What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-27 compared with 2022-04-25 · 392 added, 302 removed, 535 unchanged (56% of the section changed)

Financial Statements

Financial Statements (Unaudited)

LIBERTY ENERGY INC.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

March 31, 2022 December 31, 2021

(Dollars in thousands, except share data)

June 30, 2022 December 31, 2021

Current assets:

Cash and cash equivalents $ 41,476 $ 19,998

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

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

399,817 298,531

Accounts receivable—related party 11,183 —

Unbilled revenue 143,034 108,923

Unbilled revenue (including amounts from related parties of $ 1,254 and $ 0 , respectively)

164,222 108,923

Inventories 163,652 134,593

29 unchanged sentences

Common Stock:

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

Class A, $ 0.01 par value, 400,000,000 shares authorized and 186,859,269 issued and outstanding as of June 30, 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 325,902 issued and outstanding as of June 30, 2022 and 2,632,347 issued and outstanding as of December 31, 2021

Additional paid in capital 1,384,134 1,367,642

Accumulated deficit ( 56,174 ) ( 155,954 )

Accumulated other comprehensive income (loss) 743 ( 306 )

Accumulated other comprehensive loss ( 2,263 ) ( 306 )

Total stockholders’ equity

7 unchanged sentences

(In thousands, except per share data)

Three Months Ended March 31,

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

2022 2021 2022 2021

Revenue $ 941,370 $ 581,288 $ 1,711,851 $ 1,132,140

6 unchanged sentences

Depreciation, depletion, and amortization 77,379 63,214 151,967 125,270

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

(Gain) loss on disposal of assets ( 3,436 ) ( 277 ) 1,236 ( 997 )

Total operating costs and expenses 832,015 617,292 1,620,946 1,211,543

1 unchanged sentence

Other expense:

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

Loss (gain) on remeasurement of liability under tax receivable agreements 168 ( 3,305 ) 4,333 ( 3,305 )

Interest expense, net 4,862 3,767 9,186 7,521

Total other expense 5,030 462 13,519 4,216

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

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

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

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

Net loss attributable to Liberty Energy Inc.

Net income (loss) before income taxes 105,574 ( 36,466 ) 100,924 ( 82,439 )

Income tax expense 235 16,006 1,065 8,649

Net income (loss) 105,339 ( 52,472 ) 99,859 ( 91,088 )

Net income (loss) attributable to non-controlling interests 183 ( 1,912 ) 79 ( 6,323 )

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 105,156 $ ( 50,560 ) $ 99,780 $ ( 84,765 )

Net loss attributable to Liberty Energy Inc.

Net income (loss) attributable to Liberty Energy Inc.

stockholders per common share:

6 unchanged sentences

LIBERTY ENERGY INC.

Condensed Consolidated Statements of Comprehensive Loss

Condensed Consolidated Statements of Comprehensive Income (Loss)

(In thousands)

Three Months Ended March 31,

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

Other comprehensive loss

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

2022 2021 2022 2021

Net income (loss) $ 105,339 $ ( 52,472 ) $ 99,859 $ ( 91,088 )

Other comprehensive (loss) income

Foreign currency translation ( 3,012 ) 1,288 ( 1,956 ) 2,698

Comprehensive loss $ ( 4,424 ) $ ( 37,206 )

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

Comprehensive loss attributable to Liberty Energy Inc.

Comprehensive income (loss) $ 102,327 $ ( 51,184 ) $ 97,903 $ ( 88,390 )

Comprehensive income (loss) attributable to non-controlling interest 177 ( 1,760 ) 80 ( 6,079 )

Comprehensive income (loss) attributable to Liberty Energy Inc.

$ 102,150 $ ( 49,424 ) $ 97,823 $ ( 82,311 )

3 unchanged sentences

(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

7 unchanged sentences

Currency translation adjustment — — — — — — ( 1,957 ) ( 1,957 ) 1 ( 1,956 )

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

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

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

Net income — — — — — 99,780 — 99,780 79 99,859

Balance—June 30, 2022 186,859 326 $ 1,869 $ 3 $ 1,384,134 $ ( 56,174 ) $ ( 2,263 ) $ 1,327,569 $ 2,447 $ 1,330,016

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

Non-controlling Interest Total Equity

2 unchanged sentences

Offering Costs — — — — ( 779 ) — — ( 779 ) ( 75 ) ( 854 )

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

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 — — — — — — — — 1,372 1,372

4 unchanged sentences

Net loss — — — — — ( 84,765 ) — ( 84,765 ) ( 6,323 ) ( 91,088 )

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

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

See Notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

(In thousands)

Three Months Ended March 31,

(Dollars in thousands)

Six Months Ended June 30,

Cash flows from operating activities:

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

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

Net income (loss) $ 99,859 $ ( 91,088 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion, and amortization 151,967 125,270

Loss (gain) on disposal of assets 1,236 ( 997 )

Amortization of debt issuance costs 336 569

Non-cash lease expense 2,088 1,409

Stock based compensation expense 11,014 10,846

Deferred income tax benefit — ( 9,645 )

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

Deferred income tax expense 320 6,124

Loss (gain) on remeasurement of liability under tax receivable agreements 4,333 ( 3,305 )

Other non-cash expense 826 1,882

Changes in operating assets and liabilities:

11 unchanged sentences

Investment in sand logistics ( 5,717 ) —

Investment in Fervo Energy Company ( 10,000 ) —

Proceeds from sale of assets 7,630 1,966

1 unchanged sentence

Cash flows from financing activities:

Proceeds from borrowings on line-of-credit 400,000 50,000

Repayments of borrowings on line-of-credit ( 268,000 ) ( 50,000 )

Repayments of borrowings on term loan ( 875 ) ( 875 )

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

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

Payments on finance lease obligations ( 2,696 ) ( 4,064 )

2 unchanged sentences

Tax withholding on restricted stock unit vesting ( 9,700 ) ( 3,586 )

Payments of equity offering costs ( 523 ) ( 854 )

Payments of debt issuance costs ( 224 ) —

Payments of equity issuance costs ( 62 ) ( 848 )

Net cash provided by (used in) financing activities 118,758 ( 8,175 )

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

Net increase (decrease) in cash and cash equivalents before translation effect 21,563 ( 38,504 )

Translation effect on cash ( 85 ) 236

3 unchanged sentences

Condensed Consolidated Statements of Cash Flows cont.

