allegedly contained in the registration statement filed in connection with the IPO and requests unspecified damages and costs.

The Cobb Plaintiffs also allege control person liability claims under Section 15 of the Securities Act of 1933 against certain officers and board members of the Company and other defendants.

On April 3, 2020, Marc Joseph, on behalf of himself and all other persons similarly situated, filed a putative class action lawsuit in the United States District Court in Denver, Colorado against the Company and certain officers and board members of the Company along with other defendants in connection with the IPO and requests unspecified damages and costs (the “Joseph Complaint,” and collectively with the Cobb Complaint, the “Securities Lawsuits”).

The Joseph Complaint, which is based on similar factual allegations made in the Cobb Complaint, alleges that the defendants violated Sections 11 and 12(a)(2) of the Securities Act of 1933 by virtue of inaccurate or misleading statements allegedly contained in the registration statement and prospectus filed in connection with the IPO.

The Joseph Complaint also alleges control person liability claims under Section 15 of the Securities Act of 1933 against certain officers and board members of the Company and other defendants.

The Company has hired counsel and plans to vigorously defend against the allegations in the Securities Lawsuits.

On April 3, 2020, Marc Joseph, on behalf of himself and all other persons similarly situated, filed a putative class action lawsuit in the United States District Court in Denver, Colorado against the Company and certain officers and board members of the Company along with other defendants in connection with the IPO and requests unspecified damages and costs (the “Joseph Lawsuit,” and collectively with the Cobb Lawsuit, the “Securities Lawsuits”).

The Joseph Lawsuit, which is brought on behalf of virtually the same class as the Cobb Lawsuit and is based on similar factual allegations, alleges that the defendants violated Sections 11 and 12(a)(2) of the Securities Act of 1933 by virtue of inaccurate or misleading statements allegedly contained in the registration statement and prospectus filed in connection with the IPO.

The Joseph Lawsuit also alleges control person liability claims under Section 15 of the Securities Act of 1933 against certain officers and board members of the Company and other defendants.

During the first quarter of 2022, the Company entered into a settlement in principle with the plaintiffs in the Joseph Lawsuit to fully resolve all the plaintiffs’ claims on a class-wide basis, subject to completion and execution of definitive documentation and court approval.

The Company’s payment obligations under the settlement in principle are within available insurance.

Other Litigation

In addition to the matters described above, from time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions.

The Company’s assessment of the likely outcome of litigation matters is based on its judgment of a number of factors including experience with similar matters, past history, precedents, relevant financial and other evidence and facts specific to the matter.

Notwithstanding the uncertainty as to the final outcome, based upon the information currently available, management does not believe any matters, including those listed above, in aggregate will have a material adverse effect on its financial position or results of operations.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Condensed Consolidated Financial Statements

Note 16— Selected Quarterly Financial Data

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

Noncontrolling Interest Total Equity

Balance—June 30, 2021 178,310 1,860 $ 1,783 $ 19 $ 1,274,031 $ ( 61,475 ) $ 2,454 $ 1,216,812 $ 12,622 $ 1,229,434

Offering Costs — — — — ( 159 ) — — ( 159 ) — ( 159 )

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

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

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

Balance—September 30, 2021 178,310 1,860 $ 1,783 $ 19 $ 1,278,073 $ ( 100,365 ) $ 191 $ 1,179,701 $ 12,153 $ 1,191,854

Noncontrolling Interest Total Equity

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

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

Effect of exchange on deferred tax asset, net of liability under tax receivable agreement — — — — 324 — — 324 — 324

Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 549 549

Stock based compensation expense — — — — 3,385 — — 3,385 1,102 4,487

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

RSU vesting — — 1 — — — — 1 — 1

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

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

LIBERTY OILFIELD SERVICES INC.

The Company’s assessment of the likely outcome of litigation matters is based on its judgment of a number of factors including experience with similar matters, past history, precedents,

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

relevant financial and other evidence and facts specific to the matter.

Notwithstanding the uncertainty as to the final outcome, based upon the information currently available, management does not believe any matters in aggregate will have a material adverse effect on its financial position or results of operations.

Note 16— Subsequent Events

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

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

Borrowings under the amended ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR margin of 1.5 % to 2.0 % or base rate margin of 0.5 % to 1.0 %, as defined in the ABL Facility credit agreement.

