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Item 9A. Controls and Procedures

2023-02-10 compared with 2022-02-22 · 384 added, 366 removed, 872 unchanged (46% of the section changed)

1 unchanged sentence

Evaluation of Disclosure Controls and Procedures’

In accordance with the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report.

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2021 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

In accordance with the Securities Exchange Act of 1934 Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this report.

Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2022 to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC.

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

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

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

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

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

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

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

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

3 unchanged sentences

Executive Compensation

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

The information required by this item concerning executive compensation is incorporated herein by reference to our definitive proxy statement for our 2023 annual meeting of stockholders, which will be filed with the SEC no later than 120 days after December 31, 2022, under the captions “The Board and its Committees,” “Compensation Discussion & Analysis,” “Compensation Committee Report,” “Executive Compensation Tables,” “Director Compensation,” “Pay versus Performance” and “CEO Pay Ratio.”

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

11 unchanged sentences

INDEX TO EXHIBITS

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

and Morgan Stanley & Co.

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

2 unchanged sentences

3.1 Amended and Restated Certificate of Incorporation of Liberty Oilfield Services Inc.

3.2 Amended and Restated Bylaws of Liberty Oilfield Services Inc.

3.2 Certificate of Amendment to Amended and Restated Certificate of Incorporation (16)

3.3 Second Amended and Restated Bylaws of Liberty Energy Inc., as amended effective January 24, 2023 (21)

4.1 Amended and Restated Stockholders Agreement, dated as of December 31, 2020, by and among Liberty Oilfield Services Inc., Riverstone and the Schlumberger Parties (12)

6 unchanged sentences

10.5 Tax Receivable Agreement, dated January 17, 2018, by and among Liberty Oilfield Services Inc., and the other parties named therein (2)

10.6 Agent Designation Amendment to the Tax Receivable Agreement, dated as of February 22, 2022, by and among Liberty Oilfield Services Inc.

and R/C Energy IV Direct Partnership, L.P.

10.7 Amended and Restated Registration Rights Agreement, dated as of December 31, 2020, by and among Liberty Oilfield Services Inc., the Schlumberger Parties, and the Holders (12)

15 unchanged sentences

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

10.16 Increase Joinder and Seventh Amendment to Credit Agreement, dated July 18, 2022, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S.

LOS Corp, Freedom Proppant LLC, LOS Kermit LLC, LOS Leasing Company LLC, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, Proppant Express Solutions, LLC, ST9 Gas and Oil LLC, Well Fargo Bank, National Association, as Administrative Agent, and the lenders signatory thereto.

10.17 Eighth Amendment to Credit Agreement, dated January 23, 2023, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S.

10.18 Joinder Agreement, dated December 31, 2021, by and among LOS Leasing Company LLC and Wells Fargo Bank, National Association, as Administrative Agent (20)

15 unchanged sentences

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

10.25 Sixth Amendment to Credit Agreement, dated August 12, 2022, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S.

LOS Corp, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, Freedom Proppant LLC, LOS Kermit LLC, LOS Leasing Company LLC, Proppant Express Solutions, LLC, U.S.

Bank National Association, as Administrative Agent, and the lenders signatory thereto.

10.26 Seventh Amendment to Credit Agreement, dated November 4, 2022, by and among Liberty Oilfield Services LLC, Liberty Energy Inc., Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S.

LOS Corp, LOS Cibolo RE Investments, LLC, LOS Odessa RE Investments, LLC, ST9 Gas and Oil LLC, Freedom Proppant LLC, LOS Kermit LLC, LOS Leasing Company LLC, Proppant Express Solutions, LLC, U.S.

Bank National Association, as Administrative Agent, and the lenders signatory thereto.

10.27 First Amendment to Amended and Restated Registration Rights Agreement, dated as of December 1, 2022, by and between Liberty Energy Inc.

and Schlumberger Technology Corporation.

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

5 unchanged sentences

10.33 Form of Indemnification Agreement between the Company and each of its Directors and Executive Officers (8)

21.1 List of subsidiaries of Liberty Oilfield Services Inc.

21.1 List of subsidiaries of Liberty Energy Inc.

23.1 Consent of Deloitte & Touche LLP *

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

(16) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on April 21, 2022.

(17) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on August 17, 2022.

(18) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on July 22, 2022.

(19) Incorporated by reference to the exhibits to the registrant’s Quarterly Report on Form 10-Q, filed on April 25, 2022.

(20) Incorporated by reference to the exhibits to the registrant’s Annual Report on Form 10-K, filed on February 22, 2022.

(21) Incorporated by reference to the registrant’s Current Report on Form 8-K, filed on January 26, 2023.

* Filed herewith.

2 unchanged sentences

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

/s/ Christopher A.

26 unchanged sentences

Index to Financial Statements

Liberty Oilfield Services Inc.

Liberty Energy Inc.

Management’s Report on Internal Control Over Financial Reporting

2 unchanged sentences

Consolidated Statements of Operations for the Years Ended December 31, 202 2 , 202 1 , and 2 020

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2022, 2021, and 2020

Consolidated Statements of Changes in Equity for the Years Ended December 31, 202 2 and 202 1

2 unchanged sentences

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Liberty Oilfield Services Inc.

The management of Liberty Energy Inc.

is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act.

4 unchanged sentences

Based on this evaluation, management concluded that, as of December 31, 2022, our internal control over financial reporting was effective.

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

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

The effectiveness of Liberty Oilfield Services Inc.

The effectiveness of Liberty Energy Inc.

’ s internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report that is included herein.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Liberty Oilfield Services Inc.

To the stockholders and the Board of Directors of Liberty Energy Inc.

Opinion on the Financial Statements

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

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

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

and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

13 unchanged sentences

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Income Taxes — Tax Receivable Agreements — Refer to Note 12 to the financial statements

Critical Audit Matter Description

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

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

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

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

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

federal income tax rate then applicable, and (vi) the portion of the Company’s payments under the TRAs that constitute imputed interest or give rise to depreciable or amortizable tax basis.