(In thousands)

Three Months Ended March 31,

(Dollars in thousands)

Six Months Ended June 30,

Supplemental disclosure of cash flow information:

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

Cash paid for income taxes $ 6,073 $ —

Cash paid for interest $ 8,352 $ 5,326

11 unchanged sentences

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022 (the “Annual Report”) for additional information on the Corporate Reorganization and IPO that were completed on January 17, 2018.

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

The Company, together with its subsidiaries, is a leading integrated oilfield services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas exploration and production (“E&P”) companies in North America.

We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.

Basis of Presentation

1 unchanged sentence

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 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 accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of June 30, 2022 and December 31, 2021, and the results of operations, cash flows, and equity of the Company as of and for the three and six months ended June 30, 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 months ended March 31, 2022 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2022.

The results of operations for the three and six months ended June 30, 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.

11 unchanged sentences

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

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

27 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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.

The Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2021 does not include any results from PropX operations as the PropX Acquisition closed on October 26, 2021.

Note 4— Inventories

Inventories consist of the following:

March 31, December 31,

June 30, December 31,

($ in thousands) 2022 2021

1 unchanged sentence

Chemicals 24,660 17,996

Maintenance parts and other 103,206 93,184

Maintenance parts 116,044 93,184

$ 163,652 $ 134,593

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.

The Company did no t record any write-down to the inventory carrying value during the three and six months ended June 30, 2022 or the year ended December 31, 2021.

Note 5— Property and Equipment

Property and equipment consist of the following:

(in years) March 31, December 31,

(in years) June 30, December 31,

($ in thousands) 2022 2021

15 unchanged sentences

$ 1,267,393 $ 1,199,287

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.

Depreciation expense for the three months ended June 30, 2022 and 2021 was $ 72.4 million and $ 58.1 million, respectively.

During the six months ended June 30, 2022 and 2021, the Company recognized depreciation expense of $ 142.3 million and $ 114.8 million, respectively.

Depletion expense for the three months ended June 30, 2022 and 2021was $ 0.3 million and $ 0.3 million, respectively.

Depletion expense for the six months ended June 30, 2022 and 2021 was $ 0.6 million and $ 0.6 million, respectively.

As of June 30, 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 June 30, 2022, the Company classified $ 2.0 million of land and $ 6.0 million of buildings, net of accumulated depreciation, of one property that it intends to sell within the next year, and that meets the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet.

The Company estimates that the carrying value of the assets were greater than the fair value less the estimated costs to sell, and therefore recorded a $ 2.3 million loss during the six months ended June 30, 2022, included as a component of (gain) loss on disposal of assets in the accompanying unaudited condensed consolidated statements of operations.

LIBERTY ENERGY INC.

6 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.

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

Three Months Ended March 31,

The components of lease expense for the three and six months ended June 30, 2022 and 2021 were as follows:

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

($ in thousands) 2022 2021 2022 2021

4 unchanged sentences

Variable lease cost 1,045 1,286 2,136 1,843

Short-term lease cost 1,546 309

Short-term lease costs 1,446 1,695 2,992 2,004

Total lease cost $ 16,707 $ 14,538 $ 30,081 $ 25,003

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,

Sup plemental cash flow and other information related to leases for the three and six months ended June 30, 2022 and 2021 were as follows:

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

($ in thousands) 2022 2021 2022 2021

4 unchanged sentences

Operating leases 9,909 59,175 19,370 59,206

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.

Finance leases 6,333 — 6,333 —

During the six months ended June 30, 2022, the Company amended certain operating leases, the change in terms of which caused the leases to be reclassified as finance leases.

In connection with the amendments, the Company wrote-off operating lease right-of-use assets of $ 0.2 million and liabilities of $ 0.1 million.

Additionally, the Company recognized finance lease right-of-use assets of $ 1.8 million and liabilities of $ 1.8 million.

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

In connection with the amendments the Company wrote-off finance lease right-of-use assets of $ 6.3 million and liabilities of $ 4.9 million.

1 unchanged sentence

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

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

March 31, 2022 December 31, 2021

Lease terms and discount rates as of June 30, 2022 and December 31, 2021 were as follows:

June 30, 2022 December 31, 2021

Weighted-average remaining lease term:

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

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

Future minimum lease commitments as of June 30, 2022 are as follows:

($ in thousands) Finance Operating

3 unchanged sentences

2025 2,678 20,585

2026 2,656 9,836

Thereafter — 19,081

1 unchanged sentence

Less imputed interest ( 2,184 ) ( 12,687 )

Total $ 11,970 $ 108,403

Total Liability $ 18,106 $ 108,007

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 March 31, 2022 is $ 12.8 million;

For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of June 30, 2022 is $ 13.1 million;

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

7 unchanged sentences

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

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

($ in thousands) June 30, 2022 December 31, 2021

Equipment leased to others - at original cost $ 77,337 $ 64,770

1 unchanged sentence

Equipment leased to others - net $ 71,736 $ 63,393

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

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

($ in thousands)

1 unchanged sentence

Total $ 21,943

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

Revenues from operating leases for the three and six months ended June 30, 2022 were $ 5.9 million and $ 11.8 million, respectively.

