Liberty Oilfield Services Inc. Class A Aktie

Welcome to the Liberty Energy Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Anjali Voria, Vice President of Investor Relations. Please go ahead.

Thank you, Chloe. Good morning, and welcome to the Liberty Energy First Quarter 2026 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer; and Michael Stock, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements reflecting the company's view about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements.

These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings. Our comments today also include non-GAAP financial and operational measures. These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pretax return on capital employed and cash return on capital invested are not a substitute for GAAP measures and may not be comparable to similar measures of other companies.

A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income and adjusted net income per diluted share and the calculation of adjusted pretax return on capital employed and cash return on capital invested as discussed on this call are available on our Investor Relations website.

I will now turn the call over to Ron.

Good morning, everyone, and thank you for joining us to discuss our first quarter 2026 operational and financial results. Our first quarter results were driven by outsized demand for Liberty's premium completion service offering, outstanding operational execution and technology-driven efficiency gains. Revenue of $1 billion and adjusted EBITDA of $126 million reflected record pumping efficiencies and high fleet utilization, while absorbing the full realization of pricing headwinds and winter weather disruption.

Despite a 3-year slowdown in industry completions activity, Liberty has continued to deliver record performance quarter after quarter, an achievement that is no small feat. I want to thank the team for the hard work and dedication throughout this period that has prepared us well for the next phase of the cycle.

We are confident that the North American oil and gas industry has established a cyclical floor. We are seeing an accelerating shift in momentum, driven by unprecedented oil and gas supply disruption and renewed focus on the importance of energy security. By strategically investing through this period of frac industry softness, we are well positioned to generate superior returns as the focus shifts to secure North American supply.

Distributed power generation demand continues to build as grid interconnection bottlenecks, utility-imposed operational constraints and system congestion drive hyperscalers toward on-site power as the preferred long-term model. This shift is reinforced by extraordinary hyperscaler investment in infrastructure supporting voracious demand for AI-enabled productivity increases.

Widening policy mandates to expand generation capacity and provide grid resilience within local communities further encourage distributed power solutions. As customer requirements grow more complex, Liberty is experiencing more direct collaboration with hyperscalers, expanding beyond the developer ecosystem.

Large load customers are increasingly prioritizing fully integrated end-to-end power solutions that bring together land, fuel sourcing, midstream and generation infrastructure, grid interconnection, on-site power delivery, load optimization and life cycle operations. LPI provides seamlessly delivered power through a single trusted partner.

On-site power is a complex operational symphony that requires a sophisticated ecosystem of telemetry, logistics and technical readiness. At LPI, we have built a comprehensive execution solution designed to manage this complexity at scale from a globally integrated supply chain and a mobilized workforce to an AI-driven technology overlay to ensure peak performance.

Our commitment to reliability is anchored by our LAP advanced testing facility, where we rigorously validate the integration of hardware, software and dynamic load following performance for real customer load profiles in a controlled, low-risk environment. Our microgrid testing facility in El Reno is designed to evaluate how complex multisource energy systems within the Forte offering perform under dynamic operating conditions using our Tempo proprietary control system that governs overall system behavior.

It is structured around 3 phases of validation. First, a software phase evaluates system performance from a first principles perspective, allowing us to understand how generation, storage and power electronics respond to dynamic customer load, while also supporting system resiliency and equipment lifetime. This work informs control tuning, system architecture and the type and size of supporting assets required.

Second, a hardware-in-the-loop phase applies these learnings using the physical control system operating against simulated generation, storage and load assets. This allows us to assess response times, control logic and system coordination by validating how real controller decisions interact with dynamic system behavior before physical equipment is introduced.

Third, integrated system validation brings physical generation, storage and power electronics together on a common bus to serve representative load profiles at meaningful scale. While not full plant capacity, this step ensures that control logic, hardware interfaces, protection schemes and dynamic response translate correctly onto real equipment and operating conditions.

By progressing from modeling to controller validation to integrated system testing, we identify integration risks and control issues prior to field deployment, providing our customers with the operational certainty required to support the next generation of data center demand.

In completions, we are at the leading edge of equipment innovation and design, redefining how systems are built through our Digi Technologies platform. We are excited to reach commercial deployment of the latest DigiPrime technology, the only 100% natural gas engine with variable speed capabilities in the oilfield.

In addition, we now have a path to upgrade our engine control software to enable variable speed on our early digiPrime, Rolls-Royce MTU pump systems. Upon completion of the update, over 70% of our digiPrime fleet will have variable speed capabilities and increased horsepower. Simply put, these developments mark a major advancement in the design and engineering of mechanical power systems, improving overall efficiency and reducing total costs.

This is purposeful and focused evolution of technology, a continuous improvement loop, where we design, test, validate and scale across our fleet. We are building upon years of experience in designing complex engineering systems and equipment innovation from digiFrac electric fleets to digiPrime direct drive systems and now variable speed capabilities.

That foundation of engineering expertise empowers not only the oilfield, but also our power applications. Liberty is pushing frac efficiencies to new heights through the integration of real-time execution control and continuously learning intelligence. StimCommander, our advanced fleet control software, automates rate and pressure control in real time to improve stage consistency and reduce variability, while Forge, our cloud-based optimization platform, continuously learns from fleet-wide data to enhance performance over time through closed-loop feedback.

Together, they create a system that compounds efficiency across every stage of execution, delivering more consistent operations and a lower cost per barrel of oil. In today's high oil price environment, operators are increasingly focused on total fuel consumption and well site efficiency, and our integrated system delivers meaningful reductions in fuel intensity and optimization of natural gas substitution in dual fuel systems.

The performance gap between industry frac fleets is increasingly defined by the strength of this digital intelligence layer, allowing us to support improved well economics. Liberty's success is based on innovation and disciplined investment, consistently seizing opportunities through every phase of the cycle. We have strengthened our platform and enhanced our ability to deliver differentiated performance, positioning us well to benefit from both cyclical recovery in the oilfield and the secular growth in power demand.

During the first quarter, we executed $1.3 billion in convertible debt offerings, further strengthening our financial flexibility and positioning us for durable long-term growth. Concurrently, we entered capped call transactions at a 150% premium to the reference share price, designed to preserve substantial upside for shareholders by meaningfully reducing potential dilution from these offerings as we execute on our growing power opportunity.

This enables the necessary investment for long lead time items to achieve our 2029 goal of reaching 3 gigawatts of deployed power. The structural disruption in the Middle East has catalyzed a fundamental shift in global supply side dynamics, establishing a higher baseline for energy security and recalibrating the risk profile of regional supply.

In oil markets, the conflict in Iran has driven attacks on regional energy infrastructure and the unprecedented effective closure of the Strait of 4 moves, inducing higher oil prices and raising the prospect of a sustained increase in supply side risk premiums. In parallel, global LNG markets may face multiyear supply constraints following attacks on Qatar's Ros Laffan hub and other regional gas infrastructure.

The resulting shock is most acute in Asia, where high import dependence is forcing demand rationing amid constrained physical supply. The shale revolution has allowed the U.S. to become the world's largest oil producer and the LNG exporter, securing our energy future, while providing a reliable supply source for consumers worldwide.

Over time, geopolitical dynamics may support structural tailwinds for North America as global consumers reevaluate energy supply chains and diversified sourcing with greater reliance on U.S. and Canadian sourced oil and refined product supply. As the markets weigh rising concerns over physical oil and gas supply shortages against potential cease fire implications, North American E&P companies are evaluating a range of macroeconomic scenarios.

The recent rise in oil prices is well above early year expectations, now driving substantially better E&P economics with greater potential for increased free cash flow generation. Entering the year, service companies recalibrated frac fleet supply for flattish activity expectations, resulting in a tighter balance to meet expected demand.

Pricing pressure and softer activity over the past few years led to accelerated equipment cannibalization, fleet attrition and underinvestment in next-generation technology. Emerging strength in frac markets driven by more price responsive private E&Ps and accelerated DUC activity is enabling earlier-than-anticipated pricing recovery from cyclical lows at the start of the year.

Moving to the power outlook. U.S. demand estimates continue to accelerate, exemplified by ERCOT's recent projections that Texas grid demand could quadruple by 2032. This significant expansion is being met by a fundamental shift in the commercial landscape. Hyperscalers and other large load customers are increasingly relying on distributed power service providers to self-generate and bypass traditional grid constraints.

LPI is uniquely positioned as the enabling infrastructure provider, supporting customers as they transform from large-scale power consumers to more localized on-site energy users rather than grid-dependent power users. LPI's scalable, decentralized power solutions provide the critical operational infrastructure for these large load customers with the ability to support local grid stability.

In the second quarter, we expect sequential growth in revenue on increased utilization and corresponding improvements in profitability. While a challenging market in recent years led many to retrench, we chose to lean in and accelerate strategic investments. We have fortified our competitive advantages in power and completion technologies and are well prepared to meet the rising demand for our services that Liberty is seeing today.

Recent events have reinforced the importance of energy diversification for global consumers, and we are proud to support the growth of reliable energy sources worldwide, including through our alliances and investments in Oklo, Fervo and the Australian Beetaloo Shale Basin.

I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. The first quarter set a strong tone for the year. We overcame significant January weather disruptions and quickly returned to strong efficiency and utilization as the quarter progressed. We closed the quarter delivering record level output, generating more horsepower hours in the quarter than ever before in our 15-year operating history.

Let's turn to the earnings results. In the first quarter of '26, revenue was $1 billion, slightly below the prior quarter, but modestly higher than the year ago period. Our results reflected the full realization of pricing headwinds and winter weather challenges, partially offset by strong operational execution and customer demand for Liberty fleets.

First quarter net income of $23 million compared to $14 million in the prior quarter. Adjusted net income of $10 million compared to $8 million in the prior quarter and excludes $12 million of tax-effective gains on investments. Fully diluted net income per share in the first quarter was $0.14 compared to $0.08 in the prior quarter and adjusted net income per diluted share was $0.06 compared to $0.05 in the prior quarter.

First quarter adjusted EBITDA was $126 million. General and administrative expenses totaled $60 million in the first quarter compared to $65 million in the prior quarter and included noncash stock-based compensation of approximately $6 million. Excluding stock-based compensation, G&A decreased $5 million, primarily due to higher variable compensation costs recognized in the fourth quarter.

Other income items totaled $10 million for the quarter, inclusive of $17 million of gain on investments, offset by interest expense of approximately $8 million. First quarter tax expense was $9 million, approximately 29% of pretax income. We expect tax expense for the remainder of 2026 to be approximately 25% of pretax income and do not expect to pay material cash taxes in the year.

We ended the quarter with a cash balance of $699 million and net debt of $579 million. Net debt increased by $360 million, primarily due to convertible debt issuances. Total liquidity at the end of the quarter, including availability under the credit facility, was $1.2 billion. First quarter uses of cash included capital expenditures and $15 million of in cash dividends.

Net capital expenditures and long-term deposits were $133 million in the first quarter, which included investments in digiFleet's capitalized maintenance spending, power generation and other projects. We had approximately $24 million of proceeds from asset sales in the quarter. Recent geopolitical developments have introduced both volatility and opportunity, shifting market momentum and reshaping our outlook. We are seeing customer demand inquiries accelerate with customers turning to Liberty for fully integrated services to support their goals.

With demand for Liberty fleets exceeding capacity, we are working diligently to plan to accommodate this demand and selectively deepening relationships with strategic customers who value differential services. Our second quarter is expected to see early benefits as customers accelerate DUC activity and evaluate future plans.

As a reminder, our 2026 completions CapEx investment moderates meaningfully from prior years, but includes ongoing investment in digiFleets that have structurally advantaged economics versus competing next-gen technologies. Our completions free cash flow is strengthening.

In power, we are similarly seeing customers -- more customers gravitate to LPI. Our collaborative framework and turnkey power solutions are gaining traction as end users prioritize fully integrated one-stop solutions that reduce the complexity of finding and securing powered land. To advance these efforts, we currently have planned contract milestone payments of approximately $300 million in the second quarter or early part of the third quarter.

That secure generation capacity in support of our 3 gigawatt plan for 2029. Power opportunities inherently carry longer duration time horizons with multiyear execution cycles, and these costs will ultimately be funded by project finance as discussed on our prior calls. We remain focused on driving long-term value creation, positioning our Premier Completions business to lead through market cycles and scaling our power infrastructure platform to meet the growing demand for power services.

I will now turn it back to the operator for Q&A, after which Ron will have some closing comments at the end of the call.

[Operator Instructions] The first question today comes from Scott Gruber with Citigroup.

I was wondering if you guys could just kind of unpack the completion fundamentals from here. Obviously, activity is improving, white space is kind of getting squeezed out of the calendar. It seems like pricing is improving.

And obviously, you'll lap the winter storm burn impact from last quarter. Maybe you can just kind of walk through those pieces and any color you can provide on the activity uplift and if you'll start to see some pricing in the second quarter or whether that's a second half phenomenon?

Thanks for the question, Scott. I think you characterized most of that very, very well. We are in a different position than we would have anticipated going into this year. So as I said in my opening remarks, we definitely feel like the market is quite tight today from a utilization standpoint.

We went through the end of the calendar year, us and our peers rightsize fleets for the outlook on work. And as a result, have relatively well-utilized capacity prior to any uptick in activity. Now that's not to say there aren't some fleets on the sidelines. We believe there is some capacity that could come back. But I think the message is pretty consistent that that's a relatively limited amount of equipment and that there's going to be a meaningful capital investment for that to happen.

As a result, I would say as you start to look forward, there's a few things in play. #1, we went into the year with a relatively strong calendar to start with. We already had pretty strong utilization. We've had inbound calls around accelerating activity at this point. So those customers who had DUCs in their inventory are reaching out and asking about the opportunity to get those on to the calendar sooner rather than later.

On top of that, you're starting to see some reaction from the privates. You've heard some announcements around a commitment to increase drilling activity over the remainder of the year. And while we don't feel that impact immediately, those inbounds start to come for planned completions activity later in the year, again, just starting to absorb any remaining white space that was left on the calendar.

As that white space gets soaked up, then comes that conversation around restarting capacity. As we've said, we don't have any capacity on the fence. We have no additional pumps that we had sign lined. And so for us, that conversation really starts to look like a price conversation. Our sales team has been out in the market today, engaging in that conversation with our customers, recognizing that their economics have changed meaningfully over the last number of weeks. And that while we were responsive on the way back down, we feel it's reasonable now to ask for some of that on the way back up.

I would say that they are having great success in those conversations and that we will start to recognize some of that price here in the second quarter, along with a bit of utilization improvement to the extent we had white space on the calendar. The biggest impact of that is going to be felt in the back half of the year, but we're certainly going to feel a little bit of that here in the second quarter.

I would say it's still early days for the bigger picture stuff to play out. We haven't yet heard really any of the publics make a statement around increasing their expected spend this year. I think they started to hint at it. You've heard some companies at some of the most recent conferences talk about that idea, but they've not yet acted on that. And so we will wait to see how that plays out and then start to plan for the back half of the year and potentially early '27 accordingly.

Michael, do you have anything to add there?

Yes. No, I was -- I didn't know if you had any additional comments there, Michael.

No, we're good.

Okay. Also a follow-up on the power business, if you don't mind. It seems like initially in power, you guys were focused on a broad set of opportunities. And then I don't know, maybe call it over the last 6, 12 months, there's been a focus more on the data center opportunity, which probably reflects not wanting to tie up capacity on smaller shorter-term deals as bigger projects and bigger contracts are coming down the pipe.

And maybe my perception is off on that a bit. But just how do you view kind of where you should put your marketing efforts in power? Are you comfortable with the focus that's kind of mainly on data centers? Or do you think about taking a broader approach to establishing a kind of more diversified business? Just how do you think about where to put your marketing efforts in power?

Scott, we've definitely not chosen to focus specifically on one area. While data centers, of course, are all the talk. They are all the news today and certainly what gets all the front page headlines just given the massive growth and the incredible amount of capital being deployed there. Our marketing efforts certainly remain broad-based.

We fully anticipate doing work not only with the data centers, but also outside of that space in other commercial and industrial opportunities. I would say that as you might expect, the demand for power generation co-located behind the meter just continues to get larger and larger and larger. And while that's happening in the data center space, it's also happening outside of that space. Everybody is facing the same constraints that you hear around trying to get connected to the grid. The time lines get longer, the upfront capital commitments get stronger and stronger and stronger.

As a result, it doesn't matter whether you're a commercial or industrial application, think remote mining or something in oil and gas or whatever the case might be or a data center, you're facing those same constraints. And as a result, they're having the same conversations with LPI. And so we remain focused on all of those opportunities. If you looked at our sales pipeline, the largest share of that remains data centers, but I absolutely expect that we are going to be doing work for commercial and industrial opportunities as well, just given where we are in conversations with them at this point in time.

So I think you're going to see our contractual nature as it plays out, represent a good cross-section of business that while we're going to be -- while we're going to have a large percentage of our assets dedicated to data centers, we're absolutely going to be having some megawatts put to work outside of that space.

Yes. And Scott, I just would add a little color on that side of the world. You were right in sort of a subpart of your question. In this time when generation is limited, our focus is definitely on longer-term contracts, right? That is the key -- that is also the key part in both sectors, whether it'd be data centers or the C&I industrial, mining, critical minerals, et cetera, of the world. So it's focusing on that, not on the short term. These are long-term build-own-operate contracts, 10 to 20 years in duration. So that's where the focus is.

The next question comes from Arun Jayaram with JPMorgan.

Ron, you discussed in your prepared remarks some trends towards perhaps the disintermediation of the developers and you're having more direct interaction with the hyperscalers. Could you talk about that trend? And could that be a favorable trend for Liberty, in particular, how you've commented how there's been a move towards more fully integrated solutions.

Yes, that's a great question. And it certainly is a very, very important trend. Of course, if you look at the landscape, there's a huge number of land opportunities being developed. That's not where the challenge lies in this world. So lots of potential sites. It's ultimately up to the hyperscaler to evaluate those sites and find the ones that meet all of the criteria that they are looking at to ultimately build and operate a data center.

And we can work very closely with them alongside of them to help work through that checklist and understand the sites that represent the best possible opportunity going forward. That checklist is a long one. We've talked about that in the past. But you think about things like access to gas, community engagement, surface access rights, subsurface access rights, the list goes on and on and on. And the hyperscalers recognize that, that list is a complex one and that they have choice in land.

What they want is a great partner on the power generation side of things that can help them navigate things like the community engagement, the air permitting, the gas access and the things that LPI has worked very, very hard to bring to the table. And so what we found over the last little while is that while we initially started engaging with the developers that were effectively a bit of an intermediary between us and the hyperscalers, we've seen a lot more interest in a direct conversation there.

And now our conversations at LPI tend to be directly with the hyperscalers, evaluating a range of land opportunities, recognizing that not all of those will get across the finish line, but helping them to high-grade those and then standing alongside them as a partner to bring all of the skills and capabilities that we have to the table.

Yes. I'd sort of characterize it as we want to become -- if we go back, I'm showing my age, the Intel Inside, right? Sort of really what the difference here is you've got the land developers and you've got the land opportunities, you've got the data center developers, who are bringing -- are going vertical and building the buildings. Ultimately, it's all getting paid for by the hyperscalers. And we are the key element in there. And so being involved with all 3 of those stakeholders at the table is the key part.

And now we're more directly involved with the hyperscalers because multiple vertical developers are coming to the hyperscalers and they're going, okay, Liberty -- Liberty is our power solution. They're now comfortable with it. Land developers are going to the developers and going and say, I've got 1,000 acres. Liberty is going -- can be our power on this land, both the vertical developers and the hyperscalers are comfortable with that. But think about it that way, and that's how the conversations have kind of moved over the last 3 months or so.

Great. And my follow-up is just in completions. On the last call, you mentioned how you're adding kind of 3 to 4 kind of digiFleets in calendar 2026. I wanted to see if those were planned to be incremental units or replacement units. And just thoughts on -- obviously, you guys have been pretty busy in frac for some time. Do your agreements with your dedicated customers provide for openers, where you can start to move pricing, particularly on some of those large, more dedicated agreements?

All right. I'll take the first part of that first. As we think about digiPrime, I would say that as we went into the year, it was fully our anticipation that those pumps, that equipment would be replacement equipment. We are working hard to transition away from the last of our diesel equipment. I think it's sub-10% of what we have left operating in the field today.

And so it was our expectation we would have retired the last of that and replace that with digiPrime, making our entire fleet dual fuel or better going forward. We do have optionality there, however, to the extent the right opportunity presented itself and that opportunity would have to be the right combination of price, margin and really duration outlook on that work before we would consider turning that equipment into a new fleet, hiring the people to support that and going forward with that idea.

But we do retain that flexibility. And so at this point in time, I would say we continue to watch the market. We'll see how the broader market chooses to move forward given the dynamics that are at play today. And to the extent there is support for that, we would consider making that choice to add a fleet rather than make it all replacement.

As far as pricing going forward, of course, we do operate typically on a year-to-year arrangement. But that said, I think we work hard to maintain an open conversation with all of our customers. That's critical in a partnership. It was critical on the way down as the market evolved, our customers would come to us and recognizing where the market had gotten to ask for a pricing adjustment that reflected that. We don't view that as any different on the way up.

It's reasonable for us in times like this where their economics have moved meaningfully. The price of WTI has climbed significantly to go back and have that conversation again in the other direction. So while we do have some that have very fixed definitions around how that pricing evolves, for the most part, that is an open conversation with our customers that works both on the way down and again on the way back up.

The next question comes from Stephen Gengaro with Stifel.

I think following up on the prior question a little bit. When you think about the arb between diesel and gas burning assets, what does the supply/demand look like for non-diesel assets in the market right now? And how do you think that sort of that tightness plays out?

I think what I was getting at, and I appreciate the answer you just gave, Ron. But when we think about like when -- if you were us, when would you start to expect the pricing impact to show up on the income statement?

