Q3 2024 Liberty Energy Inc Earnings Call
Speaker Change: Welcome to the Liberty Energy Earnings Conference Call. Operative Patients will be in listen-only mode. Should you need assistance? Please take note of Conference Specialists by pressing the star key followed by zero. As for today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-toon phone.
Speaker Change: to withdraw your question, please press star, then too. Please note this event is being recorded. I would now like to turn the conference over to Anjali Voria that director of investor relations. Please go ahead.
Anjali Voria: Thanks Wyatt, good morning and welcome to the Liberty Energy 3rd Quarter 2020 4 earnings call. Joining us on the call are Chris Wright, Chief Executive Officer, Juan Guswick President and Michael Stocks.
Anjali Voria: Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include board-looking statements reflecting the company's view about future process, revenues, expenses or profits.
Anjali Voria: These matters involve risk and uncertainty that could cause actual results to different materially for more forward-looking statements.
Anjali Voria: These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties.
Anjali Voria: that are detailed in our earnings release and other public filing.
Anjali Voria: Our comments today also include non-gas financial and operational measures. These non-gas measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share. And adjusted pre-tacks return on capital employed or not assessed to breakout measures. And they not be comparable.
Anjali Voria: to similar measures of other companies, a reconciliation of net income to EBITDA and Anjali Voria, net income to a job that net income and a job that net income pursue would be shared. And the calculation of a job that pre-tax return on capital employ, apps of guests on this call are available on our investor relations website.
Speaker Change: I will now turn the call over to Chris.
Chris Wright: Thank you, Anjali. Good morning, everyone. And thank you for joining us to discuss our third quarter 2024 operational and financial results.
Chris Wright: Liberty delivered a solid quarter with revenue of 1.1 billion and adjusted EBITDA 248 million. We again reach new heights and efficiency.
Chris Wright: is something more hours in a quarter than ever before, company wide, amidst a backdrop of a slowing-demand environment.
Chris Wright: We are excited to celebrate the progress of a Liberty Digi Prime Fleet that set the company record for number of hours pumped in a month by any crew in company history.
Chris Wright: No fuel cost from natural gas, low emissions, and record operational performance.
Chris Wright: The Liberty culture of striving for improvement and pushing beyond our prior achievements continues regardless of the macro environment we find ourselves in.
Chris Wright: I'm proud of our team for executing at the highest operating levels, generating strong financial performance and value for our customers.
Chris Wright: In the third quarter, we can't write a strong free cash flow, enabling the World Bust Return of Capital Program.
Chris Wright: We opportunistically increased our shareable purchases to $32 million at a lower at $39 million at a lower stock price relative to the prior quarter.
Chris Wright: Since the reinstatement of our Capital Return Program in July, 2022, we have distributed $509 million to shareholders through the retirement of 14% of share without standing and quarterly cast dividends.
Chris Wright: Earlier this week, we also announced a 14% increase in our quarterly task dividend to AXN's per share.
Chris Wright: The compounding effect of buybacks and dividends is an attractive way to drive higher total shareholder returns over cycles.
Chris Wright: We balanced our return of capital program with disciplined investment in innovative businesses and leading edge technologies that expand our competitive damage and increase our market opportunities in the coming years.
Chris Wright: Our success across multiple business cycles is driven by our well-defined competitive mode, differential technologies.
Chris Wright: Long-term growth potential, and high returns on a festive capital.
Chris Wright: I want to highlight two of the drivers of our leading financial performance. Number one, we built trust and loyalty with our customers by delivering a superior service focused on their specific needs.
Chris Wright: and number two, we strategically expanded in essential areas that grow our technology and service leadership position.
Chris Wright: Why is this important?
Chris Wright: When we look at our relative performance in a softening market, our largest customers have grown during this period of industry consolidation, and our percentage of their work has also grown.
Chris Wright: This demonstrates the importance of dedicated relationships with customers that are also able to withstand and prosper across cycles and who value quality, safety and service.
Chris Wright: Our focus on strategic investment drives the differential experience our customers benefit from today.
Chris Wright: Welcome to Invest Miss, have allowed us to develop new markets and lead technology innovation and operational efficiency in the industry.
Chris Wright: Let me share a few recent examples.
Chris Wright: Over the past year, Liberty entered partnerships with entrepreneurs to develop the new gas-writz speed-alue basin in Australia. We have taken a significant step forward with the arrival of a Liberty fleet in country.
Chris Wright: Operations are expected to begin next month.
Chris Wright: Another example is our Liberty Advanced Equipment Technologies, lack, manufacturing and assembly division that delivered its first Diggy Prime Pumps in the third quarter.
Chris Wright: This Mark's great progress since the launch of last year.
