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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 001-38081
LIBERTY ENERGY INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
81-4891595
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
950 17th Street, Suite 2400
Denver, Colorado
80202
(Address of Principal Executive Offices)(Zip Code)
(303) 515-2800
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.01LBRTNew York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer ☐Non-accelerated filer ☐
Smaller reporting company
Emerging growth company      (Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☒ No
As of October 18, 2022, the registrant had 182,158,820 shares of Class A Common Stock and 325,902 shares of Class B Common Stock outstanding.
Our Class A Common Stock is traded on the New York Stock Exchange under the symbol “LBRT.” There is no public market for our Class B Common Stock.


TABLE OF CONTENTS
Page No.


i


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (“Quarterly Report”) and certain other communications made by us contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange of 1934, as amended (the “Exchange Act”), including, among others, statements about our expected growth from recent acquisitions such as the PropX Acquisition (as defined below), expected performance, future operating results, oil and natural gas demand and prices and the outlook for the oil and gas industry, future global economic conditions, the impact of the Russian invasion of Ukraine, the impacts of the novel strain of the coronavirus (“COVID-19”) pandemic, improvements in operating procedures and technology, our business strategy and the business strategies of our customers, in addition to other estimates, and beliefs. For this purpose, any statement that is not a statement of historical fact should be considered a forward-looking statement. We may use the words “estimate,” “outlook,” “project,” “position,” “potential,” “likely,” “believe,” “anticipate,” “plan,” “expect,” “intend,” “achievable,” “anticipate,” “may,” “will,” “continue,” “should,” “could” and similar expressions to help identify forward-looking statements. However, the absence of these words does not mean that the statements are not forward-looking. We cannot assure you that our assumptions and expectations will prove to be correct. Important factors could cause our actual results to differ materially from those indicated or implied by forward-looking statements, including but not limited to the risks described in this Quarterly Report and other filings that we make with the U.S. Securities Exchange Commission (the “SEC”). We undertake no intention or obligation to update or revise any forward-looking statements, except as required by law, whether as a result of new information, future events or otherwise and readers should not rely on the forward-looking statements as representing the Company’s views as of any date subsequent to the date of the filing of this Quarterly Report on Form 10-Q. These forward-looking statements are based on management’s current belief, based on currently available information, as to the outcome and timing of future events.
All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.
ii


PART I: FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
LIBERTY ENERGY INC.
Condensed Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
September 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$24,045 $19,998 
Accounts receivable—trade, net of allowances for credit losses of $884 and $884, respectively
480,714 298,531 
Accounts receivable—related party10,307  
Unbilled revenue (including amounts from related parties of $26,119 and $0, respectively)
200,144 108,923 
Inventories185,647 134,593 
Prepaid and other current assets95,204 68,332 
Total current assets996,061 630,377 
Property and equipment, net1,295,189 1,199,287 
Finance lease right-of-use assets31,812 18,201 
Operating lease right-of-use assets103,165 109,899 
Other assets98,669 82,289 
Deferred tax assets262 607 
Total assets$2,525,158 $2,040,660 
Liabilities and Equity
Current liabilities:
Accounts payable (including payables to related parties of $3,807 and $2,732, respectively)
$378,480 $288,801 
Accrued liabilities (including amounts due to related parties of $1,121 and $1,142, respectively)
286,504 235,115 
Deferred revenue976 4,552 
Current portion of long-term debt, net of discount of $734 and $743, respectively
1,016 1,007 
Current portion of finance lease liabilities8,694 8,743 
Current portion of operating lease liabilities29,187 31,029 
Total current liabilities704,857 569,247 
Long-term debt, net of discount of $721 and $1,270, respectively, less current portion
252,682 121,445 
Deferred tax liability563 563 
Payable pursuant to tax receivable agreements70,788 37,555 
Noncurrent portion of finance lease liabilities15,862 4,445 
Noncurrent portion of operating lease liabilities72,968 76,966 
Total liabilities1,117,720 810,221 
Commitments & contingencies (Note 15)
Stockholders’ equity:
Preferred Stock, $0.01 par value, 10,000 shares authorized and none issued and outstanding
  
