Publishers Note: Please join us at The Energy Venture Investment Summit presented by EnerCom and Colorado School of Mines, Liberty Oilfield Services Chief Executive Officer, Chris Wright will be one of our keynote speakers this coming February 10-11, 2021.
Source: libertyfrac.com
Liberty Oilfield Services Inc. (NYSE: LBRT; “Liberty” or the “Company”) announced today fourth quarter and full year 2020 financial and operational results.
Summary Results and Highlights
- Revenue of $966 million and net loss 1 of $161 million, or $1.36 fully diluted loss per share, for the year ended December 31, 2020
- Adjusted EBITDA 2 of $58 million, which excludes stock based compensation of $17 million, and annualized Adjusted EBITDA per average active fleet of $4.4 million for the year ended December 31, 2020
- Revenue of $258 million for the quarter ended December 31, 2020, a 75% increase from the third quarter
- Net loss 1 of $48 million, or $0.41 fully diluted loss per share, for the quarter ended December 31, 2020
- Adjusted EBITDA 2 of $7 million, which excludes stock based compensation of over $4 million, for the quarter ended December 31, 2020
- Average active frac fleets increased to 15.8 in the fourth quarter of 2020, up 68% sequentially
- Record sand volume pumped per fleet in the fourth quarter of 2020
- Completed the acquisition of Schlumberger’s North American pressure pumping business, OneStim®, on December 31, 2020
- Expect to maintain 30 frac fleets working in the first quarter of 2021, relatively flat with the fourth quarter of 2020 fleet count when combined with OneStim®
- Additional frac fleet deployment in 2021 dependent on improved economics
“2020 was a year defined by adaptation in the face of adversity. We successfully navigated these challenges due to the unprecedented sacrifice and commitment of the Liberty family. We began the year with strong momentum in an already struggling frac market, but a collapse in oil demand resulting from the global pandemic became our new reality. The partnerships we have forged over the years allowed us to plan through the crisis. In April, we aligned our cost structure with our partners’ evolving activity levels while providing top tier performance with safety and efficiency. These decisive actions allowed us to hit our target set in April of positive cash flow during the last nine months of the 2020 pandemic crisis, and to set the stage for our future with the acquisition of OneStim®,” commented Chris Wright, Chief Executive Officer.
Mr. Wright continued, “We enter 2021 with a sense of resolve and determination to leverage a stronger business platform of unmatched technological advantages, highly complementary business lines and an invigorated team of professionals. We are motivated by the opportunities ahead of us and the trust of our customers. Our goal remains the same: developing and delivering next generation technologies and services for the sustainable development of unconventional energy resources. Our unique culture enables high quality services, ESG leadership and superior returns across cycles.”
Outlook
Early signs of a global economic recovery are now evident, driven by the rollout of COVID-19 vaccines, stimulative fiscal and monetary policies around the world, and pent-up demand for goods and services. These factors support continued improvement in energy demand, while controlled OPEC+ production and discipline among U.S. shale companies are supporting oil and gas prices. This is reflected in a rising rig count throughout the fourth quarter.
The number of total marketable frac fleets has declined significantly as the pandemic accelerated the pace of rationalization and cannibalization of frac equipment. As customer demand is shifting towards next generation technologies that support their emissions and efficiency goals, attrition of older equipment is expected to continue. This supply shrinkage is a necessary part of moving the market towards balance. The current pricing dynamic remains challenging, but Liberty is having many productive discussions with customers to phase in modest price improvements throughout the year. Liberty was proactive in working with them as oil prices collapsed, and that partnership works both ways.
E&P operators are navigating through significant industry consolidation, a change in the political climate and a general commitment to flat production levels relative to 2020 exit rates. West Texas Intermediate crude oil prices have improved since dedicated fleet negotiations for 2021 started in the fall. We believe the frac market will experience flat to slightly rising demand for frac services in 2021, based on current visibility into customer plans. Public operator demand is expected to be relatively level loaded, whereas private operator demand is more likely to be back loaded. Against this backdrop, Liberty expects to maintain approximately 30 active frac fleets in the first quarter of 2021, with the potential of adding more fleets later in the year if the economics improve. Increased efficiencies that lower our cost of delivery coupled with a gradual, modest rise in frac pricing are the factors that can drive improved fleet profitability.
Commenting on the outlook, Mr. Wright stated, “As we enter our tenth year in operation, we are excited to lead a technology-driven structural change in the industry. We are uniquely focused on extracting significant value from our acquisition by bringing together two of the leading technology-centric service businesses in our industry and building for the future with ongoing technology alliance agreement with Schlumberger. The early response to our acquisition of OneStim® has been positive, as customers are finding value in our technology leadership as the industry transitions to harnessing knowledge and data to drive decisions. Invention and creativity take center stage in an industry at the precipice of change, and Liberty remains committed to the next decade of innovation, as we were in our first decade as a company.”
2020 Full Year Results
For the year ended December 31, 2020, revenue decreased 51% to $966 million compared to $2 billion in 2019.
Net loss before incomes taxes totaled $192 million for the year ended December 31, 2020 compared to net income before income taxes of $89 million for the year ended December 31, 2019. Net loss before income taxes for the year ended December 31, 2020 included non-recurring transaction, severance and other costs of $21.1 million.
Net loss 1 (after taxes) totaled $161 million for the year ended December 31, 2020 compared to net income 1 of $75 million for the year ended December 31, 2019.
Adjusted EBITDA 2 decreased to $58 million in the year ended December 31, 2020 compared to $291 million in 2019. Annualized Adjusted EBITDA per average active frac fleet decreased to $4.4 million for the year ended December 31, 2020, compared to $12.8 million for the year ended December 31, 2019. Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this earnings release.
Fourth Quarter Results
For the fourth quarter of 2020, revenue increased 75% to $258 million from $147 million in the third quarter of 2020.
Net loss before income taxes totaled $58 million for the fourth quarter of 2020 compared to net loss before income taxes of $59 million for the third quarter of 2020. Net loss before income taxes for the fourth quarter of 2020 included non-recurring transaction, severance and other costs of $9.4 million compared to $2.6 million in the third quarter of 2020.
Net loss 1 (after taxes) totaled $48 million for the fourth quarter of 2020 compared to net loss 1 of $49 million in the third quarter of 2019.
Adjusted EBITDA 2 increased to $7 million from $1 million in the third quarter. Annualized Adjusted EBITDA per average active fleet increased to $1.8 million in the fourth quarter compared to $0.6 million in the third quarter. Please refer to the reconciliation of Adjusted EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this earnings release.
Fully diluted loss per share was $0.41 for the fourth quarter of 2020 equivalent to fully diluted loss per share of $0.41 for the third quarter of 2020.
Balance Sheet and Liquidity
As of December 31, 2020, Liberty had cash on hand of $69 million and total debt of $106 million, net of deferred financing costs and original issue discount. There were no borrowings drawn on the ABL credit facility, and total liquidity, including availability under the credit facility, was $183 million.
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