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2026.09.22 | TB | Energy | Liberty Energy Tech Strategy

原标题：Liberty Energy – Technology Strategy, Operational Differentiation & Competitive Positioning

#energy

Third Bridge · 2026-09-22

Analyst-led • 11 Sep 2026

Companies: HAL US, LBRT US, SLB US, CVX US, XOM US

Christopher M Knight (CK) Head, Manufacturing at Scientific Data Systems Inc

Curren Larson (CL) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

CL: Welcome to Third Bridge's Interview entitled Liberty Energy – Technology Strategy, Operational Differentiation & Competitive Positioning. I'm Curren Larson, and I will be facilitating today's Interview with Mr Chris Knight, former Manager, Wireline Reliability at Liberty Energy.

Chris, before we start today's Interview, please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

CK [00:00:33]: I agree.

CL [00:00:34]: Could you briefly introduce yourself?

CK [00:00:51]: I started wireline with Schlumberger in their pump down perforating division. I actually started an open-hole before that, but primarily for this in pump down perforating. A lot of that team was actually sold as part of OneStim directly to Liberty. When they took that on, I went from being a Wireline Electronics Technician to a Maintenance Technology Lead who is basically trying to standardise processes, add new technology, work with vendors and the like. My experience was that Liberty was trying to consolidate on the technology that existed and improving reliability rather than Schlumberger's focus of massively trying to chase these large technology projects. From that role, I spent some time at a gun manufacturer for about one year as their field support manager, which I still supported Liberty, but also a variety of other customers. Then I came back to Liberty to work in Houston rather than Midland to be the Wireline Reliability and Technology Manager, where I did the high-level aspects of the different projects that Liberty Wireline was chasing. Then from there, I now work at SDS, where I continue to work with a lot of those other providers that provide wireline.

Questions

[00:02:21] How would you characterise the current environment for wireline? How commoditised is pumped-down wireline? What differentiates one provider from another?

CK [00:02:44]: Operators are heavily price-focused right now in wireline, which you'd expect, of course, because there hasn't been a lot of innovations that drastically change the environment quite yet. Automation is on the horizon for a lot of companies, and they're adding various smaller aspects of it, but until those things come around, they have the same amount of people, they have the same technology. They have wireline cables that are constantly going out and need to be replaced. There's a lot of price pressure on wireline and gun systems, switch systems and the wireline providers themselves are expected to keep dropping those prices and be more competitive and to make better targets on timing to be more flexible on their options.

Basically, it's going to be all about price until you cause any delays for the operators. That's when they finally, once it reaches a critical level, start to look at others. For the most part, you have to compete on price. You will get replaced if you cannot match those prices even if you have proven service quality so long as the other guys are about the same on service quality, even if it's worse. I would say it's extremely commoditised. I would say once there is on the horizon, as I said, the opportunity to finally start to differentiate for these guys, but once you hit a critical threshold of service quality and reliability and consistency, it's all about price only.

CL [00:04:25]: If you lose a customer, how hard is it to win back if there are issues with your reliability? Is it just a matter of cutting pricing, or is reliability so standardised that if you have an issue, you're not winning that customer back?

CK [00:04:48]: If you have an issue, it's very likely that even once you resolve it, it could be several years before you get another job because they've already set up all… When they go to replace you, they're negotiating with someone else. Oftentimes, they'll already have it in place that these pads are in agreement with this new service company. They might be able to, on new projects, bring you in if they're willing, but first, you have to talk to all the right people, you have to prove yourself. Then you have to find availability again, which essentially is not cold calling, but you're about the same spot you were trying to win the work in the first place. On the smaller operators, you can see a lot more jumping around, but usually, the margins are so low that you're leaving those to the smaller companies. You're not going to see with Liberty, for instance, where they're jumping job to job to job to job, outcompeting, say, Renegade or GR or Halliburton or whoever and just constantly jumping between each other on one kind of company's work. Usually, as I said, people are securing it for multiple pads.

[00:06:06] Considering Liberty Energy's offering today, how much economic value does pairing wireline with the frack spread actually create? Is the company's Red-on-Red advantage real or mostly just marketing?