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

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

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

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

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

Term Loan Facility

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

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

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

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

PropX Acquisition

On October 26, 2021, the Company acquired PropX in exchange for $ 13.5 million in cash and 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units (the total of the Class A and Class B shares issued as equity consideration was determined by dividing $ 76.5 million by the 30 -day average closing price of the Company’s Class A Common Stock immediately prior to closing), for total consideration of $ 104.0 million, based on the Class A Common Stock closing price of $ 15.48 on October 25, 2021, subject to customary post closing adjustments.

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

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

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

The initial accounting for the business combination is incomplete at the time of this filing due to the limited amount of time between the acquisition date and the date these financial statements are issued.

Further, it is impracticable for us to provide all of the disclosures required for a business combination pursuant to ASC 805 Business Combinations.

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

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.

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

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Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in “Cautionary Note Regarding Forward-Looking Statements,” the Annual Report under the heading “Item 1A.

Risk Factors,” and in “Part II – Other Information, Item 1A.–Risk Factors” included herein.

Risk Factors,” and in "Part II – Other Information, Item 1A.

Risk Factors" included therein.

We assume no obligation to update any of these forward-looking statements.

We are an independent provider of hydraulic fracturing services and goods to onshore oil and natural gas exploration and production (“E&P”) companies in North America.

We provide our services primarily in the Permian Basin, the Eagle Ford Shale, the Denver-Julesburg Basin (the “DJ Basin”), the Williston Basin, the San Juan Basin and the Powder River Basin.

Following the completion of the OneStim Acquisition (as defined below) we now also provide services in the Haynesville Shale, the SCOOP/STACK, the Marcellus Shale, Utica Shale, and the Western Canadian Sedimentary Basin.

We are an independent provider of hydraulic fracturing and wireline services, proppant and proppant delivery solutions, and related equipment to onshore oil and natural gas E&P companies in North America.

We have grown from one active hydraulic fracturing fleet in December 2011 to over 30 active fleets as of March 31, 2022.

We provide our services primarily in the Permian Basin, the Eagle Ford Shale, the DJ Basin, the Williston Basin, the San Juan Basin, the Powder River Basin, the Haynesville Shale, the SCOOP/STACK, the Marcellus Shale, Utica Shale, and the Western Canadian Sedimentary Basin.

Additionally, we operate two sand mines in the Permian Basin.

On December 31, 2020, the Company acquired certain assets and liabilities from Schlumberger’s OneStim® business, which provides hydraulic fracturing pressure pumping services in onshore United States and Canada, including its pressure pumping, pumpdown-perforating and Permian frac sand business.

See Note 3—The OneStim Acquisition to the unaudited condensed consolidated financial statements included in “Item 1.

Financial Statements”.

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

On December 31, 2020, the Company acquired certain assets and liabilities of Schlumberger’s OneStim business, which provides hydraulic fracturing pressure pumping services in onshore United States and Canada, including its pressure pumping, pumpdown perforating and Permian frac sand business, in exchange for consideration resulting in a total of 66,326,134 shares of the Class A Common Stock being issued in connection with the OneStim Acquisition.

As of April 20, 2022, Schlumberger owned 26.5% of the issued and outstanding shares of our Common Stock.

The combined company delivers best-in-class completion services for the sustainable development of unconventional resource plays in the United States and Canada onshore markets.

On October 26, 2021, the Company acquired PropX in exchange for $13.5 million in cash and 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units (the total of the Class A and Class B shares issued as equity consideration was determined by dividing $76.5 million by the 30-day average closing price of the Company’s Class A Common Stock immediately prior to closing), for total consideration of $ 104.0 million, based on the Class A Common Stock closing price of $ 15.48 on October 25, 2021, for a total consideration of approximately $104.0 million, based on the Class A Common Stock closing price of $15.48 on October 25, 2021, subject to customary post closing adjustments.

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

On October 26, 2021, the Company acquired PropX in exchange for $11.9 million in cash and 3,405,526 shares of Class A Common Stock and 2,441,010 shares of Class B Common Stock, and 2,441,010 Liberty LLC Units, for total consideration of $103.0 million, based on the Class A Common Stock closing price of $15.58 on October 26, 2021, subject to customary post closing adjustments.

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

Founded in 2016, PropX is a leading provider of last-mile proppant delivery solutions including proppant handling equipment and logistics software across North America.