Common Stock:
Class A, $0.01 par value, 400,000,000 shares authorized and 182,158,820 issued and outstanding as of September 30, 2022 and 183,385,111 issued and outstanding as of December 31, 2021
1,822 1,834 
Class B, $0.01 par value, 400,000,000 shares authorized and 325,902 issued and outstanding as of September 30, 2022 and 2,632,347 issued and outstanding as of December 31, 2021
3 26 
Additional paid in capital1,320,731 1,367,642 
Retained earnings (accumulated deficit)90,779 (155,954)
Accumulated other comprehensive loss(8,595)(306)
Total stockholders’ equity
1,404,740 1,213,242 
Non-controlling interest2,698 17,197 
Total equity1,407,438 1,230,439 
Total liabilities and equity2,525,158 2,040,660 
See Notes to Condensed Consolidated Financial Statements.
1


LIBERTY ENERGY INC.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Revenue:
Revenue$1,122,453 $646,714 $2,834,304 $1,778,854 
Revenue—related parties65,794 7,013 89,332 8,193 
Total revenue1,188,247 653,727 2,923,636 1,787,047 
Operating costs and expenses:
Cost of services (exclusive of depreciation, depletion, and amortization shown separately below)874,453 593,683 2,258,190 1,614,574 
General and administrative50,473 32,281 130,953 88,043 
Transaction, severance, and other costs1,767 1,556 5,293 12,173 
Depreciation, depletion, and amortization82,848 65,852 234,815 191,122 
Gain on disposal of assets(4,277)(79)(3,041)(1,076)
Total operating costs and expenses1,005,264 693,293 2,626,210 1,904,836 
Operating income (loss)182,983 (39,566)297,426 (117,789)
Other expense (income):
Loss (gain) on remeasurement of liability under tax receivable agreements28,900 (4,947)33,233 (8,252)
Gain on investments(2,525) (2,525) 
Interest expense, net6,773 4,007 15,959 11,528 
Total other expense (income)33,148 (940)46,667 3,276 
Net income (loss) before income taxes149,835 (38,626)250,759 (121,065)
Income tax expense2,572 753 3,637 9,402 
Net income (loss)147,263 (39,379)247,122 (130,467)
Less: Net income (loss) attributable to non-controlling interests310 (489)389 (6,812)
Net income (loss) attributable to Liberty Energy Inc. stockholders$146,953 $(38,890)$246,733 $(123,655)
Net income (loss) attributable to Liberty Energy Inc. stockholders per common share:
Basic$0.79 $(0.22)$1.33 $(0.72)
Diluted$0.78 $(0.22)$1.30 $(0.72)
Weighted average common shares outstanding:
Basic185,508 178,311 185,414 171,402 
Diluted189,907 178,311 190,465 171,402 
See Notes to Condensed Consolidated Financial Statements.

2


LIBERTY ENERGY INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
Net income (loss)$147,263 $(39,379)$247,122 $(130,467)
Other comprehensive (loss) income
Foreign currency translation(6,343)(2,287)(8,299)411 
Comprehensive income (loss)$140,920 $(41,666)$238,823 $(130,056)
Comprehensive income (loss) attributable to non-controlling interest299 (513)379 (6,592)
Comprehensive income (loss) attributable to Liberty Energy Inc.$140,621 $(41,153)$238,444 $(123,464)
See Notes to Condensed Consolidated Financial Statements.