There was no revenue from operating leases for the three and six months ended June 30, 2021.

LIBERTY ENERGY INC.

2 unchanged sentences

Accrued liabilities consist of the following:

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

($ in thousands) June 30, 2022 December 31, 2021

Accrued vendor invoices $ 126,319 $ 109,903

3 unchanged sentences

Debt consists of the following:

March 31, December 31,

June 30, December 31,

($ in thousands) 2022 2021

6 unchanged sentences

Total debt, net of deferred financing costs and original issue discount $ 253,950 $ 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.

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

Effective July 18, 2022, the Company executed an amendment to the ABL Facility (the “Revolving Credit Agreement Amendment”) to exercise the option to increase the ABL Facility by $ 75.0 million, to $ 425.0 million, refer to Note 17—Subsequent Events for more information.

The weighted average interest rate on all borrowings outstanding as of June 30, 2022 and December 31, 2021 was 5.3 % 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 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

million, with $ 189.0 million of remaining availability.

As of June 30, 2022, the borrowing base was calculated to be $ 350.0 million, and the Company had $ 150.0 million outstanding in addition to a letter of credit in the amount of $ 1.4 million, with $ 198.6 million of remaining availability.

Borrowings under the ABL Facility bear interest at LIBOR or a base rate, plus an applicable LIBOR margin of 1.5 % to 2 % or base rate margin of 0.5 % to 1 %, as defined in the ABL Facility credit agreement.

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

Additionally, borrowings as of June 30, 2022 incurred interest at a rate of 2.9 %.

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

4 unchanged sentences

Term Loan Facility

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 Term Loan Facility provides for a $ 175.0 million term loan, of which $ 105.6 million remained outstanding as of June 30, 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 June 30, 2022 incurred interest at a rate of 8.687 %.

The Company is required to make quarterly principal payments of 1 % per annum of the outstanding principal balance, commencing on December 31, 2017, with final payment due at maturity on September 19, 2024.

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

The Term Loan Facility is collateralized by the fixed assets of LOS and

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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.

6 unchanged sentences

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

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

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

Maturities of debt are as follows:

1 unchanged sentence

Remainder of 2022 $ 875

2024 $ 252,965

Note 9— Fair Value Measurements and Financial Instruments

5 unchanged sentences

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 three months ended March 31, 2022 and 2021.

There were no transfers into or out of Levels 1, 2, and 3 during the six months ended June 30, 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 on March 31, 2022 and December 31, 2021.

• 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.

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

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

Nonrecurring Measurements

3 unchanged sentences

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.

As of June 30, 2022, the Company recorded $ 2.0 million of land and $ 6.0 million of buildings of one property that met the held for sale criteria, to assets held for sale at a total fair value of $ 5.7 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 property based on a purchase and sale agreement for one property, which is a Level 3 input.

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 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.

As of June 30, 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

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

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

No such measurements were required as of June 30, 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 $ 32.9 million and $ 20.0 million as of March 31, 2022 and December 31, 2021, respectively, which exceeded FDIC insured limits.

The Company’s cash and cash equivalent balances on deposit with financial institutions total $ 41.5 million and $ 20.0 million as of June 30, 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 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 %

As of June 30, 2022 no c ustomers accounted for more than 10% o f total consolidated accounts receivable and unbilled revenue.

As of December 31, 2021, customer A accounted for 12 % of total consolidated accounts receivable and unbilled revenue.

During the three and six months ended June 30, 2022, customer A accounted for 10 % of consolidated revenues.

During the three and six months ended June 30, 2021, no cust omers accounted for more than 10% o f consolidated revenues.

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

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

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

($ in thousands)

Provision for credit losses on December 31, 2021 $ 884

Allowance for credit losses at December 31, 2021 $ 884

Credit Losses:

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Amounts written off —

Provision for credit losses on March 31, 2022 $ 884

Allowance for credit losses at June 30, 2022 $ 884

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 10— Equity

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RSUs were granted with vesting terms up to five years .

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

Changes in non-vested RSUs outstanding under the LTIP during the six months ended June 30, 2022 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

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Forfeited ( 65,357 ) 9.85

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

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Outstanding at June 30, 2022 2,009,215 $ 11.60

Performance Restricted Stock Units

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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 three months ended March 31, 2022 were as follows:

Changes in non-vested PSUs outstanding under the LTIP during the six months ended June 30, 2022 were as follows:

Number of Units Weighted Average Grant Date Fair Value per Unit

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Granted 412,920 12.47

Vested ( 329,277 ) 14.93

Forfeited — —

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

Outstanding at June 30, 2022 1,390,588 $ 11.87

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 Company recognized stock based compensation expense of $ 4.2 million and $ 11.0 million for the three and six months ended June 30, 2022, respectively.

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

There was approximately $ 27.7 million of unrecognized compensation expense relating to outstanding RSUs and PSUs as of June 30, 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.

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.

As of June 30, 2022 dividends have not been reinstated by the Company.

As of June 30, 2022 and December 31, 2021, the Company had $ 0.1 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.

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Notes to Condensed Consolidated Financial Statements

Note 11— Net Loss per Share

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

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

Note 11— Net Income (Loss) per Share

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

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

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

The following table reflects the allocation of net 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

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

Basic Net Loss Per Share

Net loss attributable to Liberty Energy Inc.