PropX offers innovative environmentally friendly technology with optimized dry and wet sand containers and wellsite proppant handling equipment that drive logistics efficiency and reduce noise and emissions.

PropX wet sand handling technology is a key enabler of the next step of cost and emissions reductions in the proppant industry.

We believe that PropX wet sand handling technology is a key enabler of the next step of cost and emissions reductions in the proppant industry.

PropX also offers customers the latest real-time logistics software, PropConnect, for sale or as hosted software as a service.

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

For more information refer to Note 17—Subsequent Events.

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

forming ongoing partnerships of trust and innovation with our customers;

developing and utilizing technology to maximize well performance;

and promoting a people-centered culture focused on our employees, customers and suppliers.

We have developed strong relationships with our customers by investing significant time in fracture design collaboration, which substantially enhances their production economics.

Our technological innovations have become even more critical as E&P companies have increased the completion complexity and fracture intensity of horizontal wells.

We are proactive in developing innovative solutions to industry challenges, including developing:

(i) our proprietary databases of U.S.

We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business.

We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations.

We remain proactive in developing innovative solutions to industry challenges, including developing:

(i) our databases of U.S.

unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization;

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(iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate;

and (iv) our dual fuel dynamic gas blending fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs.

We foster a people-centered culture built around honoring our commitments to customers, partnering with our suppliers and hiring, training and retaining people that we believe to be the best talent in our field to drive innovation, enabling us to be one of the safest and most efficient hydraulic fracturing companies in the United States.

(iv) our dual fuel dynamic gas blending fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs;

(v) the successful test of digiFrac™, our innovative, purpose-built electric frac pump that has approximately 25% lower CO2e emission profile than the Tier IV DGB;

and (vi) our PropX wet sand handling technology which eliminates the need to dry sand, enabling the deployment of mobile mines nearer to wellsites.

In addition, our integrated supply chain includes proppant, chemicals, equipment, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity throughout the year to better service our customers.

In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle.

Recent Trends and Outlook

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

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

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

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

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

Customers are in search of modern, environmentally friendly solutions.

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

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

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

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

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

Restrained global investment since the last oil and gas downturn has led to supply challenges at a time where worldwide demand for energy is growing and expected to surpass pre-pandemic levels in 2022.

Relatively low and declining oil and gas inventories have led to persistent upward pressure on commodity prices, even prior to the Russian invasion of Ukraine.

Although Russian export volumes of oil and gas have been only modestly impacted so far, uncertainty regarding potential future impacts of sanctions and buyer aversion to Russian hydrocarbons presents significant risk to future supply and demand balances.

We believe that the modest increases in OPEC supply and release of global emergency oil reserves are not sufficient

to supply a rebounding world economy and that North American oil and gas are critical in the coming years.

However, given the rising COVID-19 cases, mobility restrictions in Asia and the Federal Reserve signaling a sharp rise in interest rates, general economic uncertainty persists.

The frac services market is seeing robust activity improvement and a tightening of the supply-demand balance.

Drilled but uncompleted well inventory has stabilized after a steep, continuous decline from pandemic-elevated levels.

Available frac capacity is nearing full utilization as demand has increased and supply is limited due to continued equipment attrition, labor shortages, supply chain constraints and very low investment in recent years.

While the first quarter benefited from the increase in activity, we continue to face operational challenges including labor shortages, sand supply tightness and logistics bottlenecks.

During the first quarter of 2022, the posted WTI price traded at an average of $95.18 per barrel (“Bbl”), as compared to the first quarter of 2021 average of $58.09 per Bbl, and fourth quarter of 2021 average of 77.33 per Bbl.

In addition, the average domestic onshore rig count for the United States and Canada was 816 rigs reported in the first quarter of 2022, up from the first quarter of 2021 of 522 and the fourth quarter of 2021 of 704, according to a report from Baker Hughes.

Results of Operations

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

Three months ended September 30,

Description 2021 2020 Change

(in thousands)

Revenue $ 653,727 $ 147,495 $ 506,232

Cost of services, excluding depreciation and amortization shown separately 593,683 139,237 454,446

General and administrative 32,281 17,307 14,974

Transaction, severance and other costs 1,556 2,609 (1,053)

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

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

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

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

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

Income tax expense (benefit) 753 (9,972) 10,725

Net loss (39,379) (49,025) 9,646

Net loss attributable to non-controlling interests (489) (14,523) 14,034

Net loss attributable to Liberty Oilfield Services Inc.