I would say meaningfully in Q3 is the right way to think about it. We'll start to feel maybe very modest impact this quarter. But in reality, given time to have those conversations and then to work through pads and get to a place where we can enact that step in pricing, really expect that to start to show up in Q3.

I would say to the first part of your question that if there is capacity that has some ability to consume natural gas, it's in high demand today. We've talked in calls on past about that delta between the cost of running a fleet on diesel fuel versus the cost of running a fleet on natural gas.

And that ebbs and flows, of course, depending on exactly where diesel prices are. But anybody who's driving by a gas station today knows where the price of diesel has gone to of late, and it is highly elevated. That pushes that spread back up to probably something north of $20 million annualized in potential fuel savings going from 100% diesel to 100% natural gas.

And so as you can imagine right now, dual fuel or 100% gas is in high demand. Fuel is effectively a pass-through on a location. That's a cost that the E&P absorbs directly. And so they're doing all they can to mitigate that. I talked about in our -- in my opening remarks, are focused on even maximizing the substitution on those fleets about eking out that incremental couple of percent of gas substitution because that's meaningful to our customers today.

And they see that as critical to helping out their economics over the long term. So lots of focus on that particular area and certainly a huge amount of interest in gas-fired equipment.

And then on the power gen side, we get a lot of questions about this, and I just curious if you could clarify. When we think about the arrangement with Vantage and kind of what it means for you, can you talk about how we should think about that impacting power contracts? And then what exactly does the contract pay you starting with the reservation fee? How does that work exactly?

Yes. So we've released some details on it, but let me give you the general overview. We have committed to them 400 megawatts starting in the beginning of '27 that's available for them to put on any project. So think about this as saying, okay, this is a developer, we're working with them very, very closely on 9 or 10 different projects, looking at gas, looking at land availability, working specific kind of their permits on a specific project, et cetera, that we're going to be developing.

And they can do that very much so because as they choose -- want to see which -- as they're going to pitch to the hyperscaler and they're going to choose a piece of land, they know that they have this early power they can commit. Now that 400 megawatts, right, which is not under an ESA because that will be signed with the hyperscaler -- they know that they could do that in one single site, and that would be -- that's landed in the U.S. and therefore, that would be starting to go in service late '27 to early '28.

So they can develop that site with surety that they have that early power or they can develop 2 sites, split it in 2 and have early power on both those sites without having to commit to us for any more power, right? Now in exchange for that, we have a payment stream that, as I said in our press release, mirrors the equivalent of an ESA over a 5-year period for that portion of the capital expenditures that the generation relates to.

So what we've committed to on our balance sheet versus the full build-out. And as you know, kind of generation is approximately 55%, 60% of the full power plant in general, right? So ultimately, that's what they've committed to. So it gives them surety to be able to go out and do this development track. And that is the focus of that. So it's a long-term development partnership, and those discussions are ongoing with others as well.

So it's a great way to deeply embed. So we become a little bit of their part of their internal power group, looking at gas, looking at gas availability, working on land sites, they want to evaluate, seeing which ones work, which ones don't, what the power cost would be there, what that long-term view would be.

So that's how that part of that agreement works. And that's really how you want to develop infrastructure across the board in the future, right, because there are so many moving parts, whether it's air permits, whether it's local engagement, whether it's the fiber access, whether it's sort of what's happening specifically in that area of generation, if you end up wanting to have an interconnection, et cetera.

So a lot of moving parts, right? So that's the right way to do it to have these deep long-term partnerships to develop infrastructure. And I think you've seen in some ways, and I think people will realize, it mirrors exactly the way that we built our completions company, right? It was these deep, long-term relationships. Our biggest customers are our oldest customers. We were completely engaged with them in their underground engineering, even though that was service we gave for free. We had sort of like the best database in the world, everything that happened underground.

And we were deeply engaged in their completions design, allowing them to get to what Leen Weijers, our VP of Technology, would always call the Happy Valley, right? The lowest cost to bring a barrel of oil to the ground and the lowest net cost, right? Because ultimately, if the oil price goes up like now and sand prices are low, it's good value to pump more sand. When sand prices are high, you pump less sand because it's that mix. So working with that same partnership mentality in the power business is what we're doing.

The next question comes from Josh Silverstein with UBS.

First question on the power side for me. Given the kind of 6- to 9-month time duration to deploy capacity, I wanted to see if you're already taking receipt of some of this inbound to go and support the Vantage 400 megawatts for next year. I know there's some technology and things that you guys have to do in-house before deploying it. So I just wanted to see what sort of milestones you could talk about along the way there.

We certainly are taking delivery of power generation equipment already. It started arriving late last year and has been arriving through this year. We're working on packaging of that right now. As Michael has alluded to in some of his comments, these deployments tend to happen in larger blocks, hundreds of megawatts at a time in some cases.

And so it means that we ultimately build up a bit of a backlog of assets and then they will deploy it and be deployed in a relatively large tranche of equipment. Specific to the Vantage assets, those are assets that are arriving in '27 that are allocated to them. So this generation that we're taking delivery of today is allocated to other opportunities in our sales pipeline.

And then on the frac side, there's been a lot of uptick in discussions about increased energy security globally now. You guys do have some frac equipment outside the U.S. I'm curious, if you're starting to have discussions with any international oil companies or any other countries or U.S. companies with international assets about bringing some of the frac equipment you guys have here abroad.

We certainly have. We continue to get inbound calls with an ask for Liberty to go and be a presence elsewhere in the world. Of course, we took the step in Australia and excited about the opportunities there. I think we'll have first gas celebration there a little bit later this summer, maybe August, I think, is the plan for that pipeline to get connected. And of course, you've seen a lot of momentum in that area.

I think Australia, very well situated to serve the growing LNG needs in Asia. But that's certainly not the only place. Of course, there's lots of excitement elsewhere in the world. We continue to field inbounds to be a partner in that development elsewhere in the world. And we look at each and every one of those opportunities. We'll continue to evaluate them on a case-by-case basis. And when we see an opportunity that we think makes good sense, a place where we can add real value and be a great partner to either a North American E&P or a national oil company elsewhere, we're prepared to take that step.

What I would say is at this point in time, we just -- we don't have spare equipment. And so it's always been a challenge for us to say yes to that when we're still working hard to meet the needs of our customers here in North America. Maybe one other thing to add on top of that beyond just the oil and gas opportunities is the enhanced geothermal.

Of course, we're a partner with Vrbo here. That idea of taking directional drilling, horizontal wells and hydraulic fracturing and advancing geothermal is also of interest around the world. Lots of folks evaluating their energy stack and opportunities to have that grow, and that's a piece of the puzzle as well. So we've seen some inbounds in that area as well.

The next question comes from Derek Podhaizer with Piper Sandler.

Maybe a little bit of a bigger picture question on the frac side. I know, Ron, you've discussed a lot about how we've underinvested and we've been in this maintenance mode or below maintenance mode for U.S. frac fundamentals. But in the name of energy security, if we do get this call on short-cycle barrels out of U.S. shale, how should we think about the tightening frac fundamentals over the next 1 or 2 years, if we actually want to flip back to more of a growth or stay at this plateau that we reached that?

And what could it mean for availability of equipment and maybe further conversations as we start to continue to high-grade the equipment base just because you said there's really not much available supply out there in the market. Just trying to think further down the line in '27 and beyond about what the frac supply and demand could look like. So maybe just some thoughts around that.

I think a very interesting question to look at. I would suggest it would be a market that would tighten very, very rapidly. There have been some folks in the industry who've done their best to count available capacity that could come back to the table. And of course, that's not next-generation capacity. That's older diesel equipment that tends to be against the fence.

But that is just a handful of, we'll call it, conventional fleets, fleets that could do zipper frac work. Most of the work we're doing today is simul-frac work. And so you probably cut that number even in half from that. I could anticipate that getting soaked up very, very quickly. There is not, as you -- I think you've heard in the last number of calls from folks in the industry, a huge commitment to CapEx in this space. There is not a pile of new equipment being built at this point in time.

And as a result, you're talking about a meaningful amount of lead time for the industry to be able to react to that call on additional equipment, probably takes 9 months or something like that to get a fleet built and then staffed and stood up and ready to go. So there is a scenario where we start to see a very, very tight market here in the coming months and ultimately years, just given the lead time that's going to be required to react to that.

We'll see that first on the drilling side of things. Ultimately, we get a little bit of lag on that, so we get a bit of warning. But I think while it might not be the ramp out of COVID, it certainly could get us back to some very, very strong economics like that.

Got it. That makes sense. I appreciate that. And I guess flipping to the power side of things. I know in your recent deck, you highlighted that 330-megawatt data center expansion was canceled. I think you're still working with that developer. But maybe just an update around that, kind of what happened there, how we should think about those megawatts moving forward?

You totally appreciate the extended time lines withstanding these power project stuff you just spoke about the Vantage megawatts being deployed, but how should we think about that other contract you announced and then just future contracts, future deployments outside of the Vantage one?

Yes, that was working with one specific hyperscale developer, who was working with a specific hyperscaler on a campus expansion. And we were deep in the heart of contractual negotiations on both the U.S.A. and the technical side of the world. Ultimately, the hyperscaler decided to delay that campus expansion. And that reservation agreement with the developer, the way those work is they have quickly ratcheting cancellation fees to have us take megawatts off the market, which is like guaranteed off the market potentially. We have this kind of ratcheting reservation fee and it changes sort of goes up significantly each month.

And so they've already paid a multimillion dollar cancellation fee for that. But we're still working with that developer. And on that campus, I think long term, it will probably go. But those -- that 330 megawatts have been associated with a different opportunity that will execute in the same time frame.

The next question comes from Keith Mackey with RBC Capital Markets.

Maybe if we could just stay on the power side for a moment. Can you just speak to the pipeline of opportunities that you're seeing? I'm guessing it's maybe a little bit more weighted towards the data center space, but are you seeing an acceleration of these opportunities or things slowing down a little bit? And are there any opportunities you might be closer to the finish line than others for some of the incremental capacity that you've got coming?

Yes. I would say certainly accelerating. Urgency continues to strengthen in that space. A recognition that behind-the-meter power just continues to get better and better and better. We continue to be served well by the challenges that people face on the grid and really the additional commercial constraints that are being added to those.

So our sales pipeline is getting larger and larger and larger. We've added even in the last couple of weeks, a number of campuses that have the potential to be gigawatt scale or larger to our sales pipeline. As you might expect, they're all in different states of progress towards completion. We have some of those that are targeting power generation by 2027, some of those out towards 2028. And we're working closely alongside of them to meet those time lines.

I think at this point in time, we remain comfortable that we have the ability given that we've leaned in on this to meet those time lines. And so -- but I would say that our sales pipeline is still manyfold larger than what we're going to be able to deploy. We will not be able to take all of these campuses across the finish line. And so we'll ultimately end up aligned with a number of key partners.

And to your -- the very early part of your question, not all in the data center space. I mean if you look at the sales pipeline, the largest percentage of that will be focused at data center campuses, but there are in our sales pipeline, and I think ideally, probably pretty close to the finish line, some opportunities that are outside of that in the commercial and industrial space that we will execute on as well.

Okay. Understood. And just following up on the frac technology side, specifically the variable speed to G Prime pump. I think one of the solutions that companies have been working with to solve a single speed issue is just mixing a 100% gas recip engine with some Tier 2 or Tier 4 dual fuel equipment. So what is different about what you're doing? And how does having a variable speed 100% gas pump provide an advantage for you going forward?

Well, effectively, it ultimately removes the need to have that diesel -- that dual fuel equipment on location at all. It was a challenge in the early days as we really pioneered this path towards direct drive natural gas equipment was overcoming that constant speed situation and really the limiter of just a change in gear to allow a change in rate.

But now, first of all, with Cummins and subsequently with MTU, we will have a variable speed natural gas fleet. And that means that for all intents and purposes, we have a path towards 100% natural gas on location and we'll remove the need for diesel entirely on that site.

That's the long-term goal is to get to that place, where we're running on 100% clean burning natural gas. It offers obviously huge economic benefits, but it certainly comes with an emissions benefit as well that our E&P customers value tremendously in their conversations as they think about working around communities and things like that. So there's a huge amount of benefit there, and we're excited to be on that path to a place where for those fleets -- digi focused, we will not need any dual fuel equipment.

The next question comes from Saurabh Pant with Bank of America.

Ron, you talked about how quickly the market can tighten, and I heard you talk about pricing headwind and pricing recovery on the same call, right? So that answers the question, I guess, to some extent, how quickly the market can tighten, right? Just the nature of the market, I guess, tighten in both directions.

But if I just focus on the very near term, just to calibrate numbers a little bit, Ron, Mike, maybe you want to step in is -- as we think about the second quarter, Ron, correct me if I heard you wrong, right? But you talked about potentially there's a little bit of pricing upside in 2Q as well, more in second half, but maybe a little bit in 2Q.

And then seasonality helps you on the utilization side, granted you're coming off of a record high in the first quarter, right? But how should we think about 2Q? Maybe just some guideposts around how to think about what to expect for EBITDA in 2Q?

Yes. I mean, I thought the easiest way to think about it is, yes, there will be a very small amount of pricing. So I'd say high single digits kind of up on the revenue side, but mostly activity like pull-throughs.

Okay. Okay. I got it, right? And then obviously, utilization is better, so you get some benefit from that. Okay. Okay. That makes sense. And then the other one for me, right? I'm just thinking kind of bigger picture on the power side of things, Ron, like you described in your remarks, on-site power is a complex operational symphony, right?

I think that's a good way to put it. And you are doing a lot of things that you are in, right, integrated packaging, you are putting together a microgrid testing facility, but there's a lot of things that are still outside of your control, right? And like Derek pointed out, a data center campus expansion gets delayed, you got a preliminary ESA going to be terminated.

And then again, you go back to the drawing board, right? But how do you think about the risk from a timing standpoint, Ron, Mike, right, as you are in discussions on future contracts, right, just given the timing of these things, right, they're more likely to shift to the right than the left.

It certainly is an accurate statement to say that not all of those factors are in our control. There are variables that are at play on any given site that remain beyond our -- what we're focused on. And so yes, we have to be cognizant of those variables. I would say that as a partner to the hyperscalers, we have worked hard to understand many of the variables.

And I think we can be a value add in a lot of those cases, not for everything, but for a lot of them, just given the experience we bring from the oil and gas side of the world. We've been through a lot of this stuff that hyperscalers are navigating today, emissions permitting, community engagement and all of those things. That stuff we know and understand.

The hyperscalers haven't been in that space before. They haven't had to navigate the world of community engagement to understand what it means to get up in front of a community town hall and have them realize the benefit of having a data center or in our case, an oil and gas operation present in the community.

And then to understand all that we're doing to make that a benefit, not a detractor from the area. But we, of course, have an immense amount of experience there. And I think it's one of the true benefits of now being engaged directly with the hyperscalers is we're able to stand beside them, help them work through this checklist of opportunities. We get a little bit clearer line of sight into those things, but we can aid where possible.

I would say that recognizing that risk, we have a sales pipeline that's meaningfully larger than the amount of generation that we are going to bring to the table. And that's true because we understand that not all of the sites will get across the finish line. Michael noted that we're working with Vantage on quite a number of sites that they are trying to move forward. Not all of those sites will get to the finish line, but a handful of them will. And the same is true with the other parties that we're working with.

And so we remain very, very confident in our ability to deploy that 3 gigawatts by -- and have that working in 2029. I don't think sitting here today, Michael and I see any concerns with that at all. There remains an incredible sense of urgency around getting AI up and running at larger scale. You continue to hear the success stories from businesses. Every time a business takes something that was a pilot project and scales that up to full deployment across their company, there's no benefit of scale there.

The amount of compute required grows linearly with the number of people that are putting that technology to use. And the hyperscalers are seeing that firsthand. And as a result, I remain confident that while we will have some of these sites slip to the right, our ability to put 3 gigawatts to work in the next couple of years is -- I think we remain very confident in that.

No, that makes a ton of sense, Ron. I guess the fact that you're working directly with the hyperscalers is only going to help, right, just to iron out the pieces.

It certainly is. Yes, nice to be right at the table with them as well. As Michael alluded to, there's a number of parties at the table and critical to be at having a conversation with each and every one of them.

The next question comes from Dan Kutz with Morgan Stanley.

So Michael, I think I caught that you said maybe 2Q revenue could be up high single digits sequentially. So correct me if that's wrong. And then wondering if you guys could share anything on what kind of incremental margins you could see on that revenue increase, if there's any factors we should be thinking through that kind of could support above or below normal incrementals into the second quarter.

I guess one example could be that the 1Q winter storm impact, I could see that maybe driving some above normal incrementals into the second quarter. But yes, just anything you could help us with there as we're thinking through what margins could look like this quarter?

No, I just said high single digit on the top line, normal incrementals through the EBITDA sideline for activity incrementals is probably the best way to look at it. But now that's kind of the view we give.

Super helpful. And then maybe if I could ask on the 2 convertible notes offerings. Just wondering if you could share any incremental color around the strategy there and the timing, I guess, you had the first offering in early February and then relatively shortly after that in late March for the second offering.

Was that just opportunistic? I've heard that the convertible market, especially paired with the cap calls is actually a pretty inexpensive and kind of favorable source of capital at this time. So wondering if that was just opportunistic or if anything changed in kind of the power funding requirements or time lines there that catalyzed the second notes offering.

No, it was opportunistic. I mean, I think you've got to think about the fact that we've got a significant amount of forward payments that we're making on generation that will flip into project finance and then that money will recycle onto the corporate balance sheet. And that's what we're using the converts for. The first convert was incredibly successful, kind of 8x oversubscribed, 0% coupon, and we're up -- we bought a cap call.

So sort of we don't get any dilution until we get to a significant high share price. And really, we're at probably a net between the 2 calls that's slightly below -- even with the cap call cost, less than 3% net cost of capital for that $1.2 billion. So it's an incredibly cost-effective way of raising money.

And the second one, obviously, as we looked at the world economic situation with the Strait of Hormuz being shut, you've got to be aware of the fact that there can be knock-on effects of these global -- this war and the potential to affect the financial markets and making sure that we had the capital available to execute on our growth plans was key. The financial market was completely open.

The second follow-on was about the same on the oversubscription, again, a 0% effective interest rate. And so it's just a great way of raising capital to allow us to grow our power business.

The next question comes from Marc Bianchi with Cowen.

I'll just ask one in the interest of time. The CapEx, I think, was originally guided to $1 billion. Michael, I know you mentioned there's this $300 million milestone payment in second quarter or early third. But how are you thinking about that CapEx guide at this point? Do you see a chance for being above or below? And can you maybe remind us of the components?

Yes. As we look forward, I mean, it really hasn't changed at the moment. We'll probably revisit that in July as we look at the power business and where things are going. But we're still on target for about where we were on that CapEx guide. kind of about $0.25 billion of that $250 million was on the completion side of it.

And as Ron alluded to, if there's an opportunity, if that market strengthens significantly, maybe that will go up here if we are keeping -- making one of the digiFleets a new fleet, and we're keeping some of the older equipment running. But at the moment, no change to our guidance.

The next question comes from John Daniel with Daniel Energy Partners.

And keeping with Marc's comment, I'll just keep this to one question. But Ron, for a dedicated fleet, which is either dual fuel or 100% gas powered, is pricing somewhat formulaic in that there's -- that it's tied to diesel price such that if you see a rapid escalation in diesel, you get an immediate upward trigger in the price? And conversely, does it -- would there be a trigger on the downside, too?

I would say that it's not necessarily formulaic, John. Of course, we recognize the opportunity there as do our customers recognize the value that comes with that technology. And so that is certainly part of the conversation. But as in all of our relationships with our customers, we typically find that formulas aren't a great answer.

There will always come a time when the formula doesn't quite solve to the right outcome. And so inevitably, it ends up becoming a conversation. So I would say that for us, while that certainly informs the conversations that the sales team is having with our customers to deploy that technology or to recognize the value of that technology, it's not the only piece of the conversation.

Fair enough. And I'm going to squeeze one more out. I apologize. But sorry about it. The diesel prices, as you guys know, up like 50% or something. I don't know what the exact math is over the last couple of months, but it's a lot. I mean that would seemingly imply a very material price uplift for your higher quality fleets. I mean I know you can't quantify and don't want to quantify, but is that a wrong assumption?

It's not, John, but what I would say is that those fleets were also a little less or a little more immune to the pricing degradation that's happened over the last number of years. As we put new technology to work, we have expectations around the return on that invested capital with our customers, and they recognize the value of that.

And so we probably didn't see the same level of erosion in pricing there that we might have in the other technology. And as a result, despite diesel prices jumping meaningfully, we're not going to recoup the entire value of that jump in opportunity set.

The next question comes from Eddie Kim with Barclays.

Just one question for me. Just could you remind us of the 3 gigawatt target by 2029, how much of that has been ordered to date and what's left to be ordered? And in terms of what's left to be ordered, do you anticipate placing those orders by -- before the end of this year? Or will some of that fall into 2027?

I'd imagine there might be some concerns about the cost of equipment getting more expensive. So there might be a preference to accelerate those orders as quickly as possible, but just any thoughts there?

Yes. I mean as you know, we started ordering in '26. So the vast majority of it is either ordered or in contractual negotiations at the moment, where we're just kind of finalizing the Is and joining Ts for that 3 gigawatts. So that's all going to be kind of in flight this year.

I will now turn it back to Ron for closing remarks.

It is unfortunate that it takes a war in the Middle East to give the energy security conversation the attention it deserves. For years, many of the lucky $1 billion have taken energy for granted, enacting policy decisions that showed a complete disregard for the importance of access to abundant, affordable, reliable energy.

Now as the realities of a global energy supply disruption set in, I wonder if there are people looking back and asking, what have we done? Make no mistake, this is not just about high gasoline prices and expensive airplane tickets. Fertilizer prices and even just availability of that product are forcing crop switching or under application, threatening harvest yields by an estimated 10% to 15% this year.

Cold chains, the shipment of refrigerated goods are breaking down in Asia due to lack of diesel fuel, meaning people will do without access to groceries. Factories are being forced to run at 50% of capacity due to lack of energy supply. Those using diesel generation for backup, assuming they can get diesel, have seen their overall operating costs climb by as much as 30%.

