10-K: Liberty Energy Navigates Market Headwinds, Pivots to Power

Liberty Energy Inc. reported a 7% revenue decrease in 2025, alongside a strategic expansion into distributed power solutions and significant leadership changes.

Summary

• Liberty Energy Inc. is a leading integrated energy services and technology company, primarily providing completions services (hydraulic fracturing, wireline, proppant delivery, field gas processing, CNG delivery, data analytics, sand mines) to onshore oil, natural gas, and enhanced geothermal exploration and production (E&P) companies in North America and Australia.
• The company strategically expanded into the distributed power and energy storage solutions business through Liberty Power Innovations LLC (LPI), serving commercial, industrial, data center, energy, and mining industries.
• In March 2025, Liberty Energy acquired IMG Energy Solutions for approximately $19.6 million, enhancing LPI's engineering, design, and development capabilities for power systems.
• For the year ended December 31, 2025, revenue decreased by 7% to $4.0 billion from $4.3 billion in 2024, primarily due to a decrease in service and materials pricing, partially offset by moderately increased activity levels.
• Net income for 2025 was $147.9 million, a significant decrease from $316.0 million in 2024.
• Operating income declined to $72.7 million in 2025 from $389.5 million in 2024.
• EBITDA and Adjusted EBITDA also saw substantial decreases, with EBITDA at $735.8 million in 2025 (down from $940.5 million in 2024) and Adjusted EBITDA at $634.1 million (down from $921.6 million in 2024).
• Key leadership changes occurred in February 2025, with Christopher A. Wright resigning as CEO and Chairman to become the U.S. Secretary of Energy, and Ron Gusek appointed as CEO and Director, and William Kimble as non-executive Chairman.
• LPI announced plans to deploy approximately 3 GW of power projects by 2029, including an agreement with Vantage Data Centers for at least 1 GW (400 MW firm reservation for 2027) and a preliminary agreement for a 330 MW data center expansion in Texas (phases in Q4 2027 and Q2 2028).
• The company repurchased $24.0 million of Class A Common Stock in 2025, with $270.2 million remaining authorized under the share repurchase program through July 31, 2026.
• Quarterly cash dividends were paid, totaling $53.4 million in 2025, with a Q1 2026 dividend of $0.09 per share approved.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a mixed filing. While the strategic diversification into distributed power and the associated project pipeline are positive long-term moves, the significant decline in core oilfield services revenue and profitability in 2025 indicates a challenging current operating environment.

Positives

• Strategic expansion into the distributed power business (LPI) with a significant project pipeline, including agreements for at least 1 GW with Vantage Data Centers and a preliminary agreement for 330 MW in Texas, and a plan to deploy 3 GW by 2029.
• The acquisition of IMG Energy Solutions for approximately $19.6 million augmented LPI's capabilities in advanced engineering, design, development of power systems, enhanced software control systems, power marketing, and utility interconnection.
• Continued technological innovation in completions services, including the development of digiFleets (innovative electric and hybrid frac pumps with approximately 25% lower CO2e emission profile than Tier IV DGB) and wet sand handling technology.
• Maintained an integrated supply chain, including two Permian Basin sand mines, which helps reduce dependency on other providers and mitigate supply issues.
• The company's average incident rate was consistently lower than the industry average from 2023 to 2025, demonstrating strong health and safety performance.
• Cash and cash equivalents increased by $7.6 million to $27.6 million as of December 31, 2025.
• Proceeds from the sale of equity securities (Oklo shares) amounted to $151.0 million during 2025.
• The company was in compliance with all debt covenants as of December 31, 2025.
• Increased U.S. federal tax credits contributed to a decrease in income tax expense in 2025.

Negatives

• Revenue decreased by $309.0 million, or 7%, to $4.0 billion for the year ended December 31, 2025, compared to $4.3 billion for 2024, primarily due to a decrease in service and materials pricing.
• Net income decreased significantly to $147.9 million in 2025 from $316.0 million in 2024.
• Operating income decreased substantially to $72.7 million in 2025 from $389.5 million in 2024.
• EBITDA decreased to $735.8 million in 2025 from $940.5 million in 2024, and Adjusted EBITDA decreased to $634.1 million from $921.6 million.
• The company recorded a net loss on disposal of assets of $16.7 million in 2025, compared to a net gain of $5.3 million in 2024, primarily due to the disposal of older technology field equipment and an insured loss.
• General and administrative expenses increased by $22.0 million, or 10%, in 2025, partly due to increased stock-based compensation expense related to the former CEO's resignation.
• Interest expense, net, increased by $7.6 million, primarily due to the addition of finance lease liabilities.
• The average posted WTI oil price traded at $65.45 per barrel in 2025, down from $76.63 per barrel in 2024 and $77.58 per barrel in 2023, indicating market volatility.
• The average domestic onshore rig count for the United States and Canada decreased to 709 rigs in Q4 2025 from 765 rigs in Q4 2024, reflecting softening activity in the oil and gas markets.