3


LIBERTY ENERGY INC.
Condensed Consolidated Statements of Changes in Equity
(In thousands, except per unit and per share data)
(Unaudited)
Shares of Class A Common StockShares of Class B Common StockClass A Common Stock, Par ValueClass B Common Stock, Par ValueAdditional Paid in Capital(Accumulated Deficit) Retained EarningsAccumulated Other Comprehensive Loss
Total Stockholders Equity
Non-controlling InterestTotal Equity
Balance—December 31, 2021183,385 2,632 $1,834 $26 $1,367,642 $(155,954)$(306)$1,213,242 $17,197 $1,230,439 
Exchange of Class B Common Stock for Class A Common Stock2,306 (2,306)23 (23)15,817 — — 15,817 (15,817) 
Offering Costs— — — — (79)— — (79)— (79)
Other distributions and advance payments to non-controlling interest unitholders— — — — — — — — 924 924 
Share repurchases(4,702)— (47)— (69,987)— (70,034)(60)(70,094)
Stock-based compensation expense— — — — 17,031 — — 17,031 95 17,126 
Vesting of restricted stock units1,170 — 12 — 8 — — 20 (20) 
Tax withheld on vesting of restricted stock units— — — — (9,701)— — (9,701)— (9,701)
Currency translation adjustment— — — — — — (8,289)(8,289)(10)(8,299)
Net income— — — — — 246,733 — 246,733 389 247,122 
Balance—September 30, 2022182,159 326 $1,822 $3 $1,320,731 $90,779 $(8,595)$1,404,740 $2,698 $1,407,438 
Shares of Class A Common StockShares of Class B Common StockClass A Common Stock, Par ValueClass B Common Stock, Par ValueAdditional Paid in CapitalRetained Earnings (Accumulated Deficit)Accumulated Other Comprehensive Income
Total Stockholders Equity
Non-controlling InterestTotal Equity
Balance—December 31, 2020157,952 21,550 $1,579 $216 $1,125,554 $23,288 $ $1,150,637 $159,406 $1,310,043 
Exchange of Class B Common Stock for Class A Common Stock19,690 (19,690)197 (197)142,204 — — 142,204 (142,204) 
Offering Costs— — — — (938)— — (938)(75)(1,013)
Other distributions and advance payments to non-controlling interest unitholders— — — — — — — — 1,372 1,372 
Stock-based compensation expense— — — — 14,335 — — 14,335 756 15,091 
Vesting of restricted stock units668 — 7 — (3,082)— — (3,075)(510)(3,585)
Restricted stock and RSU forfeitures— — — — — 2 — 2 — 2 
Currency translation adjustment— — — — — — 191 191 220 411 
Net loss— — — — — (123,655)— (123,655)(6,812)(130,467)
Balance—September 30, 2021178,310 1,860 $1,783 $19 $1,278,073 $(100,365)$191 $1,179,701 $12,153 $1,191,854 
See Notes to Condensed Consolidated Financial Statements.

4


LIBERTY ENERGY INC.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Cash flows from operating activities:
Net income (loss)$247,122 $(130,467)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion, and amortization234,815 191,122 
Gain on disposal of assets(3,041)(1,076)
Inventory write-down1,724  
Non-cash lease expense3,085 2,834 
Stock-based compensation expense17,126 15,091 
Deferred income tax expense316 6,124 
Loss (gain) on remeasurement of liability under tax receivable agreements33,233 (8,252)
Other non-cash (income) expense, net(1,007)2,449 
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue(250,471)(121,282)
Accounts receivable and unbilled revenue—related party(36,295) 
Inventories(56,472)(6,878)
Other assets(31,030)(5,001)
Deferred revenue(3,476) 
Accounts payable and accrued liabilities143,986 135,981 
Accounts payable and accrued liabilities—related party(4,696) 
Initial payment of operating lease liability(2,309)(503)
Net cash provided by operating activities
292,610 80,142 
Cash flows from investing activities:
Purchases of property and equipment and construction in-progress(326,960)(123,008)
Investment in sand logistics(6,721) 
Investment in Fervo Energy Company and Natron Energy, Inc.(15,000) 
Proceeds from sale of assets14,806 3,689 
Net cash used in investing activities
(333,875)(119,319)
Cash flows from financing activities:
Proceeds from borrowings on line-of-credit543,000 100,000 
Repayments of borrowings on line-of-credit(411,000)(84,000)
Repayments of borrowings on term loan(1,313)(1,313)
Payments on finance lease obligations(4,791)(6,144)
Class A Common Stock dividends and dividend equivalents upon restricted stock vesting(148)(168)
Other distributions and advance payments to non-controlling interest unitholders924 1,372 
Share repurchases(70,094) 
Tax withholding on restricted stock unit vesting(9,701)(3,585)
Payments of equity issuance costs(557)(1,013)
Payments of debt issuance costs(678) 
Net cash provided by financing activities
45,642 5,149 
Net increase (decrease) in cash and cash equivalents before translation effect4,377 (34,028)
Translation effect on cash(330)(245)
Cash and cash equivalents—beginning of period19,998 68,978 
Cash and cash equivalents—end of period$24,045 $34,705 



