Liberty Oilfield Services Inc. Class A Stock

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, Nick. Good morning, and welcome to the Liberty Energy Third 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 the call are available on our Investor Relations website. I will now turn the call over to Ron.

Good morning, and thank you for joining us for our third quarter earnings call. Liberty's completions trajectory has improved meaningfully from early year cyclical lows. Third quarter revenue of $1.2 billion and adjusted EBITDA of $142 million reflected strong operational execution and modest price increases, partially offset by drilling-related delays and cost inflation headwinds. During the quarter, we delivered significantly lower fuel costs for our customers. Record natural gas substitution of over 60% of the total fuel consumed by our fleets provided annualized fuel savings equating to over $1 billion for our customers. This achievement reflects continued investments in natural gas fuel equipment and a concerted focus on the digital intelligence layer that drives meaningful operational optimization of equipment and widens the performance gap amongst industry frac fleets.

In power, we are excited to share that LPI entered into a strategic development agreement earlier this week with a leading frontier AI lab and a dedicated infrastructure platform for 1.2 gigawatts of integrated power services at data center campuses. The agreement includes a significant prepayment of capacity fees and targeted execution of the first energy service agreement contract for approximately 500 megawatts by December 2026. The agreement also establishes a phased energization schedule from Q4 2027 through Q1 2029 and includes the substantive commercial terms for the additional long-term ESAs. The agreement marks the culmination of months of work on engineering and design between our teams defining the integrated power architecture tailored to the generation, power quality, reliability and dynamic AI load requirements.

We are expanding this relationship and are already working together to advance additional projects across other sites, including gas supply, interconnection, permitting and construction planning. We continue to advance the capabilities of our integrated power platform for increasingly sophisticated on-site power systems. Reliable power at this scale requires more than generation alone. It requires seamless coordination across generation, controls, customer load and the broader electric grid.

Building on the extensive modeling, hardware in the loop and integrated system validation conducted within our own facilities, we recently completed advanced grid integration testing with the National Laboratory of the Rockies Controllable grid interface, connecting LPI's physical generation assets and tempo controls to a synthetic grid modeled on a specific real-world electric system in the Southern United States, replicating its relevant characteristics and operating behaviors.

While traditional grid studies can rely on model representations of both the grid and generation assets, this testing went a step further by pairing the representative grid model with LPI's actual generation hardware and controls, allowing us to evaluate how our physical system responds under realistic grid conditions. The testing demonstrated grid operability and expected changes over the life of an islanded to grid participating project. It also validated our control methodology and compliance with applicable IEEE standards while defining the performance characteristics of our generation assets to further inform system modeling and optimization.

Together, these results advance our ability to reliably coordinate on-site generation with the broader grid, including capabilities such as peak shaving. This work builds on our trusted relationship with NLR and provides another important step in translating our integrated power architecture into the flexible, reliable solutions required to serve increasingly complex large-scale customer loads. We are building a durable portfolio across completions and power, anchored by the principles that have long defined Liberty, a relentless focus on our customers, continuous technology innovation and disciplined execution. In completions, these capabilities have helped our customers improve performance and economics year after year, and we are applying that same approach in power as we develop differentiated solutions to meet the increasingly complex objectives of technology customers. These dual investments are strengthening our competitive advantage and expanding our market opportunities, positioning us to generate strong returns through cycles.

Earlier this week, we announced an 11% increase in our quarterly cash dividend, reflecting confidence in our strategy and a continued commitment to delivering long-term shareholder value. Global oil and refined product prices strengthened during the third quarter as the ongoing conflicts in the Middle East and Ukraine continue to impact markets. While flows through the Strait of Hormuz partially recovered, Gulf exports remain vulnerable to operational disruption, sustaining a risk premium in crude oil prices.

Renewed attacks on energy infrastructure have exacerbated refined product shortages with low diesel inventories emerging as a critical constraint. Elevated maritime freight costs and longer trade routes have further compounded these pressures, increasing delivered crude and product costs. Expectations for a prolonged supply disruption and an eventual replenishment of strategic petroleum reserves have sustained the oil risk premium and lifted forward prices.

North American natural gas fundamentals remain more balanced as strong summer power demand was outpaced by record production and ample inventories. Disruptions to Qatar gas supply have also increased reliance on U.S. LNG, including replacement cargoes required to fulfill existing customer required commitments. Longer term, LNG exports and growing power consumption from AI and data center developments are expected to drive significant demand growth.

Against this backdrop, producer well economics have strengthened meaningfully with a more constructive forward curve providing attractive 2027 oil hedging opportunities and enhancing E&P revenue visibility. These improving fundamentals further reinforce already tight frac market dynamics, where modestly higher completions activity has absorbed much of the industry's available capacity.

Ongoing fleet attrition, equipment cannibalization and industry underinvestment have constrained supply, particularly in next-generation equipment with compelling gas arbitrage economics. Increasing completion intensity and complexity also favor scaled providers with integrated services and advanced digital technologies. Together, these dynamics are supporting more durable frac markets and continued improvement in service pricing. As AI accelerates demand for compute capacity, infrastructure developers are increasingly leveraging co-located integrated power solutions for data center campuses and other large load sites to address growing community considerations around power costs, availability and other concerns. Beyond accelerating energization time lines and enabling tailored energy configurations, colocation can reduce pressure on existing grid infrastructure and limit the need for costly transmission investment, helping mitigate impacts on local ratepayers and communities.

Liberty's partnerships broaden the capabilities we can bring to these projects, combining our power services with complementary technologies and infrastructure solutions, including hybrid power systems, advanced energy management and waste heat recovery. Over time, this integrated approach creates opportunities to address overall energy efficiency while providing customers greater flexibility to address environmental and community priorities specific to each site.

Today's announcement with the Frontier AI lab underscores the strength of our integrated power platform and its ability to advance our customers' broader strategic objectives. Our relationship has been built on trust, collaboration and a shared commitment to advancing AI infrastructure at scale.

Over the past year, we have built a strong foundation spanning power design and architecture, power quality and load management, testing and validation and long-term operations needed to support this project and others like it. We are excited to support a growing base of customers seeking reliable high-performance power infrastructure for data centers and other industrial applications. As global energy consumers place greater emphasis on secure, reliable North American energy supplies, our disciplined investment in leading-edge digital and equipment technologies through cycles expands our competitive advantage and increases our market opportunities over the coming years. Strong customer engagement and strengthening market fundamentals provide a more constructive outlook as we close out the year and look ahead to 2027.

Looking forward, we expect fourth quarter weather and holiday seasonality to be partially offset by continued strength in demand, including activity deferred from the third quarter. We're proud of the Liberty team's continued focus on ingenuity, innovation and execution. We are well positioned today to serve the demand for energy services in the years ahead. I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. The third quarter was defined by exceptional operational execution, driving solid financial results. The third quarter of 2026 revenue was $1.2 billion, relatively flat with the prior quarter. Results reflected strong utilization and a modest pricing uplift, partially offset by drilling-related delays as drilling crews work to replenish customer well inventory following accelerated completions in the second quarter. Third quarter net loss of $39 million compared to net income of $43 million in the prior quarter.

Adjusted net income of $10 million compared to $14 million in the prior quarter and excludes $49 million of tax-affected unrealized loss on investments and transaction and other costs.

Fully diluted net loss per share in the third quarter was $0.24 compared to net income per share of $0.26 in the prior quarter. And adjusted net income per diluted share was $0.06 compared to $0.09 in the prior quarter. Third quarter adjusted EBITDA was $142 million. General and administrative expenses totaled $69 million in the third quarter compared to $67 million in the prior quarter and included noncash stock-based compensation of $5 million.

Excluding stock-based compensation, G&A increased $3 million, primarily due to increased compensation and other corporate overhead. Other expense items totaled $69 million for the quarter, inclusive of $63 million of unrealized fair value losses on noncore equity investments and interest expense of approximately $6 million, which included $2 million of noncash amortization of costs associated with our convertible bond issuances earlier in the year.

Third quarter tax benefit was $10 million. We expect tax expense rate in the remainder of 2026 to be approximately 24% of pretax income and do not expect to pay material cash taxes this year. In the end, we ended the quarter with a cash balance of $119 million and net debt of $1.2 billion, primarily consisting of senior convertible notes issued in the first quarter. We have no balance drawn on our revolving credit facility other than $30 million of letters of credit outstanding.

Total liquidity at the end of the quarter, including availability under the credit facility, was $669 million. Third quarter uses of cash included capital expenditures and cash dividends, net capital expenditures and long-term deposits was $622 million, which included approximately $450 million in power generation deposits and other investments in power generation, digiFleets, capitalized maintenance spending and other projects.

We also returned approximately $15 million to shareholders through cash dividends. Earlier this week, the Board declared an 11% increase in the quarterly cash dividend to $0.10 per share. Today's announcement with the Frontier AI lab represents a meaningful step forward in advancing Liberty's power strategy. The substantial capacity fee prepayment of the 1.2 gigawatts solidifies customer commitment to the development process. This structure provides greater commercial alignment and supports accelerated execution to deliver power at scale. I'd like to revisit how we're funding the significant growth opportunities ahead of us.

Our strategy is built around 3 pillars that are designed to maintain financial flexibility while securing long lead items that are necessary to meet our customers' strategic objectives and deploy power infrastructure at scale. First, our core business generates strong free cash flow, providing an important source of capital to support growth. Second, we opportunistically accessed the cap convertible market in earlier this year, raising approximately $1.3 billion in gross proceeds at 0% coupon. Both offerings were upsized with strong investor demand and the cap call structures increased the effective conversion prices to approximately $65 and $72 per share, respectively. This capital enabled us to invest in early and long lead equipment and position ourselves to meet the deployment time lines that our customers require.

Third, we're advancing nonrecourse project level financing strategy designed to recycle capital as projects progress. Our pipeline continues to attract strong engagement from a diverse group of capital providers, including project finance or bonds, dedicated infrastructure funds and private credit markets. We expect project level financing to launch in early 2027 as projects advance.

We are energized by the customer partnership we shared today and the incredible progress that the Liberty team and our power partners have achieved to date. We look forward to what we can achieve together in the coming years. 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 will come from Arun Jayaram with JPMorgan.

Ron, in terms of the competitive dynamics, there are clearly several players, including Liberty that are providing behind-the-meter solutions. This agreement that you described in the press release looks to encompass the entire molecule-to-watt life cycle. And I'd love to see if you could talk about what are the key differentiators at Liberty that helps you secure what looks to be kind of a landmark agreement for LPI?

