Liberty Energy’s Perspective in Q1: KEY Takeaways

In FY2025, Liberty Energy’s management expects higher demand for frac equipment in natural gas basins. Given LBRT’s strong frac equipment base, it will focus on frack spread modernization with advanced sensors, real-time data capture, and enhanced data visualization tools. It also diversifies into supplying power in oil and gas projects, commercial and industrial space, and smaller data centers.

[ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19,20,21,22,23,24,25" ihc_mb_template="1"]

Industry Outlook

We have already discussed Liberty Energy's (LBRT) Q1 2025 financial performance in our recent article . Here is an outline of its industry outlook. During the period when the energy market recovers from the pandemic, the energy operators have been disciplined as the upstream industry consolidated. The oilfield services companies engaged in fracking have been supporting operators to maintain the existing production levels.

Despite the depressed North American market, the industry operates at a higher production base, which implies that, compared to the previous downturns, the fracking companies will likely see resilient activity even if production falls. In this environment, LBRT focuses on frack spread modernization with advanced sensors, real-time data capture, and enhanced data visualization tools.

Frac Strategy

LBRT’s management holds the view that operators in the natural gas basins can bring additional capital, put more rigs to work, which will result in higher demand for frac equipment. Such additions can primarily take place in the Haynesville shale, where LBRT has a strong frac equipment base. Given the tie-up, Liberty will push through technological advancements such as Hive, its next-generation digital intelligence hub. It enables monitors frac operations with continuous oversight.

The frac industry may see lower frac spread count if the crude oil production in the unconventional dials down by 10%. But the management does not expect any significant drop from the current level. If natural gas production, on the other hand, picks up in gas-dominated shales like Haynesville, frac spread utilization can rise through Q3 2025.

Key Investment - Power

Since 2022, Liberty has invested in geothermal, nuclear, battery, and power generation technologies. An increase in mining, electrification, and other commercial and industrial applications will likely increase power demand in the medium term. The acquisition of IMG, a distributed power company, augmented the company’s LPI with power plant EPC management.

LBRT sees opportunities for supplying power in oil and gas projects, commercial and industrial space, and smaller data centers up to 250 megawatts in size. It has recently signed an MOU with Range Resources and Imperial Land Corporation for the development of a state-of-the-art power generation facility. It anticipates delivery of its first-generation capacity in Q3, while operation is scheduled to begin in Q1 2026.

Q1 Performance And Balance Sheet

LBRT's revenues increased by 3.6% quarter-over-quarter in Q1, while its adjusted EBITDA went up by 8%. Although the activity level increased by 4% from Q4’24 to Q1’25, pricing headwinds mitigated much of the gains. However, its net income dipped sharply, by 61%, in Q1’25 compared to Q4’24. During the quarter, utilization of frac and wireline fleets improved, and the Permian sand mines were fully utilized. Read more about LBRT's performance in our short article .

The company's debt-to-equity increased to 0.11x as of March 31, 2025. During Q1, it repurchased 1.0% of its outstanding shares and maintained its quarterly dividend at $0.08 per share. In 2025, its planned capex in the completions business is $450 million. Additionally, it has another $200 million allocated for power assets.

Relative Valuation

Liberty is currently trading at an EV/EBITDA multiple of 3.1x. Based on sell-side analysts' EBITDA estimates, the forward EV/EBITDA multiple is higher. The current multiple is significantly lower than its five-year average EV/EBITDA multiple of 15.6x.

LBRT's forward EV/EBITDA multiple expansion versus the current EV/EBITDA is higher than its peers because the company's EBITDA is expected to decline more sharply than its peers in the next four quarters. This typically results in a lower EV/EBITDA multiple than peers. The stock's EV/EBITDA multiple is lower than its peers' (NINE, PUMP, and ACDC) average of 5.1x. So, the stock is reasonably valued compared to its peers.

Final Commentary

LBRT will face the adverse effects of higher tariffs and the resultant uncertainty in the economy. Despite that, its management expects the fracking companies to be resilient activity because natural gas operators can bring additional capital and put more rigs to work in the gas-heavy shales. The company focuses on frack spread modernization with advanced sensors, real-time data capture, and enhanced data visualization tools.

LBRT’s current focus is on power generation and microgrids, and it has signed MOUs with a few operators. It anticipates delivery of its first-generation capacity in Q3. It has $200 million in capex allocated for power assets. Compared to its peers, the stock is reasonably valued.

Premium/Monthly ------------------------------------------------------------------------------------------------------------- [ihc-hide-content ihc_mb_type="show" ihc_mb_who="10,13,14,16,18,19,20,21,22,23,24,25" ihc_mb_template="1"] [/ihc-hide-content] [ump-visitor ] To unlock the content you need a Premium or Enterprise Account! [/ump-visitor]