5




LIBERTY ENERGY INC.
Condensed Consolidated Statements of Cash Flows cont.
(Dollars in thousands)
(Unaudited)
Nine Months Ended September 30,
20222021
Supplemental disclosure of cash flow information:
Cash paid for income taxes$6,502 $ 
Cash paid for interest$13,622 $9,686 
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities$83,298 $25,484 
Capital expenditures reclassified from prepaid and other current assets$12,445 $ 
See Notes to Condensed Consolidated Financial Statements.
6


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

Note 1—Organization and Basis of Presentation
Organization
Liberty Energy Inc., formerly known as Liberty Oilfield Services Inc. (the “Company”) was incorporated as a Delaware corporation on December 21, 2016, to become a holding corporation for Liberty Oilfield Services New HoldCo LLC (“Liberty LLC”) and its subsidiaries upon completion of a corporate reorganization (the “Corporate Reorganization”) and planned initial public offering of the Company (“IPO”). On April 19, 2022, the stockholders of the Company approved an amendment to the Company’s Amended and Restated Certificate of Incorporation for the purpose of changing the Company’s name from “Liberty Oilfield Services Inc.” to “Liberty Energy Inc.” and thereafter, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment to the Company’s Amended and Restated Certificate of Incorporation to reflect the new name, effective April 25, 2022. The Company has no material assets other than its ownership of units in Liberty LLC (“Liberty LLC Units”). Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022 (the “Annual Report”) for additional information on the Corporate Reorganization and IPO that were completed on January 17, 2018.
The Company, together with its subsidiaries, is a leading integrated oilfield services and technology company focused on providing innovative hydraulic fracturing services and related technologies to onshore oil and natural gas exploration and production (“E&P”) companies in North America. We offer customers hydraulic fracturing services, together with complementary services including wireline services, proppant delivery solutions, data analytics, related goods (including our sand mine operations), and technologies that will facilitate lower emission completions, thereby helping our customers reduce their emissions profile.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements were prepared using generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, these financial statements do not include all information or notes required by GAAP for annual financial statements and should be read together with the annual financial statements and notes thereto included in the Annual Report.
The accompanying unaudited condensed consolidated financial statements and related notes present the condensed consolidated financial position of the Company as of September 30, 2022 and December 31, 2021, and the results of operations, cash flows, and changes in equity of the Company as of and for the three and nine months ended September 30, 2022 and 2021. The interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim period. The results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results of operations expected for the entire fiscal year ended December 31, 2022. Further, these estimates and other factors, including those outside the Company’s control, such as the impact of sustained lower commodity prices, could have a significant adverse impact to the Company’s financial condition, results of operations and cash flows.
All intercompany amounts have been eliminated in the presentation of the unaudited condensed consolidated financial statements of the Company. The Company’s operations are organized into a single reportable segment, which consists of hydraulic fracturing and related goods and services.
Note 2—Significant Accounting Policies
Reclassifications
Certain amounts in the prior period financial statements have been reclassified from interest income to interest expense, net in the accompanying unaudited condensed consolidated statements of operation to conform to the presentation of the current period financial statements. Additionally, amounts in the prior period financial statements have been reclassified from provision for credit losses to other non-cash (income) expense, net in the accompanying unaudited condensed consolidated statement of cash flows to conform to the presentation of the current period financial statements. These reclassifications had no effect on the previously reported net income or loss.
7