I think you've summarized it very, very nicely. I would use the words of our customer when they went ahead with giving us notice that we were going to execute this landmark agreement that expressed the amount of trust they have built in Liberty over the time we have been working together. And that trust is built upon, I think, a very strong foundation that really is a function of all of these capabilities that we bring to the table. The hyperscalers and parties that are looking to build this generation to find co-located power, of course, are also new to this world. They have typically in their history, relied on the grid to provide power. And now they're finding themselves in a little bit of a different space. And they're looking for strong partners who can make that transition as seamless as possible for them to make this -- the ability to stand up a data center as effortless as possible.

We recognize that early on and so have been incredibly focused on building a strong foundation that includes all of the components that are necessary to deliver success in this space. And that includes everything from, as you noted, the gas molecule and the interconnection that's required there, maybe the contracting exercise with the gas through the design, construction and operation of not just a power plant, but also a complex balance of plant that incorporates power quality systems designed to meet the highly volatile load requirements that come with the data center. And ultimately, as we noted on the call today, allow us to integrate with the grid down the road, managing not only the requirements of our hyperscale customer and their data center load, but also the strict requirements that come with being connected to the grid, the ability to synchronize with that and meet the voltage and frequency constraints that are necessary to keep our grid up and running.

And then to layer on top of that, the commercial intricacies that come with that, the ability to interact with the grid from a commercial standpoint to leverage the attributes that, that brings to the table. As you think about all of those capabilities and then built on top of a strong supply chain packaging capabilities that ensure deliverability, you see in Liberty an organization that I would argue is really unrivaled in the space. And as a result, I think we're seeing strong trust and a real vote of confidence from our customers in that regard and ultimately leading to an agreement of this sort of scale.

Great. And my follow-up, Ron, it sounds like we're going to have to wait until December to understand maybe more details on the first ESA. But I was wondering if you could give us maybe some broad thoughts on the potential duration of this award, maybe speak to the credit quality of the Frontier lab and the ability of this award to unlock the project financing opportunities for Liberty, which Michael described in his prepared remarks.

Yes. So first to the question about the counterparty. Of course, we've said very clearly that we are only going to do business with high-quality counterparties that have a strong financial position that allows us to access the necessary financing we require to build out this power business at scale. And so you can trust that the counterparty is somebody that allows us access to the financing we have been talking about and our path forward for project level dollars there to go ahead and execute on this. As far as the term, it doesn't look any different than we have suggested in the past. This is a 15-year -- would contemplate a 15-year term for the ESA with a renewal opportunity on top of that. And as you've noted, certainly, once we get to that place where we've executed on this, we'll be in a position to provide further details.

The next question will come from Stephen Gengaro with Stifel.

So 2. The first, maybe following up on Arun's questions. Can you talk a little bit about the prepayment, the capacity prepayment and the nature of that and how we should be thinking about that over the next several months and quarters?

Stephen, so the prepayment is significant. And when we think it's significant, we think in the terms of hundreds of millions of dollars. It is a prepayment of capacity fees that will be amortized over probably the first 5 years of the contract. So therefore, will be a source of cash for that period of time and we will likely execute before -- it will certainly execute before the final ESA is paid.

Okay. And then on the legacy pressure pumping business, can you talk a little bit about the sort of pricing dynamics? And you mentioned the massive amount of money you're saving customers. And how is that playing into sort of the pricing that you're able to push for? Or is it more just a matter of supply/demand and kind of a stair step of price as the market tightens? Like how do we think about how you get paid for the massive amount of savings you're bringing to the table?

I would say there are a couple of things that you would think about there. First of all, it guarantees or effectively guarantees the utilization of that particular fleet. So as you think about the opportunities that you have going through a very challenged environment like we did for the last couple of years, -- you have this concept of last fleet standing. Liberty is -- Liberty's utilization remained very strong for all of our fleets through that entire period of time as a function of a couple of things. Number one, the service quality we bring to the table, but certainly, number two, the level of technology that we bring to the table.

Fleets like that remain in high demand through ups and downs. And so we have that underpinning demand that is always there. Those fleets tend to be more resilient from a pricing standpoint. So even when we go through an environment like we did over the last 2 years, the pricing that we get for the digi assets tends to be more resilient than you might find for a diesel fleet, where we might find a little more competition in the space and as a result, a little more price competitiveness and a bit more of a dynamic environment. The dual fuel assets tend to sit somewhere in the middle there.

The nice thing about an asset like that and the arbitrage opportunity from a fuel standpoint is that it allows us an opportunity to have a conversation with the customer about a pricing change without meaningfully changing the economics of their wells. In other words, if we can move them from a diesel fuel fleet to a natural gas fuel fleet, enabling maybe $50 million a year in annualized savings given the arbitrage as it sits today, we can ask for the price required to earn us a return on that invested capital. We've always said we want less than a 3-year cash-on-cash payback. And they can get fuel savings, we can get a price increase, and it's a win-win situation for both teams.

In an environment like this where there is, of course, very strong savings opportunities for them, it's an opportunity for us to go back to them and have a conversation about price. There -- of course, are still limits to that. The market is the market, and we live inside of that market. While I believe we always earn a premium to many of the players in the space, there is still a limit beyond which we cannot go on. So we'll continue to work pricing upwards over the coming quarters given the strength in the market and certainly with a particular focus on those fleets that are enabling those savings for our customers.

The next question will come from Scott Gruber with Citigroup.

So congrats on the deal. And it would seem pretty logical that securing the first ESA under a larger development agreement would obviously ease the path to future ESAs. How do we think about timing of those additional ESAs to kind of build to the 1.2 gigawatts deployed by '29? And given that there's been pushback at certain data center sites, how do you think about working with this hyperscaler and their kind of array of projects and your ability to kind of pivot capacity if there is pushback at certain sites and still secure those ESAs in a timely fashion to facilitate the proposed energization schedule?

Scott, you've got a lot of things to unpack here, but I'm going to try to get through them all. If I miss something, don't hesitate to come back on that. So starting with the first part of that, further ESAs. We have talked about the fact that we have a number of projects that we're advancing in parallel with one another, that our top 8 projects represented significantly more than the 3 gigawatts of generation that we had available. Those conversations continue to progress at pace. And so we remain excited about those opportunities as well. And certainly, we'll continue to update the market as we make meaningful strides on those and have something that is worthy of bringing to you in the form of a press release or something like that.

So we remain excited about those opportunities and certainly continue to see those advance. I tend to agree with your sentiment that making an announcement around 1.2 gigawatts being tied up on top of the previous reservations we have maybe adds a little incentive to move ahead, recognizing that we've got a limited amount of capacity. As far as the potential concerns out there around some sites being able to move ahead or not, we've talked about the means by which we can build some insurance, for lack of a better term into our business. And that involves a couple of things.

First of all, we like multiple legs on the stool from a customer standpoint. And so we have aimed to be engaged in conversation and ultimately advance potential projects with a number of end customers, a number of hyperscalers, recognizing that at any one time, somebody could have a change in sentiment, and we want to make sure that, that is not something that would have a meaningful impact on our business. At the same time, we have also worked to make sure that we have access to a range of sites in a range of states and range of counties inside of those states to ensure that no one decision in a particular state or in a particular locale could impact our business.

So for example, even in this conversation, this deal that we have announced here today, there is a front-running series of sites for that in a particular locale, but we have a couple of backup opportunities identified that we could pivot to. They're in different states and would allow us to, well, maybe with a slight delay, still have the project move ahead. And so we've worked hard to build that into our world so that regardless of how things play out over the coming weeks and months, we have the ability to advance this business confidently.

And then a quick one. There was a recent permit filing for a project in Wyoming called Buffalo Run. Is that one of those separate projects with a separate customer that you referred to? The ultimate capacity looks larger but appears separate? Or is it contemplated within this agreement? And any color you can provide on that project since the permit hit recently?

I can take a little bit of that one, Scott. As you know, we've been working on -- the people know that we've been working on this Wyoming site for a while, and we've just initiated the large load permit. That permitting time line is generally between about a 16- to 18-month period of time. And this really rolls into our plan as we're building a pipeline of projects and potential plants that go all the way into the 2030s, right? The earliest that this -- that project would probably start to execute at the back end of '28 into '29 and into 2030.

So as we go through the permitting process, the data center partner on that will sort of refine down its marketing with the hyperscalers. We will partner with the final hyperscaler and then potentially move forward on that side. But this is part of what we're doing now is we're building a pipeline for the next decade for a multi-gigawatt non-geographic specific IPP.

So we are working on near-term projects, as you've seen with the 1.2 gigawatt with very quick and early determinations and moving to ESAs to these larger, longer-term projects that are setting us up into the 2030s.

The next question will come from Josh Silverstein with UBS.

I want to see if you can help us match up the capacity you have coming in with the deployment schedule for the 400-megawatt Vantage deal and the 1.2 gigawatt here. Are you guys now kind of looking out to 2029 for the remaining capacity deployment? Or do you still have some room for '27 and '28?

Look, we still have some room for '27 and '28 deployment. We started taking delivery of generation early. And so we've been -- we put ourselves in a strong position to be able to meet the needs of some folks who do want to stand up power beginning as early as the back half of next year. So from a ramp standpoint, we do have in our inbound supply chain capacity still to allocate for the last part of '27 and ramping through 2028. Certainly engaged in conversations to put that to work at this point in time.

Yes. The vast majority of what we're working on as well as that sort of early stage is really the late ' 28 and through '29, the last gigawatt or so that will kind of -- just a bit over a gigawatt that will come energized in '29. So yes, those conversations are now moving further and further along. The conversations regarding the sort of early -- late '27, early '28 are very far advanced.

Got it. And then just on this 1.2 gigawatt announcement, once the initial 500 megawatts is signed, how do you expect the remaining 700 megawatts to be covered? Does it come in one single ESA? Is it multiple contracts? Like what -- why in multiple agreements versus just one big one for the 1.2 gigawatt.

So that's really about the way that they tend to build data centers. What we find is that these tend to be a very phased approach. And so while you hear these very large numbers on sites, whether it's the 1.9 gigawatts in Wyoming or these sites that are all gigawatt plus in scale, the buildings tend to be building blocks of maybe 300, megawatts 400 megawatts, 500 megawatts of IT load at a time. And the ESA is directly attached to a single building in this case. So what we're -- what you're going to see is that as the -- as our customer stands up subsequent phases of this, the next building, there'll be an ESA associated with that, and we'll attach the appropriate megawatts to that. And so you'll see this happen over a couple of phases, building by building, site by site.

Just a little color on that. That allows for efficiency in permitting and efficiency in financing.