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

Three Months Ended Six Months Ended

(In thousands) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Basic Net Income (Loss) Per Share

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 105,156 $ ( 50,560 ) $ 99,780 $ ( 84,765 )

Basic weighted average common shares outstanding 186,719 172,523 185,367 167,891

Basic net loss per share attributable to Liberty Energy Inc.

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

stockholders $ 0.56 $ ( 0.29 ) $ 0.54 $ ( 0.50 )

Diluted Net Loss Per Share

Net loss attributable to Liberty Energy Inc.

Diluted Net Income (Loss) Per Share

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 105,156 $ ( 50,560 ) $ 99,780 $ ( 84,765 )

Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock 183 — 79 —

Diluted net loss attributable to Liberty Energy Inc.

Diluted net income (loss) attributable to Liberty Energy Inc.

stockholders $ 105,339 $ ( 50,560 ) $ 99,859 $ ( 84,765 )

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Diluted weighted average shares outstanding 190,441 172,523 190,623 167,891

Diluted net loss per share attributable to Liberty Energy Inc.

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

stockholders $ 0.55 $ ( 0.29 ) $ 0.52 $ ( 0.50 )

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.

In accordance with GAAP, diluted weighted average common shares presented above do not include certain weighted average shares of Class B Common Stock and restricted stock units, because to do so would have had an antidilutive effect, as follows:

Three Months Ended Six Months Ended

(In thousands) June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021

Weighted average shares of Class B Common Stock 7 7,641 — 11,963

Weighted average shares of restricted stock units — 4,107 — 3,700

Note 12— Income Taxes

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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.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

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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

valuation allowance.

The effective global income tax rate applicable to the Company for the six months ended June 30, 2022 was 1.1 %, compared to ( 10.5 )%, for the period ended June 30, 2021.

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

net deferred tax assets while calculating income tax expense on Canada operations that are not subject to a 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.

The Company recognized an income tax expense of $ 0.2 million and $ 1.1 million during the three and six months ended June 30, 2022, respectively.

The Company recognized an income tax expense of $ 16.0 million and $ 8.6 million during the three and six months ended June 30, 2021, respectively, which included the impact of the initial recording of a valuation allowance on a portion of the Company’s deferred tax assets.

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

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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.

The Company recognized a deferred tax liability in the amount of $ 0.6 million as of June 30, 2022 and December 31, 2021.

The Company also recognized a deferred tax asset related to foreign jurisdictions in the amount of $ 0.3 million and $ 0.6 million as of June 30, 2022 and December 31, 2021, respectively.

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

The Company evaluated its deferred tax assets as of 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.

The Company evaluated its deferred tax assets as of June 30, 2022 and considered both positive and negative evidence in applying the guidance of ASC 740 Income Taxes (“ASC 740”) related to the realizability of its deferred tax assets.

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

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 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.

During the six months ended June 30, 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 six months ended June 30, 2022.

At June 30, 2022 and December 31, 2021, the Company ’ s liability under the TRAs was $ 41.9 million and $ 37.6 million, respectively, all of which is presented as a component of long-term liabilities, and the related deferred tax asset 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 June 30, 2022 and recorded a loss on remeasurement of liabilities subject to the TRAs for the six months ended June 30, 2022 of $ 4.3 million recorded as part of continuing operations.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

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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

Contributions made by the Company wer e $ 6.0 million and $ 4.1 million for the three months ended June 30, 2022 and 2021, respectively, and $ 12.1 million and $ 7.9 million for the six months ended June 30, 2022 and 2021, respectively.

Note 14— Related Party Transactions

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.

OneStim Acquisition and Related Transaction

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

As of June 30, 2022 Schlumberger owned 23,069,461 shares of Class A Common Stock of the Company, or approximately 12.3 % of the issued and outstanding shares of 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.

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.

The Company incurred $ 0.5 million and $ 5.7 million, of fees payable to Schlumberger for such transaction services during the three and six months ended June 30, 2021.

No fees were incurred during the three and six months ended June 30, 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.

1 unchanged sentence

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 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.

During the three and six months ended June 30, 2022, total purchases from Schlumberger were approximately $ 4.5 million and $ 8.1 million, respectively.

During the three and six months ended June 30, 2021, total purchases from Schlumberger were approximately $ 8.8 million and $ 19.9 million, respectively.

As of June 30, 2022 amounts due to Schlumberger were $ 1.8 million and $ 0.4 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.

Franklin Mountain Energy, LLC

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 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.

During the three and six months ended June 30, 2022 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $ 1.2 million or 0.1 % and $ 23.5 million or 1.4 % of the Company’s revenues for such periods, respectively.

Amounts included in unbilled revenue from Franklin Mountain as of June 30, 2022 and December 31, 2021 were $ 1.2 million and $ 0.0 million , respectively.

Receivables from Franklin Mountain as of June 30, 2022 and December 31, 2021 were $ 0.0 million .

Liberty Resources LLC

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

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended 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.

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended June 30, 2022 and 2021 was $ 0.0 million and $ 0.0 million , respectively, and $ 0.0 million and $ 1.2 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, there were no outstanding accounts receivable with the Affiliate.

PropX Acquisition

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

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

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.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Prior to the PropX Acquisition the Company leased equipment from PropX, during the three and six months ended June 30, 2021, the Company leased proppant logistics equipment for $ 2.1 million and $ 4.1 million, respectively.

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

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

Secondary Offering by Selling Stockholder

On April 29, 2022, the Company, Liberty LLC, Schlumberger, and BofA Securities, Inc.

Morgan Securities LLC (together, the “Underwriters”), entered into an underwriting agreement, dated as of April 29, 2022, pursuant to which Schlumberger sold 14,500,000 shares of Class A Common Stock at a price of $ 15.50 per share to the Underwriters (the “Sale”).