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 3—The PropX Acquisition
On October 26, 2021, the Company entered into the certain Unit Purchase Agreement (the “Transaction Agreement”) with Proppant Express Investments, LLC to acquire the assets and liabilities of Proppant Express Solutions, LLC (“PropX”), which provides last-mile proppant delivery solutions, including proppant handling equipment and logistics software across North America (the “PropX Acquisition”). PropX was acquired in exchange for $11.9 million in cash and 3,405,526 shares of the Company’s Class A Common Stock, par value $0.01 per share (the “Class A Common Stock”) and 2,441,010 shares of the Company’s Class B Common Stock, par value $0.01 per share (the “Class B Common Stock”, and together with the Class A Common Stock, the “Common Stock”), for total consideration of $103.0 million based on the October 26, 2021 closing price of Class A Common Stock of $15.58. In connection with the issuance of 2,441,010 shares of Class B Common Stock, Liberty LLC also issued 2,441,010 Liberty LLC Units to the Company. The Liberty LLC Units are redeemable for an equivalent number of shares of Class A Common Stock at any time, at the election of the shareholder.
The Company accounted for the PropX Acquisition using the acquisition method of accounting. The aggregate purchase price noted above was allocated to the major categories of assets acquired and liabilities assumed based upon their estimated fair value at the date of the acquisition. The estimated fair values of certain assets and liabilities require significant judgments and estimates. The majority of the measurements of assets acquired and liabilities assumed, are based on inputs that are not observable in the market and thus represent Level 3 inputs.
In accordance with ASC Topic 805, an acquirer is allowed a period, referred to as the measurement period, in which to complete its accounting for the transaction. Such measurement period ends at the earliest date that the acquirer a) receives the information necessary or b) determines that it cannot obtain further information, and such period may not exceed one year. As the PropX Acquisition closed on October 26, 2021 the Company completed the purchase price allocation, particularly as it relates to current assets and current liabilities, during the nine months ended September 30, 2022.
The following table summarizes the fair value of the consideration transferred in the PropX Acquisition and the allocation of the purchase price to the fair value of the assets acquired and liabilities assumed as of October 26, 2021, the date of the closing of the PropX Acquisition:
($ in thousands)
Total Purchase Consideration:
Consideration$103,023 
Cash and cash equivalents$53 
Accounts receivable and unbilled revenue4,089 
Inventory8 
Prepaid and other current assets1,722 
Property and equipment (1)
94,137 
Intangible assets (included in other assets in the accompanying consolidated balance sheet as of December 31, 2021) (2)
7,100 
Total identifiable assets acquired107,109 
Accounts payable2,152 
Accrued liabilities1,934 
Total liabilities assumed4,086 
Total purchase consideration$103,023 
(1) Useful lives average of 10 years, see Note 5—Property and Equipment
(2) Definite lived intangibles with an amortization period ranging from seven to 10 years
Transaction costs, costs associated with issuing additional equity and integration costs were recognized separately from the acquisition of assets and assumptions of liabilities in the PropX Acquisition. Transaction costs consist of legal and professional fees. Integration costs consist of expenses incurred to integrate PropX’s operations, aligning accounting processes and procedures, and integrating its enterprise resource planning system with those of the Company. Merger and integration costs are expensed as incurred, and equity offering costs were recorded as a reduction to additional paid in capital.
8