During the year ended December 31, 2022, exchanges of Liberty Oilfield Services New HoldCo LLC class B units and shares of Class B Common Stock resulted in an increase of $5.1 million in amounts payable pursuant to tax receivable agreements (“TRA payable”), and a net increase of $6.0 million in deferred tax assets, all of which were recorded as equity

transactions, with no impact to the statement of operations.

Upon the release of the valuation allowance, the Company recorded a loss on remeasurement of the TRA payable of $76.2 million recorded as part of continuing operations in the current year.

At December 31, 2022, the Company’s TRA payable was $118.9 million, all of which is presented as a component of long-term liabilities.

11 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Liberty Oilfield Services Inc.

To the stockholders and the Board of Directors of Liberty Energy Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Liberty Oilfield Services Inc.

We have audited the internal control over financial reporting of Liberty Energy Inc.

and subsidiaries (the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2022, of the Company and our report dated February 10, 2023, expressed an unqualified opinion on those financial statements.

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

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

Basis for Opinion

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February 10, 2023

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Consolidated Balance Sheets

5 unchanged sentences

410,308 298,531

Unbilled revenue 108,923 69,516

Inventories 134,593 118,568

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

Unbilled revenue (including amounts from related parties of $ 13,854 and $ 0 , respectively)

175,704 108,923

Inventories 214,454 134,593

Prepaid and other current assets 112,531 68,332

Total current assets 956,673 630,377

2 unchanged sentences

Operating lease right-of-use assets 97,232 109,899

Other assets 82,289 81,888

Other assets (including amounts from related parties of $ 11,799 and $ 0 , respectively)

105,300 82,289

Deferred tax asset 12,592 607

14 unchanged sentences

Deferred tax liability 1,044 563

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

37,555 56,594

Payable pursuant to tax receivable agreements 118,874 37,555

Noncurrent portion of finance lease liabilities 22,490 4,445

8 unchanged sentences

Additional paid in capital 1,266,097 1,367,642

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

Retained earnings (accumulated deficit) 234,525 ( 155,954 )

Accumulated other comprehensive loss ( 7,396 ) ( 306 )

4 unchanged sentences

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Consolidated Statements of Operations

10 unchanged sentences

Depreciation, depletion, and amortization 323,028 262,757 180,084

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

(Gain) loss on disposal of assets ( 4,603 ) 779 ( 411 )

Total operating costs and expenses 3,653,338 2,652,006 1,142,813

Operating (loss) income ( 181,224 ) ( 177,026 ) 103,597

Other (income) and expense:

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

Interest income ( 2 ) ( 297 ) ( 983 )

Operating income (loss) 495,890 ( 181,224 ) ( 177,026 )

Other expense (income):

Loss (gain) on remeasurement of liability under tax receivable agreements 76,191 ( 19,039 ) —

Gain on investments ( 2,525 ) — —

Interest income—related party — — ( 263 )

Interest expense 15,605 15,065 17,485

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

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

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

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

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

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

Interest expense, net 22,715 15,603 14,768

Total other expense (income), net 96,381 ( 3,436 ) 14,505

Net income (loss) before income taxes 399,509 ( 177,788 ) ( 191,531 )

Income tax (benefit) expense ( 793 ) 9,216 ( 30,857 )

Net income (loss) 400,302 ( 187,004 ) ( 160,674 )

Net income (loss) attributable to non-controlling interests 700 ( 7,760 ) ( 45,091 )

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 399,602 $ ( 179,244 ) $ ( 115,583 )

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

Net income (loss) attributable to Liberty Energy Inc.

stockholders per common share:

5 unchanged sentences

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

Consolidated Statements of Comprehensive (Loss) Income

LIBERTY ENERGY INC.

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31, 2022, 2021, and 2020

1 unchanged sentence

2022 2021 2020

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

Net income (loss) $ 400,302 $ ( 187,004 ) $ ( 160,674 )

Other comprehensive loss

Foreign currency translation ( 7,097 ) ( 102 ) —

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

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

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

Comprehensive income (loss) $ 393,205 $ ( 187,106 ) $ ( 160,674 )

Comprehensive income (loss) attributable to non-controlling interest 693 ( 7,556 ) ( 45,091 )

Comprehensive income (loss) attributable to Liberty Energy Inc.

$ 392,512 $ ( 179,550 ) $ ( 115,583 )

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Consolidated Statements of Changes in Equity

For the Years Ended December 31, 2022 and 2021

(In thousands, except share and per unit data)

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

(In thousands, except per share and per unit data)

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

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

1 unchanged sentence

Offering Costs — — — — ( 79 ) — — ( 79 ) — ( 79 )

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

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

Effect of exchange on deferred tax asset, net of liability under tax receivable agreements — — — — 3,757 — — 3,757 — 3,757

Deferred tax impact of ownership changes from issuance of Class A Common Stock — — — — ( 9,879 ) — — ( 9,879 ) — ( 9,879 )

$ 0.05 /share of Class A Common Stock dividend

— — — — — ( 9,123 ) — ( 9,123 ) — ( 9,123 )

$ 0.05 /unit distribution to non-controlling unitholders

— — — — — — — — ( 13 ) ( 13 )

Other distributions and advance payments to non-controlling interest unitholders — — — — — — — — 920 920

Share repurchases ( 8,186 ) — ( 81 ) — ( 125,134 ) — — ( 125,215 ) ( 98 ) ( 125,313 )

Stock-based compensation expense — — — — 23,003 — — 23,003 105 23,108

Vesting of restricted stock units 1,172 — 12 — 8 — — 20 ( 20 ) —

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

Tax withheld on vesting of restricted stock units — — — — ( 9,716 ) — — ( 9,716 ) — ( 9,716 )

Currency translation adjustment — — — — — — ( 7,090 ) ( 7,090 ) ( 7 ) ( 7,097 )

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

Net income — — — — — 399,602 — 399,602 700 400,302

Balance—December 31, 2022 178,753 250 $ 1,788 $ 3 $ 1,266,097 $ 234,525 $ ( 7,396 ) $ 1,495,017 $ 2,289 $ 1,497,306

