Liberty Energy Inc. · NYSE:LBRT
Liberty Energy — Liberty Oilfield Services — Investor Presentation (November 2018)
23 slides from Liberty Energy's investor presentation, Nov 27, 2018
Slide 1: Investor Presentation November 2018
Investor Presentation November 2018 NYSE: LBRT www.LibertyFrac.com
Slide 2: Important Disclosures: Forward Looking Statements
IMPORTANT DISCLOSURES FORWARD LOOKING STATEMENTS The information in this presentation includes “forward‐looking statements”. All statements, other than statements of historical fact included in this presentation regarding Liberty Oilfield Services Inc.’s (“Liberty” or the “Company”) strategy, future
Slide 3: Liberty Snapshot
Liberty Snapshot Liberty: The Facts Williston • Market leading, returns–focused provider of Basin hydraulic fracturing services with demonstrably superior financial performance Powder River Basin 13 Fleets • Relentless pursuit of efficiency driven by: • Differentiated technology DJ • Exceptional ope
Slide 4: Shale Revolution and Role of Liberty Principals
Shale Revolution and Role of Liberty Principals • Technological innovations in hydraulic fracturing, 100 Years of US Oil Production Shale Oil horizontal drilling and well completions starting in the late 1990's launched the Shale Revolution that has transformed world energy markets • Shale Revolutio
Slide 5: Where we play – Hydraulic Fracturing
Where we play – Hydraulic Fracturing • Frac enables production from unconventional reservoirs • Largest single component of well capital spend • Total Projected 2018 Lower 48 Drilling and Completion Capex Spend1: $90 Billion Breakdown of Avg. D&C Well Spend2 Other 22% Frac 42% Drilling 36% (1) Sourc
Slide 6: Frac Demand is Strong
Frac Demand is Strong – Lower 48 Increased Intensity Increases HHP Requirement1 Liberty Proppant Pumped Growth vs Industry1 Total Proppant Pumped (HHP Proxy) Horizontal Wells Completed Avg Proppant per Well Liberty – Proppant Pumped Frac Intensity (proppant) Increases per well Liberty Executes Rapid
Slide 7: Returns-Focused Company
Returns‐Focused Company Pre‐Tax Return on Capital Employed (ROCE)(1) ‐LTM 3Q18 Superior Returns on Capital Meticulous Focus on Frac and Frac Only Highly Profitable Operating Structure Disciplined Capital Investment Industry Comparables Liberty has the Highest Pre‐Tax Returns on Capital Employed comp
Slide 8: Strong Returns on Capital from Day One
Strong Returns on Capital from Day One Cash Return on Capital Invested (CROCI)(1,2) 47% 46% 44% 29% 28% ‐ 6 Year avg 19% 14% (1%) 2012 2013 2014 2015 2016 2017 3Q2018 YTD Compounding Share Value by reinvesting cash flow at high rates of return (1) Cash Return on Capital Invested (CROCI) is defined a
Slide 9: How We Generate Our Differential Returns
How We Generate Our Differential Returns Sustaining Free Cash Flow per Fleet 2 People and Culture Treat people right, empower employees, foster an innovation based culture, significantly lower turnover, common sense safety culture Technology Develop disruptive solutions that reduce our customers’ co
Slide 10: The Economics of Frac Companies
The Economics of Frac Companies The Effect of Efficiency • High‐efficiency frac companies Illustrative Mid‐Cycle Frac Rate of Return: generate strong returns when Frac Company Efficiency Low Mid High prudently managed through the cycle Revenue / Fleet / Year ($MM) $ 60 $ 80 $ 100 • Throughput is the
Slide 11: Liberty DNA: Technology Meets Execution
Liberty DNA: Technology Meets Execution Technology Highlights Impact Liberty FracTrends™ • 50,000+ well database Proprietary Database • Proprietary viewer and analysis tools Fraconomics™ • Integrated engineering & “big data” approach to lower a customer’s cost to produce a barrel of oil • Liberty te
Slide 12: Partnering to Lower the Cost of a Barrel