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

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

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

Cost of Services

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

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

General and Administrative

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

commensurate with the OneStim Acquisition.

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

Transaction, Severance and Other Costs

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

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

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

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

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

Depreciation, Depletion and Amortization

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

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

Gain on disposal of assets

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

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

Operating Loss

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

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

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

Other (Income) Expense, net

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

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

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

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

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

Net Loss before Income Taxes

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

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

Income Tax Expense (Benefit)

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

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

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

Nine Months Ended September 30,

Three months ended March 31, 2022 compared to three months ended March 31, 2021

Three months ended March 31,

Description 2022 2021 Change

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Depreciation, depletion and amortization 74,588 62,056 12,532

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

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

Loss (gain) on disposal of assets 4,672 (720) 5,392

Operating income (loss) 3,839 (42,219) 46,058

Other expense, net 8,489 3,754 4,735

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Net loss attributable to non-controlling interests (104) (4,411) 4,307

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders $ (5,376) $ (34,205) $ 28,829

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

Our revenue increased $240.7 million , or 43.6% , to $792.8 million for the three months ended March 31, 2022 compared to $552.0 million for the three months ended March 31, 2021.

The increase is attributable to higher service prices and increased fleet utilization, commensurate with the demand recovery and tightening of the market for our frac services.

Cost of Services

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

Cost of services (excluding depreciation, depletion, and amortization) increased $171.1 million , or 34.3% , to $670.0 million for the three months ended March 31, 2022 compared to $498.9 million for the three months ended March 31, 2021.

The higher expense was primarily related to the increase in activity from higher fleet utilization, as discussed above, and inflationary pressure on material, personnel, and repairs and maintenance costs.

General and Administrative

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

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

General and administrative expense s i ncreased $12.0 million , or 45.4% , to $38.3 million for the three months ended March 31, 2022 compared to $26.4 million for the three months ended March 31, 2021, primarily related to increased personnel costs from reinstated bonus programs which had been temporarily suspended during the first quarter of 2021 as a result of the COVID-19 pandemic, and additional corporate costs attributable to increased levels of activity.

Transaction, Severance and Other Costs

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

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

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

Transaction, severance and other costs decreased $6.3 million , or 82.5%, to $1.3 million for the three months ended March 31, 2022 compared to $7.6 million for the three months ended March 31, 2021.

The costs incurred in the three months ended March 31, 2021 primarily related to investment banking, legal, accounting, other professional services provided and integration costs in connection with the OneStim Acquisition.

Such costs were significantly lower during the three months ended March 31, 2022 as the integration efforts move towards completion.

Depreciation, Depletion and Amortization

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

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

Gain on disposal of assets

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

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

Operating Loss

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

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

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

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

Depreciation, depletion and amortization expense increased $12.5 million, or 20.2% , to $74.6 million for the three months ended March 31, 2022 compared to $62.1 million for the three months ended March 31, 2021.

The increase in 2022 was due to additional equipment placed in service since the prior year period and additional depreciation from property acquired in the PropX Acquisition.

Loss (Gain) on Disposal of Assets

The Company recorded a loss on disposal of assets of $4.7 million for the three months ended March 31, 2022 primarily as a result of plans to sell two non-strategic facilities acquired in the OneStim Acquisition compared to a gain of $0.7 million for the three months ended March 31, 2021 due to miscellaneous equipment disposals in the normal course of business.

Operating Income (Loss)

The Company recorded operating income of $3.8 million for the three months ended March 31, 2022 compared to operating loss of $(42.2) million for the three months ended March 31, 2021.

The decrease in loss is primarily due to the $240.7 million, or 43.6%, increase in total revenue partially offset by a $194.7 million increase in total operating expenses, the significant components of which are discussed above.

Other Expense, Net

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

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

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

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

Other expense, net increased by $4.7 million, or 126.1%, to $8.5 million for the three months ended March 31, 2022 compared to $3.8 million for the three months ended March 31, 2021.

Other expense, net is comprised of loss on remeasurement of liability under the TRAs and interest expense, net.

During the first quarter of 2022, the Company remeasured the liability under the TRAs resulting in a loss of $4.2 million.

