Liberty Oilfield Services Inc. Announces Strategic Actions in Response to Current Market Conditions Including Capacity & Cost...
April 02 2020 - 11:00PM
Business Wire
Liberty Oilfield Services Inc. (NYSE: LBRT; “Liberty” or the
“Company”) announced today that it has reduced the size of its
workforce, the number of active frac fleets deployed, capital
expenditures and its general and administrative cost structure in
response to significantly lower customer activity. The COVID-19
virus has resulted in a massive reduction in the demand for oil. At
the same time, OPEC+ has increased oil supply to global markets. As
a result, oil prices have declined sharply, U.S. oil inventories
are rapidly building, and demand for fracturing services is
contracting.
Liberty CEO Chris Wright commented, “The health and safety of
people always comes first. Liberty has been a leader in responding
to the COVID-19 pandemic to protect the safety of our team, their
families and all those we interact with. The COVID-19 pandemic has
led to the world’s largest oil demand destruction that will reset
oil and gas development activity levels over the next year or more.
We have never before reduced our workforce, always charting a
different path. We deeply regret that today’s circumstances
necessitate that we make significant cuts to our workforce and
restructure the compensation for those remaining. I commend the
whole Liberty team for always going above and beyond. I want to
sincerely thank the Liberty team members who are leaving for their
contributions and sincerely hope that we have the opportunity to
work together in the future.”
Liberty is also cutting 2020 total capital expenditures to be in
the range of $70 to $90 million, a reduction of approximately 50%
from our previous expectation. The Company continues to expect its
2020 capital expenditures to be weighted to the first half of the
year. The Company has initiated aggressive cost-cutting measures
both internally and externally in partnership with our suppliers
that are expected to assist Liberty with managing the challenging
market while still providing excellent service, technology and
efficient operations for our customers. In addition to the
significant staffed fleet reductions of approximately 50%, Liberty
has adjusted variable and other compensation for employees to align
the Company’s cost structure with current market conditions.
Liberty has a dedicated workforce and a variable cost structure
that enables rapid reaction to changing market conditions while
still covering all our commitments to customers.
The officers of the Company have agreed to a base salary
reduction of 30% that is greater than the previously announced 20%,
effective April 1, 2020. This is in addition to the cancellation of
cash variable compensation programs for the year which equate to a
reduction of approximately 66% in annual cash compensation versus
2019. Liberty’s directors have agreed to reduce their cash retainer
for Board service by 30%, effective April 1, 2020. These
compensation reductions remain subject to revision by the Board as
circumstances may warrant.
Liberty is suspending future quarterly dividends until business
conditions warrant reinstatement. Disciplined capital deployment is
a core Liberty principle and we look forward to resuming dividend
payments when appropriate. The Company plans to provide a more
detailed update on operating and financial conditions in
conjunction with its earnings release for the first quarter of
2020.
Mr. Wright added, “These industry conditions are unprecedented.
Hence, we are taking bold, decisive action to position Liberty to
survive this downturn and come out in a stronger competitive
position, just as we did during the previous downturn. We are
playing the long game. The next few months are likely to be the
most trying as storage constraints are blowing out differentials
across all basins, leading to significant interruptions in frac
activity. We currently expect that industry wide activity in the
second quarter will be down more than 50% from first quarter
levels. We are working closely with our customers to help them deal
with these interruptions. There is likely to be an increase in
industry activity from second quarter levels in the later part of
the year, but it will be at a reduced level from the activity
before the COVID pandemic. Our top tier customers value the Liberty
partnership, innovations and efficiency that enhances their
operations during these challenging times. All of our key customer
partnerships will be strengthened during this crisis. We are
grateful for the efforts and dedication of our employees, customers
and suppliers who together will navigate these troubled
waters.”
About Liberty
Liberty is an independent provider of hydraulic fracturing
services to onshore oil and natural gas exploration and production
companies in North America. Liberty was founded in 2011 with a
relentless focus on improving tight-oil completions, and an
emphasis on customer partnerships and technology to find innovative
answers to frac optimization. Liberty is headquartered in Denver,
Colorado. For more information about Liberty, please contact
Investor Relations at IR@libertyfrac.com.
Forward-Looking and Cautionary Statements
The information above includes “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. All statements, other than statements of historical facts,
included herein concerning, among other things, the deployment of
fleets in the future, planned capital expenditures, future cash
flows and borrowings, pursuit of potential acquisition
opportunities, our financial position, return of capital to
stockholders, business strategy and objectives for future
operations, are forward-looking statements. These forward-looking
statements are identified by their use of terms and phrases such as
“may,” “expect,” “estimate,” “outlook,” “project,” “plan,”
“position,” “believe,” “intend,” “achievable,” “anticipate,”
“will,” “continue,” “potential,” “should,” “could,” and similar
terms and phrases. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, they
do involve certain assumptions, risks and uncertainties. These
forward-looking statements represent our expectations or beliefs
concerning future events, and it is possible that the results
described in this earnings release will not be achieved. These
forward-looking statements are subject to certain risks,
uncertainties and assumptions identified above or as disclosed from
time to time in Liberty's filings with the Securities and Exchange
Commission. As a result of these factors, actual results may differ
materially from those indicated or implied by such forward-looking
statements.
Any forward-looking statement speaks only as of the date on
which it is made, and, except as required by law, we do not
undertake any obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or
otherwise. New factors emerge from time to time, and it is not
possible for us to predict all such factors. When considering these
forward-looking statements, you should keep in mind the risk
factors and other cautionary statements in “Item 1A. Risk Factors”
included in our Annual Report on Form 10-K for the year ended
December 31, 2019 as filed with the SEC on February 27, 2020 and in
our other public filings with the SEC. These and other factors
could cause our actual results to differ materially from those
contained in any forward-looking statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200402005888/en/
Michael Stock Chief Financial Officer 303-515-2851
IR@libertyfrac.com
Liberty Energy (NYSE:LBRT)
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