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 Total Stockholders’ equity Non-controlling Interest Total Equity

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

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

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

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

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

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

$ 0.05 /share of Class A Common Stock dividend

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

$ 0.05 /unit distributions to non-controlling unitholders

— — — — — — — — ( 1,532 ) ( 1,532 )

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

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

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

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

2 unchanged sentences

Restricted stock and RSU Forfeitures — — — — — 2 — 2 — 2

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

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

1 unchanged sentence

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Consolidated Statements of Cash Flows

3 unchanged sentences

Cash flows from operating activities:

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

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

Net income (loss) $ 400,302 $ ( 187,004 ) $ ( 160,674 )

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

Depreciation, depletion, and amortization 323,028 262,757 180,084

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

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

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

(Gain) loss on disposal of assets ( 4,603 ) 779 ( 411 )

Inventory write-down 1,724 — 1,087

1 unchanged sentence

Stock-based compensation expense 23,108 19,946 17,139

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

Deferred income tax (benefit) expense ( 12,472 ) 5,079 ( 25,546 )

Loss (gain) on remeasurement of liability under tax receivable agreements 76,191 ( 19,039 ) 543

Other non-cash expense, net 4 2,037 2,232

Provision for credit losses — 745 4,877

8 unchanged sentences

Accounts payable and accrued liabilities—related party ( 1,864 ) 3,874 —

Payment of operating lease liability ( 565 ) ( 895 ) ( 5,469 )

Initial payment of operating lease liability ( 2,713 ) ( 565 ) ( 895 )

Net cash provided by operating activities

530,364 135,467 85,425

Cash flows from investing activities:

1 unchanged sentence

Investment in sand logistics ( 7,415 ) ( 13,106 ) —

Investment in Fervo Energy Company and Natron Energy, Inc.

( 15,000 ) — —

Proceeds from sales of assets 23,664 25,406 3,368

Net cash used in investing activities

( 450,656 ) ( 186,494 ) ( 100,269 )

Cash flows from financing activities:

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

Proceeds from borrowings on line-of-credit 713,000 274,000 —

Repayments of borrowings on line-of-credit ( 616,000 ) ( 256,000 ) —

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

Payments on finance lease obligations ( 6,947 ) ( 7,363 ) ( 11,663 )

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

Class A Common Stock dividends and dividend equivalents upon restricted stock vesting ( 9,164 ) ( 168 ) ( 4,431 )

Per unit distributions to non-controlling interest unitholders ( 13 ) — ( 1,532 )

Other distributions and advance payments to non-controlling interest unitholders 920 1,372 ( 6,800 )

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

Share repurchases ( 125,313 ) — —

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

Tax withholding on restricted stock units ( 9,716 ) ( 3,585 ) ( 988 )

Payment of equity issuance costs ( 79 ) ( 1,330 ) ( 1,641 )

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

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

Payments of debt issuance costs ( 708 ) ( 3,120 ) ( 63 )

Net cash (used in) provided by financing activities

( 55,770 ) 2,056 ( 28,868 )

Net increase (decrease) in cash and cash equivalents 23,938 ( 48,971 ) ( 43,712 )

Translation effect on cash ( 260 ) ( 9 ) —

1 unchanged sentence

Cash and cash equivalents—end of period $ 43,676 $ 19,998 $ 68,978

LIBERTY ENERGY INC.

Consolidated Statements of Cash Flows (cont.)

For the Years Ended December 31, 2022, 2021, and 2020

(Dollars in thousands)

2022 2021 2020

Supplemental disclosure of cash flow information:

Net cash (received) paid for income taxes $ ( 9,481 ) $ ( 9,653 ) $ 1,042

Net cash paid (received) for income taxes $ 10,744 $ ( 9,481 ) $ ( 9,653 )

Cash paid for interest $ 20,310 $ 13,268 $ 11,218

1 unchanged sentence

Capital expenditures included in accounts payable and accrued liabilities $ 107,514 $ 57,475 $ 10,920

Capital expenditures reclassified from prepaid and other current assets $ 14,922 $ — $ —

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

See Notes to Consolidated Financial Statements.

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

Note 1— Organization and Basis of Presentation

Liberty Oilfield Services Inc.

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

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

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

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

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.

Effective January 31, 2023, Liberty LLC was merged into the Company, with the Company surviving the merger.

In connection with the merger all outstanding shares of the Company’s Class B Common Stock, par value $ 0.01 per share (the “Class B Common Stock”) were redeemed and exchanged for an equal number of shares of the Company’s Class A Common Stock, par value $ 0.01 per share (the “Class A Common Stock”, and together with the Class A Common Stock, the “Common Stock”).

The Company did not make any distributions or receive any proceeds in connection with this exchange.

Refer to Note 16 — Subsequent Events for more information.

The Company, together with its subsidiaries, is a leading integrated energy 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

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

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

The accompanying consolidated financial statements and related notes present the consolidated financial position of the Company and equity of the Company as of and for the years ended December 31, 2022 and 2021, and the results of operations and cash flows of the Company for the years ended December 31, 2022, 2021, and 2020.

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

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Any acquisition related costs incurred by the Company are expensed as incurred.

Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill if the definition of a business is met.

Any excess purchase price over the fair value of the net identifiable assets acquired is recorded as goodwill if the definition of a business is

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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

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

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

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

which it has banking relationships.

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

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

Accounts Receivable

On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) :

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) using the modified-retrospective approach, which allows for a cumulative-effect adjustment to the consolidated balance sheet as of the beginning of the first reporting period in which the guidance is effective.

Periods prior to the adoption date that are presented for comparative purposes are not adjusted.

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

In accordance with Accounting Standards Updates ASU 2016-13, Financial Instruments-Credit Losses (Topic 326) :

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), the Company applies historic loss factors to its receivable portfolio segments that were not expected to be further impacted by current economic developments, and additional economic conditions factor to portfolio segments anticipated to experience greater losses in the current economic environment.

Additionally, the Company continuously evaluates customers based on risk characteristics, such as historical losses and current economic conditions.

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

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

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

The Company did not record an additional provision for credit losses during the year ended December 31, 2022.