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2021 do not include any results from PropX operations as the PropX Acquisition closed on October 26, 2021. The Company does not present pro forma financial information for the periods prior to the PropX Acquisition as such information, after elimination of PropX’s historical transactions with the Company, is not materially different than the results presented in the accompanying condensed consolidated statements of operations for three and nine months ended September 30, 2021.
Note 4—Inventories
Inventories consist of the following:
September 30,December 31,
($ in thousands)20222021
Proppants$31,156 $23,413 
Chemicals20,139 17,996 
Maintenance parts134,352 93,184 
$185,647 $134,593 
During the three and nine months ended September 30, 2022, the lower of cost or net realizable value analysis resulted in the Company recording a write-down to the inventory carrying value of $1.7 million. The Company did not record any write-down to the inventory carrying value during the year ended December 31, 2021.
Note 5—Property and Equipment
Property and equipment consist of the following:
Estimated
useful lives
(in years)
September 30,December 31,
($ in thousands)20222021
LandN/A$29,384 $33,812 
Field services equipment
2-7
1,817,333 1,579,420 
Vehicles
4-7
61,674 61,282 
Lease Equipment1090,897 64,770 
Buildings and facilities
5-30
133,607 148,555 
Mineral reserves
>25
76,823 76,823 
Office equipment and furniture
2-7
8,826 8,218 
2,218,544 1,972,880 
Less accumulated depreciation and depletion(1,073,092)(863,194)
1,145,452 1,109,686 
Construction in-progressN/A149,737 89,601 
$1,295,189 $1,199,287 
Depreciation expense for the three months ended September 30, 2022 and 2021 was $77.5 million and $61.1 million, respectively. During the nine months ended September 30, 2022 and 2021, the Company recognized depreciation expense of $219.9 million and $175.9 million, respectively. Depletion expense for the three months ended September 30, 2022 and 2021was $0.3 million and $0.3 million, respectively. Depletion expense for the nine months ended September 30, 2022 and 2021 was $0.9 million and $1.0 million, respectively.
As of September 30, 2022 and December 31, 2021, the Company concluded that no triggering events that could indicate possible impairment of property and equipment had occurred, other than related to the assets held for sale discussed below.
As of September 30, 2022, the Company classified $2.5 million of land and $11.4 million of buildings, net of accumulated depreciation, of two properties that it intends to sell within the next year, and that meets the held for sale criteria, to assets held for sale, included in prepaid and other current assets in the accompanying unaudited condensed consolidated balance sheet. The Company estimates that the carrying value of the assets were greater than the fair value less the estimated costs to sell, and therefore recorded a $2.7 million loss during the nine months ended September 30, 2022, included as a component of gain on disposal of assets in the accompanying unaudited condensed consolidated statements of operations.
9


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 6—Leases
The Company has operating and finance leases primarily for vehicles, equipment, railcars, office space, and facilities. The terms and conditions for these leases vary by the type of underlying asset.
Certain leases include variable lease payments for items such as property taxes, insurance, maintenance, and other operating expenses associated with leased assets. Payments that vary based on an index or rate are included in the measurement of lease assets and liabilities at the rate as of the commencement date. All other variable lease payments are excluded from the measurement of lease assets and liabilities, and are recognized in the period in which the obligation for those payments is incurred.
The components of lease expense for the three and nine months ended September 30, 2022 and 2021 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
($ in thousands)2022202120222021
Finance lease cost:
Amortization of right-of-use assets$1,590 $1,213 $3,796 $4,565 
Interest on lease liabilities453 347 1,066 1,318 
Operating lease cost10,675 12,869 32,809 29,702 
Variable lease cost1,337 1,273 3,473 3,116 
Short-term lease costs2,121 1,479 5,113 3,483 
Total lease cost$16,176 $17,181 $46,257 $42,184 

Supplemental cash flow and other information related to leases for the three and nine months ended September 30, 2022 and 2021 were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
($ in thousands)2022202120222021
Cash paid for amounts included in measurement of liabilities:
Operating leases$10,170 $12,136 $32,065 $27,420 
Finance leases2,548 2,064 5,857 7,099 
Right-of-use assets obtained in exchange for new lease liabilities:
Operating leases3,323 10,999 22,693 70,205 
Finance leases8,409  14,742  

10


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
During the nine months ended September 30, 2022, the Company amended certain operating leases, the change in terms of which caused the leases to be reclassified as finance leases. In connection with the amendments, the Company wrote-off operating lease right-of-use assets of $0.2 million and liabilities of $0.1 million. Additionally, the Company recognized finance lease right-of-use assets of $2.7 million and liabilities of $2.7 million. During the nine months ended September 30, 2021, the Company amended certain finance leases, the change in terms of which caused the leases to be reclassified to operating leases. In connection with the amendments the Company wrote-off finance lease right-of-use assets of $13.7 million and liabilities of $10.6 million. Additionally, the Company recognized operating lease right-of-use assets of $11.8 million and liabilities of $8.8 million. There was no gain or loss recognized as a result of these amendments.
Lease terms and discount rates as of September 30, 2022 and December 31, 2021 were as follows:
September 30, 2022December 31, 2021
Weighted-average remaining lease term:
Operating leases4.9 years5.2 years
Finance leases3.0 years1.5 years
Weighted-average discount rate:
Operating leases4.5 %4.2 %
Finance leases8.0 %8.6 %