The Sale closed on May 3, 2022.

Following the Sale, Schlumberger held 35,101,961 shares of Class A Common Stock.

The Company did not receive any proceeds from the Sale.

Note 15— Commitments & Contingencies

Purchase Commitments (tons are not in thousands)

Purchase Commitments (tons and gallons are not in thousands)

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

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.

As of June 30, 2022 and December 31, 2021, the agreements commit the Company to purchas e 1,212,478 and 89,317 tons, respectively, of proppant through March 31, 2024.

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

Additionally, related proppant transload service commitments extend into 2023.

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

3 unchanged sentences

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.

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 $ 6.8 million, $ 5.8 million, and $ 0.7 million for the remainder of 2022 and the years ended 2023 and 2024, respectively.

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

Included in the commitments for the remainder of 2022 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.

No gain or loss is expected upon consummation of any such agreement.

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 Lawsuit”).

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 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,

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 third 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

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

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

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

No gain or loss is expected upon consummation of any such agreement.

From time to time, the Company is subject to legal and administrative proceedings, settlements, investigations, claims and actions.

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

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

Note 16— Selected Quarterly Financial Data

The following tables summarizes consolidated changes in equity for the three months ended June 30, 2022 and 2021:

Noncontrolling Interest Total 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

Exchanges of Class B Common Stock for Class A Common Stock 14 ( 14 ) — — 130 — — 130 ( 130 ) —

Offering Costs — — — — ( 502 ) — — ( 502 ) — ( 502 )

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

Stock based compensation expense 4,194 — — 4,194 7 4,201

Tax withheld on vesting of restricted stock units — — — — ( 9,676 ) — — ( 9,676 ) ( 9,676 )

Vesting of restricted stock units 1,084 — 11 1 — — 12 ( 12 ) —

Currency translation adjustment — — — — — — ( 3,006 ) ( 3,006 ) ( 6 ) ( 3,012 )

Net income — — — — — 105,156 — 105,156 183 105,339

Balance—June 30, 2022 186,859 326 $ 1,869 $ 3 $ 1,384,134 $ ( 56,174 ) $ ( 2,263 ) $ 1,327,569 $ 2,447 $ 1,330,016

Noncontrolling Interest Total Equity

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

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

Offering Costs — — — — ( 6 ) — — ( 6 ) — ( 6 )

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

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

Stock based compensation expense — — — — 5,619 — — 5,619 280 5,899

Vesting of restricted stock units 630 — 7 — ( 2,952 ) — — ( 2,945 ) ( 454 ) ( 3,399 )

Currency translation adjustment — — — — — — 1,136 1,136 152 1,288

Net loss — — — — — ( 50,560 ) — ( 50,560 ) ( 1,912 ) ( 52,472 )

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

LIBERTY ENERGY INC.

Notes to Condensed Consolidated Financial Statements

Note 17— Subsequent Events

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.

On July 18, 2022, the Company entered into an amendment to the ABL Facility.

The amendment amended certain terms, provisions and covenants of the ABL Facility, including among other things;

(i) increasing the maximum borrowing amount by $ 75.0 million to $ 425.0 million, subject to certain borrowing base limitations based on percentage of eligible accounts receivable and inventory, (ii) modified certain covenant and reporting-related baskets, and (iii) replacing LIBOR with the second overnight financing rate (SOFR) as the interest rate benchmark.

On July 25, 2022, the Company’s Board of Directors authorized a share repurchase program that allows the Company to repurchase up to $ 250.0 million of the Company’s Class A Common Stock beginning immediately and continuing through and including July 31, 2024.

The shares may be repurchased from time to time in open market or privately negotiated transactions or by other means in accordance with applicable state and federal securities laws.

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

The exact number of shares to be repurchased by the Company is not guaranteed, and the program may be suspended, modified, or discontinued at any time without prior notice.

The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated over the next two years.

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

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

2 unchanged sentences

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 therein.

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

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

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 have grown from one active hydraulic fracturing fleet in December 2011 to over 30 active fleets as of June 30, 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.

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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.

As of July 22, 2022, Schlumberger owned 12.3% 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.

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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

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.

While the global economic recovery outlook has softened on reverberating impacts from higher inflation, rising interest rates and the Russian invasion of Ukraine, oil and gas markets remain constructive.

Today, low global oil and gas inventories, limited OPEC spare production capacity and a lack of refining capacity are concurrently being met with increased energy demand.

Oil and natural gas demand growth is coming in part from the post-pandemic recovery in travel, China’s emergence from its enforced Covid lockdowns, plus seasonal demand.

These are all further exacerbated by the Russia/Ukraine conflict and the potential for sanctions imposed on Russian oil exports, coupled with Russia’s decision to constrain natural gas pipeline exports to Europe.

North America is positioned to be a large provider of incremental oil and gas supply.

Today, E&P operators are evaluating the opportunity to deploy incremental capital in North America to modestly grow production while remaining focused on shareholder priorities.

Supply is restricted by a tight frac market, where equipment, supply chain and labor constraints limit frac fleet availability and service quality.

Moreover, many operators desire modern, ESG-friendly frac fleet technologies that provide the opportunity for both emissions reductions and fuel savings.

The frac market is near full utilization and we expect the supply of available frac fleets to remain tight through the remainder of 2022.

We were disciplined in restraining fleet reactivations in the post-Covid era but pricing has now recovered to where we, in support of our customers’ long-term development needs, are reactivating several of our recently acquired, available fleets.

Importantly, these long-term, dedicated customers seek additional next generation fleets that are not readily available today, and we are providing an avenue to serve those customers and simultaneously driving free cash flow from these existing fleets to reinvest in our fleet modernization program.