CK [00:06:22]: For the larger customers, that's where you primarily find the real value in Red-on-Red. What they're looking for is that consistent singular package that a lot of times, through Red-on-Red, you can have better communication, you can have better logistics, but I wouldn't say, for instance, that Liberty is quite as good as, say, NexTier at having that true advantage of having both together, or even potentially Halliburton. I would say primarily what you're getting is a really good wireline, a really good frack that help to bring down your service quality issues. I would say that to Liberty, it's primarily a question of if you pair the two together, you do get better timing, you do get better service quality. Whereas I think that for other people that offer this sort of combined fleet, I think there's more technology argument there.

CL [00:07:28]: Could the company charge a premium for that integration, or is it just about getting your foot in the door through a wider offering?

CK [00:07:43]: For the most part, they actually offer discounts when you pair. Almost everybody is going to do that. You don't charge a premium because of Red-on-Red or any combined fleet. Usually, you're losing a little bit of money to do so. This is something that they've had to work towards, is not giving away wireline for free if you give them the frack work, for instance. They actually use as a value add… Not a value add. They do use as a value add, but they use as a discount option in a way to a certain extent. It's actually the exact opposite of that.

CL [00:08:18]: How much discount are you offering to sell both?

CK [00:08:30]: It completely depends, but again, because of frack being such a higher value, you're not going to see discounts on the frack side for using wireline. You're going to see them on the wireline side. As I said, Liberty has gotten away from that, but there were times where they were offering 30-50% discount, and other companies like NexTier were giving it completely free. Nowadays, you're probably seeing more of a volume drop, if anything, where you might be 10-15% cheaper, but remember, it's 10-15% cheaper from how much it costs to get wireline from Liberty vs a smaller company. With a smaller company, you could still be paying less for wireline.

[00:09:15] How regional is wireline pricing? Are you seeing substantial differences between what operators are willing to pay in the Uinta vs in the Permian?

CK [00:09:34]: It can be extremely different. We actually had found that larger guys could be 30-50% of your revenue, even though you have most of your trucks on other work. Just by region, it will be completely different environments. You're talking the Northeast, it's extremely cost-competitive, extremely low margins, extremely consistent work, but they're going to drive you down over and over and over again. Where in the Permian, there's a lot more leeway because they're trying to capture better technology and everything like that, which only happens when you leave a little bit of margin. You have to leave more margin than other places would. Just to be clear, by the way, we're only talking about North America land?

CL [00:10:22]: Yes.

CK [00:10:24]: Okay. Just want to clarify, which would include Canada?

CL [00:10:32]: Yes.

CK [00:10:34]: Canada is another one that's actually very commoditised compared to a lot of other places. They'll actually run your equipment into the ground, for instance. They'll have much higher speeds on your cables, and they will just be a lot tighter on spacing and everything like that as well.

[00:10:54] To what extent is Liberty competing against Halliburton for tier 1 work? Is it homogeneous across the board, including the regional mom-and-pops? Who is effectively setting the price?

CK [00:11:25]: What's setting the price is the mom-and-pops. They are being used that way specifically. It's why they don't keep all their eggs in one basket, like Liberty or Halliburton or NexTier or whoever, because if they did so, those companies would command the pricing. Instead, they give it to a variety of smaller companies, and then they give a portion to the larger companies because that keeps that pricing competitive, but their primary competition isn't going to be Schlumberger or even Halliburton. Halliburton has some work, but not nearly as much at least.

So they have some work, but it's nowhere near as much as a lot of these smaller mid-sized companies that you'd see, which I'm not even sure if you consider mid-size when you think of companies like Halliburton, but NexTier, Liberty, GR, Silvertip, Nine Energy, the wireline, TWG, Pintail, all these guys or Dynasty even, which falls into all others in a lot of the charts, but they're still decently considerable. All those companies are very competitive. There's even a couple that I don't see on the charts either, like Strata, the like, where, yes, they only have… Part of their problem is they're only one region, but it's one of the most profitable regions, the Permian. They might not have a lot of work in relation to the full market share of per pad, but on revenue, they actually are very competitive. Liberty is not competing with much larger companies necessarily. As far as large, you got Halliburton, NexTier, Liberty, and Halliburton is obviously way bigger than both of those combined, but those are the ones that are truly chasing, or even GR, I guess, as well, chasing tier 1, you're getting on Exxon, you're getting on Chevron, Conoco and the like, but they're still sharing with those smaller companies. Nobody's got a monopoly.

[00:13:34] What might happen to wireline margins and utilisation as US frack activity recovers? To what extent can we draw a correlation between frack count and margins?

