Liberty Energy Inc. (LBRT) Earnings

Management highlights

### Oil and Gas Completions Business Operational Highlights - Achieved record operational performance in Q2 2026, with new highs for pump hours and horsepower hours, supported by modest industry recovery from early 2026 cyclical lows - Reached a milestone for the AI-powered DigiPrime platform, with an upcoming cross-border fleet deployment to Canada alongside a long-term existing customer - Launched commercial operations of Slurry, Liberty's proprietary last-mile wellsite sand delivery system; early deployments have demonstrated meaningful benefits: replacing up to 200 daily truckloads with 8 miles of slurry pipe, eliminating ~30,000 truck trips over 7 months, reducing logistics costs, improving delivery consistency, cutting emissions, road congestion, and road maintenance - Continued value creation from AI and digital tools: FORGE, Liberty's fuel optimization system, is delivering secondary benefits beyond its original design, improving fleet design, asset utilization, overall operational efficiency, and reducing fuel consumption - Industry dynamics: Fracturing fleet markets improved modestly with a gradual increase in North American producer activity, with modest pricing recovery from early 2026 cyclical lows; next-generation dual-fuel AI-enhanced fleets remain in high demand, driven by ongoing diesel-to-natural gas fuel arbitrage benefits; large producers remain cautious on activity expansion amid commodity price volatility ### Power Solutions Business Strategic and Operational Highlights - Launched a joint venture with PowerBridge (a Five Points Infrastructure portfolio company) to develop powered digital infrastructure campuses for hyperscale, AI, and other large-load power customers; the JV's first project is the 2 gigawatt Alpha Digital Campus in West Texas, with an initial 300 megawatts of generation capacity, first power expected in Q4 2027 and full initial buildout completed in H1 2028; offtake discussions with prospective data center tenants are currently underway - Announced a strategic alliance with SLB to combine Liberty's integrated power solutions with SLB's modular infrastructure capabilities and global market reach, delivering a unified end-to-end solution for power and electrical infrastructure for data centers; the partnership will also collaborate on future technology development for hybrid power, digital energy management, and waste heat recovery - Secured multiple multi-supplier agreements to purchase 3 gigawatts of long-lead power generation equipment from Bergen Engines, Wärtsilä, and other global OEMs; Liberty's proprietary control architecture integrates equipment from multiple manufacturers to optimize the generation stack - Launched Liberty Wholesale Commodities, enabling direct participation in ERCOT power markets, allowing dynamic optimization between on-site generation and grid power to improve project economics and support grid load balancing; Liberty now supports ERCOT and PJM market integration for large-load customers - Market dynamics: Power demand fundamentals remain strong, driven by AI data center expansion; customers are increasingly prioritizing integrated full-stack infrastructure partners, creating opportunities for Liberty's differentiated offering; opportunities are being pursued across multiple U.S. regions beyond West Texas, including the West, South, PJM, and the Northeast ### Broader Strategic Context - Geopolitical disruption in the Middle East has reinforced the strategic importance of North American oil and gas resources, supporting a constructive long-term outlook for the region's energy production, with growing demand from international buyers seeking long-term supply agreements and energy security

Guidance

- Full-year 2026 capital expenditures are now guided to approximately $1.5 billion, an upward revision from prior expectations, driven by increased required upfront deposit payments to secure long-lead power generation capacity - The 3 gigawatts of secured power generation capacity targeted for delivery by the end of 2029 will require total capital expenditures of $5-$6 billion; ~25% of this total will be spent in 2026, with approximately 40% of total spending occurring in the final year before operations commence, phased between 2026 and 2029 - Initial power generation from the PowerBridge Alpha Digital Campus is expected in Q4 2027, with buildout continuing into H1 2028; meaningful income statement contributions from the power business are not expected until 2028, with full 3 gigawatt contribution to the income statement expected by the end of 2029 - Management maintained the power business' return targets: 5-6 year cash-on-cash payback, and 17-18% unlevered rate of return, even with higher current capex and deposit requirements - The 2027 RFP season for completions services is expected to proceed on a normal timeline, with a positive tone underpinned by structural supply deficits and growing long-term demand for North American energy - Management expects the cash tax rate for the remainder of 2026 to be approximately 25% of pre-tax income, with no material cash tax payments expected for the full year 2026