Interest expense, net was consistent between periods, increasing $0.6 million as a result of increased borrowings under the credit facility.

Net Loss before Income Taxes

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

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

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

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

Net loss before income ta xes decreased $41.3 million, or 89.9%, to $4.7 million for the three months ended March 31, 2022 compared to $46.0 million for the three months ended March 31, 2021.

The decrease in loss is primarily attributable to an increase in revenue, as discussed above, related to the increase in activity and service pricing.

Income Tax (Benefit) Expense

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

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

We recognized an income tax expense of $0.8 million for the three months ended March 31, 2022, an effective rate of (17.8)%, compared to a benefit of $7.4 million for the three months ended March 31, 2021, an effective rate of 16.0%.

The income tax expense is primarily attributable due to the Company recording a valuation allowance on its U.S.

net deferred tax assets and excluding any U.S.

tax benefit on U.S.

losses while calculating income tax expense on Canada operations that are not subject to a valuation allowance.

Comparison of Non-GAAP Financial Measures

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We define EBITDA as net income before interest, income taxes, and depreciation, depletion and amortization.

We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves and non-recurring expenses that management does not consider in assessing ongoing performance.

We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock based compensation, new fleet or new basin start-up costs, fleet lay-down costs, costs of asset acquisitions, gain or loss on the disposal of assets, bad debt reserves, transaction, severance, and other costs, the loss or gain on remeasurement of liability under our tax receivable agreements and other non-recurring expenses that management does not consider in assessing ongoing performance.

Our board of directors, management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion and amortization) and other items that impact the comparability of financial results from period to period.

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We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations.

Net income is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA.

Net income (loss) is the GAAP measure most directly comparable to EBITDA and Adjusted EBITDA.

Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure.

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Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

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

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

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

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

EBITDA and Adjusted EBITDA

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

Description 2021 2020 Change 2021 2020 Change

Three Months Ended March 31,

Description 2022 2021 Change

(in thousands)

1 unchanged sentence

Depreciation, depletion and amortization 74,588 62,056 12,532

Interest expense 4,007 3,595 412 11,528 10,859 669

Interest expense, net 4,324 3,754 570

Income tax expense (benefit) 830 (7,357) 8,187

1 unchanged sentence

Stock based compensation expense 6,813 4,947 1,866

Fleet start-up and lay-down costs — 5,958 (5,958) — 10,457 (10,457)

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

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

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

Gain on remeasurement of liability under tax receivable agreement (4,947) — (4,947) (8,252) — (8,252)

Fleet start-up costs 585 — 585

Transaction, severance and other 1,334 7,621 (6,287)

Loss (gain) on disposal of assets 4,672 (720) 5,392

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

Adjusted EBITDA $ 91,831 $ 31,685 $ 60,146

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

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

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

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

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

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

EBITDA was $74.3 million for the three months ended March 31, 2022 compared to $19.8 million for the three months ended March 31, 2021.

Adjusted EBITDA was $91.8 million for the three months ended March 31, 2022 compared to $31.7 million for the three months ended March 31, 2021.

The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity levels as described above under the captions Revenue , Cost of Services , and General and Administrative Expenses for the Three Months Ended March 31, 2022 , Compared to the Three Months Ended March 31, 2021 .

Liquidity and Capital Resources

Our primary sources of liquidity since our IPO have been cash flows from operations, and borrowings under our Credit Facilities.

Historically, our primary sources of liquidity to date have been cash flows from operations, proceeds from our IPO, and borrowings under our Credit Facilities.

We expect to fund operations and organic growth with cash flows from operations and available borrowings under our Credit Facilities.

We may incur additional indebtedness or issue equity in order to fund growth opportunities that we pursue via acquisition, such as with the OneStim Acquisition.

We monitor the availability of capital resources such as equity and debt financings that could be leverage for current or future financial obligations including those related to acquisitions, capital expenditures, working capital and other liquidity requirements.

We may incur additional indebtedness or issue equity in order to meet our capital expenditure activities and liquidity requirements, as well as to fund growth opportunities that we pursue, including via acquisition, such as with the OneStim Acquisition and the PropX Acquisition.

Our primary uses of capital have been capital expenditures to support organic growth and funding ongoing operations, including maintenance and fleet upgrades.