Partnering to Lower the Cost of a Barrel • Fraconomics™ and Liberty FracTrends™ • Integrated engineering & “big data” approach to lower a customer’s cost to produce a barrel of oil • Proprietary in‐house software • Industry leading simulation techniques • Calibrated Frac and Reservoir Modeling • Adv
Slide 13: Relentless Focus on Operational Efficiency
Relentless Focus on Operational Efficiency • We track all 1,440 minutes on every fleet, Higher Throughput By Lowering Non‐Performing Time (NPT) every day Example Pad Customer NPT • Meticulous downtime analysis to determine Activity Breakdown Breakdown root‐cause and engineer technology driven 8% sol
Slide 14: Liberty – The Employer of Choice
Liberty – The Employer of Choice Employee‐centered culture which attracts and retains high potential talent • Get the best talent and you win • Lower personnel turnover • Zero layoffs during the 2014 ‐ 2016 downturn • Safety first ‐ incident rate less than half of industry average • Highly variable
Slide 15: Liberty Purpose-Built Fleet
Liberty Purpose‐Built Fleet ~ 1.2 Million HHP ~1.2 Million HHP Owned/Under Construction Expected in the Field by H1 2019 Liberty Purpose‐ Liberty Quiet Liberty High Liberty Pump Down The Liberty Fleet Built Frac Fleets FleetTM Frac Fleets Pressure Frac Fleets & Pump Services 11 fleets of 40,000 9 fl
Slide 16: What Drives Financial Performance
What Drives Financial Performance The Way • Superior technology, service and safety Utilization • Excess demand for Liberty ൈ • The Right People, “Libertized” Fleets, Minimize NPT Throughput • Partner with customers to accelerate throughput ൈ • Customers value premium well results Price • Customers
Slide 17: Recent Financial Performance
Recent Financial Performance ($MM) Revenue Adjusted EBITDA1 $628 $149 $150 $600 $559 $495 $125 $117 $500 $449 $100 $400 $100 $92 $300 $75 $200 $50 $100 $25 $‐ Q4 Q1 Q2 Q3 $‐ 2017 2018 2018 2018 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Annualized Revenue / Average Active Fleet Annualized Adj. EBITDA1 / Averag
Slide 18: Conservative Balance Sheet and Ample Liquidity
Conservative Balance Sheet and Ample Liquidity Q3 2018 Liquidity Summary ($MM) Q3 2018 Cash $87 • Q3 2018 Net Debt: $20MM Debt • Q3 2018 Liquidity: >$300MM ABL Facility (Drawn) $0 • Asset Backed Loan (ABL) ‐ $250M availability Term Debt (net of Discount) 107 as of September 30, 2018 Total Debt $107
Slide 19: Market and Financial Update
Market and Financial Update • Strong fundamental demand for differentiated frac services through 2018 • Pricing was positive through mid year. • Takeaway issues slowed completions growth in the second half of 2018, which created an oversupply of frac services due to HHP built in anticipation of the
Slide 20: Our Strategy – Maximize per Share Value
Our Strategy – Maximize per Share Value 1 Disciplined Organic Growth 2 Reinvest Cashflow at High Rates of Return 3 Return Capital to Shareholders Investment Highlights 4 Balance sheet strength – low leverage and ample liquidity 5 Highly competitive Tech Nerds ‐ unmatched rate of innovation Long‐term
Slide 21: Appendix
Appendix NYSE: LBRT www.LibertyFrac.com
Slide 22: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 3 Months Ended 3 Months Ended 3 Months Ended 3 Months Ended Year Ended 30‐Sep‐18 30‐Jun‐18 31‐Mar‐18 31‐Dec‐17 31‐Dec‐17 Net Income (loss)$ 66.4 $ 94.7 $ 54.0 $ 57.7 $ 168.5 Deprecia�on & Amor�za�on 32.3 30.6 28.0 25.6 81.5 Interest Expense 3.6 3.5 6.5 5.3 12.6 Income
Slide 23: Calculation of Pre-Tax Return on Capital Employed
Calculation of Pre‐Tax Return on Capital Employed Calculation of Pre-Tax Return on Capital Employed Twelve Months Ended September 30, 2018 2018 2017 Net income1 $ 272,778 Add back: Income tax expense 36,238 Pre-tax net income $ 309,016 Sept. 30, Sept. 30, Capital Employed 2018 2017 Total debt, net o
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