The next question will come from Marc Bianchi with Cowen.

I just wanted to go back and clarify something, I think, Ron, that you mentioned on -- when the question was asked about the prepayments. I think you said hundreds of millions of dollars, and that applies to the 1.2 gigawatts. So first question is just one, correct me if that's wrong. And then the second question is, when would you anticipate to see that prepayment occur? Is that something that happens in the near term? Or is it sort of ratably as these ESAs get across the finish line?

No, you characterized that correctly. It is hundreds of millions of dollars against the 1.2 gigawatts. As Michael said, that will be ratably applied to the capacity payments over the first 5 years of the contract. And we would expect receipt of that in the near term, but it's not contingent on execution of the ESA.

Got it. Got it. And then maybe just switching over to the frac side of the business. And I guess another earlier question had kind of discussed that you've got some better than market pricing in your existing fleet because of the quality of service and the ability to have a lower cost fuel. How should we externally think about the leading-edge pricing moving higher and how that could ultimately translate into like a material increase in your EBITDA level? Do we need to see a 10% or 20% increase in market prices and then that shows up in EBITDA sometime in the middle of '27? Or maybe just talk to us about the progression there.

Yes. Certainly, the market has gotten to a stronger spot, I would say, from my standpoint, as we look out into 2027 to a position where I think we're confident that the market will be supportive of an upward trajectory for pricing. I mentioned in my remarks, the strength of the forward curve now. We had been challenged through much of this year with a situation where front month oil price was quite strong, but the curve -- forward curve fell off relatively rapidly that there just wasn't that ability to lock in strong economics through '27 and even out into '28. But in the last few weeks, we've really seen a strengthening of the forward curve.

We've got 2027, I think, up above $85 through the end of the year now and up above $70, maybe even above $75 through 2028. That helps us in that it gives us confidence around our E&P customers' outlook and their confidence around their financial returns for activity in the coming year. As a result, I think, puts us in a stronger position around being able to go out and continue to look for price increases on a quarter-by-quarter basis.

Now of course, we can't -- we don't move pricing for all of our fleets at the same sort of rate. In some cases, that could happen as frequently as quarterly. In some cases, it's more of a semiannual or annual event. And so we'll work through those case by case, customer by customer. But -- but yes, I would say, sitting here today, feeling more confident about our ability to go and get some additional price as we head into 2027. I would say that we expect to continue to face inflationary headwinds, particularly on the labor side of things.

We've seen input costs climb this year as a result of the tariff situation and also the cost of things like fluids. Obviously, we use a lot of oil and lubricants and things like that. They've climbed pretty meaningfully. But labor is going to be a big one in the coming years. Trucking, we're feeling that on as well. So we're going to be working to pass that through. And then on top of that, seek to add some additional margin to our bottom line.

The next question will come from Alexa Breno with Goldman Sachs.

I think yesterday's update was positive on the power side. Can you just talk a little bit about what needs to happen now between yesterday's announcement and then a final contract execution? What are some of the remaining milestones? And then how much of this is in your control versus maybe the customers or other parties?

Yes, Alex, I can take a little bit of that. We're in the final -- all the major commercial terms are agreed upon. We're now in the final legal drafting of the ESAs. And then we're getting into the site-specific portions that affect the contract. So those are the things that need to finalize at the moment, and they take a little while. But sort of we're at that point where we have the trust and we have enough of the major terms for a standard ESA, I would say, for the whole 1.2 gigawatts that basically becomes rinse and repeat. So once we finalize this first ESA, really the lift for the second or third or fourth with this client will be very -- will be relatively light and only be site specific after that.

Okay. That's very helpful. And then just an update on financing. You talked a little bit about conversations there. As you just move towards a contract on the power projects, how much upfront capital should we think about being committed? And then will we get financing updates along with the contract? Or any color on how we should think about it?

Yes. So I mean, I think what we're doing there is we're obviously negotiating these ESAs in concert with our financial advisers. And as we are moving now even prior to the ESA, we are accelerating the financing conversations with our financial advisers and the capital sources to try and accelerate that financing as much as possible after the signing of the ESA. Now it still does take a while. That can be anything from 8 weeks to 3 months to 4 months, depending on the type of financing and owners engineers reports and other bits and pieces. But I think we're accelerating that by doing the prework. And I think we can have that financing in place in relatively short order after the signing of the ESA.

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

Michael, you mentioned the core business generating strong free cash flow. Wondering if you can kind of help us unpack the quarter a little bit more in that respect. So how much of the EBITDA was associated with the frac business versus CapEx and potentially how we should think about that going a little -- going forward a little bit further as well?

Yes. As we look at things over the year, really, Keith, obviously, capital moves in quarter-on-quarter. EBITDA moves in a solid upswing at this present point in time. Now we'll have reasonably strong free cash flow as we've gone through this year while we're reinvesting in the base business for digiPrime. And so we had positive free cash flow from the base business this quarter. We've had it every other quarter. And the same going into next year, where I think we'll have a good solid free cash flow from the completions business, even while reinvesting in our digiFleet.

Okay. Got it. And just as you think about Q4, it sounds like we need to be thinking about a seasonal decline. Can you give us any context around the magnitude of where we think Q4 should shake out from an EBITDA standpoint?

As we've kind of previewed, you're going to see -- we always see a holiday slowdown. Again, if you're finishing okay, just before Christmas, people like to give the people time off around the Christmas holidays, et cetera. You see the onset of Christmas weather. But that's offset by the fact that we have strong commodity prices. And we're not seeing any budget exhaustion or anything of that like this year. And I think our customers are going to drive through the end of the year in their completions programs. So you'd expect that you would have a slightly smaller than normal seasonal breakdown for Q4.

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

Ron, Mike, apologies if I missed this, but did you update on the CapEx number for this year? I think it was $1.5 billion last quarter, if that number is still the same? And then just correct me if I'm wrong, the way I'm thinking about financing is you would get this prepayment relatively soon, I'm assuming before the end of the year by the time the ESA is announced or not announced, right? So that's imminent. Should we think that is enough of a bridge financing? And then when the ESA comes, you'll put that into a project finance and we don't need to worry about financing, right? Is that the right way to think about that?

I'll unpack that a little bit. Yes, our CapEx guide for the year is still intact. We're not changing that. Yes, we are going to be receiving a significant prepayment of capacity fees that will be booked on to the balance sheet as deferred revenue and will be a significant source of cash for the fourth quarter. And we don't anticipate needing to access further financing in the fourth quarter.

Okay. Fantastic. No, Mike, that's very clear. And then one in terms of just the 1.2 gigawatt deal, how should we think about profitability? Are we still thinking high teens unlevered IRR, 1.7, 1.75 in terms of CapEx? Is this along similar lines?

Yes. Nothing has changed there. We continue to target those high teens rates of return on the invested capital. The ultimate capital deployed on any given project is just going to be a function of the complexity of the balance of plant. We've got the base generation that will be a part of any project we do. And then you're going to find on the very simple end of things where we might have a basic commercial or industrial project, a much lower multiple on the cost of generation to get us to total deployed capital.

And on the other end of that scale for a very, very complex inference data center with a volatile load profile, you're going to see us push up to those higher numbers that approach -- that head up towards 2x the cost of generation for full deployment of the facility. So we'll be able to give you some color on that on a case-by-case basis as we start to announce ESAs and some specifics around individual projects.

Well, the amount of the CapEx does not dilute the earnings. So I will reiterate that a couple or 3 times today. The high teens is on all of our capital deployed. We are still targeting approximately that somewhere between around 5x cash-on-cash payback for the capital. So sometimes if it's a longer-term contract, if it's a 20-year contract, that might move out towards the 6-year mark. The 15-year, we're in that 5. So yes, so again, just to reiterate, when we undertake extended scope for a client because we are the good partner that we are for them, we do not dilute our capital returns.

No, that makes a ton of sense, Mike, risk and return and capital intensity go all hand in hand.

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

I just want to follow up on Saurabh's question just about the mechanics behind the financing. So it sounds like the significant prepayment will be your source of cash to kick off this initial 500 megawatts. But then how do we think about the mechanics and the steps to then drop the project into an SPV project level financing when you do execute that ESA as far as potentially refinancing some financing? Or just trying to work through the mechanics of how we think about that once the ESA and the SPV are set up.

Right. So let me just clarify. The $300 million is not specific to this project. It's a form of commitment from the client for the whole 1.2 gigawatts and yes it is a source of cash for the corporation for the quarter. So the corporation undertakes long lead time item spending that was initially funded by our convertible bonds in the first quarter of this year. As we sign the ESAs, those assets are then dropped down or purchase contracts then dropped down into a dedicated SPV. And that SPV undertakes project financing at that level and then reimburses the corporation for money spent at -- up until that point.

Now we will have a significant amount of equity in those SPVs. We are probably targeting an order around 20% equity and about 80% debt at the SPV level. And so therefore, you'll see that cash recycle back to the corporation being reinvested in long lead time items to generate more projects in the future.

Great. That was super clear. I appreciate that. I guess switching over to frac. Just curious about the conversations as we progress into 2027, thinking of both activity and pricing. A lot of your customers have been pretty quiet as far as what they're expecting for next year. Strip is sitting at 85%, and I imagine there's some hedges that have been put into place. You've talked about in your opening remarks, the enhancing of E&P revenue visibility. Earlier this week, a big peer of yours called for North America to be flat with no recovery in U.S. frac. Just would love to get your comments on how we should start thinking about 2027 and maybe the different moving pieces and levers if we could think about a real recovery in frac or if it's just too early to tell from right here.

Look, I would say I'm not going to say we're headed back to mid-cycle economics or anything like that next year. That would be a step too far. That said, the increase in rig count has ultimately supported an increase in demand for frac equipment, probably of order 15 to 18 incremental frac crews. And that has led to a relatively tight frac market. There is not capacity sitting around looking for work to complete. Our calendar is full. I think you'll hear from our peers probably over the course of the coming weeks that their calendars are full and utilization remains strong. That puts us in a position to look for modest pricing increases quarter-on-quarter. I would have told you maybe a quarter ago that I wasn't sure that the fundamentals were there or clarity was there around 2027 yet.

Now as we've noted, we've seen the forward curve strengthen. That hedge opportunity is there. I think we have confidence in our customers' economics for the coming year. And I think that provides us a backstop for continuing to seek some modest additional price increases over and above the inflationary impacts I expect we're going to continue to feel as we work our way through the tail end of this year and into 2027. Many of those conversations are going on right now.

We're in RFP season. We've gotten through many of those, but not complete at this point in time. Still got a little more work to do before we have the complete picture for '27. We'll give you that outlook on the next call.