CK [00:13:54]: Utilisation, obviously, will skyrocket in those environments. Once it does, the minute that it reaches the point that all of your major companies that meet the minimum criteria of service quality and the like, once they reach their 100% utilisation, pricing starts to go through the roof. Because now there's no availability of units, and there's still plenty of activity that needs to happen. You're going to see people even trying to poach. They're going to try to offer a better deal to Liberty to go from Exxon to Chevron instead, for instance, or something of that nature. You're going to see a lot of the smaller operators really have to compete because they don't have the same kind of volume that these larger companies have. They'll really offer good pricing just to get anybody to sit on their pads and do the work. I would say, if it recovers enough… The one thing to note is that a lot of these guys are preparing for when it recovers enough. Until it does, there's still usually good room for utilisation to increase. It won't get competitive until it really hits that point that everybody is fully utilised.

[00:15:05] Have you been through a scenario where utilisation actually hit 100% across major service providers?

CK [00:15:13]: 2019 was getting there. In 2019 before going into 2020, but before COVID really started, we were in a phase where everybody was starting to get to that point. You actually had oil jump up to, I believe, it was USD 130-150 at the time. There was plenty of work, and pricing was actually increasing quite a bit. It coincided with perforating switches becoming more prominent in the market. You had perforating switches selling for USD 90 per piece at the time. That was the kind of pricing power that you had. You had people that were working on Chevron earning bonuses in the USD 10,000-20,000 every two weeks, which means that there was massive ticket prices. It was actually very competitive at that time. Just for reference, switches are now USD 14 or less per piece. Right now, if you were to try to go buy perforating switches, most people will be paying somewhere in the range of USD 14, where before it was up into the USD 80s and sometimes even into the hundreds if you're talking the first round of switches back in that time. The true time where they really hit full utilisation was in 2014, and that was in the Permian and the Bakken, where basically, people were getting paid probably four times as much as we're being paid now for some of that work.

CL [00:16:53]: What early indicators or green shoots would suggest that utilisation is tightening? How much activity increase do you need to see?

CK [00:17:18]: What you'd expect to see from what perspective would you be trying to look at it?

CL [00:17:25]: Through an investor lens, would you need to see a sustained level of increased frack counts? Given we've seen 10 consecutive months of increased frack counts, should we start to see utilisation getting to that point?

CK [00:17:41]: That might be beyond anything I could say, because the only indicators that I would personally know would be internal to a company, and you wouldn't have that insight from the investor side.

CL [00:17:52]: Are there any particular equipment or labour constraints related to Liberty in a scenario where things will recover and utilisation would increase?

CK [00:18:16]: Manpower is going to be your biggest constraint. Because the thing is you can park equipment and come pick it back up, but you can't park people. Nobody is going to pay for that. That's going to be one of the biggest constraints, is if things pick up and we haven't figured out automation to start to reduce the manpower needed at the well site, then training is going to become a massive problem as you try to bring on people that have no experience whatsoever in the market. You're going to see failures start to skyrocket. You're going to see delays in schedules because of things like losing tools downhole or just constant misfires and other ODPs and the like that can really interrupt your frack schedules. That would be the biggest challenge, I think, you'll see. We even saw that a little bit in Canada back in '22-'23, where Liberty lost a lot of its prestige there because they were trying to increase to match the work and started having many different issues from that increased size. They stabilised since then, but that is something that commonly happens if you're trying to increase to match the new market share.

[00:19:33] You mentioned that wireline has become so commoditised because it's relatively homogeneous because there's no heavily differentiated technology. You probably won't see that until automation becomes more significant. What does that actually look like? In practice, what is the next frontier for wireline that would be conducive to a premium?

CK [00:20:14]: You wouldn't necessarily be charging a premium. You'd actually be most likely charging less, but your service costs would drop drastically by reducing manpower through automation. What those would mean is that once you achieve actual automation of the logging unit where the winch perforating system, pump down, wireline valves, crane movements and the like are automated, you could get down to a skeleton crew handling not just one unit, but several at once and eventually fully remote, which is going to be everybody's target because the first person to do fully remote wireline perforating is going to reduce their costs by an order of magnitude. They're going to go to 10% of the price, and then they can charge the customer 20% of the price and make a massive margin compared to what they're making currently.

That's what's going to actually differentiate because all the other things, all the other technologies are simply service quality visibility, but those don't differentiate between the companies. What does is price, as long as you hit that minimum threshold of service quality. Automation is the only thing that can truly differentiate that beyond a completely different technology that is not wireline, such as expanding research and investment into things like sliding sleeves, and dissolvable perforating liners and the like.