During the years ended December 31, 2021 and 2020, the Company recorded a provision for credit losses of $ 0.7 million and $ 4.9 million, respectively, related to two customers inability to pay and the deteriorating economic conditions for the oil and gas industry brought on by the COVID-19 pandemic.

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

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A long-lived asset is not recoverable if its carrying amount exceeds the sum of estimated undiscounted cash flows expected to result from the use and eventual disposition.

When alternative courses of action to recover the carrying amount of the asset group are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

alternative courses of action to recover the carrying amount of the asset group are under consideration, estimates of future undiscounted cash flows take into account possible outcomes and probabilities of their occurrence.

If the carrying amount of the asset is not recoverable, an impairment loss is recognized in an amount by which its carrying amount exceeds its estimated fair value, such that its carrying amount is adjusted to its estimated fair value, with an offsetting charge to impairment expense.

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

As of December 31, 2022 and 2021, the Company concluded that no triggering events had occurred, and no impairment was recognized during the years ended December 31, 2022 and 2021.

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

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

Major Maintenance Activities

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Costs that either establish or increase the efficiency, productivity, functionality or life of a fixed asset are capitalized and depreciated over the remaining useful life of the asset.

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) No.

2016-02, Leases (Accounting Standard Codification (“ASC”) Topic 842), as amended by other ASUs issued since February 2016 (“ASU 2016-02” or “ASC Topic 842”), using the modified retrospective transition method applied at the effective date of the standard.

By electing this optional transition method, information prior to January 1, 2019 has not been restated and continues to be reported under the accounting standards in effect for the period (ASC Topic 840).

In accordance with ASC Topic 842, the Company determines if an arrangement is a lease at inception and evaluates identified leases for operating or finance lease treatment.

In accordance with Accounting Standard Codification (“ASC”) Topic 842, the Company determines if an arrangement is a lease at inception and evaluates identified leases for operating or finance lease treatment.

Operating or finance lease right-of-use assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

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The Company evaluates its deferred tax assets quarterly and considers both positive and negative evidence in applying the guidance of ASC 740 Income Taxes (“ASC 740”) related to the realizability of its deferred tax assets.

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

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

On December 31, 2022, in accordance with ASC 740, the objective positive evidence of entering into a three-year cumulative pre-tax book income position, along with considering all available positive and negative evidence resulted in the release of the previously recorded valuation allowance against the Company’s U.S.

net deferred tax assets.

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

A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority.

A tax position that meets the more-likely-than-not

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

recognition threshold is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority.

Previously recognized tax positions are reversed in the first period in which it is no longer more-likely-than-not that the tax position would be sustained upon examination.

Income tax related interest and penalties, if applicable, are recorded as a component of the provision for income tax expense.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Tax Receivable Agreements

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

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

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

All Class A Common Stock shares repurchased are retired upon repurchase.

Revenue Recognition

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The Company elected to adopt a practical expedient available to lessors, which allows the Company to combine the lease and non-lease components and account for the combined component in accordance with the accounting treatment for the predominant component.

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

Therefore, the Company combines the lease and service component for certain of the

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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

Deferred Revenue

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

As of December 31, 2022 and 2021, the Company had $ 3.9 million and $ 4.6 million recorded as deferred revenue, respectively.

Transaction, Severance and Other Costs

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

During 2022, the Company incurred transaction and integration related costs in connection with the PropX Acquisition (as defined below).

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

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

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

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

Recently Adopted Accounting Standards

Simplification of Accounting for Income Taxes

In December 2019, the FASB issued ASU No.

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

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

Codification Improvements

In October 2020, the FASB issued ASU No.

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

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

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

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

Reference Rate Reform

In March 2020, the FASB issued ASU No.

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

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

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

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

Business Combinations:

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

In October 2021, the FASB issued ASU No.

2021-08, Business Combinations:

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

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

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

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

Reclassifications

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

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

Additionally, amounts in the prior period financial statements have been reclassified from amortization of debt issuance costs to other non-cash (income) expense, net in the accompanying consolidated statement of cash flows to conform to the presentation of the current period financial statements.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Note 3— Acquisitions

PropX Acquisition

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

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

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

PropX was acquired in exchange for $ 11.9 million in cash and 3,405,526 shares of the Company’s Class A Common Stock and 2,441,010 shares of the Company’s Class B Common Stock, for total consideration of $ 103.0 million based on the October 26, 2021 closing price of Class A Common Stock of $ 15.58 .

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

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

The 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.

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

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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

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

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

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

As the PropX Acquisition closed on October 26, 2021 the Company completed the purchase price allocation, particularly as it relates to current assets and current liabilities, during the year ended December 31, 2022.

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

($ in thousands)

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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

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

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

($ in thousands)

Total Purchase Consideration:

Consideration $ 683,822

Accounts receivable and unbilled revenue $ 128,602

Inventories 33,245

Prepaid and other current assets 30,859

Property and equipment (1)

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

Total identifiable assets acquired 806,422

Accounts payable 75,522

Accrued liabilities 47,078

Total liabilities assumed 122,600

Total purchase consideration $ 683,822

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

(2) Definite lived intangibles with an average amortization period of five years

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

As the OneStim Acquisition closed on December 31, 2020 the Company completed the purchase price allocation during the year ended December 31, 2021.

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

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

Years ended December 31,

Year ended December 31,

(unaudited, in thousands) 2020

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Net loss attributable to non-controlling interests ( 196,020 )

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders $ ( 856,787 )

Net loss attributable to Liberty Oilfield Services Inc.

Net loss attributable to Liberty Energy Inc.

stockholders per common share:

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

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

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

LIBERTY OILFIELD SERVICES INC.

Transaction and integration costs incurred related to both transactions were $ 5.8 million, $ 13.6 million, and $ 8.5 million, for the years ended December 31, 2022, 2021, and 2020, respectively, and are recorded as a component of transaction, severance and other costs in the accompanying consolidated statements of operations.