The next question will come from Eddie Kim with Barclays.

Congratulations on the agreement announced yesterday. Just curious if there's any concern on the timing of that ESA potentially getting pushed out to early 2027 in light of data centers now being a political headwind? Or if your confidence level on that ESA by December is pretty firm at this point?

Look, I would say that while we can't predict what the future holds here over the coming weeks and months, at this point in time, we're confident around our ability to get there. There doesn't, at this point, appear to be an issue with finalizing that before the end of the year. As we've said, even in this case, we have made sure we have contingency options in place in the event something were to happen with the primary sites such that we could pivot to another site. That might introduce a modest delay if we were to have to do that. But we've built those contingencies in to make sure that we can navigate whatever potential headwinds might come our way.

Understood. Understood. And just shifting over to pressure pumping. You mentioned sort of drilling-related delays in the third quarter. Just wondering if you could provide some more color on that. Is it just the pace of drilling has slowed down? Or does it speak more to your completions operations just being so efficient that you're bumping up against the rigs at this point? And just curious if you expect this dynamic to sort of linger for the upcoming quarters or if this was really isolated to 3Q?

I think this was a bit of a unique set of circumstances. We went through a situation where coming out of Q1 and headed into Q2, utilization jumped up pretty meaningfully across the broader industry. That incremental activity was driven by uncompleted inventory. And so we had this swath of wells out there that were waiting for a frac crew to come and work on them. That allowed us to accelerate activity levels pretty quickly and have a meaningful runway in front of us. But with the efficiency of our world these days, we work through that inventory pretty quickly.

You saw rig count come up. But ultimately, it meant that we were chasing rigs. And in a couple of particular situations, we actually did catch up to the to the rig, and it meant some space on our calendar we had not anticipated. It puts a little work into the subsequent quarter. I don't view that as a regular occurrence.

Typically, we're in a position where we've got a bit of breathing room between us and the rig or we have some other option to move the fleet to. In this case, we got caught without either of those. And so we had a bit of an impact on the quarter. But I'd call it a bit of a singularity rather than something we should expect to carry on.

The next question will come from Jeff LeBlanc with TPH Research.

I wanted to see if we could revisit your progress on securing the full 3 gigawatts by 2029 and if there's been any incremental capacity since the Cat announcement that was disclosed in the 10-Q?

No. So we are very confident that we have the 3 gigawatts available to us to execute and have energized by the end of 2029. We haven't added or announced any additional capacity on that. Obviously, we continuously work on supply chain and continuously work with our data center partners who, in some ways, are looking for earlier generation, and we are sort of exploring partnerships and potential ways to satisfy their growing need for power. But nothing else has been announced or committed to.

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

I just wanted to come back to the fourth quarter outlook. I think Keith had asked a question on that. I just wanted to maybe dive in a little bit deeper there. If you look historically, and I think that you guys have commented that fourth quarter top line seasonality is normally maybe mid- to high single-digit decline. Do you think that given the dynamics that you described, maybe low single-digit decline could be a better bogey for this fourth quarter? Or do you think that that's too optimistic? And then how do you think about the associated decremental margins for this quarter?

There's obviously, different factors that you guys have highlighted, some cost pressure, but then any incremental pricing traction that helps decremental margins. But yes, just do you think low single-digit revenue decline is too optimistic? And how would you characterize incremental margins or decremental margins relative to normal levels for this quarter?

Look, I would say we're not prepared to give a specific number around that. So I'm maybe not going to answer the question that way. I would tell you, as we've indicated with our guidance that we do have a positive view to the quarter that we do expect it's not going to be quite as meaningful as we would typically experience in a normal year given some of the activity that's pushed, given the strength of demand from the private. So we definitely got some tailwinds from that regard, but won't commit to a specific number there.

Yes. Fair enough. And then maybe just, Michael, I think you alluded to the fact that the plan is to continue investing in incremental digiPrime assets, at least at the kind of replacement level. But how do you think about that in the more near term as you're -- how do you think about capital allocation towards digiPrime investments relative to the pretty substantial capital requirements to build out the power business?

We are very, very bullish on both sides of our business. And we -- our completions business has very strong returns, and we will continue to build that over the next decade. And the same on the power side, where we don't find ourselves to be capital limited at this point. We have access to many forms of capital to help build that business. And we're going to build a long and lasting decades-long business in the power sector. Now we aren't -- again, we are very much about building long-term businesses that are sort of that we can grow over time.

So we're not looking for maybe the quickest the quickest return. We are going to continue to invest through the cycle in both power and completions and grow the business over the next 20 years.

Dan, as you can imagine, there are an awful lot of hands up for next-generation equipment in this particular environment, just given the arbitrage between diesel and natural gas. We have, I think, as Michael alluded to, always been clear that this is a both, not an either/or. We have spent 15 years building an immense amount of trust and strong relationships with our customers on that side. And we'll continue to support them with leading-edge technology and the service quality that we are well known for. That will mean we'll continue to invest in next-generation technology at a cadence that is reasonable and appropriate for the market. And certainly, at this point in time, we've got a lot of asks for it. So we will work to find a balance between the demand that we have there and the cadence at which we're prepared to continue to build that equipment.

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

Ron, just a follow on to Derek's questions. But on the core business and recognizing you're in the normal RFP season, but how would you characterize that customer urgency to secure fleets for next year? And really just trying to understand like what's happened in the last 2 weeks to 3 weeks with respect to inbound calls versus maybe what you're seeing in Q3?

I would say, while we didn't see it move forward as early as it has in some past years, we've had some situations where I think our next year's RFP season happened in the summertime. We are through a good number of those conversations. We already know the homes for most of our fleets for 2027. I would say that in some cases, there wasn't even an RFP for that. The trust and strength in the relationship has meant that our customers have just chosen to carry on with us moving into next year, recognizing there's probably a conversation around price to be had. But beyond that, committed to having Liberty at the table. So we have a few more of those to wrap up, but I think we're most of the way through that at this point in time.

Okay. You might not have the math in front of you on this question, but if you had to guess and underlying guess, what's the minimum price increase range you think you would need to just simply cover inflationary costs? Ballpark is fine. Just trying to understand the magnitude.

Oh gosh, I don't know that I know that answer off the top of my head.

Okay. All right. Fair enough. Well, that's all I got -- unless you got…

John, maybe I'll add one thought to that. I would say that we have probably offset much of that now. If you thought about some of the increases that were driving that, I would say tariffs were one of them. We've seen an increase in fluids as an example, so lubricants and things like that. That stuff is mostly stabilized now. We got a pretty steep increase through the middle of this year, and we've settled in on that. We're going to be dealing with labor inflation, as I noted, but I think we've got an outlook on that and are being a little proactive around that. So I think we've covered a lot of that.

And then layer on top of that some ability to offset those things mostly through technology and innovation. So if you think about -- if you think about the deployment of digiPrime and what we've seen there in terms of component longevity through the deployment of that asset and then also leveraging of AI as a software monitoring tool on top of that, we're able to blunt some of those impacts somewhat, mitigate what we might have felt in a more traditional fleet going forward. So I think all of those things together, we're probably in not too bad a spot headed into next year.

We'll continue to keep an eye on it, particularly labor and trucking, I think, are the 2 we're going to see out in the field directly influenced by the whole data center build.

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

America stands at an inflection point. The same nation that led the world through the industrial revolution, the digital revolution and the shale revolution is now entering a new era of unprecedented energy demand. Artificial intelligence, advanced manufacturing, data centers, reshoring of industry and continued economic growth are all increasing the need for affordable, reliable energy and modern infrastructure. The challenge before us is straightforward. If we want to remain the world's leading economy, we must ensure that we can produce and deliver the energy that powers it. This should not be a partisan issue. Americans will continue to debate climate policy, environmental priorities and the composition of our future energy mix. Those discussions are important and necessary.

Equally important are the concerns raised by local communities about how energy infrastructure is developed and its impact on the places they call home. These concerns deserve to be taken seriously. Successful projects are built not only with engineering and capital, but with trust, transparency and meaningful engagement. Yet acknowledging those concerns cannot become an excuse for inaction. The reality is that the United States needs more energy infrastructure. We need new generation capacity. We need transmission. We need pipelines. We need storage. We need the infrastructure required to support both traditional and emerging energy resources. Put simply, we need to build.

Too often, however, our conversation devolves into a choice between unrestricted development and outright opposition. Neither approach offers a durable path forward. A moratorium mentality may postpone difficult decisions, but it does not solve the underlying challenge. Americans will still need affordable electricity. Businesses will still require reliable power. Communities will still depend on the economic opportunities that energy development can create.

The question is not whether demand will exist. The question is whether we will meet it responsibly and proactively or react to shortages, rising costs and declining competitiveness after the fact. What America needs today is not less scrutiny, but more certainty. We need decision-making processes that are transparent, rigorous and efficient. We need policies that encourage investment while respecting community interest. Most importantly, we need leaders willing to focus on solutions rather than stalemate.

Throughout our history, the United States has succeeded when we confronted challenges with confidence rather than retreat. From railroads to highways, from rural electrification to the Internet, each generation invested in the infrastructure that made future prosperity possible.

Energy is the infrastructure challenge of our generation. Regardless of political affiliation, we should be able to agree on a fundamental principle. A growing nation requires a growing energy system.

The path forward will require compromise, innovation and cooperation, but it must start with a shared commitment to build the infrastructure necessary to secure America's economic future, strengthen its energy security and improve the lives of the people who depend on it every day. The greatest risk is not disagreement. The greatest risk is allowing disagreement to prevent progress. Thanks very much for joining us on the call today. Enjoy the rest of your day.

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

Welcome to the Liberty Energy Earnings Conference Call. 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, Nick. Good morning, and welcome to the Liberty Energy Second 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 views 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 include -- 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. The second quarter demonstrated strong operational execution as our team continued to deliver proven quality services amidst commodity price volatility and heightened geopolitical uncertainty. We delivered revenue of $1.2 billion and adjusted EBITDA of $151 million, leveraging the benefits of our strategic investments and AI-driven technology advancements as the industry modestly strengthened from early year cyclical lows. The success of our DigiPrime platform in the United States has translated into a notable milestone with an upcoming fleet deployment in Canada alongside a key cross-border customer.

We believe customers increasingly value partners that can deliver innovative technology, service quality and execution, creating deeper alignment and stronger long-term customer relationships over time. The next-generation fleet deployment in Canada demonstrates our ability to scale across North America while reinforcing how continuous technology innovation creates sustainable differentiation across our business.

