$3.68
$22.96
bear $3.68
base $11.17
bull $22.96
margin of safety $5.00
market price* $16.60
Liberty Energy provides hydraulic fracturing and related completion services to oil and gas producers in the major North American shale basins. Its work also includes wireline, proppant (sand) supply from its own sand mine operations, compressed natural gas delivery, and a growing power-generation business. This is a cyclical, equipment-heavy business: customers cut spending quickly when oil and gas prices or service prices fall, and the pumping fleets need constant reinvestment. What the business actually earns. We measure owner earnings as cash from operations, minus swings in working capital, minus stock compensation, minus the capital spending needed to keep the business running. Per share, on this basis, the last five years were: 2021 $0.32, 2022 $2.85, 2023 $3.20, 2024 $0.92 and 2025 a loss of $0.18. The 2022 and 2023 peak years came from a booming market; 2025 was hurt by lower service pricing and by heavy capital spending. We use the five-year median, $0.92 per share, as the normal level. The window starts in 2021 because revenue jumped from $966 million in 2020 to $2.47 billion in 2021 and the diluted share count roughly doubled (85 million to 174 million), so earlier years describe a much smaller company; the window still takes in both the boom and the current soft patch. Because revenue fell in 2024 and 2025, the method treats all of that capital spending as required upkeep, even though part of it, including a $78.8 million rise in deposits on new equipment orders in 2025, points to the power build-out. That makes 2025 look worse than the core fracturing business probably is. In our numbers, payments on finance leases used to obtain equipment ($80.9 million in 2025) are not deducted, which flatters every year and is one reason for the wide gap between our cases and the margin-of-safety price. Recent trend. Revenue in 2025 fell 7% to $4.0 billion because service and materials pricing dropped while activity edged up. Net income fell to $147.9 million from $316.0 million; the 2025 figure also includes a $162.6 million non-cash gain on investments, largely on its holding in Oklo, and the $151.0 million received from selling Oklo shares is reported outside operating cash flow, so none of it is counted in our numbers. In the first half of 2026, revenue rose to $2.21 billion from $2.02 billion, but net income fell to $65.7 million from $91.1 million and cash from operations fell to $141.4 million from $362.7 million, with roughly $120 million tied up in working capital, mainly higher receivables, while capital spending reached $380.9 million. Because the median is not moved by a single weak or strong period, we leave the normal level at $0.92. For the growth path, owner earnings in 2025 were down sharply from 2024 (from $0.92 to a loss of $0.18); we assume no growth from the normal level of $0.92 in the first year. That is higher than the 2025 result, and the reason is specific: the 2025 filing shows a $78.8 million increase in deposits on new equipment orders that the method counted as upkeep, while cost of services fell 1% for the year. Power business. In January 2026 the company announced an agreement with Vantage Data Centers to develop at least one gigawatt of power for data center projects, supported by a firm reservation of 400 megawatts of generation capacity to be delivered during 2027, and a preliminary agreement for a 330 megawatt data center expansion in Texas, starting in two phases in the fourth quarter of 2027 and the second quarter of 2028. It also announced a plan to deploy about 3 gigawatts of power projects by 2029. We give no value to any of this. The economics are not disclosed in the filing, the second agreement is preliminary, and the company says it intends to raise significant funds (debt, project financing, co-investments or possibly equity) and is seeking permission for up to $600 million of bridge loans. We also do not deduct the future cost of this expansion; we assume it earns roughly what it costs. As of December 31, 2025, $230.0 million was drawn on a $750.0 million revolving credit facility, and cash interest paid in 2025 was $39.7 million. Bear case, $3.68 per share. Fracturing service pricing keeps sliding, as it did in 2025, and owner earnings settle at about $0.35 per share, close to the lowest positive year in our window (2021, $0.32). We assume that level for ten years and then a 10% decline each year afterward. The power expansion adds leverage and possible share issuance that we do not try to price. Base case, $11.17 per share. Owner earnings stay at the five-year median of $0.92 per share for ten years, with no growth credited, because nothing in the filings guarantees growth in the fracturing business. After year ten, earnings decline 5% a year, since no contract or record we can point to holds them steady beyond that. In the 2020 downturn, when revenue fell to $966 million from $1.99 billion in 2019, the company still generated positive cash from operations of $85 million, though it reported a net loss. Bull case, $22.96 per share. Owner earnings equal the median of 2022 through 2025, about $1.88 per share, a level the business exceeded in both 2022 and 2023 even with full capital spending deducted. This level is held for ten years, then declines 5% a year. It is not a forecast of a market recovery, and it leaves out any value from the power business. What could make this wrong. Pricing could fall further than in 2025. The first half of 2026 shows profits shrinking even as revenue grew. The power expansion could absorb far more capital than it returns. On the other hand, if power projects earn well above their cost, or fracturing prices recover to 2022 and 2023 levels, the shares would be worth more than we show. Margin-of-safety price. Given the cyclicality, rising debt needs and unpriced power plans, the margin-of-safety price is about $5.00, well under half of our base case.