Segment performance

Liberty Energy operates two core business segments: Completions (oil and gas well fracturing) and Power Solutions (power infrastructure for data centers and large-load customers. No public segment-level revenue breakdown was provided in the call. For the full company in Q2 2026: total revenue was $1.2 billion, up 16% sequentially from $1 billion in Q1 2026; net income was $43 million, up from $23 million in Q1 2026; adjusted net income was $14 million, up from $10 million in Q1 2026; adjusted EBITDA was $151 million; fully diluted net income per share was $0.26, up from $0.14 in Q1 2026; adjusted diluted net income per share was $0.09, up from $0.06 in Q1 2026. G&A expenses totaled $67 million (vs $60 million Q1), including $6 million non-cash stock-based compensation; other income totaled $40 million, driven by a $43 million gain on investments (mostly from Liberty's stake in Servo post-IPO) offset by $3 million interest expense. End-of-quarter cash balance was $559 million, net debt was $736 million, and total liquidity (including credit facility availability) was approximately $1 billion. Q2 2026 net capital expenditures and long-term deposits were $221 million, including $71 million in power generation equipment deposits, plus $15 million in cash dividends.

Risks & headwinds

- Ongoing global geopolitical uncertainty (particularly renewed U.S.-Iran tensions and Strait of Hormuz supply disruptions) creates commodity price volatility, which makes North American oil and gas producers cautious about increasing activity levels and can impact near-term fracturing pricing momentum and activity levels - ERCOT grid interconnection rules and the Batch Zero interconnection queue process create timing uncertainty for power project development, with clarification on project timelines still pending for many opportunities - Large power project development requires extensive early community engagement, adding complexity and execution risk to the development timeline - Commodity price weakness (WTI falling below $70/bbl, Henry Hub falling below $3/MMBtu) can lead to slower-than-expected fracturing pricing recovery and near-term activity adjustments, particularly among private producers that account for a large share of current incremental activity and are highly responsive to short-term price moves - Power generation equipment is in extremely tight global supply, leading to higher upfront deposit requirements and inflationary pressure on total project costs - Private oil and gas producers, which make up a large share of current incremental activity, can quickly adjust activity levels upward or downward in response to short-term price moves, creating near-term quarterly activity uncertainty

Analyst Q&A

• Q: How is the power commercial pipeline evolving, and how does the PowerBridge JV differ from existing partnerships like Vantage? /

  A: The pipeline has shifted from many small projects to a smaller number of large gigawatt-scale opportunities concentrated in regions with favorable permitting and community support. The PowerBridge JV is a partnership with a powered land developer that integrates land, infrastructure, and power generation to deliver a turnkey campus solution for hyperscalers, unlike the Vantage relationship where Vantage builds and operates the data center and Liberty delivers dedicated power. Even with the JV, Liberty will still sign end-customer energy service agreements (ESAs) with hyperscale offtakers, and the platform can be scaled to additional campuses beyond the initial Alpha site.

• Q: What return hurdles apply to power projects, and when will meaningful power revenue hit the income statement? /

  A: Management has not changed return targets, still targeting a 5-6 year cash-on-cash payback and 17-18% unlevered return, which remains achievable in the current market. Early 300 megawatts of generation at the Alpha campus will come online in late 2027, with buildout finishing in early 2028, and meaningful income statement contributions are not expected until full-year 2028, scaling up from there. Full 3 gigawatt contribution will be realized by the end of 2029.

• Q: How much power generation capacity has Liberty secured, and how will CapEx trend over the next few years? /

  A: Liberty has now secured full line of sight to 3 gigawatts of generation capacity for delivery by the end of 2029, with additional capacity planned for late 2029/early 2030 to support further growth. Total capex for the full 3 gigawatts is expected to be $5-$6 billion, with roughly 25% of that total spent in 2026 (in line with the new $1.5 billion 2026 capex guidance), and ~40% of total spending occurring in the final year before operations launch.

• Q: What is the benefit of the SLB strategic alliance for customers, versus a la carte procurement? /

  A: Building large-scale AI data centers has become much more complex, especially since most new developments require on-site power generation that the grid cannot support. A unified partnership combining Liberty's power expertise and SLB's modular infrastructure capabilities gives customers a single point of contact for end-to-end delivery of both power and infrastructure, simplifying development and letting customers focus on their core compute business. The partnership also enables expansion into international opportunities in the Middle East, Asia, and Australia, leveraging SLB's global reach.

• Q: What is the outlook for fracturing pricing in H2 2026, and activity in natural gas basins? /

  A: Pricing momentum is positive but varies by fleet type and customer: next-generation DigiPrime fleets held price better during the downturn, so pricing recovery is more modest than for older conventional fleets. Pricing improvement is expected to continue through Q3 and potentially Q4, but recent WTI price weakness has made customers more cautious, creating near-term uncertainty. Natural gas basin activity remains strong, with customers taking a long-term view supported by growing demand from new North American power generation and ongoing global supply disruptions that support long-term U.S. LNG export demand.