We also commenced commercial operations of slurry, our proprietary last mile sand system, redefining how sand is delivered to the well site. Across our first 3 deployments, the system has demonstrated meaningful benefits for customers and local communities. At a current Rockies Basin deployment, nearly 8 miles of slurry pipe replace up to 200 truckloads of sand per day that would otherwise traverse 24 miles of county and lease roads. This project alone is expected to transport approximately 1.5 billion pounds of slurry sand while eliminating nearly 30,000 truck trips over a 7-month period.

The result is a safer transport system that reduces logistics costs, improves delivery consistency and decreases road congestion, dust, emissions from trucking and road maintenance. We believe slurry demonstrates how innovation can create value across the entire energy supply chain from customers and operations to landowners and the communities where we work. More broadly, our investments in AI and digital technologies continue to create value in ways that extend beyond their initial design objectives.

Tools like Forge, our distributed agentic system for fuel optimization, are increasingly identifying opportunities to enhance fleet design, asset utilization and overall operational performance while optimizing fuel consumption. The ability to uncover and act on these secondary insights highlights the power of combining Liberty's operational expertise with continuously learning digital systems, creating benefits that compound across our fleet over time. Turning to power. Our recently announced JV with PowerBridge, a 5-point infrastructure portfolio company, represents an important step in expanding Liberty's participation in digital infrastructure and large load power markets.

By combining PowerBridge's powered campus development platform with LPI's integrated power generation, energy management expertise and operational capabilities, we are creating a differentiated offering for hyperscale, AI and other large load customers. The venture is designed to create a scalable framework that aligns both organizations across the full infrastructure stack, enabling a more integrated approach to delivering powered campuses for next-generation digital infrastructure. PowerBridge's planned portfolio of gigawatt scale West Texas campuses expands our opportunities to deploy Liberty's power solutions at scale. The JV's current scope is focused on PowerBridge's Alpha Digital campus, a planned 2-gigawatt powered campus in West Texas. The initial phase of campus development is expected to include over 300 megawatts of generation capacity with the first power anticipated in the fourth quarter of 2027 and development expected to continue through the first half of 2028.

Discussions with prospective data center tenants regarding future power offtake opportunities for this client-ready platform are already underway. We are encouraged by the strong interest and look forward to advancing these discussions toward long-term commercial power offtake agreements. Last week, we announced a strategic alliance with SLB, bringing together Liberty's integrated power solutions with SLB's modular infrastructure capabilities and global market presence in a seamless solution to help address the growing need for scalable power and electrical infrastructure solutions, both inside and outside the walls of the data center with a unified interface for the customer. This collaboration enhances our ability to pursue larger and more diverse opportunities while advancing our technology road map and supporting the rapid build-out of infrastructure required for AI and high-performance computing. The alliance builds on a long-standing relationship between our 2 organizations, providing a strong foundation for execution and a streamlined customer experience.

The companies also plan to collaborate on future technology initiatives focused on hybrid power systems, digital energy management, advanced power architectures and waste heat recovery to support evolving data center energy requirements. Our LTI platform sets a new standard, combining power system architecture and energy market optimization. During the quarter, we secured multiple agreements to purchase power generation equipment with Bergen Engines, Wärtsilä and other global suppliers.

Our technology architecture and advantage proprietary control systems are designed to integrate multiple leading manufacturers, enabling us to leverage the favorable attributes unique to each engine type for the optimization of the generation stack. We also recently announced the formation of Liberty Wholesale Commodities, extending Liberty's Chorus offering through direct participation in ERCOT power markets. This capability allows us to combine on-site generation, retail electricity supply and market optimization within a single integrated solution. dynamically optimizing between grid power and on-site generation to improve project economics while supporting load balancing on the grid based on real-time operating conditions.

We are now able to integrate on-site generation with both ERCOT and PJM market participation for large-load customers, positioning us to leverage favorable grid attributes while providing grid resilience within local communities. By managing the intersection of generation assets, grid supply and market participation, we can deliver greater flexibility, enhanced economics and a differentiated customer value proposition as power requirements continue to grow. We believe this integrated approach enables large load development to support rather than strain the electrical grid in the communities in which it operates. The opportunities in front of Liberty today are broader and more diverse than at any point in our history. Our Completions business continues to benefit from years of disciplined investment in technology, execution and customer relationships, while our power platform continues to advance through commercial engagement, strategic relationships and the development of differentiated capabilities across the energy infrastructure value chain.

We remain focused on disciplined capital allocation, operational excellence and investing in opportunities that strengthen our competitive position and create long-term value for our shareholders. The most enduring consequence of the Middle East energy disruption has been a renewed focus on energy security and supply diversification. Heightened geopolitical risk, damage to regional energy infrastructure and continued uncertainty surrounding key export corridors have reinforced the strategic importance of North American oil and natural gas resources.

This shift is increasingly evident in commercial activity with international buyers pursuing longer-term agreements for U.S. petroleum products and LNG, while also seeking greater direct participation in upstream supply. Planned storage expansions across Southeast Asia and Australia, together with the need to replenish depleted strategic reserves are expected to support incremental demand for North American energy over time. As a result, U.S. and Canadian oil, natural gas and refined products are becoming increasingly important to meeting global energy needs, supporting a constructive long-term outlook for North American energy.

Global oil and gas markets experienced significant volatility during the quarter. The conflict in Iran and related energy supply disruption drove oil prices to levels not seen since 2022 before moderating as softer Chinese demand tempered some of the resulting supply uncertainty. While it remains too early to fully assess the long-term impact of recent developments, including the trajectory of Chinese demand, recent events have reinforced the complexity and interconnected nature of global energy markets. Although the acute phase of the crisis moderated following the June ceasefire and partial reopening of the Strait of Hormuz, renewed U.S.-Iran tensions highlighted the fragility of the recovery.

Early signs of normalization in physical oil flows, LNG exports and shipping logistics proved short-lived as transit through the street disrupted supply chains once again. Frac markets improved modestly alongside a gradual increase in North American producer activity, providing greater transparency into the underlying availability of frac fleets impacted by years of fleet attrition and equipment cannibalization. Improved market conditions are supporting a modest recovery in service prices from cyclical lows earlier in the year.

Next-generation technologies remain in high demand as current commodity prices reinforce both the economic value of the diesel to natural gas fuel arbitrage and the benefits of AI-enhanced systems that reduce total fuel consumption.

However, large U.S. and Canadian producers remain cautious toward increasing activity levels given continued price volatility and broader macroeconomic uncertainty, although recent developments in Canada are encouraging for the longer-term outlook. Power demand fundamentals remain strong, driven by the continued expansion of AI data center development and broader industrial power demand. As project requirements increase in scale and complexity, customers are prioritizing infrastructure partners capable of coordinating power supply, site readiness, energy management and long-term operations through a unified development approach. At the same time, hyperscalers continue to expand their internal technical and commercial capabilities, enabling a more comprehensive evaluation of long-term power and infrastructure strategies. This evolution is creating greater opportunities for power providers capable of delivering integrated solutions across the infrastructure value chain while helping hyperscale customers address a diverse range of development strategies, site characteristics, power markets and speed-to-power objectives.

Liberty's DNA is rooted in solving customer challenges through innovation, technical expertise and a culture of execution, which are attributes that align closely with the needs of today's largest energy and technology companies. Our customers are becoming increasingly aware that successful power solutions require dedicated partners capable of delivering integrated solutions and long-term operational support. This dynamic is familiar to Liberty as our large oil and gas customers have long relied on trusted partners to unlock incremental value year after year.

Looking ahead to the third quarter, we are encouraged by the momentum in the second quarter, while recognizing the uncertainties associated with global geopolitical developments and the potential effects on our customers' end markets. We remain focused on executing against the broader opportunities emerging across the energy ecosystem. I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. I'm pleased to share we delivered a solid second quarter marked by outstanding execution and disciplined investment. Building on the momentum exiting the first quarter, our team safely achieved record operational performance, setting new highs for pump hours, horsepower hours and proppant pumped, helping customers capitalize on the more constructive oil and natural gas environment. We also took deliberate steps to strengthen Liberty's future position, increasing our investment in critical long-lead power generation equipment while building teams to address an expanding set of power customer opportunities.

Let's turn to our earnings results. In the second quarter of 2026, revenue was $1.2 billion compared to $1 billion in the prior quarter. The 16% sequential increase reflected record utilization and a modest pricing uplift along with higher product sales that represented the largest contribution as customers increasingly turned to Liberty's industrial-leading ability to source, move and deliver product at scale. Second quarter net income of $43 million compared to $23 million in the prior quarter. Adjusted net income of $14 million compared to $10 million in the prior quarter excludes $29 million of tax-effected gains on investments, partially offset by transaction and other costs. The fully diluted net income per share in the second quarter was $0.26 compared to $0.14 in the prior quarter and adjusted net income per diluted share was $0.09 compared to $0.06 in the prior quarter. Second quarter adjusted EBITDA was $151 million. General and administrative expenses totaled $67 million in the second quarter compared to $60 million in the prior quarter and included noncash stock-based compensation of $6 million.

Excluding stock-based compensation, G&A increased $7 million, primarily due to higher variable compensation associated with better-than-expected second quarter results and higher IT-related costs. The other income items totaled $40 million for the quarter, inclusive of $43 million of gains on investments, offset by interest expense of approximately $3 million.

Unrealized gains primarily reflected the appreciation of Liberty's investment in Sirius following its second quarter IPO. The second quarter tax expense was $9 million, approximately 18% of pretax income, and we expect tax expense rate in 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 $559 million and net debt of $736 million. Net debt increased by $157 million from the prior quarter. Total liquidity at the end of the quarter and including availability under the credit facility was approximately $1 billion.

Second quarter uses of cash included capital expenditures and $15 million in cash dividends. Net capital expenditures and long-term deposits were $221 million in the second quarter, which included investments in the power generation digiFleets, capitalized maintenance spending and other projects, including $71 million in power generation deposits. We had approximately $2 million of proceeds from asset sales in the quarter. Entering the second half of 2026, we are encouraged by the opportunities across our business.

We continue to see a constructive backdrop for our completions business, supported by deep customer relationships, strong execution and technology advancements. At the same time, commercial opportunities are accelerating as customers seek reliable integrated solutions. Given the increasing depth of our commercial pipeline, we now anticipate approximately $1.5 billion in capital expenditures in 2026. Primarily reflecting an increase in deposit payments to secure long lead time power generation.

This investment reflects our conviction in the opportunities ahead and our commitment to generating attractive returns over time. 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 will come from Arun Jayaram with JPMorgan.