Equity offering costs totaled $ 0.1 million, $ 1.3 million, and $ 1.6 million, for the years ended December 31, 2022, 2021, and 2020, respectively, and are recorded as a reduction to additional paid in capital in the accompanying consolidated balance sheets.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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$ 214,454 $ 134,593

During the year ended December 31, 2022, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to the inventory carrying value of $ 1.7 million, which is included as a component in cost of services in the consolidated statements of operations.

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

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

Note 5— Property and Equipment

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2,345,502 1,972,880

Less accumulated depreciation and amortization ( 863,194 ) ( 622,530 )

Less accumulated depreciation and depletion ( 1,141,656 ) ( 863,194 )

1,203,846 1,109,686

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During the years ended December 31, 2022, 2021, and 2020, the Company recognized depreciation expense of $ 302.3 million, $ 243.0 million, and $ 169.9 million, respectively.

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

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

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

Depletion expense for the years ended December 31, 2022, 2021, and 2020 was $ 1.2 million, $ 1.2 million, and $ 0.0 million , respectively.

As of December 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 December 31, 2022, the Company classified $ 1.1 million of land and $ 6.2 million of buildings, net of accumulated depreciation, of two properties 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 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 $ 1.0 million loss during the year ended December 31, 2022, included as a component of gain on disposal of assets in the accompanying consolidated statements of operations.

As of December 31, 2021, the Company determined no assets met the held for sale criteria.

Note 6— Leases

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The terms and conditions for these leases vary by the type of underlying asset.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

Certain leases include variable lease payments for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets.

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Short-term lease cost 6,931 5,026

Sublease (income) — ( 113 )

Total lease cost, net $ 62,480 $ 56,662

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

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

($ in thousands) 2022 2021

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Finance leases 25,888 1,500

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

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

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

During the years ended December 31, 2022 and 2021, the Company amended certain operating leases, the change in terms of which caused the leases to be reclassified to finance leases.

In connection with the amendments, the Company recognized finance lease right-of-use assets of $ 3.5 million and liabilities of $ 3.5 million.

Additionally, the Company wrote-off operating lease right-of-use assets of $ 0.2 million and liabilities of $ 0.1 million.

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

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

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

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

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Finance leases 8.2 % 8.6 %

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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2023 12,663 11,110

2027 154 4,572

Thereafter — 14,504

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Revenues from operating leases for the years ended December 31, 2022 and 2021 were $ 25.5 million and $ 3.2 million, respectively.

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

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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$ 218,446 $ 122,452

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

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

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

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

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

(iii) increased certain indebtedness baskets;

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

(v) added new lenders to the facility;

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

The ABL Facility was initially scheduled to mature on the earlier to occur of (i) September 19, 2022 and (ii) to the extent the debt under the Term Loan Facility remains outstanding, 90 days prior to the final maturity of the Term Loan Facility.

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

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

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

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

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

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

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

On September 19, 2017, the Company entered into two credit agreements, a revolving line of credit up to $ 250.0 million subsequently increased to $ 425.0 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 July 18, 2022, the Company entered into an amendment to the ABL Facility (the “Seventh ABL Amendment”).

The Seventh ABL 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) modifying certain covenant and reporting-related baskets, and (iii) replacing LIBOR with the secured overnight financing rate (“SOFR”) as the interest rate benchmark.

On August 12, 2022, the Company entered into an amendment to the Term Loan Facility (the “Sixth Term Loan Amendment”).

The Sixth Term Loan Amendment amended certain terms, provisions and covenants of the Term Loan Facility, including among other things:

(i) a waiver of the fixed charge coverage ratio requirements for up to $ 100.0 million of restricted payments made in connection with the Company’s 2022 stock repurchase program for its common stock;

(ii) the addition of a minimum liquidity requirement of $ 150.0 million in order to make selected restricted payments, including those made under the 2022 stock repurchase program;

(iii) the modification of certain covenant and reporting-related terms, including an increase in the allowance for permitted purchase money indebtedness from $ 50.0 million to $ 70.0 million;

(iv) the addition of a prepayment premium of 1.0 % through the first anniversary of the Sixth Term Loan Amendment effective date;

and (v) the addition and modification of several provisions to replace LIBOR with SOFR as the interest rate benchmark.

On November 4, 2022, the Company entered into an amendment to the Term Loan Facility (the “Seventh Term Loan Amendment”).

The Seventh Term Loan Amendment amended the restricted payments negative covenant of the Term Loan Facility so that the fixed charge coverage ratio requirements for dividend payments are waived, so long as the total of dividends paid and payments made in connection with the Company’s 2022 stock repurchase program does not exceed $ 100.0 million.

During the fourth quarter of 2022 the restricted payments negative covenant pertaining to the fixed charge coverage ratio requirements were satisfied and the $ 100.0 million limit no longer applied.

Effective January 23, 2023, the Company entered into an Eighth Amendment to the ABL Facility (the “Eighth ABL Amendment”).

The Eighth ABL Amendment amends certain terms, provisions and covenants of the ABL Facility, including, among other things:

(i) increasing the maximum revolver amount from $ 425.0 million to $ 525.0 million (the “Upsized Revolver”);

(ii) increasing the amount of the accordion feature from $ 75.0 million to $ 100.0 million;

(iii) extending the maturity date from October 22, 2026 to January 23, 2028;

(iv) modifying the dollar amounts of various credit facility triggers and tests proportionally to the Upsized Revolver;

(v) permitting repayment under the Term Loan Facility prior to February 10, 2023;

and (vi) increasing certain indebtedness, intercompany advance, and investment baskets.

The Eighth ABL Amendment also includes an agreement from the Wells Fargo Bank, National Association, as administrative agent, to release its second priority liens and security interests on all collateral that served as first priority collateral under the Term Loan Facility, with such release to occur within 120 days after January 23, 2023, refer to Note 16—Subsequent Events for more information.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

Also on January 23, 2023, the Company withdrew $ 106.7 million on the ABL Facility and used the proceeds to pay off the Term Loan Facility.

The balance of the Term Loan Facility upon pay off was $ 104.7 million and included $ 0.9 million of accrued interest and a $ 1.1 million prepayment premium or 1 % of the principal.