CL [00:21:55]: Is that a realistic operational efficiency to expect over the next few years?

CK [00:22:12]: I would say you should expect it to, in the very front line, start to come into 100% play in the next five years and then become completely industry standard in the next 10.

CL [00:22:25]: Is there anyone in particular that you know is working on this today?

CK [00:22:35]: All of them, but I would say your furthest ahead is going to be Halliburton. Schlumberger as well, but they are not focusing on this market. They're focusing purely offshore and overseas, but Halliburton is chasing this actively. NexTier is, Liberty is, GR Energy is and even Silvertip and ProPetro as that combination. Everybody is thinking about it. Actually, Allied Horizontal is also chasing this.

CL [00:23:08]: Certainly something to keep an eye on over the next few years.

CK [00:23:17]: It's going to be the one differentiator. It's going to be the one thing that is going to… Whoever finally breaks that is going to gain a massive amount of market share pretty much overnight.

[00:23:28] How do tier 1 E&P [exploration and production] players, such as ExxonMobil, Chevron or Occidental, weigh pricing vs operational reliability and uptime when awarding multi-well or multi-year completion contracts? If it's so automated, is it just a matter of being able to meet the demand with scale?

CK [00:24:05]: Let's just cover it from the first standpoint before automation. From the first standpoint, they want uptime. That is the most important thing. Even operational reliability is just about uptime. Even pretty much anything about this is about uptime. They want to go from beginning to end and producing that well exactly according to their schedule. Even being on budget is a little bit less important than being on time for them due to the cost of time. Then they care about pricing, but only if you can meet those requirements. What I would say is that unlike your smaller guys, there is a much higher bar for service quality and for logistics and reliability at these larger companies. Once you reach that bar, that's when pricing becomes more important, but once you secure the contract, it can take a lot to unseat you. On automation, the big thing is that automation doesn't replace reliability. It is actually riding right on top of the reliability. It replaces people. If you don't have reliable equipment, you actually could even encounter a situation where things have become worse because of automation. That's going to be incredibly important in that environment as well.

[00:25:37] On the reliability aspect, Liberty claims that it's paired Red-on-Red frack and wireline fleets reduce wireline-related non-productive time by 55% vs non-Liberty paired fleets. How meaningful is that difference? Does a 50% reduction in wireline non-productive time seem operationally credible?

CK [00:26:13]: In general, I would say that it's not nearly so much of a decrease compared to your other options just because the integration is better than you'd have with a third-party frack paired with that wireline, but it's not something that makes a significant impact on wireline NPT and the like. They do not work together, say, for instance, to get them back up. If anything, it's more so that Liberty's approach has improved the service quality within wireline for Liberty, and primarily, they're paired together.

CL [00:27:00]: What is driving the lower wireline NPT [non-productive time]? Is it just better communication and coordination, or is it about standardising equipment?

CK [00:27:27]: At least until they build in better integration together, which is a project that other companies have tackled, such as NexTier and Halliburton, but until Liberty tackles those specifically, I would say that the primary thing you're seeing is the organisational change that went from PDP of Schlumberger into Liberty Wireline.

[00:27:56] Liberty noted that while its frack has above-average or premium pricing, wireline had a discounted pricing in 2024, still claiming a value advantage in terms of performance. However, that advantage fell off in 2025, where it had a discount in pricing and also discounted offering. What is driving this performance decline, and why hasn't wireline commanded premium pricing since 2023?

CK [00:28:55]: You're looking at the Kimberlite report?

CL [00:28:59]: Yes, it's a Kimberlite survey.

CK [00:29:09]: One thing I'll note, they were unable to get most of the people that they're trying to talk to, to engage the Kimberlite report, most of the operators. The ones that did religiously respond were basically responding angrily. I think that has negatively influenced where Liberty fell into the spectrum, but in addition to that, I think that less focus on their technology so far has led to them not being quite as a premium offering. They just don't have the same personnel. They have consistency from the two-and-two schedule that they use, the two weeks on, two weeks off. It means that your crews are always together. It means that you get guys that will be there for the next 20 years, but that takes time to really get rolling. On the frack side, that two-and-two because it's been building for so long, has really made just these guys that have amazing amounts of experience that have been with Liberty the whole time completely loyal.

