Liberty Oilfield Services (LBRT) Misses Q4 EPS by 6c, Revenues Beat

February 4, 2021 4:57 PM EST
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Liberty Oilfield Services (NYSE: LBRT) reported Q4 EPS of ($0.41), $0.06 worse than the analyst estimate of ($0.35). Revenue for the quarter came in at $257.59 million versus the consensus estimate of $192.18 million.

Summary Results and Highlights

  • Revenue of $966 million and net loss1 of $161 million, or $1.36 fully diluted loss per share, for the year ended December 31, 2020
  • Adjusted EBITDA2 of $58 million, which excludes stock based compensation of $17 million, and annualized Adjusted EBITDA per average active fleet of $4.4 million for the year ended December 31, 2020
  • Revenue of $258 million for the quarter ended December 31, 2020, a 75% increase from the third quarter
  • Net loss1 of $48 million, or $0.41 fully diluted loss per share, for the quarter ended December 31, 2020
  • Adjusted EBITDA2 of $7 million, which excludes stock based compensation of over $4 million, for the quarter ended December 31, 2020
  • Average active frac fleets increased to 15.8 in the fourth quarter of 2020, up 68% sequentially
  • Record sand volume pumped per fleet in the fourth quarter of 2020
  • Completed the acquisition of Schlumberger’s North American pressure pumping business, OneStim®, on December 31, 2020
  • Expect to maintain 30 frac fleets working in the first quarter of 2021, relatively flat with the fourth quarter of 2020 fleet count when combined with OneStim®
  • Additional frac fleet deployment in 2021 dependent on improved economics

“2020 was a year defined by adaptation in the face of adversity. We successfully navigated these challenges due to the unprecedented sacrifice and commitment of the Liberty family. We began the year with strong momentum in an already struggling frac market, but a collapse in oil demand resulting from the global pandemic became our new reality. The partnerships we have forged over the years allowed us to plan through the crisis. In April, we aligned our cost structure with our partners’ evolving activity levels while providing top tier performance with safety and efficiency. These decisive actions allowed us to hit our target set in April of positive cash flow during the last nine months of the 2020 pandemic crisis, and to set the stage for our future with the acquisition of OneStim®,” commented Chris Wright, Chief Executive Officer.

Mr. Wright continued, “We enter 2021 with a sense of resolve and determination to leverage a stronger business platform of unmatched technological advantages, highly complementary business lines and an invigorated team of professionals. We are motivated by the opportunities ahead of us and the trust of our customers. Our goal remains the same: developing and delivering next generation technologies and services for the sustainable development of unconventional energy resources. Our unique culture enables high quality services, ESG leadership and superior returns across cycles.”

Outlook

Early signs of a global economic recovery are now evident, driven by the rollout of COVID-19 vaccines, stimulative fiscal and monetary policies around the world, and pent-up demand for goods and services. These factors support continued improvement in energy demand, while controlled OPEC+ production and discipline among U.S. shale companies are supporting oil and gas prices. This is reflected in a rising rig count throughout the fourth quarter.

The number of total marketable frac fleets has declined significantly as the pandemic accelerated the pace of rationalization and cannibalization of frac equipment. As customer demand is shifting towards next generation technologies that support their emissions and efficiency goals, attrition of older equipment is expected to continue. This supply shrinkage is a necessary part of moving the market towards balance. The current pricing dynamic remains challenging, but Liberty is having many productive discussions with customers to phase in modest price improvements throughout the year. Liberty was proactive in working with them as oil prices collapsed, and that partnership works both ways.

E&P operators are navigating through significant industry consolidation, a change in the political climate and a general commitment to flat production levels relative to 2020 exit rates. West Texas Intermediate crude oil prices have improved since dedicated fleet negotiations for 2021 started in the fall. We believe the frac market will experience flat to slightly rising demand for frac services in 2021, based on current visibility into customer plans. Public operator demand is expected to be relatively level loaded, whereas private operator demand is more likely to be back loaded. Against this backdrop, Liberty expects to maintain approximately 30 active frac fleets in the first quarter of 2021, with the potential of adding more fleets later in the year if the economics improve. Increased efficiencies that lower our cost of delivery coupled with a gradual, modest rise in frac pricing are the factors that can drive improved fleet profitability.

Commenting on the outlook, Mr. Wright stated, “As we enter our tenth year in operation, we are excited to lead a technology-driven structural change in the industry. We are uniquely focused on extracting significant value from our acquisition by bringing together two of the leading technology-centric service businesses in our industry and building for the future with ongoing technology alliance agreement with Schlumberger. The early response to our acquisition of OneStim® has been positive, as customers are finding value in our technology leadership as the industry transitions to harnessing knowledge and data to drive decisions. Invention and creativity take center stage in an industry at the precipice of change, and Liberty remains committed to the next decade of innovation, as we were in our first decade as a company.”

For earnings history and earnings-related data on Liberty Oilfield Services (LBRT) click here.



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