The implications are far reaching. We are fortunate here in the United States. With the exception of a few states, we are insulated from the worst of the impacts. The shale revolution has ensured access to abundant quantities of oil and natural gas, ensuring we can not only look after our own, but also play a meaningful role in supporting others around the world. We would be in a very different situation were it not for the hard work, dedication and ingenuity of the people in the oil and gas industry.

Not all countries are in the same position. Some have no choice. By virtue of not being blessed with abundant natural resources, they rely heavily on partners like the United States and Canada for access to energy they so desperately need to fuel their economies. Some did have a choice, however, and it is with them that I am most disappointed and frustrated. Their policy decisions have meant that critical energy resources are not being developed or have been shut in prematurely.

These decisions were made without meaningful, if any, consideration for the broader global implications, without thought for those who rely on energy imports to either enable their current way of life or even more importantly, provide the much-needed energy to plot a path out of poverty and towards a life like the one each of us leads here.

I can only hope that this is a defining moment for the course of energy policy going forward and that there is an awakening to the truly devastating impacts of misguided decisions focused on net zero policies rather than energy abundance and that we see a pivot towards support for development of oil and gas resources with the goal of ensuring no one has to go without. Thank you again for joining us on the call today. Have a great rest of your day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Hello, and welcome to the Liberty Energy Inc. Annual Meeting of Stockholders. Please note that this meeting is being recorded. [Operator Instructions] The meeting is about to begin. I'll now turn the meeting over to William Kimble, Chairman and Board of Director of Liberty Energy, Inc.

Good morning. This is the 2026 Annual Meeting of the Stockholders of Liberty Energy Inc. My name is William Kimble, and I'm the Chairman of the Board of Directors of your company. I'll preside at this meeting. Welcome, and thank you for attending. I hope you all have either received the company's 2025 annual report prior to the meeting or that you pulled it up online today. If you read the letter that begins just inside the report, you'll have an excellent summary of Liberty's performance in 2025.

Now let me give you an outline of the plan for this meeting. First, I will introduce our directors up for election, and then we'll turn it to the official business of this meeting. The following members of our Board of Directors are standing for election today.

Simon Ayat. Mr. Ayat served as Senior Strategic Adviser to the CEO of SLB, formerly known as Schlumberger from January 2020 until January 2022. From March 2007 until January 2020 served as Executive Vice President and Chief Financial Officer of SLB. Mr. Ayat has held several financial and operational positions at SLB, where he commenced his career in 1982. Mr. Ayat is also a member of the Board of Directors and Audit Committee of Tenaris S.A., a manufacturer of pipes and related services for energy and industrial applications. Mr. Ayat serves on the Audit Committee of your company.

Arjun Murti. Mr. Murti is currently a partner at Veriten LLC, a private research investment and strategy firm and a senior adviser at Warburg Pincus, a private equity firm. He previously was a partner at Goldman Sachs from 2006 to 2014. During his time at Goldman Sachs, Mr. Murti served as sell-side equity research analyst covering the energy sector and was Co-Director of Equity Research for the Americas from 2012 to 2014. Mr. Murti has been on the Board of Directors of ConocoPhillips since 2015 and serves on its Audit and Finance Committee as Chair, Executive Committee, Human Resources and Compensation Committee.

Gale Norton. Ms. Norton has been President of Norton Regulatory Strategies, a consulting firm since 2011. From 2007 to 2010, she served as General Counsel, Unconventional Oil of Royal Dutch Shell. Prior to joining Shell, Ms. Norton served as Secretary of the Interior of the United States under President George W. Bush from 2001 to 2006 and as the Attorney General of the State of Colorado from 1991 to 1999. Ms. Norton is the Director of American Transmission Company, a private company in the electric utility industry, and she has been a governance fellow of the National Association of Corporate Directors. Ms. Norton serves as Chairperson of the Nominating and Governance Committee of your company and also serves on the Audit Committee of your company.

Cary Steinbeck. Mr. Steinbeck has been a Managing Director at Shea Ventures, an investment firm since 2014. From 2007 to 2014, he served as Managing Director at Oakmont Corporation, an investment firm. Mr. Steinbeck is a chartered financial analyst and was previously a Director at Liberty Resources LLC and Accretion Acquisition Corp. Mr. Steinbeck serves on the Audit Committee and the Compensation Committee of your company.

Now we'll turn to the formal business of the meeting. Before we continue, I would like to make the following announcement. As described in the notice and proxy statement that was previously distributed, you're entitled to participate in and vote at this meeting if you are a stockholder as of the close of business on February 18, 2026, which is the record date for this meeting or if you hold a legal proxy for the meeting provided by your bank broker or nominee. If you have a voting control number issued by Equiniti Trust Company LLC or our company's transfer agent and wish to vote during this meeting, you may do so by clicking the link name vote my shares on your screen. You may also ask written questions during the meeting if you're registered with your voting control number. Please refer to the questions box on the right of your screen to submit a question.

A digital copy of the notice and proxy statement is also available for your review. You may access that document by clicking the link name documents on your screen. An agenda with the items of business for this meeting is displayed on the screen and includes 3 proposals being voted on as further disclosed in the proxy statement.

Sean Elliott, the Chief Legal Officer and Corporate Secretary of the company, will act as Secretary of this meeting, record the minutes and see that the required corporate records are completed. The inspection of election today is Steven (sic) [ Steve ] Hoffman of Equiniti Trust Company LLC, our company's transfer agent. Mr. Hoffman has taken the necessary oath and advised that we have a quorum present. As a result, I declare that the meeting is duly and properly convened, and we can proceed with the items of business.

During this meeting, we will address the matters described on the agenda shown on your screen. Voting will be completed and announcement will be made regarding the preliminary results, and then the formal meeting will be adjourned. Questions should be restricted to the procedures for the meeting and the proposals under consideration. Thank you for your understanding. If you are eligible to vote and have not submitted your ballot or proxy or if you want to change your vote, please cast your digital vote by clicking the link named vote my shares on your screen. Ballots will be tallied after we have voted on all matters on the agenda. Upon receipt of the ballots, the polls will be officially closed. The digital votes cast today will be counted in the final tally along with the proxies previously received. We will announce the preliminary results of the voting at the end of the meeting.

The polls are now open for the meeting on the following items of business as of 9:07 a.m.

Proposal 1, we are voting to elect 4 Class 1 directors to serve until the 2027 Annual Meeting or until their successors are duly elected and qualified. The Board recommends voting for all 4 directors.

Proposal 2, we are voting on a resolution to approve on a nonbinding advisory basis, the compensation of the company's named executive officers as described in the proxy statement. The Board recommends voting for this item. This is an advisory vote only and it's not binding on the company or the Board of Directors.

Proposal 3, we are voting to ratify the Audit Committee's appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the current year. The Board recommends voting for this item. Tessa Schneider, a partner with Deloitte & Touche, is in attendance today and is in charge of the external audit team of our company. Ms. Schneider will be available to answer any questions during the last part of this meeting.

The floor is now open for questions and discussion concerning the proposals. If you registered with our voting -- your voting control number and wish to submit a written question, please refer to the questions box on the right of your screen. We will respond to any questions as practically.

Voting is by proxy and digital ballot. Each share of common stock is entitled to 1 vote. Let me remind you that if you've already sent in your signed proxy, there is no need for you to cast a ballot now unless you wish to change your vote that you put on your proxy. The individuals named in the proxy will vote shares as indicated on the proxy that you've already mailed or delivered to us. As a reminder, if you are voting today, please make sure you have your voting control number issued by Equiniti and click the link name vote my shares on your screen. We will now provide some additional time for the submission of your voting.

[Voting]

There being no further business to come before the meeting, I declare the polls are now closed for all items of business as of 9:11 a.m. No additional ballots, proxies or votes and no changes or verifications will be accepted. Proxies and digital ballots will now be tabulated by an inspector of election. We'll be happy to entertain any stockholder questions at this time. Does anybody have a question?

Based upon the preliminary information provided by the inspector of elections, I can report that each class -- each of the Class 1 nominees for Board of Directors have received sufficient votes to be elected, and each is therefore duly elected to serve for a term expiring at the 2027 Annual Meeting.

Two, the advisory vote regarding the compensation of your company's named executive officers as disclosed in the proxy statement has received a majority of the votes cast and is therefore approved.

Three, the proposal to ratify the selection of Deloitte & Touche LLP as independent auditors of your company for the current year has received a majority of the votes cast and therefore, is ratified.

The final voting results, including any ballots and proxies recorded during this meeting, will be set forth in the report of the inspector of elections and will be included in the minutes of the meeting. The final voting results will also be reported in a filing with the Securities and Exchange Commission within 4 business days following this meeting. Before adjourning, I'd like to thank all of our stockholders and especially those who sent in a proxy for this meeting and those in attendance at this virtual meeting. The meeting is now adjourned.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Welcome to the Liberty Energy Earnings Conference Call. [Operator Instructions] The event is being recorded. I would now like to turn the conference over to Anjali Voria, Vice President of Investor Relations. Please go ahead.

Thank you, Dave. Good morning, and welcome to the Liberty Energy Fourth Quarter 2025 and Full Year 2025 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer; and Michael Stock, Chief Financial Officer. Before we begin [Audio Gap] expense's or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These statements are [Audio Gap] comments today also include non-GAAP financial and operational measures. These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted [Audio Gap] share diluted share and the calculation of adjusted pretax return on capital employed and cash return on capital invested as discussed on the call are available on our Investor Relations website. I will now turn the call over to Ron. .

Good morning, everyone. And thank you for joining us to discuss our full year and fourth quarter 2025 operational and financial results. Liberty's strong fourth quarter results capped a year marked by heightened oil market uncertainty and softer industry completions activity. Our team's focus on technological innovation and strong operational execution drove superior performance and a resilient Kochi of 13% during a volatile year. We delivered revenue of $4 billion, adjusted EBITDA of $634 million and a return of capital of $77 million from cash dividends and early year share buybacks all while investing for growth and long-term value creation.

We strengthened our customer relationships by expanding our Simo frac offering with strategic dedicated customers and delivered meaningful efficiencies Leveraging Liberty developed AI-driven asset optimization software and our Digi technologies transition, we reduced total maintenance cost per unit of work by approximately 14%. The Concurrently, we built the LPI execution platform for earnings growth with strategic partnerships and targeted investments. We have been strong commercial traction capitalizing on the revolutionary transformation of power supply and delivering that is redefining the energy landscape.

We are at the forefront of a seismic shift in how data centers and other in grid dynamics and market pressures. Our robust power execution platform is built upon 15 years of industry-leading experience in the design manufactured, engineering and operation of complex industrial scale assets, leveraging our broad North American geographic footprint, expansive supply chain and AI-enhanced operations and maintenance systems. Our comprehensive power solution is designed to address our customers' top priorities, rapid, scalable deployment with uninterrupted operations and predictable power costs.

LPI's power as a service offering underpinned by the Forte generation platform, Tempo power quality management system and our midstream services delivers resilience, economic efficiency and operational flexibility. Our core solution could further unlock power cost advantages through grid integration while also transforming our customers into active contributors to grid reliability for local communities. LPI's distributed power solutions are a strategic cornerstone of resilient future-proof energy planning for our customers.

Earlier this year, we announced an agreement with Vantage Data Centers to develop and deliver at least 1 gigawatt of utility-scale high-efficiency power solutions, supporting the energization of Vantage data center projects for hyperscale end users. The agreement is anchored by a firm reservation of 400 megawatts delivered during 2027 with a contracted payment structure that aligns with the expected returns under an ESA with end users. This agreement creates a collaborative framework to accelerate the deployment of power solutions for Vantage's data centers, preserving flexible execution to meet customer needs across a broad portfolio of data center sites.

We also entered into a power reservation and preliminary ESA with another leading data center developer for a 330-megawatt data center expansion in Texas. The project is currently expected to begin operations in 2 phases, with the first half online in Q4 2027 and the second half in Q2 2028. the agreement defines the economic terms of the expected ESA as well as the construction schedule, cost recovery and termination payment provisions in the event the final agreement is not executed. Our project portfolio is both deep and diverse, which reflects the breadth of the LPI distributed power solution. We are working with clients that want a pure behind-the-meter solution for the life of their project clients that want to interconnect the project to the grid as soon as possible and all flavors in between.

LPI is 1 of the only companies that can scale effectively between 100 megawatts to multi-gigawatt power plants and have the geographic footprint to own and operate generation across North America. Our projects will be developed using LPI's Forte modular standardized construction approach, designed to derisk project execution and will include the tempo power quality system to manage the high amplitude cyclical load variations of AI workloads. These customers could also benefit from the core solution with a potential grid integration, optimizing power costs and providing access to grid attributes that they value.

As we enter the new year, Liberty's premier completions business and rapidly scaling power infrastructure platform position the company to lead through market cycles and capitalize on power growth potential. During 2025, we strengthened our core oil field service operations. [Audio Gap] AI-driven data center expansion, the onshoring of domestic manufacturing and increasing industrial electrification has created structural demand growth for power. Under investment in grid infrastructure, transmission constraints and evolving commercial realities and utility reforms, driven in part by public concerns have catalyzed broader market recognition of the inherent strategic value of distributed power solutions.

Against this backdrop, data center demand for power is projected to grow threefold by 2030 and already long interconnection queues continue to lengthen, highlighting the urgent need for flexible, scalable capacity to meet rapidly evolving energy requirements. LPI is well positioned to support this call, providing power consumers with predictable long-term power prices. Our platform is designed to be economically competitive with today's grid prices at our [Audio Gap] now stabilized after a protracted period of softening activity as the industry has largely adjusted to last year's OPEC+ supply concerns, and tariff-related volatility.

Fourth quarter completions activity to 5 normal seasonal sequential declines surpassing expectations. Completions demand is projected to hold firm in 2026. North American producers are responding to global oil and gas dynamics with flat oil production targets and modest growth in gas-directed activity. Global oil markets are currently balancing a structural oil surplus, elevated geopolitical risk and an OPEC plus production pause, keeping oil prices largely range bound. Natural gas markets are supported by significant expansion in LNG export capacity and multiyear growth in power consumption.

Industry fundamentals are expected to improve over time as supply side dynamics gradually rebalance with completions demand. Recent pricing pressures on completion services, combined with the slowdown in activity have driven an acceleration in equipment cannibalization and fewer crews are available to meet any incremental completions demand. E&Ps remain focused on harnessing efficiency gains and engineering solutions to lower the total cost per unit of energy, driving the bar higher for technologically superior services and operational success to achieve these results. Few service providers are positioned to meet the increasing demand for multi frac jobs, 24-hour continuous operations and AI optimized automation and real-time operational transparency that enhances completions execution and data-driven decision-making. This ongoing flight to quality is fundamentally reinforcing Liberty's market leadership as producers rely on our total service platform, seamlessly aligning our integrated services to deliver a superior service and drive relative outperformance.

This quarter, we launched Atlas and Atlas IQ, a unified technology platform that transforms real-time data into actionable insights, enabling faster decision-making and improved operational efficiency for both our customers and Liberty's operations. Atlas is a cloud-based completions data platform that automatically deploys with every Liberty crew, delivering subsecond operational equipment and performance data without requiring additional customer infrastructure. By consolidating live and historical field data, documents and automated reporting into a single secure portal, Atlas gives customers immediate visibility into their operations.

Atlas IQ extends this capability with an AI-powered assistant that enables natural language queries across operational data and technical knowledge. -- delivering fast context-aware insights while keeping all data private within Liberty's environment. Together, these platforms enhance data visualization, improved decision-making and enable both Liberty teams and customers to respond more effectively in a dynamic operating environment. Liberty has evolved from a premier North American completions company into a diversified energy technology and power infrastructure platform. We invested in our technology and culture while growing our oilfield market share and developing LPI. This proactive stance has left us well positioned to capitalize on the dual tailwinds of a potential completions inflection and the generational surge in U.S. power demand.

Our differentiated power execution platform and a robust pipeline of power projects position us to capture structural growth in power demand. We now plan to deploy approximately 3 gigawatts of power projects by 2029 to deliver sustained long-duration earnings and high returns for our investors. Our first quarter is expected to reflect the full realization of pricing headwinds and winter weather disruption to drive lower sequential revenue and adjusted EBITDA. While the precise timing of a broader oil market recovery remains uncertain, we are anticipating stabilization in completions markets, significant demand for our digiTechnologies platform had improved economics and a powerful growth engine with AI and cloud data center power demand. We are focused on driving value creation, prioritizing long-term returns with our industry-leading completions business and our Power growth platform.

Our success is fueled by the combination of cutting-edge technology, a dedicated workforce and strategic partners across the energy ecosystem, powering innovation today to shape the future of the industry. I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. I'd like to begin by first echoing Ron's sentiments. Congratulations to the entire Liberty team for navigating such a volatile year with strong results. We drove this achievement by delivering operational and safety records quarter after quarter, leveraging our vertical integration to deliver superior service and capture a larger part of our customers' spend and advancing our industry-leading AI enhanced digital solutions to not only optimize our performance but also provide customers with enhanced visibility into our operations.

New technologies and AI-driven software development are making a fundamental difference in driving margin enhancement and differentiating our service offering to customers. As we look ahead, we're using the full resources of the Liberty platform to drive success in our distributed power solutions business. LPI's durable competitive advantages are built upon our differential culture and exceptional people and are structured to deliver strong cash returns from disciplined organic investments in technology and equipment over the long term.

Our most recent announcements with 2 leading data center developers represent important milestones in our journey. These contracts reflect the strength of our strategy of investing in differential technology and assets that provide sustainable long-term commercial advantages. Engineering sophisticated power quality systems to meet complex and evolving load requirements and unlocking price optimization through opportunities through grid participation. Over the next 3 years, we have a variety of projects within our pipeline that we expect to execute with underpinning our goal of monetizing 3 gigawatts of power by 2029 .

let's turn to our earnings results. For the full year, revenue was $4 billion compared to $4.3 billion in 2024. Net income totaled $148 million, and adjusted net income was $25 million. excluding $123 million of tax-effected gains on investments. Fully diluted net income per share was $0.89. Adjusted net income per fully diluted share was $0.13 and full year adjusted EBITDA was $634 million compared to $922 million in the prior year. In the fourth quarter of 2025, revenue was $1 billion, representing a sequential increase of 10% driven by activity levels that meaningfully exceeded the industry.

Fourth quarter net income of $14 million compared to $43 million in the prior quarter, adjusted net income of $8 million compared to a loss of $10 million in the prior quarter and excludes $6 million of tax-affected gains on investments. Fully diluted net income per share in the fourth quarter was $0.08 compared to $0.26 in the prior quarter. Adjusted net income per diluted share was $0.05 compared to a loss of $0.06 in the prior quarter. Fourth quarter adjusted EBITDA was $158 million, increasing from $128 million in the prior quarter.

General and administrative expenses totaled $65 million in the fourth quarter compared to $58 million in the prior quarter and included noncash stock-based compensation of $6 million. Excluding stock-based compensation, G&A increased $6 million primarily due to higher variable compensation costs associated with better-than-expected full year financial results. Other than expense items totaling $3 million for the quarter, inclusive of $7 million of gains on investments, offset by interest expense approximately $10 million.

Fourth quarter tax expense was $3 million, approximately 20% pretax income. We expect the tax expense rate in 2026 to be approximately 25% of pretax income and do not expect to pay material cash taxes in the year. We ended the year with a cash balance of $28 million and net debt of $219 million. Net debt increased by $49 million from the prior year. In 2025, cash flows were used to fund capital expenditures, $53 million in cash dividends and $24 million in share buybacks. Total liquidity at the end of the year, including availability under the credit facility, was $281 million. Net capital expenditures and long-term deposits were $203 million in the fourth quarter and $571 million for the full year, which included investments digi fleets, capitalized maintenance spending, LPI infrastructure, power generation and other projects.

Fourth quarter capital expenditures included $79 million in deposits for long lead time power generation equipment. In 2025, we returned $77 million to shareholders [Audio Gap] sized $151 million of investments. Looking forward in 2029, we anticipate revenue will be approximately flat year-over-year. as we expect higher fleet utilization will be offset by industry-driven pricing. We anticipate increased development and overhead costs for the expansion of our LPI Distributed Power Solutions business of approximately $15 million to $20 million. Together, these will drive lower adjusted EBITDA year-over-year. Over contribution from the distributed power solutions projects in the coming years. Our completions capital expenditure moderated in 2026 to approximately $250 million, including $175 million in maintenance capital expenditures.

The remaining related to the approximately 3 to 4 digit fleets. We can build. We continue to see strong demand for our digi offering and investment is further underscored by superior economic profile from lower maintenance costs related to other fleet technologies. Looking at our Power business, we expect to take delivery of approximately 500 megawatts of power generation equipment to 2026. Our capital expenditures are expected to be split between approximately $275 million to $350 million in long lead time deposits and approximately $450 million to $550 million of project-related expenditures.

The latter of which are expected to be funded by project financing as we discussed on our last earnings call. The [Audio Gap]. We have a diverse portfolio of projects in our pipeline and an execution plan to position us to reach 3 gigawatts deployed plants by 2029. These opportunities are at different stages of the development cycle from early planning and design to near-term ESA execution.

The Taco solutions we've engineered and the strong partnerships across developers, hyperscalers and OEMs position us well to achieve these targets. Our capital is focused on investments to create lasting competitive advantages. We continue to reinforce our leadership in completions while building a differentiated power business with diverse end markets. Less cyclicality in targeting strong long-term returns. By combining advanced technology, strong partnerships and advantaged assets we are creating an enduring business for decades to come and aiming to be the partner of choice for all of our customers. We are excited for the years ahead. I will now turn it back to the operator for Q&A, after which Ron will have some closing comments at the end of the call.

[Operator Instructions] our first question comes from Stephen Gengaro with Stifel.