Risks

• Federal, state, local, and other legislative and regulatory initiatives relating to hydraulic fracturing may limit future oil and natural gas E&P activities and could have a material adverse effect on results of operations and business.
• Federal legislation and regulatory initiatives relating to drilling on federal lands could harm the business and negatively impact the oil and natural gas industry.
• The business depends on domestic capital spending by the oil and natural gas industry, and reductions in capital spending could have a material adverse effect on liquidity, results of operations, and financial condition.
• The volatility of oil and natural gas prices may adversely affect the demand for completions services and negatively impact results of operations.
• Delays or restrictions in obtaining permits for operations or by customers for their operations could impair the business.
• Oil and natural gas companies' operations using hydraulic fracturing are substantially dependent on the availability of water; restrictions on obtaining water or disposing of flowback/produced water may impact operations and adversely affect the business.
• Operations are subject to risks associated with climate change and potential regulatory programs meant to address climate change, which may impact or limit business plans, result in significant expenditures, or reduce demand for services and revenues.
• An increased societal and governmental focus on ESG and climate change issues may adversely impact the business, access to investors and financing, and decrease demand for services.
• Operations are subject to significant hazards (e.g., accidents, blowouts, explosions, spills) some of which are beyond control and may not be fully covered under insurance policies.
• Potential for continued or increased severity of trucking-related issues or accidents, which could materially affect results of operations.
• Exposure to claims for personal injury and property damage, which could materially adversely affect financial condition, prospects, and results of operations.
• Subject to environmental and occupational health and safety laws and regulations that may expose the company to significant costs and liabilities.
• Oilfield anti-indemnity provisions enacted by many states may restrict or prohibit a party's indemnification of the company.
• Technology advancements in well service technologies, including those involving completions services, could have a material adverse effect on the business, financial condition, and results of operations.
• The ability or willingness of OPEC+ and other oil exporting nations to set and maintain production levels may have a significant impact on oil and natural gas commodity prices.
• Geopolitical conditions, including political turmoil and volatility, regional conflicts, sanctions, terrorism, and war could result in market instability, which could adversely affect the business, financial condition, and results of operations.
• The company is required to make payments under Tax Receivable Agreements (TRAs) for certain tax benefits, and the amounts of such payments could be significant, potentially exceeding actual tax benefits or impacting liquidity.
• Adverse effects from uncertainty in global financial markets and the deterioration of the financial condition of customers.
• Business, financial condition, and results of operations may be adversely impacted by the effects of inflation.
• Reliance upon a few large customers (top five accounted for approximately 39% of 2025 revenue) may adversely affect revenue and operating results if a major customer is lost or fails to pay.
• Cybersecurity risks, including information theft, data corruption, operational disruption, and/or financial loss.
• Assets require significant amounts of capital for maintenance, upgrades, and refurbishment, and may require significant capital expenditures for new equipment.
• Reliance on certain third parties for materials (e.g., proppant, chemical additives) and a limited number of assemblers/suppliers for major equipment exposes the company to risks including price, timing of delivery, and supply chain disruptions.
• Changes in transportation regulations may increase costs and negatively impact results of operations.
• Diversification and entry into new lines of business in distributed power generation carry a variety of risks, including new regulatory exposures, capital requirements, and lack of direct management experience in this specific business.
• The market price for common stock will become subject to factors different from those that have historically impacted it as the company diversifies into distributed power.
• Power generating operations performance involves significant risks and hazards and may be below expected levels of output or efficiency.
• The distributed power business is dependent on relationships with key suppliers to obtain equipment requiring significant capital commitments, potentially on terms that limit the ability to adjust to changing market conditions.
• Inability to adapt distributed power technologies to meet increasing customer needs and power loads could result in increased downtime and disruptions to power supply.
• Distributed power solutions in some applications could be adversely affected if grid power becomes readily available to customers on more attractive terms.
• The power industry is highly competitive and rapidly evolving, potentially leading to lower market capture than expected.
• Distributed power systems involve long and uncertain sales cycles, and there is no assurance of converting sales prospects into revenue-generating contracts.
• Current and future indebtedness could adversely affect financial condition.
• Unsatisfactory safety performance may negatively affect customer relationships and adversely impact revenues.
• Inability to fully protect intellectual property rights may lead to a loss in competitive advantage or market share.
• Adverse effects from disputes regarding intellectual property rights of third parties.
• Seasonal weather conditions, natural disasters, public health crises, and other catastrophic events outside of control could severely disrupt normal operations and harm the business.
• Sand mining operations are subject to a number of risks relating to the proppant industry (e.g., ground conditions, permits, environmental compliance, water availability).
• Silica-related legislation, health issues, and litigation could have a material adverse effect on the business, reputation, or results of operations.
• Subject to the Federal Mine Safety and Health Act of 1977, which imposes stringent health and safety standards on certain aspects of operations.
• The occurrence of explosive incidents could disrupt operations and adversely affect the business, financial condition, and results of operations.
• Choice of forum provisions in the charter and bylaws could limit stockholders' ability to obtain a favorable judicial forum for disputes.
• There can be no assurance that the company will repurchase shares of Class A Common Stock in any particular amounts.