Ron and Michael, I was wondering if you could talk about how the commercial pipeline is evolving and maybe elaborate on your commentary that power requirements in terms of increasing in scale and complexity and how you think Liberty is positioned given the shift in market dynamics?

Thanks for the question. I'll add a few comments and then maybe Michael might jump in with a few things on top of that. I would say that we are seeing the commercial pipeline evolve a little bit just in terms of the complexity and scale of the opportunities that are in front of us. If you look at things over the last 12 to 18 months, we've seen, I'd say, a pretty consistent migration from what were going to be a larger number of smaller projects now to a smaller number of larger opportunities. We're seeing more and more campuses that are at that gigawatt-plus scale at ultimate build-out that are going to have a number of phases involved in them where they started maybe a few hundred megawatts and grow to several gigawatts in scale over a period of time. And in some cases, with those located relatively close to one another.

I think people are recognizing that there are -- there are places in the United States that are going to be easier to move ahead with this sort of construction that leverage the local attributes that are present there and the support of the community, and we're going to see some focus in those areas. And they're going to leverage, I think, some additional scale in that. So we're certainly seeing a larger number of campuses that talk about this gigawatt scale potential. That's ultimately made our sales pipeline larger and larger and larger.

We continue to share that with the Board, and you've seen their confidence expressed in that through our continued addition of generation -- inbound generation capacity in the contracts we announced this year or this past quarter. So lots of excitement there and looking forward to the coming months and years in this world. Michael, do you want to add some things on top of that?

Yes. I think when we look at it, these larger campuses are sort of stage build-out. As we've said before, we think the vast majority of our campuses or our power generation facilities will eventually be integrated with the grid. They'll start behind the meter, then they will expand from there with the grid integration. And so looking at that grid integration and sort of as you've seen, probably a rapidly set of changing rules and clarifications around different areas of the grid between PJM and especially ERCOT.

I think when you see a lot of the projects in ERCOT at the moment, you've seen this kind of, I would say, probably a little bit of a holding pattern over the last 3 or 4 months and exactly sort of the location of where build-outs are going to happen and sort of the timing around the batch zero process, sort of when those first they've sort of batch their interconnections into groups. and sort of which projects will be in Batch zero, so which projects may get interconnection in the next 3 years, what that might look like, et cetera. So a lot of planning around that.

We've also seen a lot of planning discussion around community engagement and the need for sort of kind of a deep community engagement as you start down the early stages of these projects, and you're starting to see that happening across the board. So yes, a lot of complexity around that and then sort of defining sort of how this generation will grow over time and what those campuses will look like, a little clarification around the load cases. You're moving along from these AI training loads sort of were being modeled with early-stage white papers from the chip manufacturers to folks getting to the point where they're standardizing the size of their build of their data halls to make it far more efficient to build these campuses out. So there's been a lot of, I would say, a lot of work being done in the background in the whole industry. And I think kind of you see some of the partnerships that we've announced and some of the ones that we're talking to like the SLB partnership, they got a lot of modular equipment. They've got like 3.25 million square feet under one roof in Shreveport. And when you see the size of that, and that's because the massive amounts of building are going on. And I think standardizing that and standardizing the solutions is coming into focus across all areas of the value chain.

Great. My follow-up is on the PowerBridge JV. This is in addition to the Vantage agreement you previously signed.

Can you maybe help investors talk about these development partnerships? And how would you compare and contrast these towards a traditional ESA type of agreement with an end customer?

So I would say they're not the same thing at all. Ultimately, even with this PowerBridge JV, we will end up with an ESA with a hyperscaler. What the JV does for us is offer a couple of things. First of all, to the point Michael was making around a more straightforward approach for the hyperscalers, modularity and simplicity. This offers them a single point to come and sign on for a power data campus. It allows them to, through a single entity, take care of the land and associated infrastructure that goes with that along with the power generation capabilities. We are aligned in that message. It allows us to share together in some of the opportunities there.

So we have a joint venture platform that has us with a bit of an interest on the land side of things and our partner in PowerBridge with a bit of an interest in the power generation side of things. So we are aligned and in lockstep as we talk with the potential hyperscale customers for this particular opportunity. It's also a platform on which we can go beyond this campus. It is designed as a premise that we could scale to additional opportunities beyond the initial Alpha Digital site. Michael, do you want to add some other thoughts there?

Yes. No, I think, Arun, you should just think about it as there is 3 sort of major players, right, in this AI development, data center development, right? You need to have land with power and utilities, right? You need a data center like basically a building and then you need kind of a user or offtake of that compute. And the subtleties where that value chain gets broken down into many different ways.

But if you think about it, our power is necessary to sort of build anything, you're going to bring your own power to build any data center. But on the powered land side, for the first part of that chain, we work with a large number of powered land developers, but we're very close to the PowerBridge. -- and we're now doing a JV with their multi-campuses in Texas, where they're building fiber rings and they're making this kind of a center for development for hyperscalers. So that's the first stage that needs to be. So they're a really strong partner there. If you think about building data centers, we're working with a number of data center builds that everyone you know, that Vantage is one that we dedicated power.

We've got a dedicated commercial relationship, and we're going to have dedicated power for their facilities. And they're building the data center and they're running it for the hyperscalers. And then ultimately, we will contract with modular developers where you've got hyperscalers that may build their own facility without someone like a Vantage or some of those builders of data centers. And they may just contract directly with the powered land folks and ourselves for the power, and they will run the compute on their behalf. And then you've got a little bit of -- sort of in the middle there where you have the GPU clouds who are running compute and then selling that compute power to folks. So there's some breakdowns in the value chain. But as you see, we're picking great partners along that way who we directly integrate. And by having those partners, when you think about the work we do with PowerBridge, we're spending a lot of time, our teams get very, very close in the design, development, distribution of power.

These will have large-scale power coming on behind. And so ultimately, it allows us to build to expand our technical ability and build our modular solutions that can have greater expansive growth possibilities.

The next question will come from Stephen Gengaro with Stifel.

So I think 2 for me. I think the first, when we think about the power gen opportunity, can you talk a little bit about sort of the return hurdles that you're thinking about? And maybe how should we think about -- I know you talked about 300 megawatts, I think, by the end of '27. When we start to see kind of the impact kind of rolling through the income statement? I know it's kind of medium term, but how should we think about that the next couple of years?

Yes. Stephen, I don't think our view to a return on the invested capital has changed at all.

We are still absolutely focused on a return profile that is a 5- to 6-year cash-on-cash payback, 17%, 18% unlevered rate of return. So I don't think we've wavered on that at all. I think we still see that as very reasonable in the market we're in today. And then as far as deployment, I think you colored it right, which is to say, yes, we're going to have some early-stage generation running kind of the first part of that 300 megawatts by late '27, but that will build out over the early part of '28 as well. And so I would say you really don't start to feel meaningful impact on the income statement from the power generation business until 2028 proper and then scaling from there.

And I think I would just catch that with the fact that you're going to see a buildup of G&A. I mean, as sort of as you're building a business sort of between now and early '27. You're going to start seeing revenue and fall through in late '27.

And you're going to see by the end of '29, the full income statement fall through of that 3 gigawatts that we've talked about.

Okay. Great. No, that's helpful. And the other one, when we think about just the domestic frac business, I mean, clearly, things are tight for the higher-end equipment. We've heard pricing momentum. I know it takes time to kind of roll through the entire fleet. But what are you seeing kind of from a magnitude of price move? And what are -- how should we just think about the puts and takes in the second half of '26?

I would say we're certainly seeing positive traction there. The scale of the move is definitely -- that's hard to quantify on an overall basis given that it varies a little bit case by case.

Of course, we didn't give up as much price on that next-generation equipment over time. That had real durability to it. And so we didn't see quite the same dip into the trough as we did with maybe the more traditional diesel-fired equipment. And as a result, the pricing coming back off of the -- or out of the trough is going to look a little bit different for each of those cases. And I think as we said, it's going to vary customer by customer. Of course, we have some customers where that's going to happen a little quicker than it is for others.

And so there's a little bit of a balance there. We're -- the sales team continues to have positive traction there. We're out having those conversations on a daily basis, but we are navigating a little bit of complexity. You saw in the -- with the announcement of the MOA, WTI come all the way back down to under $70.

And so we appreciate that our customers are navigating a little bit of complexity in the market right now. That's adding maybe a layer of uncertainty in their future, and we're feeling that as part of those conversations. So we're working closely with them. We continue to push for higher prices and expect you'll continue to feel that over the course of Q3 and maybe even into Q4. The commodity situation not quite as strong. While the market is a little tighter for equipment, the market for sand and chemicals still hasn't resolved itself to any significant degree. And so we still continue to see while higher volumes going through there, challenged margins on that side of things.

The next question will come from Scott Gruber with Citigroup.

I wanted to inquire about the purchase agreements with Bergen and Wärtsilä and others. What's the total quantity of capacity that you've lined up from a construction slot standpoint kind of over what time frame do those construction slots spread? And I know there's been a thirst to secure kind of larger capacity gas resets. So I just wanted to get a sense of the size of the capacity that you secured.

Yes. through -- if you add on what we'll kind of execute in the near term, we will have secured the 3 gigawatts through the end of -- that will be part of our plan through the end of '29. And then eventually, we'll have some early 2030 deliveries, late '29, early '30 deliveries that will support part of the potential growth into 2030.

Got it. And just coming back to the base business, just the color on revenue growth and incrementals into 3Q? And do you have any early indication on seasonality for 4Q, whether it could be lighter, heavier? Just any early indications from customers?

I would say probably too early to tell on Q4 at this point in time. We don't know what next week holds from a macro standpoint. And so I think that will continue to influence how our customers are looking at the remainder of the year and the activity levels that we're going to see there, particularly for the privates. As you can imagine, they have made up the lion's share of the additional activity we have seen this year.

They have jumped to be a larger proportion of completions activity than we would typically see as the norm. And they are a group that reacts very, very quickly. And they can -- that can be to the positive, that can also be to the downside. So probably too early to tell on Q4. On the move into Q3, of course, we continue to be out there having conversations around price. But as I said, we are navigating a bit of a volatile environment. There are going to be some puts and takes there for sure. It looks like the calendar continues to be quite strong. It looks like utilization is going to be very, very good through this quarter. And I hope that will continue to be supportive of a positive pricing environment. But I didn't anticipate $68 WTI post an MOU either. So I'm reluctant to be too firm or positive on exactly what the quarter is going to hold, given some puts and takes that are going to be at play in the market.

Is there still some openness in the calendar for 3Q that drives the uncertainty?