Chris Wright: For the last few years we have supported our frack operations with the design and manufacturing of liberty pump technology, including power ends, fluid ends, and ancillary equipment.
Chris Wright: We are now designing and manufacturing digital technologies, as well as critical components for LPI and products.
Chris Wright: The New Latin Organization expands our ability to design, engineer, and package complete the proprietary systems.
Chris Wright: The success of new technology comes through ownership of the engineering design and the ability to rapidly incorporate feedback from field operations.
Chris Wright: This accelerates the innovation cycle and reduces total cost of ownership.
Chris Wright: are manufacturing strategy reflects a balance approach to in-house versus outsourced production.
Chris Wright: We're by week in leverage selective key learnings through the innovation cycle with our external partners which remain an important part of the scale of our manufacturing and assembly needs.
Chris Wright: Our Prop Exhibition, acquired three years ago, is a leading provider of last-mile, profit-handling and delivery solutions and has delivered nearly 400 billion pounds of sand since inception.
Chris Wright: As the premier provider of wet sand handling technology, we're excited to share several new developments.
Chris Wright: is recently deployed this new prop stack, damp pile delivery system, optimizing the use of damp sandpiles through high throughputs track locations.
Chris Wright: The innovative new prop hopper, together with advanced laser-sand metering technology currently in testing, offer additional value to our customers through improved accuracy and simplified on-site operations.
Chris Wright: We are also in the advanced stages of testing a slurry pipe system for last mild delivery of sand that could minimize trucking, reduce environmental impact, and provide real sustainable cost reductions across the value that change.
Chris Wright: Earlier this summer, Liberty Power Innovations, LTI, Fuel Gas Operations commenced in the DJ Basin with 3rd CNG sales in July.
Chris Wright: LPI's expanded compression and delivery operations in Colorado are off to a strong start. Helping bring our fractal heat, CNG fuel and services to critical mass.
Chris Wright: We are now supporting most of our gas burning fleets in both the Permian and DJ Basin.
Chris Wright: Alongside CNG, we are also treating field gas in the Hainesville, Permian and other bases for certain customers.
Chris Wright: LPI handled more gas volumes and delivered more CNG in the third quarter than in its operating history, with much more runway to expand.
Chris Wright: Today, the Rising Demand for Power in Commercial and Industrial Applications offers compelling opportunities for LPI.
Chris Wright: We are excited to leverage the expertise that we have built, constructing and managing power plants for broccoli.
Chris Wright: to additional opportunities both inside and outside the oil field, an energy-rich future creates opportunity.
Chris Wright: As much of the ensuing demand will be meaningfully powered by natural gas, which is an area we believe we have significant advantages.
Chris Wright: The other opportunity in growing, long-term supply of firm power is nuclear, which has been much in the news these days. Our ownership stake and partnership with small modular reactor company O-Clow has been truly exciting.
Chris Wright: Oil Markets reflects significant uncertainty across the global economy, OPEC plus production plans, Chinese economic growth, and Middle East Sea of political dynamics.
Chris Wright: Welcome to the next oil. We'll grow by approximately 1 million barrels of oil per day this year and is expected to exceed that rate next year.
Chris Wright: While global oil production may be in surplus in 2025, oil prices are expected to remain relatively range-bound and supportive of North America activity.
Chris Wright: Natural gas prices rose in recent weeks as storage congestion concerns ease due to producer contaminants and strong domestic power generation demand. However, higher prices may incentivize reversal of curtailments and therefore prove to be transitory.
Chris Wright: The commissioning of LNG export facilities in the U.S. and Canada is expected to stimulate gas activity in 2025 and support higher sustained natural gas demand.
Speaker Change: Mark Markets are navigating the flowing of EMPs operators 20-24 development programs in response to the strong first half 2024 production efficiency games from factors including producer consolidation.
Speaker Change: Longer matter of wells and concentration of activity in high graded acreage.
Speaker Change: elevated uncertainty in energy markets as further left operators were locked in to accelerate completion's activity in advance of the new year.
Speaker Change: We now expect a low double digit percentage reduction in Q4 activity, a bit more than the typical Q4 softening.
Speaker Change: Completion's activity likely increases in early 2025 to support slattish EMP oil and gas production targets.
Speaker Change: It's late 2023, U.S. Poodle Production has been relatively flat and would likely decline if current completion activities levels persist.
Speaker Change: Eventually, activity levels will likely increase to support growing global demand for oil and natural gas.
Speaker Change: Facts industry dynamics are pullies to improve in 2025 from today's levels.
Speaker Change: EMPs brought wells to production faster this year, and part due to completion of efficiencies and increased frack intensity with higher pump rates.
Speaker Change: Aficiencies were aided by a mix-shift towards larger producers benefiting from consolidation and partnership with top tier fac service providers.