With wireline, it's only been around since '21. There's only been a two-and-two since middle of 2022. It hasn't actually been building very long. . You might have a guy at Silvertip who's a shooter getting paid USD 250-300, but exact same guy working that exact same job at Liberty would make closer to about 150, maybe a little bit less. It's actually a significant drop that also allows these companies to poach them. I think that over the next 10 years, you'll probably see it start to slide into the value advantage, but it's going to take a while for that to happen. Because that's the most important aspect, at least until you build in, again, automation where you've actually taken personnel quality out of the equation. Now it's all about process quality and standardisation and technology, but at least at this point, it's all about personnel. You'll have entire crews going from company to company. Literally, you won't be hiring a crew lead, you'll be hiring the crew lead and his operators, a whole crew if you poach them from another company. A lot of these companies that you'll see with the lower pricing and the higher perceived performance, that's exactly what they did.

[00:32:19] Could you elaborate on the DigiWire and e-wireline offerings, and how do they change Liberty's offerings vs some of the regional shops?

CK [00:32:41]: An e-wire unit means that when they say that, like an e-unit, what they mean is that it's a unit that does not rely on a gas engine. Instead, it relies on electric generator for power. That's the primary definition. Even by that definition alone, there's a lot of customers, especially like, say, for instance, in Colorado and areas in the Permian and companies in the Permian like Exxon and the like that favour that because it means better fuel pricing, and it means that they're more environmentally friendly. Like when they go to run their reports, about performance at a well site, they can actually show that it environmentally was less problematic, I guess, would be the word, but then another thing that e-units have been adding is more electronics and electrical systems built in for the winch, for the power system. You gain the ability to control all these systems. That's going to be where they really are making their offering is, "Hey, we don't just have an electric unit. We have a Benchmark, Ezdan, or an NOV, DigiWire unit, that allows you to automate the winch that allows you to set a speed and a max tension, and it will maintain that the whole way to the point that you told it to go to."

You're going to start seeing that more and more with Texas Wireline, with Synergy, with Benchmark and hopefully, NOV once they get back into that part of the game. You're going to see that focus. That is what the real advantage is of those units is you're slowly adding the technology needed to automate. There is one more benefit. Wireline cables are incredibly expensive. That pricing has to be built in ticket prices. They go out. It's about every 28 days, you're going to lose a cable per pad, per unit. In that 28 days, this USD 100,000 cable, maybe USD 180,000 cable, depending on which one you're getting, is going to wear out and have to be replaced. They're going to build that into the ticket pricing. Electric units are part of how they try to control for that because it's about the way you run the winch. It's about the way that you're operating the logging unit. They actually get to tell the operators, "Hey, we're reducing these costs by this percentage, and we're passing those savings to you."

CL [00:35:32]: You don't expect these offerings to create a premium in a way that automation would in the future. It's more about enhancing the margin on Liberty's side.

CK [00:35:47]: They do charge a premium almost always for these DigiWire units because it's new technology. They had to buy new units for it, and customers are willing to pay it. Sometimes they require it.

CL [00:35:59]: How significant is the premium over conventional?

CK [00:36:04]: They'll charge every single pad. It will be added to the equipment costs. It might be bumping at 5% on a pad.

[00:36:14] How do technical SLAs and equipment audit standards differ between major E&Ps and smaller private operators? You mentioned that major E&Ps should have a certain level of reliability. How does that differ vs smaller operators? When you say smaller operators, are you referring to Permian specific, or are you talking about a private small operator?

CK [00:36:51]: Okay. I would differentiate between basically your tier 1s, maybe your Oxys and legacy Anadarko or the like. Then your much smaller guys would be everybody else. I'm not as… I don't have as many of those names memorised as a lot of the operations guys would, but I can tell you that when you're talking about your tier 1s… Yes, basically your tier 1s, they're extremely strict on auditing standards, and their service agreements are very precise on exactly what they require from you. They'll even go as far as saying that you need to have stricter maintenance cycles for your equipment. They'll ask you for certifications for your pressure equipment. They'll literally send people to your maintenance facility to audit and to see that things are being done to their standard.

Where basically, Oxy is going to have requirements that they've learned in blood they need, but they're not going to be nearly so strict. Then your smaller guys, they're almost just cowboys. They have no standards at all. You might get run off if you have a ship fail and it pisses them off, but they're not going to mandate anything. I would say it can be extremely different between them. Service quality… Hold on, sorry. I'm reading off your question here. I don't think you've asked that second part yet.