Last quarter, you talked about the pipeline of opportunities and how it has significantly strengthened over the prior 3-month period. Can you talk a little bit -- I mean given your comments about expanding the 3 gigawatts and what you're seeing in the market commercially right now?

Yes. I'll add some comments and maybe Michael will have some to add on after me. But I would say we seen a continued trend in what we saw over even the middle months of last year, which was this idea that rather than co-located behind the meter power being a bridge idea, transition towards co-located behind-the-meter power representing the best solution for long-term power provision at a data center site. They've recognized that not only does it check the boxes you continue to hear about like speed to market and concerns around grid stability and public concerns around the what it's going to mean for the price of power, but also from a commercial standpoint, recognize that if you're looking for surety of power price over the long term, we have the best ability to provide that with a co-located behind-the-meter solution. .

And then we can, of course, layer on top of that, the potential attributes that come with any grid interaction should that be of interest to them. So we have that commercial strategy available to them. to leverage the grid to the extent it makes sense. As that snowball has continued to roll down hill and get bigger and bigger and bigger, the interest in having partners like Liberty alongside you for power provision has just gotten greater and greater and greater. What you've seen then as a result of that is some real urgency to lock up power to have surety of that supply, and you've seen that in these 2 most recent agreements we've announced, first with Vantage and then with this subsequent data center fabricator that they wanted to be able to guarantee to their end use customer. We have the power. We can show that to you. We know where it's coming from and we've got it locked up with a reliable partner. That continues to gain momentum. And as a result, the gigawatts we had talked about can [Audio Gap]...

What Ron said. I mean for the large tech companies, their business growth and what is going to change the world is driven off the surety of being able to expand their data center volume and AI growth. And the key about that is having surety of when you can bring these billions of capital to bear and organizing that supply chain. As you've seen with sort of the investments from the big 6 deep into their supply chain. And the key -- one of the key factors of that is surety of power and surety of time when the compute can come online because there is a long supply chain that they have to organize to make sure that happens. And we provide that security and that is valuable to the big 6.

And when you think about the expansion to 3 gigawatts and maybe also like what does the customer kind a preference. So how do you -- do you see your mix evolving? And do the customers care? Or are they just really focused on securing power?

I would say a couple of things to that, Stephen. First of all, we can absolutely achieve that 3 gigawatts entirely with RESIP in our supply chain today. We've got line of sight to that as we sit here right now. So absolutely confident we could do that. To the extent it made sense to have turbines as a part of that mix for a particular project. That's absolutely a possibility as well. If you think specific to the technology, and this is something we've certainly talked about in the past. The value of RESIPs is really inherent in a couple of factors. Number one, efficiency of capital deployment. When you think about the plus equation for achieving the sort of reliability that data center providers desire on their site, that's very efficiently achieved with a modular approach using gas reset. .

Layered on top of that is the heat rate or efficiency of that asset, and we've talked about that as well. If you think about the platform of gas RESIPs that we're going to use the First of all, the high-speed smaller, more modular engines, 2.5 and 4.3 megawatts, but then layered on top of that, these larger medium-speed assets. You're talking about an asset that has a -- particularly in the case of the medium-speed engines, a heat rate that's competitive with many of the earlier generation combined cycle plants think '90s through 2010 time frame in a simple cycle environment and under challenging operating conditions, not far [Audio Gap] even modern combined cycle plants today. So you have a very, very efficient asset in terms of converting natural gas into electricity meaning a very, very competitive power price, not just today, but tomorrow and well into the future. So I think from that standpoint, operators recognize the value that gas recip brings to the of choice for deployment.

And I think that has recognized customers Stephen the construct to the gas reset, which probably a year ago was more unfamiliar to the power teams that were being built inside the big 6. Now there is a lot of familiarity about the efficiency of the N-plus equation and the inherent benefits of the execution and the ability of putting those to work. And I think that is a key factor. If you think about the fact that we will use 1/3 less fuel than a simple cycle turbine. Just when you -- we think about the emissions profile, it is significant. So therefore, we believe that we have -- we are having the right technical solution for our clients.

Very like when we built -- started building and electrifying our digital assets, digiFrac assets. We did this -- we did -- we looked at all of the technologies technology-agnostic company, and we are a team that is based around an engineering -- excellent engineering leadership that focuses on what is the right solution, not the easy button. .

The next question comes from Keith MacKey with RBC Capital Markets. .

Just wondering if you can comment on the delivery of equipment, where you are in the process there with respect to delivery packaging and ultimately, what underpins your 1 being able to meet the time lines for the upcoming deals that you've got to commit to?

Yes, Keith, I'll take a lot of that. In reality, we've spent a lot of the last 6 months developing -- expanding our deep relationships with our supply chain. And when you think about it, we always had very, very strong relationships in the high-speed arena with the Enbarker and Caterpillar, and we've expanded those relationships to all of the large medium-speed engine manufacturers. And we have been -- we spent some time in Europe. We spent a lot of time on their factories, their factory floors with their production planning and have shored up the delivery schedules out as far as through the end of '29 in some cases, for the ability to execute on these long lead projects for our customers.

When you think about it, these projects are going to start with initial implementations and it is much more capital efficient, cost-efficient and better to expand a data center in an existing current data center than it is to build greenfield. So as we build these initial campuses, those campuses will continue to expand right through the [indiscernible] to hit the compute levels that are being demanded by our ultimate end users.

Okay. And just one more question, if I could. So 3 gigawatts by 2029. Can you just comment on will that likely be more deals [Audio Gap].

A combination of both of those, Keith. We certainly expect that with our current customers, those will be growing opportunities together as we continue you to expand those not only starting initial facilities but additional facilities beyond that. And certainly, we expect to add additional customers in that mix as well. We've got ongoing conversations with a number of different partners in that space. So expect to have a number of legs on that stool, ultimately down the road.

And the next question comes from Marc Bianchi with TD Cowen.

I guess maybe, Michael, this is probably 1 for you. So if I heard you right, it sounded like you talked about $1 billion worth of spending for 2026 and maybe half of that, talk a little bit more precisely about how you're thinking about EBITDA for '26?

So Marc, the -- while I talked -- I split the spending into a long lead time to put and specific project spending that we funded by project finance those long lead time deposits are really for long-lead ton generation that as soon as that generation is assigned to a project that will then move into the project financing roll. That is all being sourced, package, manufactured engineered through our Liberty Advanced Equipment Technologies group, which is a registered manufacturer and purchasing company. That will eventually be sold to the project companies and then there will be project financing -- structural funding at the project level that will support that spend. See -- I would expect to see those deposits that I've talked about for the year '26 actually move into project financing runs within the majority of that within that year. .

So there will be a movement between those 2 categories. But I wanted to give you kind of a split on that. So there will be more project finance the capability that is given by those numbers. The rest of the spending, we believe that we will easily handle with very, very fortress-like balance sheet that we have now and our ability to fund that through free cash flow and debt availability.

Okay. And how should we think about the level of EBITDA? I mean, I think if I sort of read back what I heard, revenue is flat in '26 higher utilization, offset by pricing, EBITDA down, but just any steer on sort of the magnitude there? Things were quite strong in 4Q, so you're starting from a nice level?

Right. Yes, I think 4Q was an anomaly. We had almost the opposite effect of the seasonal swing -- we had, I think, what was some people finishing our programs they had may be delayed from the beginning part of the year due to economic uncertainty of geopolitical worries. So that was -- I think I would look at somewhat of that bounce up in Q4 was a bit of an anomaly. And so yes, so the EBITDA will be down, which is, as you would imagine, but virtually all driven by the completions business, as EBITDA will start to kick in for the power business in a significant way in '27.

Marc, I would say just -- I'll just add a little more color to that and maybe a few things to keep in your mind about this year. I would say we probably got pricing off low to mid-single digits as rough order of magnitude to give you some sense of how that will impact us on the EBITDA line. And then I would also keep in mind that whether we've also had a pretty meaningful weather event already this year. We -- over the course of this past weekend prioritize safety for our crews and the subcontractors that work with us out in the field. .

Obviously, road conditions very, very challenging in Texas and Louisiana. And as a result, through close communication with our customers, made appropriate decisions around activity levels out in the field that probably impacted close to 2/3 of our capacity. The majority of the equipment operating in Texas and Louisiana, over a period of maybe as long as [ 5 ] is probably a bit early to tell exactly what the true impact of that is going to be, but it was a meaningful event for sure.

Next question comes from Jeff Leblanc with TPH.

I believe in the past, you've mentioned that LPI intends to help their hyperscaler partners secure the fuel source. And I want to make sure this is still the case. And if so, has there been a greater urgency from your partners on securing these agreements as demand continues to increase does it make the LPI platform more attractive to your customers?

Jeff, I think you described it perfectly. Certainly, just like in our completions business, we aim to building an LPI a business that really is a full-service business, power-as-a-service from beginning to end. And so that includes, of course, the midstream side of things. We've got a very capable team under Richard Bradsby that is absolutely capable of going out and making arrangements for interconnect pipeline. We can interact on behalf of the customer with respect to natural gas and the supply of that we're not going to take on any risk in that regard. But we absolutely have the capability and expertise to play a significant role in that.

And I would say it's 1 of the things that makes us a very, very valuable partner in this space is not only that midstream capability, but all of the other pieces of the puzzle we bring to the table. I think you've heard from us that we've been very thoughtful around the construction of that business and the capabilities that we have built within it beyond the midstream side of things, the commercial interaction with the grid, the packaging capabilities, the engineering solutions around power quality services, all of these things are assets that we think differentiate us from somebody who might be able to bring generation to the table.

And the next question comes from Josh Silverstein with UBS.

So you mentioned that you have confidence in getting the 3 gigawatts delivered -- or sorry, deployed in 2029. Can you just talk about how this additional 2 gigawatts may change from a cost relative to the first gigawatt? Or is there additional cost because of the tightness in the market or similar economics to what you were paying before?

No, I would say you wouldn't you shouldn't expect meaningful change in economics at all. One of the great things about having strong partners on the supply chain side, a strong relationship with those counterparties that we're doing business with. -- is that those relationships don't change. And we are not -- we're not finding ourselves in a position where the wins of the market are impacting our ability to procure the equipment we need at costs in line with our expectations.

And so we've suggested in the past about $1 million a megawatt of the generation as a nice round number. And then maybe $1.5 million, $1.6 million, depending on complexity of the load case for all-in with balance of plant. And at this point in time, I would tell you that our expectations around those costs have not changed.

Got it. And then when you're having discussions with data centers or other operators, are they still interested in signing these 10-, 15-year agreements? Or is there some sort of out that they're trying to get and maybe 5- to 10-year window, assuming that there's going to be an improvement in grid connectivity then?

No, definitely not. I would say, if anything, the pendulum swinging the other way with more openness to the idea of distributed go located behind the meter power is the right long-term answer. I think we've been able to demonstrate and the market has recognized over the last 12 months that this solution is the better long-term solution for a whole host of reasons reliability, economics, the commercial optionality that the grid brings, addressing public concerns around cost of energy and the list goes on.

So I would say that the willingness to enter into a 15-year ESA with a distributed power generation company like Liberty is absolutely getting greater and greater and greater. My guess is that you're going to see how we think about power systems evolve over the coming years with the recognition that distributed power is going to play a much, much bigger role in our world. that we're going to build these data centers, as Michael alluded to, they will continue to expand. But that in the event the grid arrives, we are not going to be there as backup but actually is the primary supply for the data center and then additional resilience for the grid. I think we can bring a story to the community that says we are a benefit to that community and their cost of power over the long term, not a detriment as a presence there.

Let me give us just a little bit of color to Ron's comments here as well, I think you have to remember the underlying economics that drive everything in the industry. We are bringing a solution to that provides power at grid parity now. That grid parity has a much lower -- that power has a much lower inflationary [Audio Gap] power prices in the next 15 years are very, very different. Gas prices will rain relatively range-bound. Grid power prices, everybody expects to increase significantly because we are rebuilding a 50-year-old transmission system, and that is going to be passed along either directly to the large loads or as part of a general upgrade to the system.

So we are grid parity now with and 5, 10, 15 years from now, we're going to be significantly lower than the grid price right now we can, with our Corus system and the team that we're building there that we have built there provide you integration with [indiscernible] are other attributes that you wish to take advantage of or the ability to actually bring your sort of peak power price down by taking where there is oscillations where there is cheap power available, we're providing you a machine heat rate guarantee, and we will never go above this power price.

But if the power price in certain parts of the day or certain seasons, where it's very sunny in the winds blowing all the time, and therefore, there's a little bit of excess kind of that renewable power. We can buy that power when we get integrate it and bring down your costs significantly below the grid on average pricing. So we have a solution that works economically for the next 15 years -- and that is what's driving our customers. They are incredibly, incredibly financially focused business people, and we bring them an economically winning solution.

And the next question comes from Derek Podhaizer with Piper Sandler.

Just wanted to get your take on the supply side for power generation assets. Obviously, it feels like every day, we're hearing a number of OEMs entering this recip and turbine space, talk about converting and repurposing older jet engines to power data centers. So obviously, this creates a bit of an oversupply concern that's emerging in the market. but it really sounds like you're creating this integrated power services infrastructure solution to defend this mode.

Just could you help us understand a bit more about -- we hear about all the supply potentially coming into the market -- but what makes it different for you guys in building that moat and why you really should -- we shouldn't have any concerns as far as this excess or flood of supply or the perception of that supply coming into the market?

Thanks for the question, Derek. Of course, it's not as straightforward as just bringing supply to the table. If you think about the complexity of the load and the other components that have to be brought to bear to be successful in the power generation space, particularly for a data center. It's a lot more than showing up with a used turbine repurpose to run generation. I think we have talked about all the components that we have built into the LPI platform.

And I think a real testament to the success we've had there and the belief that people have in that are these recent deals that we have announced. Vantage has vetted the LPI platform, the capabilities we bring to the table that range from the midstream capabilities, the packaging and supply chain capabilities, our power quality systems and the technology that we will deploy there. And with respect to that technology, the specificity of that with regards to the type of load that we are going to be addressing the grid interaction capabilities that Michael just spent some time talking about and our commercial optionality there.

As you bring -- as you think about that entire portfolio of services really our LPI Power as a Service platform, that stands far apart from somebody who could bring a gray market turbine to the table and some generation attached to that. As a result, I think we remain extremely confident in our space in the market and our ability to continue to grow this business despite the fact that you're going to see abundant supply there. I'd argue that's beneficial maybe from a time line standpoint that will potentially enable us to get these projects across the finish line quicker rather than worrying about a stretched out supply chain, that maybe adds a little bit of flexibility there. But in terms of displacing LPI and our place in that market, absolutely not.

Yes. I think the only thing that it will do, when you think by the time you take a gray market turbine and refurbish it to 0 hours, you're really not talking much difference in total costs. from the brand new version of it. And then obviously, that all that does is actually speed up the supply time line from the delays of expanding the turbine factories themselves. So that really just changes that. And the only thing that they will do with our partners and our ability to put generation into sources of generation into our Power Solutions group will just enable us to speed our growth rather than slow it down. .

Right. No, that makes sense. -- is very helpful color. And I mean clearly recreating the integrated solutions that you've done in frac in the power side and the position that you've been able to build with frac. So it's exciting to see. I guess on the follow-up side, sticking with the Power 3. Maybe just talk about M&A, not necessarily from buying power generation assets. But as far as supporting Forte, Tempo, Corus. These are the clear pillars to your integration strategy. What could we potentially see from Liberty, whether it's bolt-on tuck-in to support the build-out of this integrated solution?

I think I'll take this well,. As you know, we're organic builders, right? That is our focus. We will develop partnerships where we've got very, very close partnerships. But very much along as we've built the frac business, look to us to add technology or things over time that make sense that really that increase our vertical stack and increase our technological heft. So as we add things like that, those are the key things that will be small additions where they bring and they expand and they fit nicely within the puzzle that we have built. .

We've always been thoughtful about making sure we understand the things that are have significant implications in terms of our ability to execute. So if you think about on the oilfield services side, we recognize that in the transition of natural gas, we had to control the CNG supply that when we transition to an electric fleet, we wanted to control power generation. that we've recognized we had to have some manufacturing capability in-house that it made sense to have some sand production capabilities to support our business.

We find those things that are key inputs critical to our success. And those are the things you should expect us to focus on to the extent those show themselves on the power generation side.

Long lead items that you can make sure that you have access that allows you to derisk execution are also valuable to us.

And the next question comes from Dan Kutz with Morgan Stanley.

Ron, I just wanted to put a finer point on the pricing comment that you shared earlier, I think you said that track was down maybe in the low single digit, mid-single-digit range. And I was just wondering if you could share what the time frame was for that comment, whether it was kind of like a year-over-year or expected in 1Q or kind of cumulative in 4Q through 1Q, just so we can think about how much of those kind of pricing decrementals we should flow through our estimates for 2026?

Dan, I think you want to think about that as really relative to the second half of '25. The pricing that we're going to see in '26 is really a reflection of RFP season, that's taking place against a second half '25 backdrop as we're going through that. In some cases, in Q3, some of that stretching out into Q4. But that's really the time frame against which you want to measure that going forward.

Understood -- and then -- go ahead. .

No, sorry, go ahead.. .

And then maybe just on the improved utilization comment in 2026. I guess just ballpark, should we think about normal incrementals on the higher utilization? And maybe if you could kind of unpack some of the good drivers in a little bit more detail, whether it's just demand resilience versus further increases in horsepower per fleet from more final frac and continuous frac or if a big factor is the kind of like the quality that you flagged and the associated by market share gains?

Yes, that's a very good question. And to your point, there is a lot to -- there are a lot of pieces of the puzzle there that are moving in some cases, counter to 1 another, in some cases, supportive of 1 another. I would say that in terms of utilization, it's probably fair to think about that from a normal incremental standpoint. But there are some puts and takes to that. We continue to be asked for that drive towards continuous pumping. And so that remains a very specific goal for some of our customers, and we are working hard alongside of them to plot a path to accomplishing that outcome. As you noted, intensity continues to climb and fleets continue to get larger.

As you think about an environment, I'll can out the Western Haynesville as an example. That will be the deepest, highest-pressure work we do, I think, anywhere in North America and will require the largest amount of horsepower on any given location that we would have any place. So as we continue to see people operators trend into those sorts of environments. Our fleets are going to continue to get bigger. The amount of intensity on the well site going to continue to climb. Alongside of that, we'll continue to push for that 24-hour a day, 7-day a week pumping environment that will be offset to the extent we can manage it by efficiencies that we gain in our operations through the use of AI. We've alluded to some of the savings that have come through the implementation of our software platform, what that's meant from a maintenance standpoint.

And in parallel with that, the deployment of the digiTechnologies and the impact -- the positive impact that they have had from an operations standpoint. So there's a lot of things moving there, and as a result, probably makes it a little difficult to get to exactly the puts and takes, but you're thinking about all of the right variables in the math.

And the next question comes from Eddie Kim with Barclays.

I just wanted to ask about the end markets for your power generation equipment. In the past, you've talked about commercial and industrial and potentially even deploying equipment for Permian micro grids. But at this point in time, is it fair to say the vast majority of the 2 gigawatts incremental 2 gigawatts you plan to deploy by 2029 are likely all -- most, if not all, going to be deployed for data center operators? Or just curious on your thoughts on the end markets for your power gen equipment.

I would certainly say, Eddie, that relative to my comments on this call last year, where I said I thought we'd probably be primarily C&I opportunities, maybe some oil field electrification as the largest slice of the pie ultimately growing into data centers. The reverse is true today. Certainly, the large percentage of the assets that we will deploy projects that we will take on will be in the data center space. But we are absolutely still pursuing a number of C&I opportunities. There still continues to be the dire to electrify operations in the oilfield and we are at the table for a number of those conversations as well. So I don't want to suggest that those have gone away by any stretch of the imagination. But to your point, they will represent the smaller piece of the pie relative to the data center opportunities in front of us. .

Understood. Understood. That makes sense. And then shifting over to pricing. In the past, you've talked about for some kind of the longer-term opportunities, like, say, 10 or 15 years maybe a 5, 6 year payback on the upfront cost of the equipment was appropriate. Is that still your expectation? Or have your thoughts on pricing and payback changed at all? .

No, no changes there at all. I think we still believe that a 5 to 6 year payback is very, very reasonable that we should expect unlevered returns in the high teens. So no changes from what we've guided to in the past. .

And the next question comes from [ Caitlin Donahue with Goldman Sachs. ]

Can you provide some color in terms of different size megawatt units as a packaging solution for your customers. I know we've been seeing some of these units come in at 2.5 and 5.5 megawatt units, but there's the possibility of megawatt units coming into the market over time. What is the customer interest in this? And how do you see Liberty potentially offering this over the longer term? .

You're going to see a mix of both of those technologies in our world for sure. We absolutely have a good amount of the smaller high-speed gas engines, the 2.5 and 4.3-megawatt assets that will be a part of our world. The wonderful advantage to those assets is that as a high-speed asset, they're very, very responsive to load dynamics and so they can play a very, very important role in a complex load use situation. .

They also remove a lot of the EPC risk on location in that we prepackage those assets. So they come into the Liberty Advanced Equipment Technologies group. We're packaging those up. And that results in relatively minimal construction required on location. They show up in a container. We do a little bit of interconnection work with the central control facility, some plumbing and wiring and whatnot, and you have a power plant ready to go. You transition to that larger medium-speed asset in the 10 to 12 megawatt range. You get some inherent advantages there in that. You have a large, stable platform, a lot of rotating inertia there and incredible efficiencies.

You're talking about an asset with a heat rate that's probably sub-7,000, not exactly in line with modern combined cycle but very, very close to modern combined cycle for a fraction of the cost. And so -- to the point Michael was making earlier around the economics of our power generation, effectively the efficiency of the conversion from natural gas into electricity and the reduced emissions footprint that comes with that efficient conversion. These large assets play an important role in that. You can expect to see on these larger installations I think the gigawatt type scale campuses, power hauls, 200-megawatt blocks of these large medium-speed engines that are going to be a key piece of that.