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

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

Cash and cash equivalents increased by $12.9 million to $32.9 million as of March 31, 2022 compared to $20.0 million as of December 31, 2021, while working capital excluding cash and current liabilities under debt and lease arrangements increased $64.4 million.

We have $350.0 million committed under the ABL Facility (net of any outstanding letters of credit), subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory (with the ability to request an increase in the size of the ABL Facility by $75 million) available to finance working capital needs.

As of March 31, 2022, the

borrowing base was calculated to be $298.3 million, and the Company had $108.0 million outstanding, in addition to a letter of credit in the amount of $1.4 million, with $189.0 million of remaining availability.

Additionally, we have $106.0 million borrowings remaining on the Term Loan Facility, which was originally $175.0 million.

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

The Credit Facilities contain covenants that restrict our ability to take certain actions.

At March 31, 2022, we were in compliance with all debt covenants.

See Note 8 —Debt to the consolidated financial statements included in “Item 1.

Financial Statements (unaudited)” for further details.

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

Nine Months Ended September 30,

Three Months Ended March 31,

Description 2022 2021 Change

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Net cash used in investing activities (90,857) (23,787) (67,070)

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

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

Net cash provided by (used in) financing activities 88,958 (3,266) 92,224

Analysis of Cash Flow Changes Between the Three Months Ended March 31, 2022 and 2021

Operating Activities .

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

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

Net cash provided by operating activities was $14.6 million for the three months ended March 31, 2022, compared to $27.5 million for the three months ended March 31, 2021.

The $13.0 million decrease in cash from operating activities is primarily attributable to a $240.7 million increase in revenues, offset by a $182.1 million increase in cash operating expenses and a $71.1 million decrease in cash from changes in working capital for the three months ended March 31, 2022, compared to a $8.0 million increase in cash from changes in working capital for the three months ended March 31, 2021.

Investing Activities .

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

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

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

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

Net cash used in investing activities was $90.9 million for the three months ended March 31, 2022, compared to $23.8 million for the three months ended March 31, 2021.

Cash used in investing activities was higher during the three months ended March 31, 2022 as the Company continues to invest in equipment, including digiFrac, compared to more limited capital spending during the three months ended March 31, 2021.

Financing Activities .

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

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

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

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

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

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

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

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

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

Borrowings under the ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR margin of 1.5% to 2.0% or base rate margin of 0.5% to 1.0%, as defined in the ABL Facility credit agreement.

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

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

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.

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.

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

Net cash provided by financing activities was $89.0 million for the three months ended March 31, 2022, compared to net cash used in financing activities of $3.3 million for the three months ended March 31, 2021.

The $92.2 million change in financing activities was primarily due to net borrowings of $90.0 million on the ABL Facility during the three months ended March 31, 2022, compared to no borrowings on the ABL Facility for the three months ended March 31, 2021.

Additionally, there was a $1.1 million decrease in payments on finance lease liabilities as the number of finance leases has decreased since March 31, 2021.

Cash Requirements

Our material cash commitments consists primarily of obligations under long-term debt, TRAs, finance and operating leases for property and equipment, and purchase obligations as part of normal operations.

We have no material off balance sheet arrangements as of March 31, 2022, except for obligations of $20.0 million payable within 2022 and $1.4 million payable thereafter.

See Note 15 —Commitments & Contingencies to the unaudited condensed consolidated financial statements included in “Item 1.

Financial Statements (Unaudited)” for information regarding scheduled contractual obligations.

There have been no material changes to cash requirements since the year ended December 31, 2021.

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

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

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

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

The Company’s effective tax rate is also less than the statutory federal tax rate of 21.0% because of foreign operations and 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.

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

During the nine months ended September 30, 2021, the Company has applied for and expects to receive a NOL carryback refund to recover $5.5 million of cash taxes paid by the Company in 2018.

This amount has been reflected as a receivable in prepaids and other assets in the accompanying unaudited condensed consolidated financial statements.

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

The combined effective tax rate applicable to the Company for the three months ended March 31, 2022 and 2021 was (17.8)% and 16.0%, respectively.

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

net deferred tax assets as of March 31, 2022, due to entering into a three year cumulative pre-tax book loss position, primarily as a result of COVID-19 related losses in 2021.