Future Outlook

North American producers are expected to maintain flat oil production and modest growth in gas-directed activity in 2026, with global oil markets balancing a structural surplus, geopolitical risks, and OPEC+ production pauses. Natural gas markets are supported by LNG export capacity expansion and multi-year power consumption growth. Industry fundamentals are anticipated to improve as supply-side dynamics rebalance with completions demand. Liberty Power Innovations (LPI) plans to deploy approximately 3 GW of power projects by 2029, with specific agreements including at least 1 GW for Vantage Data Centers (400 MW firm reservation for 2027) and a preliminary agreement for a 330 MW data center expansion in Texas (phases in Q4 2027 and Q2 2028).

Management Comments

• "We support all energy sources that improve our energy system and better lives."
• "We passionately work to better the process of bringing hydrocarbons to the surface in a clean, safe and efficient fashion and view these principles as foundational to our business."
• "We believe technical innovation and strong relationships with our customers and suppliers distinguish us from our competitors and are the foundations of our business."
• "We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations."
• "Our people are our most important asset and ensuring their safety and the safety of those around them is the most important thing we do."
• "We believe that the benefits of increased protection and our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because, among other things, negotiation of these proposals could result in an improvement of their terms."

Industry Context

StockSavvy.ai notes that Liberty Energy's strategic pivot into distributed power generation aligns with broader industry trends of increasing power demand from data centers, industrial electrification, and onshoring of manufacturing, coupled with underinvestment in traditional grid infrastructure. This diversification positions Liberty to capitalize on a growing market segment beyond its core oilfield services, which faced softening activity and pricing pressures in 2025. The decline in WTI oil prices and rig count reflects a challenging environment for traditional E&P services, making the distributed power expansion a crucial strategic move for future growth and stability.

Comparison to Industry Standards

• The company's average incident rate was consistently lower than the industry average from 2023 to 2025, indicating superior safety performance.
• Horizontal rigs accounted for approximately 87% of all rigs drilling in the United States and Canada as of January 23, 2026, up from 77% as of December 26, 2014 (Baker Hughes data), reflecting an industry-wide shift towards more efficient drilling techniques.
• The average days required to drill a well dropped from 28 days in 2014 to 16 days in 2025 (Lium Research data), showcasing significant industry-wide improvements in drilling efficiency.
• The total amount of proppant used per well increased from six million pounds in 2014 to roughly 25 million pounds in 2025 (Liberty's FracTrends database), indicating increased complexity and service intensity of horizontal well completions across the industry.

Management Changes

Corporate Governance

Legal Proceedings

• The company is subject to legal and administrative proceedings, settlements, investigations, claims, and actions from time to time, but management does not believe any matters, individually or in aggregate, will have a material adverse effect on the company's financial position or results of operations.
• The company is currently under IRS examination for the tax year ended December 31, 2023, with no material audit adjustments proposed at this time.
• The enforceability of similar exclusive forum provisions in other companies' certificates of incorporation or bylaws has been challenged in legal proceedings, and it is possible that, in connection with one or more actions, a court could rule that these provisions in Liberty Energy's amended and restated certificate of incorporation and bylaws are inapplicable or unenforceable.