Depending on the end use case potentially paired with some amount of smaller high-speed engines and then, of course, our power quality system to go along with that to deliver that load. But both of those technologies critical to the path forward, and you're going to see both of them play a very, very important role in Liberty's supply chain and execution going forward.

That makes sense. And then just 1 last quick one. In terms of that 3 gigawatt number deployment by 2029, is there a cadence that we should be looking for in terms of that deployment over the next few years? Or can we expect it to be a little bit more lumpy as contracts or signed over time? .

Yes. As far as contracts are signed over time, but it will accelerate from now through to the end of '28 with the and service. That's the way you should think about it. The contract -- you'll hear the contract amounts when the contract announcements are made, but really, that will be defined by the accelerating speed of our supply chain and then our ability to install those in the field. Obviously, when we talk about that 3 gigawatts by 2029, given the time frame of our shipments arriving, you take you take ownership in Europe, you've got to ship them to the U.S., you've got to move them to side. We will have -- it's not like we are stopping in 2029. So 2029 will continue to accelerate beyond in the year we've just had our '29 announcement. .

I will now turn it back to Ron for closing remarks.

I received an unexpected letter this past Friday. It was from a woman named Nancy, and it came to me through a bit of mistaken identity. As it turns out, the local utility provider where Nancy lives in Massachusetts is also called Liberty and she was writing to the CEO of Liberty to express her concerns with the cost of heating their home. We've since sent the letter off to the correct Liberty with the hope that they will address her concerns. But in her letter, she raises an important issue that I want to close with today.

Nancy wrote the she and her husband are in their 70s and living on social security, she went on to say that last month, their gas bill was $226, of which $68 was the gas and $158 was the delivery charge. This month's bill was $319, of which $102 was the gas and $217 was the delivery charge. She pointed out that the delivery charge is more than 2x the cost of the gas and wanted to know why. One in 3 American households today experiences energy poverty or the inability to access sufficient amounts of electricity and other energy sources due to financial constraints.

And yet, States like Massachusetts continue to settle their residents with additional financial burden in the pursuit of net 0 targets and other similar energy initiatives, a program called Mass Save in this case which is an integral part of the state's plan to become carbon neutral by 2050. The cost of this program is carried by the rate payers, people like Nancy and her husband through a fee added on to their cost of delivery for natural gas. People in Massachusetts have seen their gas bills climb by as much as 20% or out $60 this month in Nancy's case directly because of this program. Net 0 policies raise energy costs for American families and businesses threaten the reliability of our energy system and undermine energy and national security. They have also achieved precious little in reducing global greenhouse gas emissions.

The fact is that energy matters. It's what keeps people alive on weekends like this past one, putting families in a position where they are forced to choose between a comfortable or even safe indoor temperature and putting food on the table is simply unacceptable. And state mandates like Mass Save are only amplifying this issue. Liberty turns 15 this year. I am incredibly proud of the Liberty team for the significant contributions we've made over those years to enable and advance the shale revolution a step change in U.S. energy supply that ensures abundant, affordable, reliable energy for families like Nancy and her husband.

I am equally energized by the opportunities ahead to carry on this important work. continuing to service this business while also expanding our new and growing LPI business to provide the necessary power for growing data center demand. Helping ensure American families also have abundant, affordable and reliable electricity to meet their daily needs without hardship. Thank you, everyone, for joining us today.

This conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Welcome to the Liberty Energy Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Anjali Voria, Vice President of Investor Relations. Please go ahead.

Thank you, Bailey. Good morning, and welcome to the Liberty Energy Third Quarter 2025 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer; and Michael Stock, Chief Financial Officer.

Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements reflecting the company's view about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These statements reflect the company's beliefs based on the current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings.

Our comments today may include non-GAAP financial and operational measures. These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pretax return on capital employed and cash return on capital invested are not suitable for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income and adjusted net income per diluted share, and the calculation of adjusted pretax return on capital employed and cash return on capital invested as discussed on this call are available on our Investor Relations website.

I will now turn the call over to Ron.

Good morning, everyone, and thank you for joining us to discuss our third quarter 2025 operational and financial results.

Liberty achieved revenue of $947 million and adjusted EBITDA of $128 million in the third quarter despite a slowdown in industry completions activity and market pricing pressure. Our team delivered solid operational results, once again delivering the highest combined average daily pumping efficiency and safety performance in Liberty's history.

We are committed to driving outstanding results for our customers while navigating current market challenges. Our leadership in technology innovation and service quality delivers differential results, strengthening long-term relationships and reinforcing our competitive position through cycles. While we anticipate market headwinds will persist in the near term, we are well positioned to capitalize on opportunities that will make us stronger as the cycle improves.

Our digiPrime fleets are achieving outstanding performance and leading efficiency metrics across the company. Several fleets deployed with our largest customers broke new records for pumping hours, horsepower hours and proppant volumes pumped during the quarter. Additionally, our team's uniquely engineered digiPrime pumps are realizing measurable cost improvements relative to conventional technologies. Early indications show total maintenance cost savings are greater than 30% on digiPrime pumps. The elegant simplicity of Liberty's design reflects advanced engineering and thoughtful innovation, resulting in a streamlined power-dense unit that delivers superior performance and increased output between maintenance cycles.

Across our fleet, we are also driving meaningful efficiencies for our customers with our AI-driven automated and intelligent rate and pressure control software, StimCommander. This advanced fleet control software enables pump operators to navigate diverse fleet designs while seamlessly managing on-site pressure and rate. By automating these functions, StimCommander delivers significant benefits, faster and more consistent stage execution, reduced time on location, fuel savings, lower emissions and improved safety.

Today, fleet automation is driving a 65% improvement in the time to deliver the desired fluid injection rate and a 5% to 10% improvement in hydraulic efficiency. This marks the culmination of a decade of effort by the Liberty team, enhanced by the strategic acquisition of SLB's completion technologies during the COVID downturn.

Liberty's cloud-based platform, Forge, further empower StimCommander with intelligent asset orchestration through continuous AI optimization. By analyzing billions of data points and leveraging years of Liberty's best-in-class operational execution, Forge enhances StimCommander's performance and precision.

We mistakenly called it a large language model in our press release, but it isn't static AI. It's a distributed agentic intelligence system built for the field. It continuously plans, learns, acts and adapts through real-time feedback and reinforcement loops, ensuring each iteration enhances the next decision. By modeling the evolving behavior of every asset, Forge turns raw data into predictive intelligence, driving compounding performance gains across every stage, fleet and operation.

It also integrates critical insights from proprietary Liberty platforms like Frac Pulse, our real-time monitoring and analytics system, to provide comprehensive tracking of fleet condition performance and emissions. Together, these technologies create a powerful, adaptive automation ecosystem that delivers increasing operational efficiency and value.

Structural demand for power continues to strengthen as evidenced by large-scale long-duration power commitments across the industry. AI compute load represents a meaningful long-term growth opportunity, and broader electrification trends and industrial reshoring efforts are also driving incremental, steady baseload demand. At the same time, the grid is facing mounting reliability and capacity challenges driven by increased intermittent generation and a lack of investment in transmission infrastructure.

Liberty's power opportunities are strengthening as sophisticated electricity consumers seeking dynamic, flexible solutions are recognizing the value of having an advantaged energy partner that provides a solution aligned with their specific needs. Liberty is in close engagement with potential customers with large, highly transient power demand that will benefit from rapid deployment schedules with high reliability power solutions at grid competitive prices. Customers will have a key power partner that offers a fully integrated energy solution spanning on-site power fuel management and the option for grid integration and attributes.

Furthermore, our on-site power solutions are fully customizable power plants that provide consumers with reliability and surety around long-term power costs. serving as a strategic hedge against potentially significant increases in grid power prices.

We are confident in the growth trajectory of our power business and are expanding our power deliveries in anticipation of customer conversions from our expansive pipeline of opportunities. We are in the process of securing additional power generation, bringing our total capacity to over 1 gigawatt to be delivered through 2027, and we expect further increases will be necessary to meet the growing demand for our services.

Oil and gas industry frac activity has now fallen below levels required to sustain North American oil production. Oil producers, which comprise a vast majority of North American frac activity, opted to moderate completions against the backdrop of macroeconomic uncertainty and after exceeding production targets during the first half of the year. Slowing trends in oil markets have more than offset increased demand for natural gas fleet activity, where long-term fundamentals remain encouraging in support of LNG export capacity expansion and rising power consumption.

Moderation in activity anticipated in the near term is transitory in nature. Global oil oversupply is expected to peak during the first half of 2026. Many shale oil producers are targeting relatively flat oil production, requiring modest activity improvement in the coming year from current levels, and long-term gas demand and related completions activity continue to be on a favorable trajectory. Together, these factors set the backdrop for improving frac fundamentals later in 2026, assuming commodity futures prices remain supportive.

Lower industry activity and underutilized fleets in today's frac markets are driving pricing pressure, primarily for conventional fleets. This slowdown is accelerating equipment attrition and fleet cannibalization, setting the stage for a more constructive supply and demand balance of industry frac fleets in the future. An improvement in frac activity, coupled with tightening frac capacity, would support better pricing dynamics.

The outlook for higher-quality next-generation fleets remain strong as operators continue to demand next-generation fleets that provide significant fuel savings, emissions benefits and operational efficiencies. Liberty's digi technologies platform continues to see significant demand and more favorable economics through cycles and leverages our total service platform with scale advantages, integrated services and robust digital technologies.

Although industry frac activity has declined since early 2023, the Liberty team has consistently outperformed markets by staying relentlessly focused on customer success and alignment of shared priorities. During the third quarter, we further strengthened our simul-frac offering with the reallocation of horsepower for long-term partners. We remain focused on expanding competitive advantages through cycles, allowing us to navigate softer anticipated conditions in the months ahead while remaining well positioned to react swiftly when demand for frac services rises.

We have never been better positioned to face tough markets and take advantage of profitable opportunities. We are excited by the momentum we are seeing in both our completions and power opportunities and are well positioned to deliver an unparalleled offering in the years ahead.

I wanted to take a moment to share that we recently welcomed Alice Yake, a recognized energy and infrastructure expert, to our Board to help guide and accelerate our efforts in power services. With decades of leadership across energy infrastructure, power service and strategy, and regulatory affairs, as well as critical perspectives on electrical infrastructure challenges, she brings a rare combination of technical depth, policy insight and executional excellence. As the energy landscape rapidly evolves and demand for resilient, reliable power systems grows, we're excited to move forward with intention, drawing on her expertise to shape impactful power solutions.

I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. Let me begin by celebrating the successes of the Liberty team. Our year-to-date results have been solid during a period marked by macro uncertainty, OPEC+ supply increases, softening fracturing. The Liberty team has outperformed the market by leading in reliability, technology and service quality across all facets of the business, from frac and wireline to our sand mines and sand handling businesses, to CNG deliveries and power services. We are proud of the hard work and dedication our team has shown over the last several years, continuing to drive innovation in equipment and digital technologies and strengthen our long-term competitive advantages.

In the third quarter of 2025, revenue was $947 million, compared to $1 billion in the prior quarter. Our results decreased 9% sequentially as activity softened following a strong uptick in the second quarter and market-driven pricing headwinds took hold.

Third quarter net income of $43 million, compared to $71 million in the prior quarter. Adjusted net loss of $10 million, compared to adjusted net income of $20 million in the prior quarter. And excludes a $53 million tax-affected gains on investments.

Fully diluted net income per share was $0.26, compared to $0.43 in the prior quarter. Adjusted net loss per diluted share was $0.06, compared to a profit of $0.12 in the prior quarter. Third quarter adjusted EBITDA was $128 million, compared to $181 million in the prior quarter.

General and administrative expenses totaled $58 million in the third quarter, flat with the prior quarter, and included noncash stock-based compensation of $5 million. Other income items totaled $57 million for the quarter, inclusive of $68 million of gains on investments, offset by interest expense of approximately $11 million.

Third quarter tax expense was $12 million, approximately 22% of pretax income. We continue to expect tax expense rate to be approximately 25% of pretax income in 2025. And we expect no significant cash taxes in the fourth quarter.

We ended the quarter with a cash balance of $13 million and net debt of $240 million. Net debt increased by $99 million from the prior quarter. Third quarter use of cash included capital expenditures, working capital, lease payments, debt issuance costs and $13 million in cash dividends. Total liquidity at the end of the quarter, including availability under the credit facility, was $146 million.

Net capital expenditures were $113 million in the third quarter, which included investments in digi fleets, capitalized maintenance spending, LPI infrastructure, power generation and other projects. We had approximately $6 million of proceeds from assets held in the quarter, and we now expect total capital expenditures for 2025 of approximately $525 million to $550 million.

In the fourth quarter, we're anticipating normal seasonal trends relative to the third quarter. E&P production outperformance coupled with the economic uncertainties already led to an industry-wide activity reductions in the third quarter, setting up a more normal cadence of activity into the fourth quarter. At these levels, we believe the industry activity will begin to stabilize and could see an eventual uptick during 2026.

Looking ahead, our 2026 capital expenditures are markedly shifting towards the growing opportunities for power generation services. We now expect to have approximately 500 megawatts of generation delivered by the end of '26, another 1 gigawatt of cumulative power generation by the end of '27. We expect further increases will be necessary to meet significant power opportunities while our completions CapEx moderates in the years ahead.

We remain relentlessly focused on generating significant value for our shareholders. We believe we are fast approaching the bottom of the trough in our cyclical completions business, and we are excited by the momentum we are seeing in power opportunities. As such, we increased our quarterly cash dividend by 13% to reflect the confidence we have in our future and a continued commitment to delivering long-term value to shareholders.

I will now turn it back to the operator for Q&A, after which Ron will have some closing comments at the end of the call.

[Operator Instructions] Our first question comes from Stephen Gengaro with Stifel.

Ron, I think the first for me is I think we've, in general, come to have a lot of confidence in Liberty's deployment of capital. But the big question that we get often is you have power on order and we're sort of awaiting contracts. So can you just talk about sort of your visibility on demand for the power generation assets that you're planning to add over the next 24 months?

Certainly, Stephen. And first of all, I appreciate your recognizing that we are sound stewards of capital. We've done that for 15 years, and I would certainly assure you that we don't view the power business any differently than that. This is not something we're going to approach any differently than we have our core business.

I would tell you a few things in answer to that. First of all, I think we've learned that it takes a little longer in the power business to get a contract to completion than it does in our core oilfield services business. And so while you always have lots of great opportunities that we've talked about, our sales pipeline there, it just takes a bit more time to get these things to the place where we're comfortable making an official announcement around them.

I would say, maybe in general answer to your question, a few things. Number one, in the last 90 days, our sales pipeline has more than doubled from what we talked about at the end of the second quarter. I would tell you also that the urgency in that sales pipeline has increased meaningfully. And so we're absolutely feeling that, and you're seeing that in our response around ordering power.

I would tell you that between LOIs and contract terms, we have out in front of customers paper for more than a few gigawatts of capacity needs. And I would tell you that ourselves as the leadership team, together with our Board, are sufficiently confident in our ability to convert some of that to long-term contracts that we have made the decisions we have around the ordering of additional capacity.

These conversations will carry on. And when we get to a place where we have paper we're comfortable talking about and making a firm announcement around, we'll absolutely do that. I would say that in all cases, we're talking about long-duration partnerships here, things that are measured in 15-plus years. I would also say that these are things that would be deployed over a period of time. This is not conversations for deployments overnight, but as you've come to see, I think, with data centers, things that would grow gradually in building blocks over a period of years.

Great. And just one quick follow-up. Is there a specific customer base we should be thinking about? Or is it data centers, energy applications, et cetera? Or is it something specific that you're really targeting?

I would say that we -- of course, we continue to talk to a range of end-use customers. I would say that my expectation is we probably end up with a higher percentage of our capacity with data center customers than maybe we had anticipated at the outset of our foray into this business.

Our next question comes from Marc Bianchi with Cowen.

I guess on the financing of all of this capacity that's coming in, where is the capital going to come from? Are you potentially getting customer prepayments or maybe we have some sort of PPA and you can finance against that? What should the capital look like for funding this growth?

I'll take that one, Marc. So power plants, PPAs or any long-lived assets like this, like we think how the co-locators or those data centers fund their projects, there'll be a long-term ESA, energy service agreement, PPA. The assets themselves will be, most likely for the large loan customers, dropped down into a project company.

Those project companies will be funded by debt that is backed by that PPA ESA. Think about the fact that most likely that will be project-specific debt, maybe around -- you could get to approximately 70% of the capital needs by debt. It will be nonrecourse to the corporation. Probably funded, if you were looking at the debt markets at the moment, anywhere depending on the -- whether you're in construction or whether or not you are in production of electrons, that's probably somewhere between mid- to high single-digit paper that you're looking at there. The balance would be -- come from cash flow, which is, again, the 70% will come from cash flow from the company and corporate debt, so that would be.

We may look at, depending on the size of the project and the partners involved, taking on potentially minority infrastructure partners alongside us in some of those projects. So that's the large load, when we think about the data center, the big large load projects or even the large load C&I, you think about greenfield industrial projects.

The smaller projects, if you think sub-100 megawatts, will be funded on the balance sheet. Those ones when you think about oil and gas customers, et cetera, they will be maybe shorter term, somewhere between 5- and 10-year contracts of small numbers.

And as you see, some of our larger projects, we may well do with our other partnership, technology partnerships. And as we see, you may have multiple technologies in there as evidenced by our [ hopeful ] partnership that is in the future in the 2030s, but that will also potentially be part of it as well. So there will be a lot of details around each of these projects that will come out when we make the announcements.

Yes. That's very helpful. The other question I had was on -- we've heard some of the other participants in sort of mobile energy support for data centers talk about transient response, and you guys mentioned it in your press release. These other participants have said that there's certain technology advantages that they have around satisfying that need. Can you talk about how Liberty plans to handle that? And maybe just educate us a little bit about what the transient response involves.

Well, we won't get into the absolute details there, Marc. Certainly, we're working on some thoughtful and, I'd say, maybe somewhat proprietary solutions around that. But I would tell you that our electrical engineering team has been working very, very closely with our partners in that space around a very specific solution to that.

And that solution is tailored specifically to the generation assets that we will be deploying to any given individual project. So of course, as you can appreciate, a large recip behaves slightly differently than a smaller recip, behaves slightly differently than a gas turbine. And so as you consider being able to respond to transient loads in each of those environments, you need to have a solution that is tailor-made to that. And so we're confident that our engineering team together with those partners have a fantastic solution that meets those needs. And so we're comfortable with how we're moving forward there.

And one thing I might clarify there, Marc, just a little bit. Yes, I wouldn't characterize it as mobile power. I think sort of that's left over from a couple of years ago. There is some mobile power, what we use for frac. There will be some version of mobile power that we will use for -- think about [ data whole ] commissioning or special power boosting wins needed when you're kind of doing an expansion on a site-specific project. But this is in-situ power, permanently in place, doing permanent power generation. So I would say, I think you need to kind of think about that differently from the sort of the generator renter companies. This is truly pure generation.

Our next question comes from Scott Gruber with Citigroup.

I want to get a little more details just around the CapEx buildup for next year with the additional megawatts coming in. And I assume that the base business kind of down towards those maintenance CapEx. Maybe if you can give us some additional color on the building blocks for that, the '26 CapEx figure?

Yes. As obvious, we always give you the details in the January call, and we'll give you the buildup and then kind of update that guidance as we go through it. But yes, we're speaking to have approximately 500 megawatts through the end of the year. Some of that will be landing towards the end of the year, then will just be the package generation. But some of it will -- or a significant portion of it will be with installation.

So I think you can use sort of a variation around -- just think about installed generation around about 1.5 million, 1.6 million a megawatt. If you think of sort of long lead and generators at around 1 million. So it will be the balance of that. And we'll give you an update, a view of that in January as we go through. And we'll give you -- probably, I would say, expect in January, a bit more of a longer-term look on our current views on future cash flows in the power business. We'll take a little bit of a longer view on how we talk to the Street by January on that part of the business.

Kind of speaks to my next question. I was going to ask maybe to provide some color just on the EBITDA payback on the contracts you're seeing, if it's kind of 1.5-ish on CapEx per megawatt, are you still thinking we're kind of in that 3 to 4-year payback on that investment?

So, Scott, obviously, it obviously depends on the term of the contract. When you think about longer live contracts with investment-grade clients in the 15-plus years, obviously, you're going to have a longer cash-on-cash payback to achieve our targeted return profile of an unlevered cash return in sort of the high teens, right? So you're probably talking 5, 5-and-a-bit on that.

Short-term contracts, obviously, will be a quicker payback. So if you're doing shorter-term contracts in the 5 to 7 years for smaller oil and gas implementation, yes, you'll be on the 3-plus year, the 3-year version of that. But the longer-life contracts, obviously, you're going to have a longer payback period, but much more secured and it's going to be take-or-pay ESAs.

I got you. If I could sneak one more in. Is there a tension today between kind of reserving some capacity for larger data center contracts and kind of not wanting to dedicate that capacity to some other end markets? Or is the data center opportunity moving so quickly that you guys don't really feel a tension in terms of dedicating capacity at this juncture?

There is significant tension around reserving capacity. Near-term generation capacity -- near-term generation need is very high, near-term generation capacity is nowhere near what's available in the market. So there is significant tension around that.

Our next question comes from Ati Modak with Goldman Sachs.

Ron, you mentioned it's taking longer to sign some of these power contracts because the market is different, but can you help us think through the steps that you are looking at to sign these contracts so that we understand it?

Yes. And I think there's a number of them. Of course, these are big projects. These are billions and billions and billions of dollars of investment that are going into the ground there. And so as you think about all the pieces that have to come together there, it's not an insignificant number. In our oilfield services world, you have an E&P that's already locked up land, they've done their geology work and they're drilling wells in a pretty straightforward cadence. And so they have a pretty clear outlook to that.

