Key challenges and market outlook: In Q2, LBRT Energy’s (LBRT) management sees the North American fracturing market as “steady, healthy.” The US operators appear to settle for modest production growth, which paves the way for steady frac spread utilization. The global energy market is heading for a tighter demand-supply balance as OPEC+ cuts supply and the US slows production growth. Despite the significant drop in natural gas prices over the past year, the industry will likely see moderate softness in completion activity. The pressure pumpers and frac spread operators will likely respond by curtailing fleet growth to manage operating margins. You may read more about the company in our previous article here.
Weaker fundamentals metrics: LBRT’s revenues decreased by 5% in Q2 quarter-over-quarter, while its adjusted EBITDA recorded a 6% fall. The company’s debt-to-equity remained low at 0.17x as of June 30. It also repurchased 2.7% of its outstanding shares in Q2 as a part of its repurchase program, which commenced in July 2022.
LPI and other initiatives: In Q2, LBRT strengthened its Texas operations for its LPI business. LPI sources natural gas fuels in support of its digiTechnologies rollout. In completion activity, the technology can drive earnings higher in the future. In Q1, it launched Liberty Power Innovations and acquired Siren, which helped expand its vertical integration strategy. Read more about this in our article here.
Thanks for reading the LBRT take three, designed to give you three critical takeaways from LBRT’s earnings report. Soon we will present a second update on SLB earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