Speaker Change: Industry-wide track efficiency is at its highest levels, but we expect the rate of improvement will slow going forward. Higher intensity fractions require more horsepower.
Speaker Change: Software Activity has been a catalyst for equipment attrition, cannibalization, and idling of fleets.
Speaker Change: Together, these implied that the supply and demand balance of fractalies is tighter than headline fractality counts suggest.
Speaker Change: Large, well-tapedal IDMPs are enjoying attractive economics across a wide range of oil prices.
Speaker Change: to maintain efficiency gains and further support the increase in complexity of the MP needs, investment is necessary in leading-ed service technologies.
Speaker Change: Software and FRAC activity levels are pressuring prices in the near term to levels that are inconsistent with the anticipated market demand and supply of horsepower in 2025.
Speaker Change: It is important that service prices support investment, especially given aging equipment, industry under investment in next generation technologies, and growing fleet sizes.
Speaker Change: Few service providers are positioned to manage the growing complexion, complexities of completion advance with quality service and next-generation technologies.
Speaker Change: We are significantly advantage with our deep customer relationships, leading edge, diggy technologies offering and the integrated services that enable strong efficiencies for our customers and returns for our shareholders.
Speaker Change: We remain disciplined in advancing and asset deployment as we seek to drive superior long-term financial results.
Speaker Change: Over the last two years, we have maintained a roughly flat deployed fleet count. However, admits near-term reductions in customer activity and market pressures.
Speaker Change: We are planning to temporarily and modestly reduce our deployed fleet count while continuing to support our long-term partners.
Speaker Change: Looking ahead, we expect a deliver healthy free-task flow generation in 2025. Our investment cadence within track flows following an accelerated technology transition push in the last few years.
Speaker Change: Our strategic investment is expected to shift in support of our growing opportunities for power generation services.
Speaker Change: We are well positioned to deliver on our dual priorities of strategic investment and return of capital to shareholders, creating value over the long term.
Speaker Change: With that, I'd like to turn the call over to Michael Stock, our CFO to discuss our financial results and outlooks.
Michael Stock: Good morning, everyone. Over the past two years, our results demonstrate the hard work and dedication of the Liberty team.
Michael Stock: with delivered superior turns during a time when industry activity levels and mark conditions have softened from peak levels.
Michael Stock: We've also strategically used those two years to focus on building our competitive advantages.
Michael Stock: We embarked on the initiative to transition our fleet to next generation digital technologies that are in high demand.
Michael Stock: We are pleased to share that we are on track to start the year with approximately 90% of fleets. Primarily powered by natural gas, the dual fuel and digital digital fleets.
Michael Stock: We also launched an of now-reach critical mass and LTI infrastructure to power our fleet. As we look ahead, we are well positioned to drive continued differentiation and solid performance through cycles.
Michael Stock: In the third quarter of 2024, Redding U is 1.1 billion compared to 1.2 billion in the prior quarter, representing a 2% sequential decline on pricing headwinds.
Michael Stock: The third quarter net income after tax was $74 million, compared to a 108 million in the prior quarter.
Michael Stock: Ajusted net income after tax was 76 million, compared to 103 million in the prior quarter, and excludes a pre-tax net unrealised loss of $3 million for mark-to-market loss adjustments.
Michael Stock: For the elusive net income per share was $0.44 compared to $0.64 in the prior quarter and adjusted net income per elusive share was $0.45 compared to $0.61 in the prior quarter.
Michael Stock: 3rd cause of a adjusted EBITDA was 248 million compared to 273 million in the prior quarter.
Michael Stock: General and Administrative Experiences, total 59 million in the third quarter, largely in line with 58 million in the second quarter and included non-cash stock-based compensation of $5 million.
Michael Stock: Other expensive items total $11 million for the quarter, inclusive of the aforementioned $3 million net unrealised lost on investments, net interest expense of $9 million was relatively in line with $8 million in the prior quarter.
Michael Stock: The third quarter tax expense was $22 million, approximately 23% of pre-tax income. We continue to expect the tax expense rates in 2024 to be approximately 23% of pre-tax income.
Michael Stock: Cash Taxes was $16 million in the quarter and we now expect 2024 Cash Taxes. It's to be approximately 50% of our sector's book tax rate for the year.
Michael Stock: We enter the quarter with a cash balance of $23 million and net data of $100 million.
Michael Stock: Net Decline by 17 million from the end of the second quarter. Third quarter uses this cash, including capital expenditures, 30, $9 million in share by bags, and 11 million dollars of quarter cash to the business.
Michael Stock: Total liquidity at the end of the quarter, including availability and the credit facility was $352 million.
Michael Stock: Net Capital expenditures were 163 million in the third quarter, which included an investment in Digi-Fleets, Geofuil fleet upgrades, LAD, and Terminian facility construction, capitalised maintenance cleaning and other projects.