There -- I think there are operators that continue to evaluate their decisions there. I would say our utilization looks quite strong at this point in time. We have very, very modest white space in the calendar. We could maybe accommodate a tiny a little bit of additional work. But at this point in time, from a utilization standpoint, Q3 looks good.

The next question will come from Joshua Silverstein with UBS.

Just in regards to the power generation capacity additions, with the recent Bergen and Wärtsilä signing, do you guys now have line of sight to the 3 gigawatt target for 2029? And then just based on how you scheduled the capacity coming into you guys, how do you see CapEx trending over the next few years relative to the $1.5 billion you're now forecasting for this year?

I can take that one. Yes. So as you see, the 1.5, we're probably -- if you think about 3 gigawatts, right, that's going to be somewhere between $5 million and $6 million of CapEx to build that. So you think about that, we're probably through this year, we'll have spent about quarter of what will be needed to generate that -- the earnings from that 3 gigawatts. So that's about it.

You'll see probably Masamino, 40% to 50% of it in the last year before operations and then everything more spread between now and then.

And as far as line of sight to the supply chain, we know where all of that power is coming from. We have line of sight to that inbound 3 gigawatts and even beyond that. We have our -- we have line of sight to our growth headed out into late '29 and early 2030. So very, very comfortable with where all that's coming from.

Got it. And then in addition to the new PowerBridge JV as well, I believe you guys are also working towards something in Wyoming as well.

I think you have a permit filed there. Can you just talk a little bit more about that project and maybe some of the time lines or what you're thinking about doing there in the region?

Sorry, go ahead.

I was just say we're not going to talk specifically about those projects, right? As you've seen, the permits are filed, community engagement is underway. This is a process that is very collaborative with our data center builder up there and very collaborative with the community. And these things will evolve over time...

I think you covered it well, Michael.

The next question will come from Marc Bianchi with TD Cowen

I wanted to ask about, first, the PowerBridge and this Alpha campus that they have. Can you say how much of that has been leased at this point? And then related to that, when will you get to a joint venture finalization with them and sort of firm offtake?

Yes. So discussions with clients are underway, as we've said in the release. The JV finalization will happen over the next little while, the near term as we walk through that. And we will announce customer leases when they're signed.

Got it. Okay. So at this point, it hasn't -- the site doesn't have any leases booked yet?

No. No. As we said in the press release, the negotiations are underway, discussions and negotiations are underway.

Okay. Okay. And then on the SLB agreement, can you maybe talk a little bit more about the value proposition to the customer? Like what is it that you're able to do being -- going in with SLB on these projects that the customer wouldn't be able to get if they procure things à la carte or separately?

I think you're fair in saying that they could go out and procure these things à la carte. What we are finding, and I think this is really a function of the growing complexity that they are experiencing around building the campuses at this pace and scale that they would like to is that the simpler the approach for them, the happier they are.

A unified customer interface that checks a number of boxes versus having to go to a whole series of suppliers makes their life a lot simpler. And they can focus on the things that they need to focus on at that point in time, and we can take care of the other stuff. So it is our opinion that this unified approach that the ability to take care of some of the pieces of the puzzle, both outside the walls of the data center and also inside the walls of the data center is something that's going to be viewed quite positively by the hyperscalers, by the end-use customers there, given that it's going to make their jobs easier.

I think if you look at how this has evolved over the last 18 months, I think there's been a recognition that, a, okay, the grid is not going to be there. We're going to have to build these power generation facilities ourselves. That's added. maybe an unanticipated layer of complexity to their construction exercise to the path from getting to a desire for compute to ultimately having that compute running. And the easier we can make that path for them, the happier they're going to be and the better partner we can be.

So we really like it from that standpoint. It -- and I think it's something that we can take not only to customers here in the United States and Canada, but also internationally. We're starting to hear a lot about data center opportunities in the Middle East, in Asia, in Australia. There was a big announcement just a couple of days ago about opportunities in the Beetaloo. And I think we have a great opportunity with the global reach of the organizations to be an active participant in those.

The next question will come from Joe Laetsch with Morgan Stanley.

So I wanted to follow up on the Power Bridge JV.

So I know the initial phase is over 300 megawatts, but could you just talk about the signpost we should watch for around additional phases and how we should think about incremental power being added? And then as part of that is the 2 gigawatt opportunity at the West Texas data center. Is that exclusive to Liberty at this time?

Yes. So you're right. This will be an announcement phase. This is kind of like the first phase that will get built out as these campuses expand, there's 2 sites to that campus East North and South that will be over time. As they've got multiple campuses that we will end up -- we may directly develop. And there may well be other power generation on that site eventually and which we will partner in or not. It's just as we expand these things, it will have a growth path. But it's a very, very large opportunity set for us.

Great. That's helpful. And then on the frac side, could you just talk to the latest trends you're seeing in gas basin activity? We're back below $3 on Henry Hub and there's some concerns around higher associated gas given where oil prices sit and some pipelines coming off the Permian. So just your latest thoughts on activity in the oil versus gas basins here would be great.

Yes. I would say the gas basins activity continues to be strong there. We continue to see very positive forward looks from our customer base in the pure gas basins. I think they're taking a long view to this, recognizing there's going to be some volatility along the way.

The macro situation still looks quite positive. We have both the incremental growth in demand here onshore North America from a power generation standpoint, we see the amount of generation capacity that is going to be constructed over the coming years. And the math around the gas that's going to consume is relatively straightforward. So we have that tailwind onshore North America. I think the tailwinds globally are also positive, again, not without some bumps along the way, but we -- I think we'll continue to see challenges from LNG export out of the Middle East.

And as a result, a trend towards leveraging the supply out of the United States and Canada as longer-term opportunities going forward. So I'd say quite positive from that standpoint. Yes, we're going to get associated gas that's going to come from those oily basins as well, and that is absolutely going to be part of the supply stack and will have an impact on on pricing over time as capacity comes on and then is filled and comes on and is filled. But I think our gas customers are used to that.

They're used to seeing some of this up and down. But my sense is they're focused on the long term and the value proposition that they see there for the development of their assets.

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

Ron, Michael, maybe Michael, you want to spend some time on this. I was trying to think through the $1.5 billion CapEx that you said for this year. What's remaining in the second half is a little above $1.1 billion. I'm trying to line it up with your delivery schedule, your deployment expectations and just the liquidity that you have, right? So ultimately, how are you thinking your latest thoughts on funding as we make our way through the progress payments and delivery and everything around that?

So yes, as you see kind of a large portion of that is deposits on long lead equipment. Our thoughts on funding really haven't changed as we signed the ESAs. These projects will be dropped into SPVs and then done with some version of project financing that will be nonrecourse back to the corporate balance sheet. That cash will get recycled back on to the corporate balance sheet and then be put down for further deposits. So that's the funding cycle, general funding cycle of these, Saurabh?

Okay. Okay. I got it. Has anything changed in terms of the payment terms and conditions there, Michael, as you go ahead and secure more equipment, are you having to pay more upfront? Because I was also trying to tie it all into -- I think you said $5 billion to $6 billion for the total 3 gigawatt. I'm wondering if that's a little higher than what you were thinking initially?

Yes, I think it's a little higher. I mean this kind of baking in, we've got inflation that goes out through the deliveries in 2029. As you -- I think everybody has pointed out, I mean, generation is an incredibly short supply. So obviously, that makes a good position for the suppliers, the OEMs of this equipment, which allows them to be -- to negotiate terms that works for them and a lot of them are expanding their capacity. So they are sort of also looking for their own cash flow.

So I'd say, generally, earlier deposits were -- if we modeled it in January versus the way the contracts have got finalized, they are a little bit higher in the earlier year deposit than we probably would have initially thought. Costs are the same. We've baked in inflation, potential inflationary costs and construction costs and that in our general -- in my sort of overarching number that I gave you in that. And that will include BESS, and that will include sort of as we're looking at sort of an average for our data center clients at 50%, et cetera. So yes, so it's an all-in cost.

Right. No, that makes sense. Everything is tight, right? So we've got to see some inflation.

Okay. That makes sense. And just a quick one on the frac side of things, Michael, Ron, I'm just thinking about the 2027 RFP season, right? So I'm thinking about the bigger customers, the more stable customers that you have.

Typically, we start seeing that in the fall, still a little early for that, but any early thoughts on how you think your customers might be thinking about the RFP season, how you might be thinking about the RFP season? I know it's a very dynamic market. But any early thoughts on what we should expect out of that? And just even on the timing, do you think it's normal? Do you think it's later than normal this year? Do you think it could be pulled forward? Just any color on that?

So Saurabh, I would say our outlook for 2027 remains quite positive. We still have the underpinnings of a significant structural disruption in the supply of oil over this past number of months. We've had 1 billion-plus barrels of oil taken out of the market, and there is going to have to be a path to navigating back out of that. We -- as we noted in our comments, are hearing about increased storage capacity being built in Asia and in Australia. We saw countries that faced really challenged supply situations earlier this year to the point where they were having to restrict usage of petroleum products. And that's not a situation any country wants to find themselves in. And so I think we're going to see them working to build up resilience to that. never mind beginning to refill the strategic petroleum reserves that were drawn down over the course of this to help mute the impact of the disruption. So I think we have positive underpinnings for a solid 2027.

And I think that will be reflected in the RFP season when that comes. I suspect it comes at a normal time. I don't think we're going to see it earlier or later than normal. I think we're going to see a positive tone from our customers there that will be reflective of the demand for North American product. And as a result, that's why I think we feel positive about headed through the rest of this year and out into 2027.

We are certainly going to be in a better position than we were coming into the start of 2026.

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

I just wanted to go back to the Power Bridge announcement for the Alpha Digital campus. I guess maybe help us understand what really gives you that confidence for the delivery date to start in the fourth quarter of 2027. And then maybe is this expected to be island in power? Or if not, what's the expectation for it to be put on the grid? Michael, I think you talked about that the Batch Zero dynamic.

So maybe just a little bit more on that and how that could potentially impact this project with PowerBridge.

One of the reasons we're excited about working with the PowerBridge teams, the technical teams are very, very close, is that we're able to sort of put in flight both the long lead time engineering and integration. And then we'll start with permitting, which in Texas is a relatively efficient process -- and so yes, this probably will start -- this will definitely start behind the meter. They'll likely to be in a Batch 0. They're in a Batch 0 area there.

So it will likely have a grid interconnection sometime in '28, but we shall see of what size. And given the dynamics of the West Texas market, it could probably be an export grid interconnection because there's very little spare power in that region. So there's a lot of building going on. So I think that's where it is. But yes, that will be a Batch 0 site, but I think '28...