Additionally, there were $ 0.2 million in bank and legal fees included in the pay off, refer to Note 16—Subsequent Events for more information.

The weighted average interest rate on all borrowings outstanding as of December 31, 2022 and December 31, 2021 was 9.0 % and 7.9 %, respectively.

Under the terms of the ABL Facility, up to $ 425.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory.

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

Borrowings under the ABL Facility bear interest at LIBOR or a

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

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

As of December 31, 2022, the borrowing base was calculated to be $ 425.0 million, and the Company had $ 115.0 million outstanding in addition to letters of credit in the amount of $ 2.6 million, with $ 307.4 million of remaining availability.

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

Additionally, borrowings as of December 31, 2022 incurred interest at a weighted average rate of 6.3 %.

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

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

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

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The Term Loan Facility provides for a $ 175.0 million term loan, of which $ 104.7 million remained outstanding as of December 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 December 31, 2021 incurred interest at a rate of 8.625 %.

Amounts outstanding bear interest at SOFR or a base rate, plus an applicable margin of 7.625 % or 6.625 %, respectively, and borrowings as of December 31, 2022 incurred interest at a rate of approximately 12.0 %.

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.

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

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

Certain mandatory prepayments and optional prepayments are subject to a prepayment premium of 1 % of the prepaid principal declining annually to 0 % after the first anniversary of the Sixth Term Loan Amendment effective date.

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

5 unchanged sentences

Years Ending December 31,

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

Note 9— Fair Value Measurements and Financial Instruments

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

These fair value measurements maximize the use of observable inputs.

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

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

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

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

Transfers occur at the end of the reporting period.

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These financial instruments do not require disclosure by level.

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

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

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

The carrying values of all of the Company’s financial instruments included in the accompanying consolidated balance sheets approximated or equaled their fair values on December 31, 2022 and 2021.

• The carrying values of cash and cash equivalents, accounts receivable and accounts payable (including accrued liabilities) approximated fair value on December 31, 2022 and 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 December 31, 2022 and 2021, as the effective interest rates approximated market rates.

Nonrecurring Measurements

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See Note 3—Acquisitions.

As of December 31, 2022, the Company recorded $ 1.1 million of land and $ 6.2 million of buildings of two properties that met the held for sale criteria, to assets held for sale at a total fair value of $ 6.3 million, which are included in prepaid and other current assets in the accompanying consolidated balance sheet.

The Company estimated the fair value of the properties based on a purchase and sale agreement and a communicated selling price, which are Level 3 inputs.

Recurring Measurements

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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 consolidated financial statements.

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

No such measurements were required as of December 31, 2022 and 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.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

The Company’s cash and cash equivalents balance on deposit with financial institutions total $ 43.7 million and $ 20.0 million as of December 31, 2022 and 2021, respectively, which exceeded FDIC insured limits.

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

As of December 31, 2021 and 2020, the below customers accounted for the following percentages of the Company's consolidated accounts receivable and unbilled revenue and consolidated revenues, respectively:

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

2021 2020 2021 2020 2019

Customer A 12 % — % — % — % — %

Customer B — % 11 % — % 12 % — %

Customer C — % 11 % — % 11 % — %

Customer D — % — % — % 10 % — %

Customer E — % — % — % 10 % — %

As of December 31, 2022 and 2021, customer A accounted for 11.0 % and 11.8 %, respectively, of total consolidated accounts receivable and unbilled revenue.

During the years ended December 31, 2022 and 2021, no customers accounted for 10% of consolidated revenues.

During the year ended December 31, 2020, customer B accounted for 12.1 %, customer C accounted for 10.7 %, customer D accounted for 10.3 %, and customer E accounted for 10.2 %, of total consolidated revenues.

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

As of December 31, 2022, the Company had $ 0.9 million in allowance for credit losses.

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

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

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

Subsequent to the adoption of ASU 2016-13 on January 1, 2020, the Company recognized a $ 4.9 million allowance for credit losses, to the Company’s accounts receivables in consideration of both historic collection experience and the expected impact of deteriorating economic conditions for the oil and gas industry as of such date.

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

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

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

($ in thousands) 2022 2021 2020

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

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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Outstanding at December 31, 2022 2,985,727 $ 12.15

LIBERTY OILFIELD SERVICES INC.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

1 unchanged sentence

Performance restricted stock units (“PSUs”) granted pursuant to the LTIP, if they vest, will be settled in shares of the Company’s Class A Common Stock.

PSUs were granted with a three year cliff vesting schedule, subject to a performance target compared to an index of competitors ’ results over a three year period as designated in the award.

PSUs were granted with a three -year cliff vesting schedule, subject to a performance target compared to an index of competitors ’ results over the three -year period as designated in the award.

The Company records compensation expense based on the Company’s best estimate of the number of PSUs that will vest at the end of the performance period.

4 unchanged sentences

Granted 412,920 12.47

Vested ( 329,277 ) 14.93

Forfeited — —

4 unchanged sentences

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.

On April 2, 2020, the Company suspended future quarterly dividends until they were reinstated on October 18, 2022 by the Company’s board of directors.

The Company paid cash dividends of $ 0.05 per share of Class A Common Stock on December 20, 2022 to stockholders of record as of December 6, 2022.

Liberty LLC paid a distribution of $ 9.0 million, or $ 0.05 per Liberty LLC Unit, to all Liberty LLC unit holders as of December 6, 2022, $ 9.0 million of which was paid to the Company.

The Company used the proceeds of the distribution to pay the dividend to all holders of shares of Class A Common Stock as of December 6, 2022, which totaled $ 9.0 million.

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

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

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

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

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

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

Additionally, as of December 31, 2022 and 2021, the Company had $ 0.2 million and $ 0.2 million of dividend equivalents payable related to RSUs and PSUs to be paid upon vesting, respectively.

Dividends related to forfeited RSUs or PSUs will be forfeited.

Share Repurchase Program

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

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

On July 25, 2022, the Company’s board of directors authorized and the Company announced 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.