[00:38:35] How does service quality influence the contract retention during periods of slow activity? I recognise it would not be something that you're too worried about today, but over the next couple of years, if pricing were to normalise on the commodity side and there's an activity slow down, to what extent could that influence contract retention?

CK [00:39:04]: It depends on the kind of slowdown. If we're seeing normalisation, then if you have good service quality and you're already doing pretty good on pricing, as long as there wasn't a boom that caused pricing to go very, very high, in those periods, you're either going to start bringing your prices down or, yes, they're just going to full-on replace you, but pricing is already in a decent spot and it's just very busy and it slows down and prices normalise. It's just not as active, then I would say service quality can matter quite a bit to whether you're going to be retained, but the minute you start getting to the point that it's actually slow and they're running out of work, they're going to choose the people that are the cheapest at that point. Because at that point, they're just trying to finish up the work they have as low a price point as they can possibly get until they sit down and wait.

[00:40:00] What does the typical maintenance CAPEX requirement and component overhaul cycle for high-duty-cycle wireline units operating in deep high-pressure basins, such as the Delaware, look like? How do the maintenance costs compare between electric wireline spreads and traditional diesel units?

CK [00:40:43]: Maintenance, a lot of times, people have a structured service-hours cycle, like every 500 hours, every 2,000 hours, every 10,000 hours, every 20,000 hours, 20,000 usually being right around when you do a full rebuild of a truck, which might cost you USD 80,000-90,000. Smaller companies might be doing closer to USD 50,000 or just not doing it. Then, your just typical maintenance might be costing you anywhere from USD 5,000 to USD 25,000 depending on exactly what's being maintained. Usually, it's the higher-level maintenance cycles that require more cost expenditure, of course, like the 10,000s. Then, in, say, tougher basins, I would say high pressure isn't going to affect most of your equipment other than your pressure equipment, but they actually get rated equipment for those zones. Mainly, you're seeing repairs. You will see quite a bit of extra cost in hot and high-pressure places for some of your equipment. Cables will get damaged more often.

Now you're talking even faster than 28 days per cable. You might be talking close to 21. It might only be 3-3.5 weeks before that thing is failing, if that's what you mean there. Because obviously, that's not going to affect the truck, that's going to affect the actual equipment that's touching the well. Then on maintenance costs, electric wireline spreads, you can't really say spread. Because there are only two things. You're talking the unit and the pump-down trailer.

I guess in Silvertip or NexTier, they actually do have pump down as part of the wireline set-up. I guess you can say that depending on exactly what it entails, but your costs are a lot better actually because you turn off that truck, you turn off that PTO, there's no cycling on the engine. You come in, you park, you turn off the vehicle, you turn on a generator and that one generator… Where there's one generator for multiple items, that's when you get the best cost value, but also, you get a good cost value just from running… Even if you have a generator per item, it's still cheaper than doing any kind of wear on that engine. Once you start using electric units where you're consistently using a generator, you're putting maybe a couple of thousand… I would say maybe 5,000 miles or 5,000… Not even 5,000 hours.

It's going to be much, much lower, maybe 10%, 5% even engine use for those tractors, which are the largest part of your cost on logging units for maintenance. That's actually a massive benefit. Some companies have even done it where they contract out tractors to bring logging units that do not… They're just on a trailer. You drop it off, the tractor disconnects, drives away, and then the logging unit is just sitting there without any tractor at all. They don't even have that cost into their system anymore. They don't even have that maintenance. They don't even need mechanics really. It can actually have a huge effect.

[00:44:20] Given electric wireline operations represent a small slice of operators' service, how should we think about the montisation of these services in the long term? Are operators moving towards performance-incentive fee structures or incentives for zero NPT [non-productive time] or stage efficiency, or could that stay despite a more active environment on a traditional fixed daily stage rate card?