During the second quarter of 2022, the posted WTI price traded at an average of $108.83 per barrel (“Bbl”), as compared to the second quarter of 2021 average of $66.19 per Bbl, and first quarter of 2022 average of $95.18 per Bbl.

In addition, the average domestic onshore rig count for the United States and Canada was 810 rigs reported in the second quarter of 2022, up from the second quarter of 2021 of 508 and slightly decreased from the first quarter of 2022 of 816, according to a report from Baker Hughes.

Results of Operations

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

Three months ended March 31,

Three months ended June 30, 2022 compared to three months ended June 30, 2021

Three months ended June 30,

Description 2022 2021 Change

1 unchanged sentence

Revenue $ 942,619 $ 581,288 $ 361,331

Cost of services, excluding depreciation and amortization shown separately 670,019 498,935 171,084

Cost of services, excluding depreciation, depletion and amortization shown separately 713,718 521,956 191,762

General and administrative 42,162 29,403 12,759

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Depreciation, depletion and amortization 77,379 63,214 14,165

Gain on disposal of assets (3,436) (277) (3,159)

Operating income (loss) 110,604 (36,004) 146,608

Other expense, net 5,030 462 4,568

Net income (loss) before income taxes 105,574 (36,466) 142,040

Income tax expense 235 16,006 (15,771)

Net income (loss) 105,339 (52,472) 157,811

Net income (loss) attributable to non-controlling interests 183 (1,912) 2,095

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 105,156 $ (50,560) $ 155,716

Our revenue increased $361.3 million , or 62.2% , to $942.6 million for the three months ended June 30, 2022 compared to $581.3 million for the three months ended June 30, 2021.

The increase in revenue is attributable to higher service pricing and an activity-driven increase in fleet utilization and efficiency commensurate with increased demand for hydraulic fracturing services.

Cost of Services

Cost of services (excluding depreciation, depletion and amortization) increased $191.8 million , or 36.7% , to $713.7 million for the three months ended June 30, 2022 compared to $522.0 million for the three months ended June 30, 2021.

The higher expense was primarily related to increases in materials and parts consumption and higher labor costs related to higher fleet utilization as well as ongoing inflationary increases impacting costs for materials, labor, and maintenance parts.

General and Administrative

General and administrative expenses increased $12.8 million , or 43.4% , to $42.2 million for the three months ended June 30, 2022 compared to $29.4 million for the three months ended June 30, 2021 primarily related to increases in performance-based variable compensation, labor cost inflation, and corporate costs related to increased activity.

Transaction, Severance and Other Costs

Transaction, severance and other costs decreased $0.8 million, or 26.8%, to $2.2 million for the three months ended June 30, 2022 compared to $3.0 million for the three months ended June 30, 2021.

The costs incurred in the three months ended June 30, 2021 primarily related to integration cost, investment banking, legal, accounting, and other professional services provided in connection with the OneStim Acquisition.

Such costs were lower during the three months ended June 30, 2022 as the integration efforts move towards completion.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization expense increased $14.2 million , or 22.4% , to $77.4 million for the three months ended June 30, 2022 compared to $63.2 million for the three months ended June 30, 2021.

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

Gain on Disposal of Assets

The Company recognized a gain on disposal of assets of $3.4 million for the three months ended June 30, 2022 primarily as a result of the sale of used field equipment and light duty trucks in a strong used vehicle and equipment market compared to a gain of $0.3 million for the three months ended June 30, 2021 due to miscellaneous equipment disposals.

All disposals recorded during the three months ended June 30, 2022 and 2021 were in the normal course of business.

Operating Income (Loss)

The Company recorded operating income of $110.6 million for the three months ended June 30, 2022 compared to operating loss of $36.0 million for the three months ended June 30, 2021, an increase in operating results of $146.6 million, or 407.2%.

The increase in operating income is primarily due to the $361.3 million, or 62.2%, increase in total revenue only partially offset by a $214.7 million increase in total operating expenses, the significant components of which are discussed above.

Other Expense, net

Other expense, net increased $4.6 million, or 988.7%, to $5.0 million for the three months ended June 30, 2022 compared to $0.5 million for the three months ended June 30, 2021.

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

The Company remeasured the liability under the TRAs resulting in a loss of $0.2 million for the three months ended June 30, 2022, compared to a gain of $3.3 million for the three months ended June 30, 2021.

Additionally, interest expense, net increased $1.1 million as a result of increased borrowings under the credit facility.

Net Income (loss) before Income Taxes

The Company realized net income before income taxes of $105.6 million for the three months ended June 30, 2022 compared to net loss before income taxes of $36.5 million for the three months ended June 30, 2021.

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

Income Tax Expense

We recognized a tax expense of $0.2 million for the three months ended June 30, 2022, at an effective rate of 0.2%, compared to a tax expense of $16.0 million, at an effective rate of (43.9)%, recognized during the three months ended June 30, 2021.

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

net deferred tax assets, beginning in the second quarter of 2021, resulting in income tax expense for that period, while in subsequent periods no tax expense or benefit is recognized on U.S.

state and federal income or loss.

Six months ended June 30, 2022 compared to six months ended June 30, 2021

Six months ended June 30,

Description 2022 2021 Change

(in thousands)

Revenue $ 1,735,389 $ 1,133,320 $ 602,069

Cost of services, excluding depreciation, depletion and amortization shown separately 1,383,737 1,020,891 362,846

General and administrative 80,480 55,762 24,718

Transaction, severance and other costs 3,526 10,617 (7,091)

Depreciation, depletion and amortization 151,967 125,270 26,697

Loss (gain) on disposal of assets 1,236 (997) 2,233

1 unchanged sentence

Other expense, net 13,519 4,216 9,303

Net loss before income taxes (4,650) (45,973) 41,323

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

Net loss (5,480) (38,616) 33,136

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

Net loss attributable to Liberty Energy Inc.