Future minimum lease commitments as of September 30, 2022 are as follows:
($ in thousands)FinanceOperating
Remainder of 2022$2,204 $9,330 
20239,610 30,228 
20244,799 23,758 
20254,910 21,430 
20266,709 10,384 
Thereafter 19,074 
Total lease payments28,232 114,204 
Less imputed interest(3,676)(12,049)
Total Liability$24,556 $102,155 

The Company’s vehicle leases typically include a residual value guarantee. For the Company’s vehicle leases classified as operating leases, the total residual value guaranteed as of September 30, 2022 is $12.9 million; the payment is not probable and therefore has not been included in the measurement of the lease liability and right-of-use asset. For vehicle leases that are classified as finance leases, the Company includes the residual value guarantee, estimated in the lease agreement, in the financing lease liability.
Lessor Arrangements
The Company leases dry and wet sand containers and conveyor belts to customers through PropX. PropX leases to customers through operating leases, where the lessor for tax purposes is considered to be the owner of the equipment during the term of the lease. The lease agreements do not include options for the lessee to purchase the underlying asset at the end of the lease term for either a stated fixed price or fair market value. However, some of the leases contain a termination clause in which the customer can cancel the contract. The leases can be subject to variable lease payments if the customer requests more units than what is agreed upon in the lease. The Company does not record any lease assets or liabilities related to these variable items.
The carrying amount of equipment leased to others, included in property, plant and equipment, under operating leases as of September 30, 2022 and December 31, 2021 were as follows:
11


LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
($ in thousands)September 30, 2022December 31, 2021
Equipment leased to others - at original cost$90,897 $64,770 
Less: Accumulated depreciation(8,288)(1,377)
Equipment leased to others - net$82,609 $63,393 
Future payments receivable for operating leases commenced and committed but not delivered as of September 30, 2022 are as follows:
($ in thousands)
Remainder of 2022$4,126 
202316,704 
20249,218 
20251,051 
2026 
Thereafter 
Total$31,099 
Revenues from operating leases for the three and nine months ended September 30, 2022 were $6.7 million and $18.4 million, respectively. There was no revenue from operating leases for the three and nine months ended September 30, 2021.
Note 7—Accrued Liabilities
Accrued liabilities consist of the following:
($ in thousands)September 30, 2022December 31, 2021
Accrued vendor invoices$116,859 $109,903 
Operations accruals93,979 64,707 
Accrued benefits and other75,666 60,505 
$286,504 $235,115 
Note 8—Debt
Debt consists of the following:
September 30,December 31,
($ in thousands)20222021
Term Loan outstanding$105,153 $106,465 
Revolving Line of Credit150,000 18,000 
Deferred financing costs and original issue discount(1,455)(2,013)
Total debt, net of deferred financing costs and original issue discount$253,698 $122,452 
Current portion of long-term debt, net of discount$1,016 $1,007 
Long-term debt, net of discount and current portion252,682 121,445 
Total debt, net of deferred financing costs and original issue discount$253,698 $122,452 
On September 19, 2017, the Company entered into two credit agreements, a revolving line of credit up to $250.0 million, subsequently increased to $425.0 million, see below, (the “ABL Facility”) and a $175.0 million term loan (the “Term Loan Facility”, and together with the ABL Facility the “Credit Facilities”).
On July 18, 2022, the Company entered into an amendment to the ABL Facility (the “Seventh ABL Amendment”). The Seventh ABL Amendment amended certain terms, provisions and covenants of the ABL Facility, including among other things: (i) increasing the maximum borrowing amount by $75.0 million to $425.0 million, subject to certain borrowing base limitations
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LIBERTY ENERGY INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
based on percentage of eligible accounts receivable and inventory, (ii) modifying certain covenant and reporting-related baskets, and (iii) replacing LIBOR with the secured overnight financing rate (“SOFR”) as the interest rate benchmark.
On August 12, 2022, the Company entered into an amendment to the Term Loan Facility (the “Sixth Term Loan Amendment”). The Sixth Term Loan Amendment amended certain terms, provisions and covenants of the Term Loan Facility, including among other things: (i) a waiver of the fixed charge coverage ratio requirements for up to $100.0 million of restricted payments made in connection with the Company’s 2022 stock repurchase program for its common stock; (ii) the addition of a minimum liquidity requirement of $150.0 million in order to make selected restricted payments, including those made under the 2022 stock repurchase program; (iii) the modification of certain covenant and reporting-related terms, including an increase in the allowance for permitted purchase money indebtedness from $50.0 million to $70.0 million; (iv) the addition of a prepayment premium of 1.0% through the first anniversary of the Sixth Term Loan Amendment effective date; and (v) the addition and modification of several provisions to replace LIBOR with SOFR as the interest rate benchmark.
The weighted average interest rate on all borrowings outstanding as of September 30, 2022 and December 31, 2021 was 7.0% and 7.9%, respectively.
ABL Facility
Under the terms of the ABL Facility, up to $425.0 million may be borrowed, subject to certain borrowing base limitations based on a percentage of eligible accounts receivable and inventory. As of September 30, 2022, the borrowing base was calculated to be $425.0 million, and the Company had $150.0 million outstanding in addition to a letter of credit in the amount of $1.4 million, with $273.6 million of remaining availability. Borrowings under the ABL Facility bear interest at SOFR or a base rate, plus an applicable SOFR margin of 1.5% to 2% or base rate margin of 0.5% to 1%, as defined in the ABL Facility credit agreement. Additionally, borrowings as of September 30, 2022 incurred interest at a weighted average rate of 4.8%. The average monthly unused commitment is subject to an unused commitment fee of 0.25% to 0.375%. Interest and fees are payable in arrears at the end of each month, or, in the case of SOFR loans, at the end of each interest period. The ABL Facility matures on the earlier of (i) October 22, 2026 and (ii) to the extent the debt under the Term Loan Facility remains outstanding, 90 days prior to the final maturity of the Term Loan Facility, which matures on September 19, 2024. Borrowings under the ABL Facility are collateralized by accounts receivable and inventory, and further secured by the Company, Liberty LLC, and R/C IV Non-U.S. LOS Corp., a Delaware corporation and a subsidiary of the Company, as parent guarantors.
Term Loan Facility
The Term Loan Facility provides for a $175.0 million term loan, of which $105.2 million remained outstanding as of September 30, 2022. Amounts outstanding bear interest at SOFR or a base rate, plus an applicable margin of 7.625% or 6.625%, respectively, and borrowings as of September 30, 2022 incurred interest at a rate of 10.18%. The Company is required to make quarterly principal payments of 1% per annum of the outstanding principal balance, commencing on December 31, 2017, with final payment due at maturity on September 19, 2024. The Term Loan Facility is collateralized by the fixed assets of LOS and its subsidiaries, and is further secured by the Company, Liberty LLC, and R/C IV Non-U.S. LOS Corp., a Delaware corporation and a subsidiary of the Company, as parent guarantors.
The Credit Facilities include certain non-financial covenants, including but not limited to restrictions on incurring additional debt and certain distributions. Moreover, the ability of the Company to incur additional debt and to make distributions is dependent on maintaining a maximum leverage ratio. The Term Loan Facility requires mandatory prepayments upon certain dispositions of property or issuance of other indebtedness, as defined, and annually a percentage of excess cash flow (25% to 50%, depending on leverage ratio, of consolidated net income less capital expenditures and other permitted payments, commencing with the year ending December 31, 2018). Certain mandatory prepayments and optional prepayments are subject to a prepayment premium of 1% of the prepaid principal declining to 0% after the first anniversary of the Sixth Term Loan Amendment effective date.
The Credit Facilities are not subject to financial covenants unless liquidity, as defined in the respective credit agreements, drops below a specific level. Under the ABL Facility, the Company is required to maintain a minimum fixed charge coverage rat