Additionally, on January 24, 2023 the Board authorized and the Company announced an increase to the share repurchase program that increased the Company’s cumulative repurchase authorization to $ 500.0 million.

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 through July 2024.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

During the year ended December 31, 2022, Liberty LLC purchased and retired 8,185,890 LLC Units from the Company for $ 125.3 million, and the Company repurchased and retired 8,185,890 shares of Class A Common Stock for $ 125.3 million or $ 15.31 average price per share including commissions, under the share repurchase program.

As of December 31, 2022, $ 124.7 million remained authorized for future repurchases of Class A Common Stock under the share repurchase program.

During the years ended December 31, 2021 and 2020, under the prior share repurchase program, no shares were repurchased and retired under the share repurchase program.

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

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

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.

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

(In thousands, except per share data) Year Ended December 31, 2022 Year Ended December 31, 2021

Basic Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Basic Net Income (Loss) Per Share

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 399,602 $ ( 179,244 )

Basic weighted average shares outstanding 174,019 85,242

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

Basic weighted average common shares outstanding 184,334 174,019

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

stockholders $ 2.17 $ ( 1.03 )

Diluted Net Loss Per Share

Net loss attributable to Liberty Oilfield Services Inc.

Diluted Net Income (Loss) Per Share

Net income (loss) attributable to Liberty Energy Inc.

stockholders $ 399,602 $ ( 179,244 )

Effect of exchange of the shares of Class B Common Stock for shares of Class A Common Stock 716 —

Diluted net loss attributable to Liberty Oilfield Services Inc.

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

stockholders $ 400,318 $ ( 179,244 )

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Diluted weighted average shares outstanding 189,349 174,019

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

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

stockholders $ 2.11 $ ( 1.03 )

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

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

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:

Year Ended Year Ended

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

Weighted average shares of Class B Common Stock — 7,052

Weighted average shares of restricted stock units — 3,589

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

Note 12— Income Taxes

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As of December 31, 2022, tax reporting by the Company for the years ended December 31, 2019, 2020, and 2021 is subject to examination by the tax authorities.

With few exceptions, as

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

With few exceptions, as of December 31, 2022, the Company is no longer subject to U.S.

federal, state or local examinations by tax authorities for tax years ended before December 31, 2018.

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Total Deferred $ ( 12,472 ) $ 5,079 $ ( 25,546 )

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

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

Income tax (benefit) expense $ ( 793 ) $ 9,216 $ ( 30,857 )

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

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

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($ in thousands) 2022 2021 2020

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

Computed tax expense (benefit) at the statutory rate $ 83,897 $ ( 37,336 ) $ ( 40,222 )

Increase (decrease) in tax expense resulting from:

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

State and local income tax expense (benefit), net 10,224 ( 5,204 ) ( 2,212 )

Non-controlling interest ( 151 ) 1,565 9,463

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Change in valuation allowance ( 91,336 ) 50,111 —

Other TRA adjustment ( 2,763 ) — —

impact of foreign earnings 315 — —

Other, net 1,048 137 ( 43 )

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

Total income tax (benefit) expense $ ( 793 ) $ 9,216 $ ( 30,857 )

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

The effective tax rate for the years ended December 31, 2022, 2021, and 2020 was ( 0.2 )%, ( 5.2 )%, and 16.1 %, respectively.

The Company recognized income tax benefit of $( 0.8 ) million during the year ended December 31, 2022.

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

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

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

net deferred tax assets as of December 31, 2021, due to entering into a three-year cumulative pre-tax book income position, as a result of improved operations.

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

5 unchanged sentences

Intangibles 576 301

Property and equipment 4,638 —

Other 450 219

Total deferred tax assets 136,149 149,501

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Net deferred tax asset $ 11,548 $ 44

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

net deferred tax assets of $ 6.1 million.

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

The deferred tax assets include U.S.

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

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

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

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

During the year ended December 31, 2022 the Company released the valuation allowance on the Company’s beginning U.S.

net deferred tax assets, resulting in the recognition of an income tax benefit of $ 91.3 million.

As of December 31, 2022, the Company had significant deferred tax assets and liabilities, deferred tax assets include U.S.

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

In addition, the Company recorded a deferred tax liability for the difference between the book value and the tax value of the Company's investment in Liberty LLC.

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

As of December 31, 2022, the Company has available U.S.

federal net operating loss carryforwards to reduce future taxable income of $ 3.7 million expiring in 2027, and $ 231.5 million with no expiration date.

federal net operating loss carryforwards to reduce future taxable income of $ 121.6 million with no expiration date.

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

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This amount has been reflected as a receivable in prepaids and other assets.

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

The remaining deferred tax asset for net operating losses available for carryforward are presented as part of deferred tax assets.

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

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Uncertain Tax Positions

The Company records uncertain tax positions on the basis of a two-step process in which (1) the Company determines whether it is more likely than not the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions meeting the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

for those tax positions meeting the more likely than not recognition threshold, the Company recognizes the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority.

The Company determined that no liability for unrecognized tax benefits for uncertain tax positions was required at December 31, 2022.

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

LIBERTY OILFIELD SERVICES INC.

Notes to Consolidated Financial Statements

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

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

Tax Distributions

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Net advances received by Liberty LLC from non-controlling interest holders were $ 0.9 million and $ 1.4 million, respectively, for the years ended December 31, 2022 and 2021.

Additionally, Liberty LLC distributed $ 2.8 million of which $ 2.8 million was paid to the Company and $ 0.0 million to non-controlling interest holders for the year ended December 31, 2022.

Liberty LLC distributed $ 0.0 million for the year ended December 31, 2021.

Tax Receivable Agreements

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

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

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

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

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

At December 31, 2022, the Company’s liability under the TRAs was $ 118.9 million, all of which is presented as a component of long-term liabilities, and the related deferred tax assets totaled $ 99.9 million.

Upon the release of the valuation allowance, the Company recorded a loss on remeasurement of the liabilities subject to the TRA of $ 76.2 million recorded as part of continuing operations in the current year.