CK [00:44:59]: This will depend on the tier of operator you're talking about. Exxon, Conoco and the like, your tier 1s and then your tier 2s, where Oxy might fit and their equivalents… They will use these quite a bit. It wasn't even their idea. This was pushed on them by the wireline operators, by the frack companies where they're basically, "We'll go this lower price, but if we deliver this for you, if we deliver this no NPT, and we help you get the stage efficiencies you desire, let's build in the remainder of the cost that we desire based on that. If we don't perform, you don't pay us." That structure actually works very well for those companies. For smaller companies, they'll just run you off if you don't meet their targets, so they don't need to. It matters for the larger operators. You'll actually see that quite a bit. They're going to split it up every little way they can. For instance, they'll split off tools and services and the like, where instead of charging all as one ticket, they'll be, okay, we're charging this much per ticket. Compare that to the smaller guys, but we offer this, that's extra, this online cloud system. We're going to charge you for the cloud system separately, and they'll pay it. A lot of these guys will pay willingly to get those additional services.

[00:46:27] What is the likely strategic rationale behind a hydraulic fracturing and wireline provider such as Liberty to expand into large-scale distributed power generation and industrial data centre power infrastructure? Could you elaborate on how this added service complements the company's business model?

CK [00:47:04]: From the initial standpoint, what I would say is that Chris, the previous CEO, was very inspired by these efforts. He actually already had invested into a micro nuclear company. I can't remember exactly the name that we actually partner with now, but anyways, he'd already had his eyes on that space. When they saw the opportunity to get into that space by building up LPI, which they turned in from an acquired company, I can't remember the name of the acquired company, but they took them in and then turned them into Liberty Power Innovations. They were leveraging the fact that we have natural gas, that we're producing the natural gas or at least we're part of that process to produce it. With electric fleets, we were already using this other company to basically supply the natural gas to all of these electric units on the fracking side. All those pumps are being powered by natural gas from this company and a couple of others. That's what really got them to start looking at that business and how it worked. When they did so, that's when they saw that they could go beyond just servicing the side that produces it to getting into a much more lucrative, especially with the growth of AI, into the natural gas side for power generation, primarily for industrial usage, such as data centres and the like. When you see data centres, really, the reason they're getting into that is because it's the most stable and highest growth place to put those kinds of resources in natural gas generation and delivery. Also let them leverage their own logistics on delivery as well.

CL [00:49:04]: You're able to leverage delivery. How distinct are the engineering and maintenance field operations teams?

CK [00:49:17]: It's utterly separate. They completely rebuilt. They were pulling all sorts of different people from both the frack and wireline side to come into LPI. Then they run that completely separate. You don't get to use their people for anything. They supported them in the field, but mainly just the way that they did before they purchased that company as well.

[00:49:52] Do you see any risks that the growing power business could divert capital, engineering resources or attention away from maintaining the reliability and equipment pace of Liberty's core frack and wireline operations?

CK [00:50:09]: They already have, in a general sense, done exactly that, pouring capital into their primary first projects in power generation, those actual units that they sell, but that has started to stabilise the last that I knew. They're now getting into just full-on contracts for funding, they would get a contract, they go to the bank, get a loan that match that contract and then build the everything they needed from there. Their capital needs are actually satisfied by contract-backed loans from banks. The part where they were siphoning capital and resources had already happened by now.

[00:51:00] What would you be watching most closely for Liberty's frack, wireline and power generation segments in terms of spend and recovery over the next 1-2 years?

CK [00:51:31]: I will say that their natural gas power generation business, if it grows to me, is a lagging indicator of growth on the core completions business. If you see their work expanding, that means there's more natural gas requirements in the industry, in the broader scope of people that need natural gas power solutions for data centres and the like. I would say between that and AI growth, those will be the things that you'll look for if you're trying to see if their business is going to grow. It's going to be growing internationally, not just nationally. Including their completions, actually. They're in Australia now, and that isn't the only place they've looked.

[00:52:28] What challenges do you think Liberty could face in penetrating other markets such as Argentina or Australia? How do you think about the the company's competitive positioning in those markets?

CK [00:52:49]: Liberty has a pretty hard requirement when it comes to any place that they go to internationally, they need infrastructure. They're not like other companies, like Schlumberger, Halliburton, Baker Hughes, Weatherford and the like who are willing to invest in building up local infrastructure to facilitate their services. Liberty isn't willing to take on projects that will take 20 years to pay off. Australia was a very natural fit because it already has the needed infrastructure. I would say if the path is already paved, that's when Liberty looks to enter because what they're really trying to do is take an existing stable market and come in being the premium high-reliability option and honestly, actually the value option if you're comparing them to a lot of the internationals.

CL [00:53:41]: I'll leave it there. I just want to say thank you for sharing your insights on Liberty Energy.

CK [00:53:57]: Yes, absolutely.

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