In this case, you're talking about a series of parties that have to come together, identify the land, take care of air permitting, fiber, fuel source in the form of natural gas, and end-use, if you're a hyperscaler, the end-use contract with the customer that's going to co-locate in that facility. So you have to have a number of these pieces that all come together. And ultimately, when all of those are satisfied, then they get comfortable signing the final energy services agreement with us.

And so while they are somewhat long in the making, you get -- I would say we get to clarity around what the end result is going to look like sooner than that. But that doesn't mean you're at a firm contract at that point in time. So we just have to work alongside of them and -- as they work through these steps and patiently stand by until we get to a place where we can sign the final documents.

That makes a lot of sense. And then maybe for Michael, you talked about project level financing for some of these entities. Would you consider equity or any kind of converts as potential tools in the mix?

So, obviously, Ati, we are always looking for the most cost-effective and the most efficient way to finance the growth of this company to drive the highest value for our investors. So as we would say, nothing is necessarily off the table. But we have, I believe, a very, very clear path to being able to fund a large portion of these projects that -- without major dilution.

Our next question comes from Saurabh Pant from Bank of America.

Ron, Mike, it sounds like you're making a lot of good progress on the power side of things. And maybe kind of a follow-up on what Ati just asked on the contract, right, how are you thinking about those contracts. These are very different from what -- not just you, what we are used to, right? So we are trying to figure out how are you looking at potential risks and pitfalls and liabilities, right, all of that good stuff, right? So maybe just a little bit of color, 15-year, maybe north of 15-year contracts, how do you protect yourself from that risk? I know the opportunity is fantastic, right, but I'm just weighing up both sides of the equation.

Right. So the first way that you look at is who is your counterparty, Saurabh. So okay, you're looking at, even though -- let's just say 70% the sort of data market that's going to be built is probably 6 or 7 large -- very, very large investment-grade clients. right? The other 30% is more the multiple uses, the banks, so the BofAs, the JPMorgans, the smaller companies in the world. It's a joke. But the -- those sort of large investment-grade offtake and so your ESA is with that large investment-grade offtake. You're doing it in conjunction with a company, these very large developers who build the data centers and run them as a REIT, so you choose your counterparty on that side very closely, somebody who's got an execution history, the ability to put the buildings on the ground in a reasonable time frame, right?

Then you've got to look at, obviously, you've got an engineering effort on your own, making sure you understand your solutions, making sure you understand the delivery of your supply chain and your EPC partner that is executing on there to make sure that you are not running in, that you said, a reasonable time schedule, you have no issues around delays around LDs. It's an engineering solution, making sure that you're building, let's just say, 1.2, 1.3x to get you your [ 5 9s ], which we can do with the smaller recips, and your comfort level around being able to deliver that [ IT ] load that they need. So it's all of that managed by the team here, rolling up into a risk committee. There's a review on every single project. And that balance of that is what protection.

Now each one of these projects, these large loan projects, will be rolled down into a separate project code, as I said, with nonrecourse debt that have specific -- or just like you do with any other large real estate development, with the corporate protections around that. So it's a very different setup from our current business, but we have thought through all that very, very carefully.

Okay. Okay. No, that's fantastic color. Mike. We'll keep an eye out on how things evolve. But one other thing, Ron, Mike, whoever wants to take this. On the technology side of things, right? When we were talking about 400 megawatt, that was supposed to be all nat gas recips, right? But now that we are over 1 gigawatt, and again, this is not the end, by the way, right? I'm sure you would look at more opportunities. How are we looking at the technology side of things evolving between recips and turbines and maybe a little bit of a battery to supplement all of that, right? How are you thinking about that? And then just the lead time to order that and get that in time?

That's a very good question. And I would say that I think we've always said, while recips are going to form the core of our technology platform, that we recognize there are going to be cases where other technologies will make a lot of sense in concert with those or maybe in place of those.

So I would tell you today that of the of the capacity we are procuring, the large majority of that remains gas recip engines. We like that technology and we believe it brings some inherent benefits to the table, particularly around heat rate. But that said, when it comes to power density, you get some real benefits from a gas turbine. And so we absolutely see those as part of the puzzle.

And then as you think down the road, you know the end-use parties that are going to be consuming these electrons, or at least the vast majority of them, and they all have publicly stated goals around reducing the carbon intensity of their electricity. We have some very specific partnerships around that, particularly the Oklo partnership. We will some time into the next decade be able to bring small modular nuclear to the table. And so we see that being a piece of the puzzle as well.

In the nearer term, recognizing that emissions can be a challenge, particularly in nonattainment areas, and we've talked about the Colorado Air & Space Port as an example, the front range of Colorado is a non-attainment area and requires some very specific solutions to ensure we can achieve the emissions caps that are necessary there. Fuel cells offer a great partnership together with gas recip to help accomplish that. And so you can expect, as we talk about these projects in the future, likely a mix of generation technologies that are best suited to address the needs of that particular site.

Okay. Fantastic. And I'm glad we are talking about the next decade and not the next quarter.

Our next question is from Tom Curran with Seaport Research.

Sticking with the Power-as-a-Service business here. For the initial 100 megawatts of capacity being delivered this quarter, Q4, would you please review the deployment time line in its major stages? Are you still anticipating about 6 months from equipment delivery to first revenue out in the field? And then do you anticipate opportunities to maybe shorten that time line as you ascend the learning curve?

So I'll take this one. It depends on the technology. Generally, from packaged recips to electron generation, 6 months is a good sort of average number. When you move up the scale onto the turbine side of the world, you'd probably take that to maybe -- or the larger recips, which will be in large power hauls, that's probably 9 months from generation to electrons.

Now you can, depending on where the project is, some of these large projects are going to be interesting, because that's sort of an average as you will be doing sort of the dirt work and the building and sort of landing the generation. So some of the early generation will have a longer time to revenue generation and some of the later engines that get installed will have a shorter time. So just talking in general averages, and I think that's fairly -- it's going to be project and site-specific around that -- on average over the next 5 years.

Got it. And then Liberty not only has a well-deserved, consistently earned stellar reputation as a steward of capital. But I would argue on the technology side, as frequently the smartest guys in the room, trailblazers on innovation and technology adoption. I don't want to unfairly highlight sort of one to get it worked out here, but when it comes to [ Natron ], obviously, you nailed it with being ahead of the curve on advanced nuclear and [ Yoko ] relationship as well as on enhanced geothermal and turbo. Natron hasn't worked out.

Ron, I'd just be curious to hear when it comes to long duration energy storage and that longer-term potential for where you might go with batteries as part of LPI EPS fleet, how are you thinking about sodium ion technology? Do you still think that's going to be one of the likely longer-term winners? Or are you maybe pivoting to other electrochemical technologies when it comes to batteries?

Yes. Good question. I would say that as far as the technology itself goes, still a big fan of sodium ion technology. If you think about things like the C rating and potential cycle count for a sodium ion battery, it's just awesome technology in that regard. You can dump-charge into and remove charge from those batteries at rates that are hard to match with some other technologies, and the total cycle count or lifespan for one of those batteries is meaningfully higher than for lithium-based technology.

So we really do like the technology. Unfortunate the Natron situation that they just couldn't get to scale. But we'll still continue to watch for that technology to be deployed.

Of course, we use a lot of battery capacity in our world today that's present in our digi world, both on the digiPrime fleets and on the digi frac locations, we rely on lithium-based technologies there because you have a weight consideration that comes into play. You don't get the same energy density out of a sodium-based chemistry as you do out of a lithium-based chemistry. And so when weight and size are a factor, there's a reason lithium technology is the technology of choice in EVs, for example.

And the same is true for us. Of course, we have size and space considerations when it comes to deploying batteries on our frac locations, and so we've leaned towards lithium technologies there. We're familiar with those. We have strong partnerships there. And we'll continue to leverage those partnerships as necessary, both on the core OFS space and in the power space to the case that that makes sense. But we'll continue to keep an eye on those other technologies for future opportunities as well.

Our next question comes from Jeff LeBlanc with Tudor, Pickering, Holt.

I was just curious, how should we think about capital allocation between frac and LTI moving forward? We know that you previously mentioned that the base case is for no digi builds in 2026. But given the compelling opportunity in power, is there any reason this shouldn't be the case moving forward if frac prices stay at the current levels?

So our frac business is an incredibly vibrant and great business that has great long-term cash generation ability over the next decade. And so we invest in that business, as we always have and as we always will, on the basis and the timing of the cycle, for that business. And that won't be affected at all by investments in our power business.

We are not going to be capital limited as far as investments in these 2 businesses. They stand alone and they -- we will invest as makes sense for future cash generation abilities.

Our next question comes from Derek Podhaizer with Piper Sandler.

I just wanted to go back to Saurabh's question and maybe clarify the answer. On just the type of equipment that you'll be ordering and delivering, I know initially it was the 400 megawatts, I think that was typically made up of the recips, the 2.5 to 5-megawatt units. And then we think about the incremental 100 by the end of next year and then the 600-plus, to get to over 1 gigawatt. I think you started mentioning we might get a mixture of type of assets. But can you be more specific if you will continue to invest in the recip? And then if you are moving towards the turbines, I mean how much is -- we could think about that in terms of megawatts for your deliveries?

Derek, I would say that the vast majority of this incremental capacity is also gas recip. Turbines will play a role in the world, although I think as we continue to look forward, we will still lean very heavily on the gas recip technology. If you think about, and I've said this in past calls, ensuring long-term durability in the business, bringing the best technology to the table in support of our customers, we like recip because of the heat rate. You have an opportunity under simple cycle conditions to deliver conversion of molecules to electrons at a level that is on par with the grid today, at about 45% thermal efficiency. That is impossible to achieve with a simple cycle turbine. You're going to, right out of the gate, put yourself at a disadvantage with respect to fuel burn per electron delivered.

And so while we believe there is an important place for turbines in the power generation world, we talked about density as one of those attributes, we really like the gas recip technology. And you should expect to see that be a very meaningful part of our portfolio today, tomorrow and in the years to come.

That's helpful. And maybe just to clarify on that, is there any larger recips that you can go out and acquire? I mean I know the 2.5 to 5, but 10 megawatt-plus type of recips out there that you can put into your portfolio?

Yes, there absolutely are. So if you think about our portfolio going forward, it is going to be -- we're going to have capacity centered around the Jenbacher unit, which is 4.3, 4.4 megawatts per unit. But you absolutely can get much bigger gas recip engines than that.

Michael mentioned the idea of a power haul. The Jenbachers are a packaged unit something that we package and deliver to site, basically ready to go, save for some basic dirt work. As you start to move into that larger capacity, the 10, 11, 12-megawatt kind of size, those are very, very large units. Those are going to be inside of a power haul, a building that will be constructed on site, and then we'll have those installed in there. And so as he was alluding to the different time lines for -- from delivery to power generation, it was specifically around those 2 different asset scales that he was he was talking. So you should expect to see both that smaller, more modular type approach in our world, along with the larger units deployed in a power haul type facility also.

If you look at, Derek, you're going to -- power blocks basically with our partners at Caterpillar, sort of the 2.5 megawatts and 25-megawatt blocks, you're going to have the larger Jenbachers and 50-megawatt blocks to deliver, then we'll have the 200-megawatt power haul, which is delivered by a number of our core partners for these larger recip engines.

And then as you go up in size after that, any very, very large installations, that's when, as Ron pointed out, you may go to a larger sale turbine solution as well as waiting for the Oklo powerhouses which would be our natural sort of large scale behind the recips once we get past 2030, once into 2030, that will be the solution there.

Right. Okay. That makes -- very helpful detail. And I guess for those power halls, those bigger recips. Are those included in this 1 gigawatt target that you just laid out?

We're not going into the details of exactly where it is, but they are basically all recips for the 1 gigawatt number.

Got it. Okay. That's fair. And then a ton of questions have been asked on power, so just maybe a housekeeping one for me as far as how we should think about the fourth quarter. Obviously, we have some seasonality creeping in, third quarter was much -- was softer than expected. But how should we think about maybe top line and some of the decrementals? Should we stay at that 55% level? Or should we start to normalize just given kind of where we started in 3Q, where we're going in 4Q?

Derek, I would say that at this point in time, we're anticipating just typical seasonality as really the change in cadence from Q3 to Q4. We'll see how that plays out as the quarter unfolds. But that's what we're assuming at this point in time.

Our next question is from Keith MacKey with RBC Capital Markets.

First wanted to start out on that $1.5 million to $1.6 million per megawatt number. I think we've been incorporating something slightly lower than that, in the $1.3 million to $1.4 million range previously. Can you just talk about kind of what has driven the increase there? Is it varying scope of the equipment you'll be providing around these projects? Or is it pricing or is it a mix of both? Just curious what's really driven that. And ultimately, how close do you think we are to the to the end-stage determination of what these projects will actually cost once they get into the field. Is that $1.5 million to $1.6 million a 50% to 70% confidence number? Or is it a 70% to 85% confidence center? Just curious for some color...

Yes. It sort of does depend on scope, Keith, kind of material. That's us taking [ 13 8 ] generation, stepping it up to 35 and handing the electrons off, so that your scope can move. I mean, obviously, that's assuming, to some degree, at some point, most of the gas delivered to the feeds line, right? So depending on where sort of how long a gas line, whose scope that's in, how long sort of the interstate connection and the pipe. So a lot of moving parts around where those projects can ultimately come in, whose scope that ends up in. That's why those sort of numbers are there.

There also are price increases, right? I mean as you can see, there is a huge amount of demand for power generation. A large portion of that is sort of built outside the country. So sort of prices are moving on a fairly regular basis and is -- when we look out, a lot of some of these prices, we're starting to look at, and discuss with our partners, supply chains out '28, '29 talking to the Oklo team about what we can do in '30. So we are talking a large a long way into the future in some of those. So the pricing will move over time.

The great thing is when you look at the efficiency of our solution and the effectiveness of what we can do and the capital effectiveness especially, we can provide what is a grid parity or lower than group price now to these large load customers with very little inflationary need comparative to what the group is going to go up, right? Capacity fee is going to kind of probably inflate CPI everybody, I would say, as you talk to a grid over the next 15 years, the inflation rate of natural gas, given how successful we are on our completions business and how good our service teams are there, is going to be far lower than the general inflation rate of grid power prices, right? So when customers sign up with us now, they're getting at-grid or lower-than-grid pricing. And if they reject forward 15 years, they're going to be significantly below what the grid pricing has been. So it's a compelling, compelling technological and economic solution for these folks.

Yes. Got it. I appreciate the color on that. Maybe if I could just circle back to Derek's question about Q4. I understand the guidance there for normal seasonality, although it tends to be an industry where I find that normal seasonality is hardly normal.

We might agree.

Yes. So if we were to put just some general guidepost around that, like if I look at the last 2 years, the revenue is down 12%, down 17% in '23 and '24, respectively, for Q4, like, is that sort of the range we should be thinking about for Q4 this year with kind of a similar level of decremental? Or is there anything specific in this year that might make it different from those prior years?

I think that's probably the top end. I think we get into a normal seasonality, which is lower than the last 2 years. But that's probably the top end of what you would model. Activity-based decrementals on that, yes.

Our next question comes from Eddie Kim with Barclays.

Just wanted to touch on that additional capacity of 600 megawatts. Just wanted to clarify how much of that 600 megawatts is secured or how much you've ordered versus how much of it you're in advanced discussions for.

And secondarily, just your confidence level in being able to deliver that full 1 gigawatt capacity by the end of 2027. We've heard a lot of they're all sold out. So just curious, your confidence level in being able to deliver that on time.

Yes, very -- we have unique relationships. Obviously, these are a lot of the same players that we've -- north of $5 billion to work with over the last 12 years, right? So we have unique relationships with these folks. So very, very confident.

Supply chains, we're clarifying some of the bits and pieces of some parts of those megawatts at the moment. But yes, very confident that it will all be delivered. Now that will be landed. That's not generating, that will be landed, right? But that's the key portion of what's available. So it can be then being sort of like starting to work on to the [ dirt ].

Understood. Understood. And then just in terms of that 600 megawatts, is all of that in advanced discussions right now? Or have you actually secured some part of that?

It's all advance -- as far as the supply chain, the delivery of it?

Just in terms of what you've ordered.

The vast majority.

The vast majority of the 600-megawatt -- incremental 600 megawatts is ordered. Okay. Understood.

Correct.

Okay. Great. My follow-up is just on Oklo. First, I believe you had a small equity stake in Oklo. Could you just remind us how big that stake is? And with regards to the collaboration agreement, what are you currently contemplating in terms of the number of megawatts you'll be allocating or ring-fencing for that collaboration? And when do you think is the earliest you would see a deployment of those assets?

So sort of our investment in Oklo, I think you said is in our queue, you have the details around it, and you'll see that we have been monetizing some of it. And actually just moving that straight into deposits on power generation, which, again, I think our long-term power generation contracts and context with the hyperscalers, and a large number of those will eventually include the inclusion of -- potentially inclusion of [ SMRs ], maybe not on the same specific sites, but with the same customers, right?

But you think the vast majority, 70% of the sort of the IT infrastructure, data center is going to be built by 6 or 7 folks, right, using 10 or 12 developers to do that work for them. So the combination of ourselves at Oklo will be involved in a lot of projects together. We'll see how that goes. But yes, was quite exciting. I was at the groundbreaking of their national lab generator, and we're hoping to see electrons flowing from that at the early part of '28, I believe. So I think the DOE has been very, very helpful with the development of nuclear.

Our next question is from Dan Kutz with Morgan Stanley.

So Michael, correct me if I'm wrong, but I think earlier all the color that you gave around the financing options, that was all for the incremental 600 megawatts. So A, correct me if that's wrong.

And B, I just wanted to confirm for the initial 400 megawatts that you guys ordered, is the plan still that that's all going to be kind of financed organically using the revolver and using organic cash or, I guess, in a scenario where maybe if things played out worse than contemplated in the near term here, and how would you think about financing options for the initial 400 megawatts if kind of the existing capital structure needed a little bit of extra capital to kind of get those to the finish line?

Yes. Hang on, I can answer. All right. So I don't think you should think of the initial 400, the next 600. I think you need to think about this as a building of an ongoing business, right, holistically. We will fund sort of the early-stage deposits, the movement of supply chain, until those long lead time equipment are assigned to a signed ESA. When you're assigned to a signed ESA, now it could be megawatt number 98 or megawatt number 105, whichever would be [indiscernible] the assigned to an ESA, dropped down into a project and then funded separately.

So really, what you're looking at there, about 30% of that project will be funded by equity, either ours or potentially in partnership. And so when you look at it, it's going to be an ongoing stream, a development stream. You've got to remember, what we're doing here is we're building a company for decades, a generational -- a generational power generation company with strong 15-plus year cash flows that are going to be building out and exponentially additive as we go through into the future. So this is something that is being built brick by brick by brick. So I think that's the key way to think about it that.

Great. That's really helpful. And then I don't know, maybe for Ron or either of you, but I guess I'm just thinking about some of the puts and takes on completion services or frac profitability per fleet, and there are kind of some puts and takes to think through, I mean you guys have flagged pricing pressure, and then also, I feel like Liberty tends to be less reactive in kind of scaling up and down the cost structure in up or down cycles, but rather kind of maintains the high-quality labor force and the overall high-quality business. But I guess there's some offsets you guys have flagged as well, growing fleet size and horsepower per fleet. At least this year, the fleet mix improved with the incremental [indiscernible] frac deliveries, efficiencies are improving. So yes, maybe you could just unpack what you've seen in kind of profitability curve fleet and how you think that trends moving forward.

Certainly, Dan. We -- I would start by saying that, of course, we view this business just like Michael talked about the power business. This is -- we have a long-term view on this. So no, of course, we don't react quarterly to ups and downs. People are our most important asset. They are the reason we are as successful as we are. And so we don't make changes in head count because of what we view as a short-term blip in activity.

I think we are very confident in the long-term viability of the business, in the long-term outlook for oil and gas demand, and the role that Liberty will play in delivering that. So we take a long-term view to that piece of our business as well and particularly the people that are involved in that business.

There are, as you say, some puts and takes. Of course, we are in an industry that has competitors, and unfortunately, when we have companies that find white space on their calendar, the way they choose to defend market share is with price. And we're not immune to that, of course. Our customers are aware of where the market is. And so that ultimately leads to conversations that have us needing to adjust our pricing in line with the market.

That said, we are still fully utilized today. That is a testament to the people that are in the field, the technology that they have to work with, the supply chain and other things that support them. And we expect that to continue. And we'll navigate the pricing headwinds in the near term. And when things get better, we will be, as we always have been in the past, the best positioned company to take advantage of that going forward.

This concludes our question-and-answer session. I would like to turn the conference back over to Ron Gusek for any closing remarks.

Thank you, Bailey. We pride ourselves on delivering efficiency, on maximizing the effective utilization of the assets we deploy to the field, with the goal of delivering the lowest total cost of completions for our customers and ensuring that a barrel of oil or Mcf of gas produced here in North America remains competitive on the global stage.

Delivering the highest levels of efficiency means ensuring we have the best of everything on location: the best people, the best technology, the best company to deliver each individual service. We've always said that Liberty wants to be the provider of frac, wireline and logistics on any well site, but only if we are the best choice in each of these. If not, then take what we are best at and pair us with the best partners for the others. Accepting mediocrity is just bad business, bad for competitiveness, bad for consumers and bad for investors.

Unfortunately, the current punitive tariff policies are doing just that. Tariffs make the economy less efficient. They are a path to mediocrity, not excellence. They raise prices, cut profits, increase unemployment, diminish productivity and slow economic growth. North America is a leader in energy production, energy that the world desperately needs. Unfortunately, tariffs on steel and aluminum products are driving up the cost of that production, impacting competitiveness on the global stage, potentially leading to a loss of market share. How is that a positive income for either the U.S. or our trading partners?

The Secretary of Energy has called the race for AI dominance our next Manhattan Project. Winning this race requires access to massive amounts of new power generation capacity and associated hardware, along with many other sophisticated components. Much of this is currently made overseas, and much of it is now subject to tariffs. Is this a path to winning a race the administration has identified is so critical to our nation's future? I would argue, no. It's a path to mediocrity at best. I hope we quickly pivot to a different course, one that puts us firmly on the path to energy and AI dominance here in the U.S.