Net income (loss) before income taxes 100,924 (82,439) 183,363

Income tax expense 1,065 8,649 (7,584)

Net income (loss) 99,859 (91,088) 190,947

Net income (loss) attributable to non-controlling interests 79 (6,323) 6,402

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 99,780 $ (84,765) $ 184,545

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.

Our revenue increased $602.1 million, or 53.1%, to $1.7 billion for the six months ended June 30, 2022 compared to $1.1 billion for the six months ended June 30, 2021.

Cost of Services

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.

Cost of services (excluding depreciation, depletion and amortization) increased $362.8 million, or 35.5%, to $1.4 billion for the six months ended June 30, 2022 compared to $1.0 billion for the six months ended June 30, 2021.

The higher expense was primarily related to increases in materials and parts consumption and higher labor costs related to higher fleet utilization as well as inflationary increases impacting costs for materials, labor, and maintenance parts.

General and Administrative

General and administrative 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.

General and administrative expenses increased $24.7 million, or 44.3%, to $80.5 million for the six months ended June 30, 2022 compared to $55.8 million for the six months ended June 30, 2021 primarily related to increases from reinstated bonus programs which had been temporarily suspended during the first quarter of 2021 as a result of the COVID-19 pandemic, labor cost inflation, and corporate costs related to increased levels of activity.

Transaction, Severance and Other Costs

Transaction, severance and other costs decreased $6.3 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.

Transaction, severance and other costs decreased $7.1 million, or 66.8%, to $3.5 million for the six months ended June 30, 2022 compared to $10.6 million for the six months ended June 30, 2021.

The costs incurred in the six months ended June 30, 2021 primarily related to integration costs, investment banking, legal, accounting, and other professional services provided in connection with the OneStim Acquisition.

Such costs were lower during the six months ended June 30, 2022 as the integration efforts move towards completion.

Depreciation, Depletion and Amortization

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.

Depreciation, depletion and amortization expense increased $26.7 million, or 21.3%, to $152.0 million for the six months ended June 30, 2022 compared to $125.3 million for the six months ended June 30, 2021.

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

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.

The Company recognized a loss on disposal of assets of $1.2 million for the six months ended June 30, 2022 primarily as a result of the sale of one and plan of sale for another non-strategic facility acquired in the OneStim Acquisition compared to a gain of $1.0 million for the six months ended June 30, 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.

The Company recorded operating income of $114.4 million for the six months ended June 30, 2022 compared to operating loss of $78.2 million for the six months ended June 30, 2021, The operating income is primarily due to the $602.1 million, or 53.1%, increase in total revenue partially offset by a $409.4 million increase in total operating expenses, the significant components of which are discussed above.

Other Expense, net

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 increased $9.3 million to $13.5 million for the six months ended June 30, 2022 compared to $4.2 million for the six months ended June 30, 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

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 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.

The Company remeasured the liability under the TRAs resulting in a loss of $4.3 million for the six months ended June 30, 2022, compared to a gain of $3.3 million for the six months ended June 30, 2021.

Additionally, interest expense increased $1.7 million as a result of increased borrowings under the credit facility.

Net Income (Loss) before Income Taxes

The Company realized net income before income taxes of $100.9 million for the six months ended June 30, 2022 compared to net loss before income taxes of $82.4 million for the six months ended June 30, 2021.

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

Income Tax Expense

Income tax expense decreased $7.6 million to $1.1 million for the six months ended June 30, 2022, at an effective rate of 1.1%, compared to $8.6 million, at an effective rate of (10.5)%, recognized during the six months ended June 30, 2021.

This decrease in income tax expense is primarily attributable to the Company recording a valuation allowance on its U.S.

net deferred tax assets, beginning in the second quarter of 2021, resulting in income tax expense for that period, while in subsequent periods no tax expense or benefit is recognized on U.S.

state and federal income or loss.

Comparison of Non-GAAP Financial Measures

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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:

Three and six months ended June 30, 2022 compared to three and six months ended June 30, 2021:

EBITDA and Adjusted EBITDA

Three Months Ended March 31,

Description 2022 2021 Change

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

Description 2022 2021 Change 2022 2021 Change

(in thousands)

Net loss $ (5,480) $ (38,616) $ 33,136

Net income (loss) $ 105,339 $ (52,472) $ 157,811 $ 99,859 $ (91,088) $ 190,947

Depreciation, depletion and amortization 77,379 63,214 14,165 151,967 125,270 26,697

Interest expense, net 4,324 3,754 570

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

Interest expense 4,862 3,767 1,095 9,186 7,521 1,665

Income tax expense 235 16,006 (15,771) 1,065 8,649 (7,584)

EBITDA $ 187,815 $ 30,515 $ 157,300 $ 262,077 $ 50,352 $ 211,725

Stock based compensation expense 4,201 5,899 (1,698) 11,014 10,846 168

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

Fleet start-up and lay-down costs 5,169 — 5,169 5,754 — 5,754

Transaction, severance and other costs 2,192 2,996 (804) 3,526 10,617 (7,091)

(Gain) loss on disposal of assets (3,436) (277) (3,159) 1,236 (997) 2,233

Provision for credit losses — 745 (745) — 745 (745)

Loss (gain) on remeasurement of liability under tax receivable agreements 168 (3,305) 3,473 4,333 (3,305) 7,638

Adjusted EBITDA $ 196,109 $ 36,573 $ 159,536 $ 287,940 $ 68,258 $ 219,682

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 .