Related Party Transactions

• **Schlumberger Limited**: Total purchases of approximately $1.7 million from January 1, 2023, until January 31, 2023. Schlumberger ceased to be a related party effective January 31, 2023, after the company repurchased and retired 3,000,000 shares of Class A Common Stock for $45.0 million.
• **Franklin Mountain Energy, LLC**: Revenue of $5.8 million from completions services provided from January 1, 2025, through January 27, 2025. Franklin Mountain ceased to be a related party effective January 28, 2025.
• **Liberty Resources LLC**: Revenue of $11.1 million from completions services provided from January 1, 2024, through March 13, 2024. Interest income from the Affiliate was $0.5 million during the same period. All amounts outstanding with the Affiliate were collected in full during Q1 2024. Liberty Resources LLC ceased to be a related party effective March 14, 2024.
• **Oklo Inc.**: The company's investment converted into publicly traded shares in May 2024. Chris Wright, the company's previous CEO, was appointed to Oklo's board but resigned effective February 3, 2025, after which Oklo ceased to be a related party. The company recorded a gain of $137.8 million on investments in 2025 and sold shares valued at $151.0 million.
• **Nomad Proppant Services LLC**: The company purchased $0.6 million in proppant from Nomad during 2025. Payables to Nomad were $0 as of December 31, 2025. The company received cash distributions from Nomad in the amount of $5.2 million during 2025.
• **Bettering Human Lives Foundation**: The company made charitable contributions of $0.9 million to the Foundation during 2025 and received $0.6 million in other service revenue under a professional services agreement. Anne Hyre, the sister-in-law of former CEO Chris Wright, serves as the executive director of the Foundation and is employed by a subsidiary of the company and seconded to the Foundation.

Stakeholder Impact

• **Shareholders**: Experienced a decrease in net income and operating performance in 2025, but may benefit from the strategic diversification into distributed power for future growth. The share repurchase program and consistent dividends provide some return. Anti-takeover provisions could limit premiums in change-of-control transactions.
• **Employees**: Benefit from continued investment in hiring, training (e.g., Liberty Frac Academy), and retention, including competitive salaries, comprehensive benefits, and long-term incentive plans. The company emphasizes a culture of operational excellence and superior safety.
• **Customers (E&P)**: Continue to benefit from technological innovations (e.g., digiFleets, wet sand handling) and an integrated supply chain aimed at efficient, lower-emission completions. However, softening activity and pricing pressures in the oil and gas market may impact demand for services.
• **Customers (Distributed Power)**: New opportunities for data centers, industrial facilities, and other high-demand consumers to access advanced distributed power and energy storage solutions, potentially leading to reduced emissions and optimized power costs.
• **Suppliers**: The company maintains long-term relationships with multiple industry-leading suppliers of proppant, chemicals, and equipment. Vertical integration through sand mines and Proppant Express Solutions helps secure supply, but reliance on a limited number of assemblers/suppliers for major equipment carries risks.
• **Creditors**: Impacted by the company's current and future indebtedness, including the Revolving Credit Facility and Caterpillar Agreement. The company's compliance with financial covenants and plans for potential new bridge loans and increased convertible indebtedness are relevant to creditors.
• **Communities**: Supported through the Bettering Human Lives Foundation, which promotes clean cooking solutions and improves well-being globally. The company also provides K-12 scholarships, funds a Liberty Scholars program, and engages in targeted outreach to organizations focused on veterans, poverty abatement, low-income housing, criminal justice reform, and job opportunities.

Next Steps

• Deploy approximately 3 GW of power projects by 2029.
• Develop and deliver at least 1 GW of power solutions to support Vantage Data Centers projects, with a firm reservation of 400 MW to be delivered during 2027.
• Begin operations for a 330 MW data center expansion in Texas in two phases: the first half online during Q4 2027 and the second half online in Q2 2028.
• Continue to manage liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle.
• Seek an amendment to the Credit Agreement to permit new bridge loan indebtedness and increase the basket for permitted convertible indebtedness.
• Elect Class III directors at the 2025 annual meeting of shareholders serving for a term of three years.
• Elect Class I directors at the 2026 annual meeting of stockholders to serve for a term of one year.
• Elect Class I and II directors at the 2027 annual meeting of stockholders to serve for a term of one year.
• Elect Class I, II, and III directors at the 2028 annual meeting of stockholders for a one-year term, at which time all directors will be elected to serve for one-year terms at all subsequent annual meetings of stockholders.
• Pay a quarterly dividend of $0.09 per share of Class A Common Stock on March 18, 2026, to holders of record as of March 4, 2026.

Key Dates

Recommendation

The company is undergoing a significant strategic shift into distributed power, which has long-term growth potential and could diversify revenue streams away from the cyclical oilfield services market. However, the core business experienced a notable decline in revenue and profitability in 2025 due to challenging market conditions. While the new power projects are promising, they are still in early stages of development and subject to execution risks and uncertain sales cycles. The current financial performance warrants caution, but the strategic direction and existing strengths in oilfield services suggest holding the stock to observe the execution of the diversification strategy and the recovery of the energy market.

Keywords

Hydraulic fracturing, Oilfield services, Completions services, Distributed power, Energy storage, Data centers, E&P, North America, Permian Basin, Williston Basin, Haynesville Shale, Eagle Ford Shale, DJ Basin, Western Canadian Sedimentary Basin, Appalachian Basin, LPI, digiFleets, Proppant, Wireline, Natural gas, SEC filing, 10-K, LBRT, Corporate governance, Risk management