Okay. Got it. That's helpful. Then on the frac side, just looking at what we saw in 2Q, you had a really big step-up in revenues, but a clear lack of flow-through with the 15% incrementals. I think you touched on the chemicals and proppant market. But maybe just a little bit of color there. And I know we've already discussed frac pricing, but just the confidence level to push that through. I mean, I understand that WTI pulled back pretty hard, but where we're sitting today looks attractive. The 27 strip looks attractive. We've seen this significant frac attrition. You have a high-graded fleet. Just the ability to push price and what incrementals could look like as we get towards the back half of the year.

Yes. I would say, Derek, we continue to remain positive on that. For sure, on the service side of things, the opportunity to push prices there. The value for the technology proposition is absolutely there. And you'll certainly feel that headed through Q3, and we'll see what Q4 looks like, but ideally, it's through that as well. So I would say we remain positive on that outlook, tempered by the macro uncertainty, whatever that may hold. But on that side of things, things are good. The commodity side, the product side, as I mentioned, a little more challenged.

We still aren't in a position where sand prices are recovering meaningfully or things like that. And so we are doing a lot more simul-frac this year. That means we're moving a lot more product in a 24-hour window. We've got fleets that are putting away record levels of sand.

We announced a record with a 24-hour record with a customer again this past quarter. So we're moving a lot of product. But as you've noted, that isn't coming with the margin uplift we'd love to see there. Hopefully, that resolves itself in the not-too-distant future as well.

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

Can you just start off with giving us a bit more color on your power generation unlevered returns targets. As you've detailed, the CapEx has gone up significantly, which I think is something that doesn't necessarily surprise people at this point. And yet you're still targeting a mid- to high teens unlevered return for that business. So can you just comment on how you're able to maintain that level of return while facing the CapEx inflation you're facing?

Yes. So I mean the prices have gone up, but I mean, I think it's the complete scope. And I think the demand is still within economic returns for the grid. And so we're still driving those strong returns. We don't see pushback on the pricing for us to get to that long-term pricing.

Okay. Got it. So you're able to raise prices commensurately.

Yes.

Okay. Okay. And then just going to the frac market, Ron, I don't think I've heard you talk about Canada so much on a call before. So good to see that you're -- you have confidence in the market there. Can you just comment on kind of what you're seeing in Canada relative to the U.S. and ultimately, what underpins your confidence to bring this new DigiPrime fleet to Canada? Will that fleet be incremental to what you're currently running? Or will there be some retirements to keep overall capacity the same?

Yes. I would say, certainly have been excited to see developments in Canada over the last 6 months. It had been a challenged, I'll call it, decade out there during which the industry was in a pretty tough spot. But I think we've got some supportive outcomes going on there. The announcements around the pipeline quite positive. I think that has some real optimism amongst the E&P community in Canada. We've seen some dollars come back to the country in the form of Shell plc buying ARC. So these are all exciting developments that have us, I'd say, looking very positively at the country and the opportunities in the Western Canadian Sedimentary Basin.

You're starting to see the acquisition environment there put companies in a place where they have real scale to operate a program that's probably more closely aligned with what we often see in the U.S., that being the full utilization of a fleet from January through December. And that's also a positive development. That just leads to improved efficiencies and utilization of equipment.

And it was that outlook that had us in a place where we were excited to put this next-generation equipment to work up there. So we're shipping DigiPrime up there. It's going to work for a customer that we work with on both sides of the border that we've had a long partnership with that has line of sight to a pretty meaningful program and high levels of utilization for that. It will be a replacement fleet for us and not additive at this point in time.

I wouldn't say that the market is in a place where it would support additional capacity up there. I hope that changes in the not-too-distant future. But today, we're planning for it to be a replacement for some older Tier 2 dual fuel equipment or Tier 2 diesel equipment that we have up there, I'm sorry.

The next question will come from Caitlin Donohue with Goldman Sachs.

I wanted to touch on LWC. Can you walk us through how you plan to leverage the business and the participation in the power markets? How you see it aiding in Liberty's long-term power strategy?

Yes. I would say, Caitlin, that it offers us a wide range of opportunities, but there are really a couple that we are quite focused on. We -- and I think we said a little bit about this in the past. But if you think about an environment like West Texas, where there has been meaningful deployment of wind and solar on the grid, you have these environments, a hot sunny day where the wind is blowing, where there is abundant power available on the grid and wholesale prices are pushed down to quite low levels. We have the opportunity to leverage that for the benefit of the economics of the project over the long term. So we wanted to put ourselves in a position where we are absolutely able to do that, where when the grid was in a situation where they might otherwise have to curtail power and that's pushing prices down that we could wind down our generation, procure power at low prices off the grid, maybe help them avoid some curtailment, hold the capacity factor for the grid up a little bit and boost our economics at the same point in time, while ultimately saving our customers some fuel because, of course, fuel is a pass-through for them.

But on the flip side of that, there are also some other opportunities to make sure that we are supportive of the grid. Communities want to know and understand that the hyperscalers are bringing to the table not only their own generation, but ideally support for the grid. A means by which to help hold power prices down.

They are very concerned about their electricity prices with good reason. I think they're focused on the wrong issues for why prices are going up. But we want to make sure that we can provide confidence that as a generation partner there, we are able to provide some assistance in that regard to leverage the additional generation capacity that we have on location to aid the grid in times of tightness where power prices are climbing. And so we see that as kind of a means that we can play the grid in 2 ways. My guess is that it will probably be primarily the one where we are leveraging lower cost power on the grid for economic benefit, but we are absolutely committed to delivering the message that we are there to support the grid as well in cases where that's needed.

That makes sense. And just one last one for me. Regionally, I know you've been talking about this opportunity in West Texas.

How are you seeing other opportunities across the U.S., whether you're speaking with customers in PJM, just kind of level setting what you're seeing in terms of demand from other regions outside of ERCOT.

Yes. Pretty strong. I mean we've got a diverse -- customers are looking at a diverse set of opportunities. From the West, Far West is Nevada through Utah, Wyoming, Texas, obviously, I think the largest portion of power generation and data centers will be built and then sort of bringing down through the south and even as far as Mississippi, some of the costs there and then up into PJM, Ohio and even discussions in the Northeast and some sites that are reclaimed industrial sites in Michigan. So yes, there's a lot of interest across the whole country.

The next question will come from Eddie Kim with Barclays.

Just one question from me. Just circling back to PowerBridge and the Alpha Digital campus. What's your confidence level that the project will qualify for baseload categorization in ERCOT's Batch 0 process? Because if it doesn't qualify for baseload, I would think that, that would -- that might put the 4Q '27 or even the 2028 time line at risk.

So 2 things. Yes, I think it will be Batch 0. I think power is going to be short in that region. And the early generation is going to be behind the meter, so that won't be at risk from the Batch 0. The time line won't be at risk. So the early generation is going to behind the meter for will end up being a dedicated campus.

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

Just a quick follow-up to Keith's question on the fleet that went to Canada. Was that some of the new capacity that you built? Or was that a transfer from the U.S.?

And then can you just speak broadly to like your '27 thoughts, early thoughts on further digiPrime trying to build out?

John, that will be new capacity we're building. It will be built and delivered over the back half of this year. Unfortunately, the requirements for trailers in Canada are not aligned with the requirements for trailers in the United States from an axle design standpoint. And so it is equipment that is designed specifically for transport on the roads in Canada. and as a result, sits on a unique trailer for that. So we're building that as we speak. I would say that as far as continued demand for digiPrime, as you can imagine, with the crack spread where it is and diesel prices remaining elevated, natural gas as a fuel source remains very, very attractive, and we continue to have significant inbound demand for digiPrime as a result. We haven't made decisions around the CapEx program for 2027 at this point in time, but we'll be working through that with the Board, sharing with them our customers' desires and what we think ultimately is going to be a reasonable path forward. But you can certainly, I think, almost certainly expect us to build some DigiPrime in 2027, barring a change in things.

Do you think the demand -- if oil prices stay where they are now and just the outlook stays robust, do you think we could return to the date of take-or-pay contracts for equipment like digiPrime in '27?

Well, John, for us, of course, we've never really asked for a take-or-pay per se. We -- that generally hasn't been in our DNA. But our outlook or expectation around putting digiPrime to work has not changed even in these challenged environments. If we're going to deliver digiPrime, we want line of sight to a couple of years of work and an appropriate payback time frame for that. And that's been true in '23, '24, '25, '26, and it will be true in '27 again as well.

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

Our mission at Liberty is a simple one, to better human lives, the lives of those who work here, the lives of those in the communities within which we work and the lives of those around the world who rely on the abundant, affordable, reliable energy we help to produce each and every day. This year, we are proud to celebrate 15 years in service of that mission. Jim Brady, our SVP of Operations and employee #1 at Liberty started on May 2, 2011. We were a small company with one fleet operating out of a tent in Williston, North Dakota. We were built around a simple vision that Chris and Jim shared from the very beginning, to build the best dam frac company, period. We hired 51 people back first year. 33 of them are still working here today, and we've added almost 6,000 more.

The scale of what we've built together is extraordinary, but the shared culture and values that brought us together in those early days have not changed. Our success is thanks, first and foremost, to the 6,000 individuals at Liberty who come to work every day with the goal of delivering excellence in everything that we do. There is no such thing as a commoditized business when people are involved. People matter. Safety matters, service quality matters, relationships matter.

And I want to thank all of you in the Liberty family, especially the men and women who are at the tip of the spear out in the field for ensuring that everyone you work alongside every one of our customers and every one of our supply partners experience our values every day. You are what makes Liberty so special. There are so many highlights to celebrate from 15 years, certainly more than I can name in this short time, but there are a few that stand out. We grew from a tent in the Bakken to operations across 10 basins, including Canada and Australia. We completed the transformational acquisitions of Sanjel's U.S. assets and Schlumberger's North American OneStim assets, became a publicly traded company listed on the NYSE and grew to more than $4 billion in annual revenue. Along the way, we published 3 editions of Bettering Human Lives and launched the Bettering Human Lives Foundation. We introduced great technologies like the Quiet Fleet, the entire Digi platform, novel sand handling systems and expanded through vertical integration and equipment packaging and CNG fuel supply and most recently entered into the distributed power generation business.

We've accomplished a lot in our first 15 years, but we're just getting started as we continue to build the best gen energy company, period. So to the entire Liberty family and to our partners and friends on this journey, thank you for all that you do. It is a privilege to work alongside you all. Liberty forever.

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] 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.