Thanks for joining us on the call today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Welcome to the Liberty Energy Earnings Conference Call.

[Operator Instructions]

Pleas note, this event is being recorded. I would now like to turn the conference over to Angeli Voria, Vice President of Investor Relations. Please go ahead.

Good morning, and welcome to the Liberty Energy Second Quarter 2025 Earnings Call. Joining us on the call are Ron Gusek, Chief Executive Officer; and Michael Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements reflecting the company's view about future prospects, revenues, expenses or process. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements.

These statements reflect that the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings. Our comments today also include non-GAAP financial and operational measures. These non-GAAP measures including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pretax return on capital employed and cash return on invested capital are not a substitute for GAAP measures, and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA, net income to adjusted net income, and adjusted net income per diluted share, and the calculation of adjusted pretax return on capital employed and cash return on invested capital, as discussed on this call are available on our Investor Relations website. I will now turn the call over to Ron.

Good morning, everyone, and thank you for joining us to discuss our second quarter 2025 operational and financial results. Liberty delivered an exceptional second quarter amidst increased macroeconomic uncertainty and energy sector volatility. Revenue and adjusted EBITDA increased 7% and 8% sequentially, respectively, against an industry backdrop of softening completions activity. This strong performance is a direct reflection of the outstanding contributions of our team safely driving record efficiencies and increased utilization that more than offset industry pricing headwinds.

Our outstanding performance of shows lasting customer loyalty and reinforces our position as the fleet of choice in a competitive market. Tariff policies, the accelerated unwind of OPEC plus production and geopolitical tension drove renewed uncertainty in the energy sector. During the quarter, we collaborated as partners with our customers to drive greater efficiencies which is likely to grow our market share as activity pulls back in the second half of 2025. Amidst market pressures and near-term reductions in customer activity, we are planning to modestly reduce our deployed fleet count and reposition this horsepower to support expanded demand from long-term partners for our simul frac offering.

We are leveraging our full suite of completion products and services, including frac, wireline sand, chemicals, logistics, fueling services and top-tier engineering and diagnostic tools to drive increased engagement with our customers. We have created a unique competitive position that allows us to stay agile in dynamic markets. We are excited to bolster our technology leadership with rapid progress on our cutting-edge digiPrime enhancement with the industry's first variable speed natural gas reciprocating engine. This is truly the next wave of technology and frac fleet design. We now have 2 variable speed digiPrime units pumping in the field, that have together completed over 1,700 hours of testing in the high-pressure environment of West Texas. These units provide precision rate control and increased torque, increasing both operational and capital efficiency. This latest technology advancement expands our ability to offer a 100% natural gas solution.

Our successful development and field testing during the second quarter reflect our commitment to continued innovation in high-efficiency, low-emission technologies. Three years on from our first digiFleet deployment, the results continue to exceed expectations. The platform is delivering substantial, measurable benefits, most notably in the durability and performance of key components. One of the core advantages of operating on 100% natural gas is the reduced wear and tear on engine components compared to diesel. Natural gas combustion produces fewer particulates, extends oil life and significantly reduces engine stress.

Factors that contribute to engine life spans expected to be 2x to 3x longer than conventional diesel and dual fuel powered systems. We are already seeing this play out in the field. digiFleet power ends are lasting twice as long as conventional power ends, while managing significantly higher load. Similarly, fluid ends are achieving twice the horsepower hours of their conventional counterparts. These early results are clear evidence of the operational and capital efficiency gains enabled by our digiFleet. They directly support our mission to deliver the lowest total cost of service to our customers while setting a new standard for sustainable performance in the field.

We also completed a successful field trial of the industry's first last mile sand slurry system. The system performed as designed consistently exceeding delivery volumes in conjunction with our proprietary water handling system. By transporting sand slurry via pipe, it is expected to reduce costs improved delivery reliability and decreased dust emissions and road maintenance for our customers. Growing demand from data centers and industrial users necessitates a collaborative approach to address power service requirements, that increasingly surpassed the traditional utility offering. During the second quarter, we announced 2 strategic alliances for the development of power facilities. In Pennsylvania, we are collaborating with Range Resources and Imperial Land Corporation to provide power services to anchor a strategically located industrial park, tailored for scalable development with advantaged access to Marcellus natural gas.

In Colorado, our strategic alliance with Altitude x Aviation Group will support a proposed development at the Colorado Air and Spaceport powered by a Liberty microgrid. These partnerships address the barriers that commercial and industrial developers face, including access to suitable land, integrated power management solutions and reliable fuel supply. Together, we offer a turnkey solution that combines on-site generation, market integration and infrastructure readiness to meet the evolving needs of high-demand users. Our recently announced collaboration with Oklo represents an exciting path towards delivering integrated next-generation power solutions for sophisticated large load customers. This comprehensive approach combines the speed to market of Liberty's distributed natural gas power, and high-performance load management solution to meet immediate demand with a path to integrate grid power management and baseload small modular nuclear reactors with Oklo's Aurora powerhouses. This complete solution is designed for data centers, industrial sites and utility scale facilities, providing rapid deployment enhanced grid optimization and long-term price stability. This ultimately enables a seamless path to reduce carbon intensity without sacrificing reliability and flexibility.

Liberty was an early investor in Oklo, committing $10 million in 2023. After evaluating companies and technologies across the advanced nuclear space, we identified Oklo's innovative business model and scalable design and differentiated technology as an important strategic solution to meet the growing power demands of large-scale energy users. We are thrilled to be aligned at a pivotal moment where collaboration can drive meaningful impact. Together, we will deliver an unprecedented fully integrated power and grid management solution, offering large-scale energy users, a new level of reliability, scalability and flexibility that simply hasn't existed before. While oil markets continue to evolve in response to dynamic global economic and geopolitical developments, North American production has remained relatively stable. As the world's largest supplier of oil and natural gas, U.S. producers continue to play a vital role in delivering reliable energy to global markets, supporting domestic industrial activity and power demand and providing strategic leverage in the geopolitical landscape.

Recent events ranging from shifting tariff policies to rising regional hostilities, and mixed economic signals affecting global oil demand have not yet driven a meaningful North American production response. Larger, well-capitalized producers with strong balance sheets and highly efficient operations enjoy healthy well economics, enabling them to weather commodity price volatility. Intra-quarter price fluctuations created hedging opportunities, further tempering supply side reactions. Producers are targeting a relatively flat production profile, sustaining a baseline of frac activity to offset the natural decline of producing wells. Completions activity is anticipated to gradually slow during the second half of the year, reflecting disciplined capital deployment, and contributing to market pricing pressures on services.

This slowdown in activity is expected to accelerate equipment cannibalization and attrition, which fundamentally improves the supply and demand dynamics within the services industry over the cycle. Today's larger producers require a technically superior offering to meet the rising demand for efficiencies and engineering support that few service companies are positioned to deliver. Liberty's unmatched portfolio breadth, integrated services and technical innovation uniquely enable us to deliver greater value to our customers and drive outperformance. As we look ahead, the strategic investments we have made in completions through cycles enhances our ability to support customers in an evolving landscape.

We are leveraging our integrated suite of completion services, cutting-edge technologies, industry-leading partnerships and the dedication of our exceptional team to navigate market uncertainties. Within our Power business, LPI delivers a robustly engineered end-to-end energy solution uniquely integrating on-site generation and load management, ISO market participation and advantaged retail supply, creating a comprehensive, flexible approach that redefines reliability and cost efficiency in deregulated regions. We are excited by LPI's future growth and its ability to contribute to our track record of delivering superior long-term returns while balancing disciplined investment with a strong balance sheet through cycles.

I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. I'm pleased to share that we achieved solid financial results despite the ever-changing macro landscape of the second quarter. Liberty's activity levels climbed quarter-over-quarter despite industry-wide frac activity declines observed during the period. We saw a resulting increase in our market share, a trend we expect to continue in the back half of the year given our differential service offering and expected relative outperformance. We also made significant progress in our power business, cultivating long-term relationships that will drive future successes.

In the second quarter, revenue -- in the second quarter, revenue of 2025 revenue was $1 billion compared to $977 million in the prior quarter. Our results increased 7% sequentially as higher activity in nearly all our business lines more than offset pricing headwinds and softer conditions in the Permian SAM market. Second quarter net income of $71 million compared to $20 million in the prior quarter, adjusted net income of $20 million compared to $7 million in the prior quarter and excludes in $51 million tax-affected gains on investments. Fully diluted net income per share was $0.43 compared to $0.12 in the prior quarter. Adjusted net income per diluted share was $0.12 compared to $0.04 in the prior quarter. Second quarter adjusted EBITDA was $181 million compared to $168 million in the prior quarter, an 8% sequential increase.

General and administrative expenses totaled $58 million in the second quarter compared to $66 million in the prior quarter, which included a noncash stock-based compensation of $6 million. G&A decreased $7 million from the prior quarter, primarily due to accelerated modified stock-based compensation associated with the Christmas departure in the first quarter. Other income items totaled $58 million for the quarter, inclusive of $68 million on gains on investments, offset by interest expense of approximately $10 million. Second quarter tax expense was $24 million, approximately 25% of pretax income. Cash taxes were $20 million. In the second half of 2025, we now expect tax expense rate to be approximately 25% of pretax income and approximately no payment on cash taxes in the second half of the year.

We ended the quarter with a cash balance of $20 million and net debt of $140 million. Net debt decreased by $46 million from the prior quarter. Second quarter uses of cash included capital expenditures and $13 million of cash dividends. Amidst market uncertainties, we elected to refrain from share buybacks to allow a period of assessment while focusing on the execution of our long-term strategic plans. We will continuously monitor evolving macroeconomic conditions and remain flexible and value focused in our buyback approach. Total liquidity at the end of the quarter, including availability under the credit facility, was $276 million. Subsequently, in July 2025, Liberty expanded its credit facility in support of strategic growth in power generation with a $225 million increase in our aggregate commitments to $750 million, subject to borrowing base limitations.

Net capital expenditures were $134 million in the second quarter, which included investments in digits, capitalized maintenance spending, LPI infrastructure and other products. We had approximately $3 million of proceeds from asset sales in the quarter and $51 million of proceeds from the sale of equity securities. We now expect total capital expenses for 2025 of approximately $575 million, approximately $75 million less than planned, roughly evenly distributed between reduced completions CapEx and delays in delivery of power generation relative to expectations in January. As we approach 2026, we will assess market volatility and implications of completions CapEx while continuing to lean into the growth potential of our power business.

After a strong uptick in the second quarter, we expect third quarter revenue and EBITDA to soften sequentially. Many service providers that had already experienced white space during the second quarter were quick to respond unconstructively, resulting in pricing headwinds. As a result, the macroeconomic developments over the last 3 months, we are withdrawing our full year EBITDA target range provided in January, and we'll provide additional color on our fourth quarter expectations on our next earnings update. In spite of the anticipated frac market softness, we are encouraged by the opportunities ahead and our ability to create value. We have confidence in our ability to demonstrate continued outperformance.

We are working diligently alongside our customers to provide best-in-class service and engineered solutions that respond to evolving well economics and drive more entrenched relationships with these customers. Our power opportunities continue to expand and we're excited by the relationships we have built [indiscernible] position us to deliver comprehensive integrated long-term solutions. We are deeply committed to generating superior returns for our shareholders over the cycles. I will now turn the call back to the operator for Q&A, after which Ron will have some closing comments.

[Operator Instructions]

Our first question will come from Stephen Gengaro with Stifel.

So 2 for me that are public connected, and we get asked this a lot, so I'll ask -- when we think about the power generation side of the business, can you talk about, one, sort of what the current sort of supply chain looks like for incremental capacity and then the other question is sort of around, kind of the potential for some of these assets to be contracted over the next couple of quarters?

Yes, Stephen, so let me tackle the first one. On a -- from a supply chain standpoint, there definitely is, particularly on the gas recip side, incremental capacity available beyond, for example, what we have already procured we have had conversations with our supply base. And certainly, I think this is specific to Liberty and our relationships there. have identified availability of meaningful additional capacity. We could significantly expand our order book for 2026 if we so desire to, and have those assets delivered over the latter part of 2016 and headed into early 2027. So we have that opportunity there.

I think realistically, if we wanted to, we could probably more than double our order book for 2026 if we chose to. With respect to the second part of your question, maybe I'll tackle it and then if Michael has anything to tack on from his standpoint, he certainly can. We've announced a number of larger partnerships. And of course, those are bigger development efforts. And so as you think about things like permitting and whatnot, there is a time line involved in that sort of stuff. And so those ones are going to be a little longer as we think about asset deployment for something like that. You're probably talking about into 2027 for those types of bigger partnerships. We are going to start deploying power generation assets this fall. So we have 3 sites, 1 in Colorado and 2 in Texas that we will begin to deploy assets on here in the back half of the year. and I'd expect we'll begin generation for that sometime in 2026.

Great. And then just as a follow-on, given the Oklo announcement, it sounds like -- I mean one of the things that Wall Street is trying to figure out is kind of the sort of bridge to something down the road, whether it's grid power or SMRs or whatever it might be. But your relationship with Aqua, it seems like it's at least partially stemming around creating this kind of long-term power solution until some of these SMRs are more active, which is probably 5 to 7 plus years. How do we think about that? I a long-term relationship as baseload? Or could some of what you're doing to be kind of included as backup power as the MRs come on longer term?

I think you're generally thinking about that in the right direction, but I'd say even broader than that, Stephen. Of course, we have this time line delta. We have customers who desire to bring their facility industrial complex, whatever it might be online sooner than might be possible if they were going to wait for an SMR. And so in the first phase of this, we do provide that bridge for start-up and continuous operations until we can deploy an SMR to the site.

Once we get an SMR there, though, you have to remember that nuclear is best suited to baseload power to long-term steady supply of a continuous amount of kilowatts or megawatts. If you think about a data center, you have there an asset that has highly variable load demand, loads that can fluctuate by a significant percentage of total load over fractions of a second. And so you need a mechanism for response to that. The partnership with natural gas recip and ultimately, some more advanced technology, I think capacitants and super capacitants enables that variability in -- but as a partnership, not as one or the other.

The other advantage is with gas on top of nuclear, you rely on the nuclear for that baseload capacity. But when and if the grid arrives, it also allows some flexibility in that regard. You could think about our ability with fast response gas to be able to keep an eye on prices available on the grid, to the extent there's abundant women solar that day and power prices are quite low. We could ramp down the gas and take advantage of that opportunistic pricing. To the extent the inverse is true, and we have very, very high grid prices. We have the ability to start up all of that gas capacity, make sure we're taking care of the core customer, but also putting some of that power out on the grid. So I think if you view this as a very long-term partnership, you can see that there are some real economic opportunities with nuclear paired together with gas, not just in the near term but over decades to come.

Our next question will come from Scott Gruber with Citigroup.

Good morning. Realize all the moving pieces on the completions that makes it tough. But just wanted to get some more color on the second half. Activity is down, but you're redeploying some capacity you're taking share, but pricing is a headwind. So just can you provide some more color on the revenue trajectory and EBITDA trajectory in 3Q? And what's the early look for 4Q? Will seasonality be worse than normal? Or are we in a situation where -- because customers are slowing today, that may moderate the 4Q decline. So just some color there would be great.

Yes. Good question, Scott. Certainly, we're coming off of an incredible high in Q2. We had a tremendous quarter this past quarter. But as you've noted, we've seen activity start to come down. That's predicated by rig count falling and we've seen that happen over this quarter and continue into the start of the third quarter. We always, from a completion standpoint, lag that by 3 or 4 or 5 months. And so we're expecting to see that impact on the completions world over the back half of the quarter.

And so well, we had very strong utilization in Q2. Relative to that, we are starting to see more white space appear on the calendar. I think it's our expectation that we're going to see an activity reduction maybe of order mid-single digits or thereabouts in terms of our utilization of the asset base. As we noted, we're repurposing assets a little bit. We are taking down our fleet count. But with the desire to get to increased efficiency, our customers are seeking more simul frac work. And so we're repurposing that horsepower, lowering overall fleet count, maintaining effectively our horsepower utilization though, and running fewer, larger fleets to meet that demand to drive efficiency in these environments.

Now of course, with that additional white space as we look out in the back half of the year, we're going to see some pricing headwinds as you noted. And certainly, we expect that to be a piece of the puzzle as well. At this point in time, I think we'd say probably low single digits pricing headwinds. And there's a little bit of context to that, of course, we have relatively firm pricing with our leading-edge technology, think that digiFrac and digiPrime assets that are out there, a little more challenged pricing with the older assets, particularly the diesel equipment but averaged across the asset base, probably something in the low single digits range.

As for Q4, probably a little early to tell at this point in time. I certainly appreciate your thinking there, and I hope that's how it plays out. But I think for us, just given how bumpy the market has been, and we're probably going to take a bit of a wait and see on Q4. And as we get a bit closer to that, we'll be able to provide some -- probably a clear outlook there. Michael, anything to add?

No, I think you covered it well there. I think at least normal seasonality for Q4 coming off Q3, but we'll have some more clarity as we get closer.

All right. I appreciate it. And then I wanted to come back to the Oklo Alliance it's certainly an interesting alliance. Now Oklo,I believe, has a bunch of MOUs for their reactors. With the alliance, will you be targeting customers with MOUs? Are they clamoring for a kind of faster time to first power? Or will the alliance be mainly targeting new customers?

No. So when you think about it, the -- with the Oklo powerhouses, these are large low sort of very large customers, right? And so these are multiyear development MOUs they have -- so when you think about it, sort of how that customer wants to develop power over the next 5 to 10 years. So yes, so definitely, the Liberty Oklo Alliance will be working on with those customer relationships.

This allows the ability to bring power forward and having a more integrated and grid interconnected long-term solution, which will sort of solves a lot of the problems when you think about you want to get to a long-term nuclear solution where people are still focused on a low-carbon solution. And -- but you want to be able to get to that point we want to win the AI race now. right. So the bringing of Liberty's Forte generation and load management solution, which allows us to manage those incredible variable loads that is driven by the AI data centers, so they want to be able they want to deal with. Also, the seasonal variability due to the significant parasitic load of cooling of data centers, right?

So therefore, the Oklo powerhouses are great to the baseload portion of it. And the Liberty Gas will be a 20-plus year generating asset as part of that integrated solution. So yes, so we will be working diligently to bring forward a lot of this data center development that has been talked about over the last year.

Our next question will come from Keith MacKey with RBC Capital Markets.

Just maybe first start out on the sand slurry pipe system you talked about in the release. Can you just give us a sense of the operational advantages or cost differential that, that type of sand transportation provides versus the traditional methods?

Yes. Good question, Keith. It's I won't get into the weeds on the numbers, but to give you some sense of how that difference might play out. But I'll give you a very simplistic scenario. You can imagine an environment where there is a existing proximity mine, so effectively a wet sand mine located in the middle of somebody's contiguous acreage. The sand slurry system allows us -- today, we're using a number of around 10 miles to never put that sand in a truck to have that leave a proximity mine in a slurry pipe and be pumped all the way to location.

Once we get to location, we remove the water from it. We stack it in a wet pile just like you would see with any other pile system and have that sand ready to go for use on location. So in that extreme case, we actually never put a truck on the road to handle sand. In maybe a slightly different example, -- probably one of the biggest challenges we have when you think about the logistics for sand is the last portion of the last mile of delivery. So if you think about West Texas, the Permian area, we might go and get sand from one of the mines in the [ Kermit Monahans ] trend. We'll load that on a truck, we'll drive down a highway for a good portion of the way. But then ultimately, we end up on a ranch road. Our rent roll that will have a speed limit of 10 miles an hour. It is relatively well maintained, might have some call gates along the way. That's a significant use of time for a truck it might be half of the driving time even though it's only a fraction of the distance that they have to travel.

There's also a significant cost to the E&P to maintain that road when we have to deliver hundreds of trucks of sand up and down that each and every day. You can appreciate that that's the most volume from a vehicle standpoint, going in and out of location for the operation of the frac. The slurry system allows us the opportunity to remove that entirely. We could have the sand trucks deliver only on pavement and thus maintain their round trip efficiency, maximizing the number of loads they get in today and minimizing our per ton mile cost for that and then transfer that sand into a slurry system to deliver the rest of the way to location.

We eliminate the truck traffic, the dust, the noise that comes with that. We give the truckers a more efficient time frame, and we basically remove all the road maintenance costs that come with all of that traffic on the road. And so we view that as the economic opportunity for the customers in this. It's not going to be an application that works every place, but I think there are going to be a lot of opportunities in basins where it's going to make a lot of sense.

Got it. I appreciate that color. Appreciate the comments on the utilization softening and the pricing as well across the asset base. Can you just give us a sense of how the active consolidating some of your horsepower into fewer fleets might change the earnings power of the business on a like-for-like basis. So would you expect that the simul frac operations to have higher earnings power or lower earnings power relative to your prior asset footprint without any of these additional changes?

Yes, there's a small change there, Keith. But in relative terms, we -- services are priced on the basis of a return on the assets themselves, right? So whereas -- we will have less fleet each fleet will be slightly more profitable on a fleet basis. But on a per horsepower basis, you're going to see some similarities and you're going to see some reduced average cost per lateral foot for the clients. So it's a bit of a win-win for everybody.

Our next question will come from Marc Bianchi with TD Cowen.

I wanted to ask a couple of clarifications around sort of the outlook for the second half here. Ron, you were talking about the drawdown in activity, maybe something in the order of mid-single digits and then add a few percentage points of price to that. So it would appear, maybe we're talking about something like 7% or 8%. Is that what you expect for third quarter? Or is that kind of a mix of third quarter and fourth quarter?

And then I don't know, Michael, if you want to try to help us with how to think about the operating leverage, the decrementals that we would see on that type of a revenue decline.

I sort of -- you broke up just a bit in the middle there on this end. Sorry, Marc, can you just repeat the question?

