Liberty Energy Inc. exceeded financial estimates for the second quarter as it navigates E&P consolidation—and scored record pumping efficiencies in the quarter. But the company sees more muted activity ahead for the remainder of the year.
Frac industry trends have moderated marginally in recent periods due to reduced drilling activity in both oil and gas basins during the first half of 2024, Liberty said in its July 17 earnings release.
“We now anticipate total North American completions activity will be modestly softer in the second half of the year due to budget front-loading by some operators. However, we expect Liberty’s financial performance to be similar in the second half of the year compared to the first half,” Liberty CEO Chris Wright said.
The company saw a “slight” EBITDA beat of $273 million in the quarter—a 12% increase from first-quarter 2024—that was above Wall Street and TPH estimates, TPH & Co. said on July 18.
“The company commented that they continue to improve on efficiencies,” TPH analyst Jeff LeBlanc said. Progress included increasing gas substitution rates by more than 25% year-over-year and utilizing the company’s AI augmented logistics platform to reduce proppant downtime and quicken delivery times by ~35%.
“From a fundamentals standpoint, the company commented that H2’24 activity should be modestly softer due to select budgets being weighted towards H1’24, that consolidating upstream companies continue to prioritize superior performance & technology when selecting service partners, and that current frac activity is only sufficient to maintain production,” LeBlanc said.
Liberty credited innovation within its supply chain to innovate and drive efficiencies in procurement, construction and “delivery of essential materials for frac operations” for a strong quarterly performance.
Liberty additionally deployed its AI software platform, Sentinel, across all U.S. basins, helping lower customer costs, the company said.
The software allowed Liberty to reduce “our already very low proppant delivery downtime by 90% and decreased the truck count and delivery time by approximately 35% each, lowering the cost for our customers to bring a barrel of oil to the market,” Wright said.
Additionally, Liberty said it notched the highest diesel displacement in company’s history with the deployment of its natural gas-powered digiFleets and dual fuel technologies.
Liberty Power Innovations, which employs mobile field gas processing units to provide local access to CNG, according to Liberty’s website, also began operations in Colorado’s Denver-Julesburg Basin.
For the quarter, Liberty’s revenue increased to $1.2 billion, up 8% from first-quarter 2024. Adjusted net income was higher than the previous quarter as well, totaling $103 million for the second quarter compared to $82 million in the first quarter.
Liberty distributed $41 million to shareholders through share repurchases and cash dividends.