During the year ended December 31, 2022, exchanges of Liberty LLC Units and shares of Class B Common Stock resulted in an increase of $ 5.1 million in amounts payable under the TRAs, and a net increase of $ 6.0 million in deferred tax assets, all of which were recorded through equity.

The Company did not make any TRA payments for the year ended December 31, 2022.

The Company also made TRA payments of $ 1.9 million and $ 5.5 million, totaling $ 7.4 million for the year ended December 31, 2020.

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

LIBERTY OILFIELD SERVICES INC.

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

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Notes to Consolidated Financial Statements

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

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

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

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

Contributions made by the Company were $ 25.8 million, $ 19.0 million, and $ 4.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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

Note 14— Related Party Transactions

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

Schlumberger Limited

As of December 31, 2022 Schlumberger owns 9,001,961 shares of Class A Common Stock of the Company, or approximately 5.0 % of the issued and outstanding shares of Common Stock.

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

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

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

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

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

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

During the years ended December 31, 2022 and 2021, the Company incurred $ 0.0 million and $ 5.7 million of fees payable to Schlumberger such transaction services.

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

During the year ended December 31, 2021, a subsidiary of the Company and Schlumberger entered into a property swap agreement under which the Company exchanged with Schlumberger a property acquired in the OneStim Acquisition and $ 4.9 million in cash for a separate property that the Company will utilize with its existing operations.

During the year ended December 31, 2022, the Company repurchased and retired 1,700,000 shares of Class A Common Stock for $ 27.8 million or $ 16.35 average price per share from Schlumberger, under the share repurchase program.

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

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

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

In separate transactions, the Company has sold equipment to Schlumberger including $ 0.1 million and $ 1.3 million during the years ended December 31, 2022 and 2021, respectively.

The Company recognized a gain on the sale of equipment of $ 0.0 million and $ 0.9 million, respectively.

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

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

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

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

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

On June 10, 2021, the Sale closed.

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

Prior to the Sale, R/C IV Liberty Holdings, L.P.

(“R/C Liberty”) exercised its redemption right and redeemed 10,269,457 shares of Class B Common Stock resulting in an increase in tax basis, as described under “Tax Receivable Agreements” in Note—12 Income Taxes, which was subsequently offset by an increase in valuation allowance during the year ended December 31, 2021.

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

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

During the year ended December 31, 2022 and 2021, total purchases from Schlumberger were approximately $ 21.7 million and $ 28.2 million, respectively.

As of December 31, 2022 amounts due to Schlumberger were $ 2.6 million and $ 0.7 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 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 year ended December 31, 2022 the Company performed hydraulic fracturing services for Franklin Mountain in the amount of $ 131.8 million or 3.2 % of the Company’s revenues for such period.

Receivables from Franklin Mountain as of December 31, 2021 were $ 0.0 million .

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

Amounts included in unbilled revenue from Franklin Mountain as of December 31, 2022 and 2021, were $ 13.9 million and $ 0.0 million , respectively.

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

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

LIBERTY OILFIELD SERVICES INC.

The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the years ended December 31, 2022, 2021 and 2020, were $ 16.7 million, $ 2.8 million and $ 0.0 million , respectively.

As of December 31, 2022 and 2021, there were $ 0.0 million and $ 0.0 million , respectively, outstanding receivables within the Company’s accounts receivable-trade and unbilled revenue line items attributable to the Affiliate.

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

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

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

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

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

On December 28, 2022 (the “Agreement Date”), the Company entered into an agreement with the Affiliate to amend payment terms for outstanding invoices due as of the Agreement Date to be due on April 1, 2024.

Amounts outstanding from the Affiliate as of the Agreement Date were $ 11.8 million.

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

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

Any receivable amount outstanding at the end of each month is subject to 12 % interest through March 31, 2023, 15 % from April 1, 2023 through September 30, 2023, and 18 % thereafter.

During the years ended December 31, 2022, 2021 and 2020, interest income from the Affiliate was $ 0.0 million , $ 0.0 million and $ 0.3 million, respectively.

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

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

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

The PropX Services Agreement was terminated on May 29, 2018;

however, the Company continues to lease equipment from PropX.

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—Acquisitions for further discussion of the transaction.

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

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

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

During the year ended December 31, 2020 the Company leased proppant logistics equipment from PropX for $ 8.7 million.

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

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

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

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

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

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

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)

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

As of December 31, 2021 and 2020, the agreements provide pricing and committed supply sources for the Company to purchase 89,317 and 1,580,750 tons, respectively, of proppant through June 30, 2022.

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

As of December 31, 2022 and 2021, the agreements provide pricing and committed supply sources for the Company to purchase 2,915,172 and 89,317 tons, respectively, of proppant through December 31, 2024.

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

Additionally, related proppant transload service commitments extend into 2023.

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

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

($ in thousands)

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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

LIBERTY OILFIELD SERVICES INC.

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

LIBERTY ENERGY INC.

Notes to Consolidated Financial Statements

make any of the minimum purchases and the Company and its suppliers cannot come to an agreement to avoid such fees, the Company could incur shortfall fees in the amounts of $ 16.1 million and $ 1.4 million for the years ended 2022 and 2023 respectively.

Company could incur shortfall fees in the amounts of $ 27.9 million and $ 6.9 million for 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 year ending December 31, 2021 are approximately $ 8.5 million of payments expected to be made to Schlumberger, in conjunction with a permissive use agreement provided by Schlumberger, in the first quarter of 2022 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in OneStim’s frac and wireline operations.

Included in the commitments for the year ending December 31, 2022 are approximately $ 7.8 million of payments expected to be made in the first quarter of 2023 for the use of certain light duty trucks, heavy tractors and field equipment used to various degrees in 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 Complaint”).

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

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

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

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

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

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

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.

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.

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

Note 16— 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 January 23, 2023, the Company, Liberty Oilfield Services New Holdco LLC, R/C IV Non-U.S.

LOS Corp, Liberty Oilfield Services LLC, other subsidiaries of the Company, Wells Fargo Bank, National Association, as administrative agent (the “Agent”), and other lenders entered into an Eighth Amendment to the ABL Facility (the “Eighth ABL Amendment”).