Sure. It seems like between the activity and price that you talked about, it sounds like maybe it's something like a 7% or 8% decline. The question was, is that all in 3Q? Or is it sort of spread over the second half? And then how much of a decremental margin should we be looking at recognizing there's some price and some mix and lots of moving pieces.

So yes, Michael is doing some quick math for you there, Marc, but I think I don't think I'd add those 2 things together necessarily to get to 7% or 8%. I think you want to think about those things independent of one another, and that will get you to probably some slightly different numbers than just the sum total of the [indiscernible] Michael, do you want to provide some things...

I think you're right. I mean I think if you look at those numbers, you get to mid-single-digit activity where you've got decrementals that are a little elevated to your usual sort of 35% because of as we are changing out our fleet count. And then you've got, as Ron said, some single-digit pricing decline on average across the whole fleet. I think you can get to the math on getting to the numbers with that.

Got it. And that's all happening in third quarter, like this is essentially what you think for the calendar third quarter?

The general assumption is pricing stays relatively flat through sort of we're seeing those drops now, as best we know, it stays relatively flat through the fourth quarter, and you'll see some seasonality. But again, we'll have a lot more clarity on that when we get to the next earnings release.

Yes. Okay. Makes sense. And then the other one I had was on the CapEx reduction, you mentioned some of it was frac and some of it was some sort of slower delivery for the power equipment. I guess, could you help us understand how much is each? And then with the power piece, was that your decision or the vendor's decision? And what's the chance of seeing further delays there?

It's about split 50-50. You've got to remember, on the power side, really, that's just a firming up of delivery times. Remember, we gave you some numbers at the beginning of the year in January, right? So things sort of be as far as those delivery times firming up between sort of November, December, January and February of next year.

So it's just a firming up of the actual delivery times out of the factory. So not a big number, but you've got an artificial 12-month period we're talking about here. And then on the frac side, yes, about 50% of that reduction comes out of the frac side as we start to tamper down CapEx on the completion side of the business as we move towards where we see the market changing as we continue to drive strong free cash flow out of that business as we go forward.

Our next question will come from Saurabh Pant with Bank of America.

Ron, maybe I'll start with the big picture question. Like you said in your prepared remarks, right, it seems like E&Ps are solving for flat production, right? So if we think about that, new frac, I think, close to 20% of the wells in North America. As you look forward and have your discussions with your customers, Mike, how do you think customers might budget for 2026, right? Just broad strokes, any high-level thoughts on that?

Yes. I'm certainly happy to provide my speculation on that. Of course, I would love to be in the boardroom with them when they're making those decisions. But my suspicion is that we are going to see the E&Ps onshore North America generally try to hold production at levels somewhere close to where they are today. It's my opinion that it would be difficult to regain that market share in the foreseeable future.

And so my sense is barring some meaningful economic dislocation, we're going to see them with a budget that has sufficient activity to hold production close to where it is right now. We maybe see a modest decline. Maybe it's -- maybe we'll see production come off 100,000 and I think at the outside 200,000 barrels a day. But I'm of the opinion that they will plan a budget accordingly that supports levels at that point. And we'll see what actually happens going forward, but that's my expectation.

Right. No, I know it's too early to speculate, but I appreciate the thoughts, Ron. And then one question I had a follow-up on Mark's question on the power deliveries, right? I understand you're firming up the schedule. But I'm just trying to extrapolate what we heard on the Baker call earlier this week, they're booking a lot of orders.

It seems like they're booking more orders than they have capacity right now, right? So I'm just trying to wonder, as you, at some point, think about, okay, should we at least get a slot, if not a firm order for deliveries beyond 400 megawatt. Any thoughts on what lead times might look like for that?

I think we're pretty comfortable saying that today with our partners on the power generation side, we can still expect deliveries in a 12-month time frame without any concern. In fact, we had a conversation literally the first part of this week to confirm what our additional opportunities would be for 2026. And so I'm quite confident telling you that if we were looking to add meaningful capacity to our order for next year, we could do that and expect deliveries in the same time frame that we are getting them today.

I got it. And very quickly, Michael, of that $575 million in CapEx that you gave us, how much of that is maintenance?

So a little bit -- it's a bit below $200 million.

Our next question will come from Grant Hynes with JPMorgan.

So despite some of the sort of pricing pressure that you kind of mentioned in the release in the lower part of the market, it seems like still kind of getting strong economics on the digiFleets rolling out. Maybe how should we just think of sort of go-forward cadence on digiFleets as we think about power CapEx largely spoken for next year? And I guess, any flexibility kind of on that side?

So I think, Grant, as we -- based on what we know today, we're going to finish out our Digi program for 2025. Those fleets are committed to customers. They have a home to go to at contractual terms that we are very, very happy with. But as we look out into 2026, I think given our outlook today, there's a reasonable chance that we will retrench to effectively maintenance CapEx on the completion side of the business that we would not deploy any additional Digi capacity next year. Subject to change if market conditions change and we see a reason to make a move there. But at this point in time, I think we'd say that's our most likely outlook.

And then also, we've heard from some peers just on some nat gas activity being relatively stable. Obviously, I think some mix, but maybe with LNG facilities coming online, maybe seeing some early demand signals. I guess, can you just speak to this and maybe provide color if any of the equipment you were speaking about is kind of levered to gas stations?

That's a great point. Certainly not something we had mentioned, but we are in the fortunate position of being underweight Permian relative to rig count there and overweight Haynesville relative to rig count there today. So we are doing a good amount of work in the Haynesville. We're seeing strong support there and expect to see that continue through the latter part of the year, at least as best as we can tell today. So it has been a tailwind relative to the other parts of our operating platform.

Our next question will come from Derek Podhaizer with Piper Sandler.

I guess I just wanted to ask on the attrition comments you guys had in your opening statement. Maybe could you help us understand what you guys expect as far as moving diesel from the market? And you just answered the last question, not replacing much more digi as we look into next year. But maybe just help us understand the supply-demand dynamics of the industry and what you expect as far as diesel being removed and how that can help the supply and demand picture moving forward?

Yes. I think if you think about the market and even the commentary you've heard up to this point in time, I think you'll hear very consistently that there is strong demand for next-generation capacity and even the latest in dual fuel technology, specifically Tier 4. And then demand starts to fall off as you work your way down there. And so when we think about capacity that's going to end up with meaningful white space and ultimately probably sidelines, over the back half of this year and maybe even headed into next year, that's primarily going to be Tier 2 diesel capacity, maybe even a little bit of Tier 2 -- older Tier 2 dual fuel stuff.

But I think the way you want to think about that is, as that stuff ends up on the sideline, particularly given a challenged economic environment like this, for those who are maybe finding themselves in a challenged cash flow position, the easy answer there is to cannibalize those assets for components to keep the core of the fleet running. You use the transmission, you use the power end, you use the fluid end, you use whatever might be helpful on there. And ultimately, you get to a place where that asset really just isn't worth bringing back into service. And so while we use 10% as kind of the average attrition rate on an annual basis, you go through years with really compelling economics where that number probably falls down into the mid-single digits, maybe even.

And then you get to years like this where the economics are certainly more challenged. And it's our position that, that number will climb up probably into the mid-teens and that we're going to see an accelerated rate of attrition over the back half of this year and into '26. That ultimately sets us up for a much stronger rebound, a much tighter market, much quicker than you might anticipate when things start to turn around.

That's helpful and encouraging. Maybe just going back to the slurry pipe, pretty interesting technology. Can you help us understand maybe total addressable market there. Is that just a Midland solution in the Permian, given where the mobile many mines are the wet sand? Or could you move over to the Delaware? Or could there be anything outside of the Permian that we should be thinking about?

I think all of the above are certainly true. There's no reason we couldn't deploy it in the Delaware as well. There's definitely proximity mines over there. there might be advantages in terms of crossing state lines or whatever the case might be. I think there are opportunities across the Permian Basin. I wouldn't rule out a place like the Haynesville as a potential opportunity.

We use wet sand there and -- there may be a case where it makes sense in that environment as well. Certainly not something you're going to run in the dead of winter, of course. So that probably removes some amount of the geography. But outside of that, it's got real application over the right sort of distances.

Our next question will come from Eddie Kim with Barclays.

Just wanted to ask about the decision to reduce your fleet count and redeploy some of those fleets to larger customers with simul frac operations. Is that because customers right now or certain customers are just kind of stopping completions activity all together maybe in response to the decline in the oil-directed rig count we've seen over the past 2 months?

Or is it more because they're asking for pricing concessions at levels that are maybe unsustainable for your return threshold? Just any color there would be great.

There's probably a little bit of both of those. I think you could definitely find some smaller operators who are choosing to just stand down completions activity at this point in time. And there has been some reductions in activity. But there's also a real pricing challenge. I think we had some -- we had some folks in the space who were facing already a calendar with a bit of white space on it into Q2 and they responded. We would argue unconstructively in that regard with respect to price. And so we've seen some real degradation from a pricing standpoint in the market.

And in some cases, that has us choosing not to participate in that. And so we would rather reallocate those resources in support of our strong long-term partners and helping them drive efficiencies through things like simul frac that are ultimately a win for both of us in this time.

Understood. And then -- just shifting over to the Oklo strategic alliance you announced earlier this week. I know it's really early days. But just based on your understanding of their sort of project time line today, when do you think is the earliest you could see revenue from this partnership? Is it 2028 or maybe 2030? Just curious on your best estimate there.

Really, when you think about the [indiscernible] , it's the same with any data center development, right? What this does is it allows the rollout of power, early generation power to Davis senders as they build out in stages, right? And so I'd say you probably would see revenue on any of these large data centers sort of coming into '27 being anything of significance, right? And then from the nuclear power houses, you're probably in the early 30s when they are also generating, right? So you're going to build out your initial natural gas generation first, Think of it in stages and then adding your nuclear baseload over time.

At the same time, the nuclear baseload arrives, we'll probably, on average, get close to having grid and connection which is then where we can then do the Liberty Corus solution will kick in and we'll manage the grid interconnection and the interaction between these large loads and the grid. So it's a combination of that. So that's sort of like the time frame in general. But what it will do is to bring forward this ability. So you'll be ahead of these large loan customers commit and have a road map to getting to some nuclear power, but without able to actually execute within an 18-month period from the first -- from signing a contract to powering a data house.

Our next question will come from Jeff Leblanc with TPH.

The one question I did have is on mechanically these fleet repositionings, are you taking diesel assets to support gas burning assets? Or will the assets be upgraded before being redeployed? Or I guess, separately, are you redeploying some of your natural gas burning assets to the simul frac?

So we're not upgrading any assets at this point in time. Any of the older diesel equipment is headed for retirement at some point in time when that makes the most sense or potentially, I think, ultimately, if there's a home for that overseas, there's -- it may find its way there. But for us, we're not taking any of the Tier 2 diesel and turning that into Tier 2 dual fuel at this point in time.

Our expectation is that our asset base over the long term will consist primarily of Digi with some Tier 4 DGB backstopping that. And so as we think about the asset redeployment, that's just looking at the needs of our customers and making sure that we have the right assets in the right place to support their long-term needs. And so the operations team, the sales team working closely together to make sure that as we do this in a fashion that sets us up for the best possible success over the coming months and years.

As a speed to move to the simul frac as well. They will be supporting in the short term as some of the -- the rest of the big fleet gets rolled out over the balance of this year. So it allows us to get to the same or frac quicker. But ultimately, that's a temporary solution that will be replaced by the digs that come out in the second half of the year.

Our next question will come from Tom Curran with Seaport.

Good morning, everyone. On the CS side, when it comes to the track operations, engineering and diagnostic tools, which offerings seem to be making the most difference when it comes to share gain traction or your ability to defend pricing here and there.

Well, there's a few things that play into that, and it really depends who the customer is that you're talking about. We have a range of customers who all have different end goals or different places where they need support or desire technology. In some cases, and I'd say particularly for the larger portion of our customer base, I think those majors and large independents it is generally a drive towards next-generation technology on location, backstopped by a strong safety record, great supply chain and some real innovations around the software side of things.

So as we continue to advance our master rig control system, which we've been running in the field for more than a few years now. These things all are driving efficiency on location, getting jobs done quicker and just enabling them to get to a lower cost for a barrel of oil produced an Mcf of gas produced. We have other partners, though, who lean heavily on us for our engineering support. So if you think about some of the smaller operators that are out there that maybe don't have all of that frac design expertise and capability inside of their shop. They are leading very, very heavily on us, particularly in a time like this.

One thing we always like to remind customers is that frac designs do not remain steady. The best possible frac design to put in the well changes depending on the economic conditions of the day, might be that it makes more sense pump a little more sand, particularly given where sand prices are today than it might have 24 months ago that there's a better return on that. And so we have customers who lean heavily on us from an engineering standpoint to work through that optimization effort with them.

As one of the only companies, frac companies left that still maintains a strong engineering and geosciences team, we're the go-to partner for things like that. So it varies by customer. What enables us retain that strong partnership and ultimately earn a bit of a premium working with that customer.

That was helpful, Ron. And then kind of shifting to the PS side. Two questions about the partnership with [indiscernible] for the PAC project. Would you expect the eventual contract structure for LPI to allow for the sale of excess electricity into the wholesale market? And then compared to ING's legacy [indiscernible] I know that this past proposal invites is a system that initially will be nearly twice the size of 45 megawatts versus pits 23 cognizant of how early it is on the time line, but -- what are some of the major similarities in contrast you would anticipate relative to the pit microgrid?

And in part where I'm going with this is, is there an effort to move towards it and be able to demonstrate some degree of standardization that LPI will be able to offer?

Yes. So the -- if you think about the pit microgrid, right, that is based around a modular power generation solution, right? Each one of those powerhouses comes on 3 different trucks and within a 24-hour period, that would be craned into position. And so -- and then there's about 6 weeks of total commissioning after that. So you could get to the frac of about a 2 week -- once you've done all your site work and your footings, et cetera, you can get to about a sort of an offload situation where you're sort of about 2 to 3 weeks of construction and connection with all the quick connects, and then you get to sort of about a 6-week to 8-week commissioning cycle, right?

So it's a very standardized modular process. We're bringing that to all of the products we do. And so very much about the [ CAS ] product will be based around that similar sort of solution. Now there could be a combination of different generating technologies, right, whether it's the embark or the cab, the embarks that we run at the pitch solution. or the Caterpillar ones, which are a slightly smaller one that we've used as a base for our frac, which were about a 2.5 megawatt as a baseload. But very much the same modular construction, which takes a lot of the risk out of the construction, a lot of -- everything is done and tested in a factory, and therefore, you take a lot of the need for trades out of the field.

So it also reduces -- significantly reduces the cost and time of implementation. So very much the CAS product project or even the data center projects that we are bidding at the moment, very much based around that solution. Think of it as like modular legos and we can build you a power plant of any given size, right? Now as we get up into the larger and larger projects, we may use a slightly larger power generation unit than the 4.3 embark or the 2.5 [indiscernible] we may move up to the sort of 10 -- and eventually, we will use to package turbines depending on fuel source and power density requirements.

But ultimately, the philosophy is very much what you see at the Pittsburgh Airport that very much as much as possible, packaged in a factory and brought to site to speed the implementation. Integrated with the grid, most definitely, the offtaker at [indiscernible] will actually be most likely a sort of sort of local utility, proof the Adams County side of that organization. And so yes, we will be able to -- for all of our industrial sites that we are developing, we will be able to wheel power onto the grid and provide local grid support into the wholesale market.

Our next question will come from John Daniel with Daniel Energy Partners.

Ron, sort of an ops question for you. Historically, we always thought of the Haynesville has been like terrible wear and tear on the frac equipment. And I'm just curious, does that same where Terex applied to the new generation technology like your Digi fleets?

John, you're absolutely right. That is a very high intensity environment. It is high rate, high pressure work. And there are only some who are successful in deploying technology there and being a successful partner. We have made tremendous strides there. And certainly, we have seen to this point in time with our next-generation assets just a real change in asset life. And that's true in high-pressure, high-intensity environments as well. I would say there are probably a couple of reasons for that.

One is that we've designed the asset specifically for that type of workload. It's designed to handle the flow rates that we're putting through that and, of course, digiPrime and in eighth year, we're delivering 12 barrels a minute out of a single pump. So probably twice the rate we typically send out of a more traditional pump. But you have a pump that was designed with that very idea in mind. It's not like we took some existing technology and then tried to cram some more through it. Instead, we have from the ground up and asset designed to handle that rate and pressure.

And then in parallel with that, of course, we've been working very, very hard on the asset monitoring, digital twin and AI oversight of our entire asset base. And I think that has also played significantly into our ability to extend the life of these components. We have the hive here in just northeast of Denver, staffed with a team 24 hours a day and maybe more importantly than that, they are supported by a sophisticated set of algorithms that's monitoring the second derivative of every data stream that we collect off of an engine transmission, power and/or pump and all the other components that are out there.

And we are finding things before they become an issue. We were able to see that change in a trend identify that to the crew in the field make a minor repair instead of a major repair and that really has gone a long way in terms of extending asset life as well. So I'd say, you layer that on top of a next-generation fit-for-purpose asset, and you get these incredible performance improvements that we have seen.

Our next question will come from Dan Kutz with Morgan Stanley.

So maybe just on the -- going back to the international opportunities. I know you guys are doing work in Australia. For any of kind of the future international deployments of some of the Tier 2 assets. As you think about those opportunities, is Australia, the only market that you guys are looking at or looking at some of the other unconventional basins like Argentina or Middle East?

And then I'm not sure if you quantified this before, but anything you could share on kind of the cost to ship a fleet internationally and kind of staff up and deploy that fleet and, I guess, any kind of associated upgrade costs. Just wanted to check in and get a better picture on the international opportunities.

Yes. Of course, we continue to look at all the opportunities around the world, and we get inbound from all over the places you can imagine. The Middle East is a common spot where we get inquiries from Argentina has been on the radar screen of late given the change in government there and the success that has brought in the country. And as a result, an expected -- real expected uptick in activity in the [indiscernible] So we continue to keep our eyes on all of these opportunities.

And I would say even over and above that opportunities for growth in Australia as another place. So we're on the ground there, of course. We've got our fleet there. We're doing the work in the Vital Basin, but Australia is recognizing that they need more gas and they need more gas onshore Australia. That's leading to some support for unconventional work not only in the [indiscernible] elsewhere, particularly in the Queensland area. So we are engaged in all of those conversations. And when we see opportunities that make sense, we are certainly prepared to take some of that capacity and go to work there. I'd say, as to the cost, obviously, that's going to depend on where we go.

Going to a country like Australia, it comes with very stringent requirements around importing an asset there. You were not allowed to have a speck of dust on a piece of equipment to get through customs when you arrive in Australia. And so those assets were completely refurbished. They were scrubbed down effectively with the toothbrush to make sure that they were absolutely spotless. When we arrived in Australia and that we ran into no customs issues there. Of course, that's not the same case din all the environments we might visit. So you're going to see that number vary a fair bit. But you could be rest assured that we are not a company that's going to send a substandard fleet of equipment, some place to do work.

We go there to be the best at what we do. We go there to excel at what we deliver. And so we're going to make sure that we put a fleet on the water that is up to the standards of the work we're going to be doing there. So there's an investment that goes with that for sure. Obviously, not the cost of a new fleet, but there's a refurbishment cost that's attached to that.

Understood. That's really helpful. And then maybe just one on shareholder returns and apologies if I is kind of the read now that I know you guys didn't do any buybacks in 2Q. How do you think about weighing potentially picking up some shares at an attractive valuation and the other capital allocation priorities that you have? Or maybe kind of the balance sheet, a governor on shareholder returns like you guys are open to it if there's some excess cash after the other capital calls have been satisfied. Just how do you think about share buybacks at this point?

Yes. Of course, we think about share buybacks the same way all the time, which is an opportunistic approach to them. When the greater the dislocation between our stock price and what we view as the intrinsic value of the company, the more app we are be involved in the market. The last quarter, of course, a pretty volatile one, and we wanted to make sure that we had our feet underneath the bus that we had a good look ahead as to what was coming and that we were well set up, and well positioned to navigate that, whatever it might be and to take advantage of any opportunities that might come in front of us.

Of course, we've been opportunistic both in the '15, '16 downturn and in the COVID downturn, we had tremendous opportunities there that really took the company to another level. We want to be ready for those as such that they might appear. And so yes, we took a short gap in the second quarter just to stand back and understand the landscape, make sure that the balance sheet was well set up for whatever the future would hold. And as we look forward, of course, we'll continue to look at our stock price and whether or not that is the best use of some cash as we move through the balance of the year. Michael, any under...

No, I'd just say one of the key things there is that investing in growth has really got a great potential to increase our long-term EPS but of Liberty's earnings. And that really drives the greatest value over time. And we've got some great and exciting growth opportunities in front of us.

This concludes our question-and-answer session. I would like to turn the conference back over to Ron for any closing remarks.

Thank you. Global oil demand grew by 0.7% last year. supplying 34% of global energy needs. Global natural gas demand grew by 2.5% last year, supplying 25% of global energy needs. Electricity demand grew by 4% and outpacing total energy system demand growth. We have a similar power story unfolding here in the United States, driven by growth in AI and a reshoring of manufacturing.

Recognizing that we had a bigger role to play in delivering on our mission to better human lives, we changed our name from Liberty Oilfield Services to Liberty Energy in April of 2022. We subsequently made investments in small modular nuclear through Oklo, in enhanced geothermal through Furbo and in batteries through Natron. We have worked hard to ensure that the critical role oil and natural gas play in the global energy stack is recognized and that their continued development is supported by the regulators, the public and the financial community, and we are committed to continuing that important work.

Unfortunately, our electricity grid has suffered due to similar challenges misguided policy market distorting financial incentives and push back against major infrastructure build. But with that comes opportunity. We're energized by this next chapter of the Liberty Energy story and as a champion of abundant, reliable power to meet the growing needs for electricity in the U.S. and as a key provider to consumers of the advanced distributed power services necessary to support their business. We look forward to the years ahead. Thank you for joining us on the call today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.