The Company’s effective tax rate is also less than the statutory rate because of foreign operations for 2021, and the non-controlling interest’s share of Liberty LLC’s pass-through results for federal, state and local income tax reporting, upon which no taxes are payable by the Company for the three months ended March 31, 2022 and 2021.

The Company recognized income tax expense of $0.8 million for the three months ended March 31, 2022 and an income tax benefit of $7.4 million for the three months ended March 31, 2021.

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

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

This amount has been reflected as a receivable in the prepaids and other current assets line item in the accompanying audited consolidated balance sheets.

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

Tax Receivable Agreements

In connection with the IPO, on January 17, 2018, the Company entered into two TRAs with the TRA Holders.

The TRAs generally provide for the payment by the Company of 85% of the net cash savings, if any, in U.S.

federal, state, and local income tax and franchise tax (computed using simplifying assumptions to address the impact of state and local taxes) that the Company actually realizes (or is deemed to realize in certain circumstances) in periods after the IPO as a result, as applicable to each of the TRA Holders, of (i) certain increases in tax basis that occur as a result of the Company’s acquisition (or deemed acquisition for U.S.

federal income tax purposes) of all or a portion of such TRA Holders’ Liberty LLC Units in connection with the IPO or pursuant to the exercise of the right of each Liberty Unit Holder (the “Redemption Right”), subject to certain limitations, to cause Liberty LLC to acquire all or a portion of its Liberty LLC Units for, at Liberty LLC’s election, (A) shares of our Class A Common Stock at the specific redemption ratio or (B) an equivalent amount of cash, or, upon the exercise of the Redemption Right, the right of the Company (instead of Liberty LLC) to, for administrative convenience, acquire each tendered Liberty LLC Unit directly from the redeeming Liberty Unit Holder for, at its election, (1) one share of Class A Common Stock or (2) an equivalent amount of cash, (ii) any net operating losses available to the Company as a result of the Corporate Reorganization, and (iii) imputed interest deemed to be paid by the Company as a result of, and additional tax basis arising from, any payments the Company makes under the TRAs.

With respect to obligations the Company expects to incur under the TRAs (except in cases where the Company elects to terminate the TRAs early, the TRAs are terminated early due to certain mergers, asset sales, or other changes of control, or the Company has available cash but fails to make payments when due), generally the Company may elect to defer payments due under the TRAs if the Company does not have available cash to satisfy its payment obligations under the TRAs or if its contractual obligations limit its ability to make such payments.

Any such deferred payments under the TRAs generally will accrue interest.

In certain cases, payments under the TRAs may be accelerated and/or significantly exceed the actual benefits, if any, the Company realizes in respect of the tax attributes subject to the TRAs.

The Company accounts for amounts payable under the TRAs in accordance with ASC Topic 450, Contingencies .

If the Company experiences a change of control (as defined under the TRAs) or the TRAs otherwise terminate early, the Company’s obligations under the TRAs could have a substantial negative impact on its liquidity and could have the effect of delaying, deferring or preventing certain mergers, asset sales, or other forms of business combinations or changes of control.

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

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

Critical Accounting Policies and Estimates

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We believe that some of our accounting policies involve a higher degree of judgment and complexity than others.

As of December 31, 2020, our critical accounting policies included business combinations, leases, revenue recognition, estimating the recoverability of accounts receivable, inventory valuation, accounting for income taxes, and accounting for long-lived assets.

As of December 31, 2021, our critical accounting policies included business combinations, revenue recognition, estimating the recoverability of accounts receivable, inventory valuation, accounting for income taxes, property and equipment, leases, tax receivable agreements, share repurchases, accounting for long-lived assets, and foreign currency translation.

These critical accounting policies are discussed more fully in the Annual Report.

Effective January 1, 2021, the Company commenced operations in Canada and therefore added a critical accounting policy for foreign currency translation (see Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements included in this Quarterly Report).

There have been no other changes in our evaluation of our critical accounting policies since December 31, 2020.

There have been no changes in our evaluation of our critical accounting policies since December 31, 2021.

Off Balance Sheet Arrangements

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

We have no material off balance sheet arrangements as of March 31, 2022, except for purchase commitments under supply agreements as disclosed above under “Item 1.

Financial Statements—Note 15—Commitments & Contingencies.” As such, we are not materially exposed to any other financing, liquidity, market, or credit risk that could arise if we had engaged in such financing arrangements.

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

What changed 10-Q

Item 1. Financial Statements