EBITDA was $187.8 million for the three months ended June 30, 2022 compared to $30.5 million for the three months ended June 30, 2021.

Adjusted EBITDA was $196.1 million for the three months ended June 30, 2022 compared to $36.6 million for the three months ended June 30, 2021.

The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity levels as described above under the captions Revenue , Cost of Services , and General and Administrative Expenses for the Three Months Ended June 30, 2022 compared to the Three Months Ended June 30, 2021 .

EBITDA was $262.1 million for the six months ended June 30, 2022 compared to $50.4 million for the six months ended June 30, 2021.

Adjusted EBITDA was $287.9 million for the six months ended June 30, 2022 compared to $68.3 million for the six months ended June 30, 2021.

The increases in EBITDA and Adjusted EBITDA primarily resulted from improved market conditions and activity levels as described above under the captions Revenue , Cost of Services , and General and Administrative Expenses for the Six Months Ended June 30, 2022 compared to the Six Months Ended June 30, 2021 .

Liquidity and Capital Resources

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

Cash and cash equivalents 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.

Cash and cash equivalents increased by $21.5 million to $41.5 million as of June 30, 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 $134.9 million.

We have $350.0 million committed under the ABL Facility, increased to $425 million subsequent to June 30, 2022, see Note 17—Subsequent Events to the consolidated financial statements included in “Item 1.

Financial Statements (unaudited)” for further details, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory available to finance working capital needs.

As of June 30, 2022, the borrowing base was calculated to be $350.0 million, and the Company had $150.0 million outstanding, in addition to a letter of credit in the amount of $1.4 million, with $198.6 million of remaining availability.

Additionally, we have $105.6 million borrowings remaining on the Term Loan Facility, which was originally $175.0 million.

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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.

At June 30, 2022, the Company was 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.

We have no material off balance sheet arrangements as of June 30, 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.

Share Repurchase Program

Under our share repurchase program, the Company is authorized to repurchase up to $250.0 million of outstanding Class A Common Stock through and including July 31, 2024.

Shares may be repurchased from time to time for cash in the open market transactions, through block trades, in privately negotiated transactions, through derivative transactions or by other means in accordance with applicable federal securities laws.

The timing and the amount of repurchases, if any, will be determined by the Company at its discretion based on an evaluation of market conditions, capital allocation alternatives and other factors.

The share repurchase program does not require us to purchase any dollar amount or number of shares of our Class A Common Stock and may be modified, suspended, extended or terminated at any time without prior notice.

The Company expects to fund the repurchases by using cash on hand, borrowings under its revolving credit facility and expected free cash flow to be generated over the next two years.

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

Three Months Ended March 31,

Six Months Ended June 30,

Description 2022 2021 Change

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Net cash provided by (used in) financing activities 118,758 (8,175) 126,933

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

Analysis of Cash Flow Changes Between the Six Months Ended June 30, 2022 and 2021

Operating Activities .

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.

Net cash provided by operating activities was $135.6 million for the six month s ended June 30, 2022, compared to $35.6 million for the six months ended June 30, 2021.

The $100.1 million increase in cash from operating activities is primarily attributable to a $602.1 million increase in revenues, offset by a $380.5 million increase in cash operating expenses and a $134.3 million decrease in cash from changes in working capital for the six months ended June 30, 2022, compared to a $14.4 million decrease in cash from changes in working capital for the six months ended June 30, 2021.

Investing Activities .

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.

Net cash used in investing activities was $232.8 million for the six months ended June 30, 2022, compared to $65.9 million for the six months ended June 30, 2021.

Cash used in investing activities was higher during the six months ended June 30, 2022, compared to the six months ended June 30, 2021 as the Company continued to invest in equipment, including building new digiFrac™ fleets, to support increased customer demand in next generation equipment and technology.

Financing Activities .

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.

Net cash provided by financing activities was $118.8 million for the six months ended June 30, 2022, compared to net cash used in financing activities of $8.2 million for the six months ended June 30, 2021.

The $126.9 million increase in cash provided by financing activities was primarily due to net borrowings of $132.0 million on the ABL

Facility during the six months ended June 30, 2022, compared to no net borrowings on the ABL Facility for the six months ended June 30, 2021.

Additionally, there was a $1.4 million decrease in payments on finance lease liabilities as the number of finance leases active for the full period has decreased since June 30, 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.

Our material cash commitments consist 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 June 30, 2022, except for obligations of $27.4 million payable within 2022, $18.2 million in 2023, and $4.2 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.

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

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

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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 combined effective tax rate applicable to the Company for the six months ended June 30, 2022 and 2021 was 1.1% and (10.5)%, 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.

net deferred tax assets as of June 30, 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 recognized income tax expense of $0.2 million and $1.1 million for the three and six months ended June 30, 2022, respectively, and $16.0 million and $8.6 million for the three and six months ended June 30, 2021, respectively, which included the impact of the initial recording of a valuation allowance on a portion of the Company’s deferred tax assets.

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

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

Critical Accounting Policies and Estimates

The unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see Note 2—Significant Accounting Policies to the unaudited condensed consolidated financial statements included in the Annual Report).

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

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.

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 March 31, 2022, except for purchase commitments under supply agreements as disclosed above under “Item 1.

Critical Accounting Estimates

The Company’s unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see Note 2—Significant Accounting Policies to the unaudited consolidated financial statements in this Form 10-Q and Note 2—Significant Accounting Policies and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Annual Report).

A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations.

We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

There have been no material changes in our critical accounting estimates since our Annual Report.

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