Michael Stock: We had approximately $4 million of proceeds from asset sales in the quarter
Michael Stock: In the fourth quarter, we expect Catholic expenses to be approximately $200 million, based on expected timing deliveries on digit technologies, completion of fuel technology upgrades, demand for wet sand handling equipment.
Michael Stock: Arability to generate strong cash flows through cycles, enables our commitment to to capital returns.
Michael Stock: In the third quarter, we refer to 39 million dollars of shares, or over 1% of the shares outstanding, and distributed 11 million in cash dividends.
Michael Stock: We continue to deliver on a return of capital program while reinvesting and higher returns opportunities that increase our long-term cash flow generation.
Michael Stock: We are now anticipating fourth quarter seasonality, be more pronounced and typical, as early year EMP production out performance, coupled with emerging macroeconomic absurdities, keep EMP's hesitance to raise activity ahead of a new year.
Michael Stock: While I'm usually soft to year-end activity levels as serving as a backdrop in pricing conversations, these pressures are inconsistent that the anticipated industry demand in 2025.
Michael Stock: We believe fleet activities now at or below levels require to sustain, space-ish oil and gas production and are poised to inflict higher in 2025. Horizontal rig counts have also stabilized a signal of bottoming activity in the market.
Michael Stock: After two years of largely maintaining a flat fleet count, we are now planning to temporarily reduce our deployed fleet by approximately 5%. We will react to those fleets to support our customers' long-term development needs in a discipline fashion.
Michael Stock: As we invest it early in the cycle to build our competitive advantage, transitioning our fleet to next generation, digital technologies. We now expect our capital spending program for our completeness services to decline in 2020's rise.
Michael Stock: As such, we can expect free cash flow is defined as even our list capics to the completeness business to increase year over year.
Michael Stock: We have significant flexibility to maintain strong free cash flow generation and adjust a capital spending target. The fun potential to power opportunities while continuing to support our robust return of capital program.
Michael Stock: We've spicked our investment to shift towards growing opportunities for bad generation services in the years ahead.
Michael Stock: We also increased our quarterly cash dividend by 14% to reflect the confidence we have in our ability to invest and expand our long-term earnings, drive free cash flow, generation and deliver a leading return of capital strategy.
Michael Stock: We combine a cash dividend with opportunistic shared repurchases to generate significant value for our shareholders.
Speaker Change: I will now send the call back to Chris for a few remarks.
Chris Wright: Thanks, Michael!
Speaker Change: Slawing Activity is pressuring pricing levels.
Chris Wright: in consistent with expected future demands. Let me try to put this in perspective.
Chris Wright: are purfly track profitability remains above the cyclical high in 2018.
Chris Wright: This cycle is markedly different than previous cycles.
Chris Wright: Reflecting a far healthier frac market with perhaps wider differential and profitability across the quality of frac providers.
Chris Wright: Already, we are seeing smaller frac companies fall into insolvency, and most of our competitors in decimates in frac equipment are below their attrition levels. Available frac capacity is shrinking.
Chris Wright: This will lead to tightening it in the frack market even without increasing frack demand.
Chris Wright: Our competitive advantage is bigger than it is ever better.
Chris Wright: Capacs and our core business will trend downward next year and in the foreseeable future, boosting our free cash flow.
Chris Wright: Liberty Power Innovations is in its infancy and we have the technology, business infrastructure, and cash flow to develop a high return, size and more diversification to the frack business.
Chris Wright: However, we love the fracked business and have never been more excited about our competitive position at future prospects in fracked.
Chris Wright: I will now turn it back to the operator for Q&A after which I will have some closing comments at the end of the call.
Speaker Change: I'll now open the line up for your questions as a reminder to ask a question you may press star then one on your touch tone phone. If you're using a speaker phone please pick up your hands up before pressing the keys.
Speaker Change: But any time your question has been addressed and you would like to withdraw your question, please press star then too.
Speaker Change: At this time, we'll pause momentarily to a similar roster.
Speaker Change: [inaudible]
Speaker Change: and the first question comes from Skygrooper with City Group, please go ahead.
Speaker Change: Yes, good morning.
Speaker Change: Morning Scott, Boris Gap.
Speaker Change: I'm going to start, you know, on your comments around investment next year. So you have a tell less gap decks or completions.
Speaker Change: That'll rise with lower completions, CapEx. Next, what does it mean for how many E-Fract fleet additions you could target for next year? And it sounds like, you know, LPI investment could go higher next year, so putting those two pieces together, what your early thoughts on 25 CapEx and a wide range is fine. I know we're early, but just curious what that range could be.
Speaker Change: to
Speaker Change: Thank you Scott. I mean, that level of caffeine, so we were discussing then, probably has to bring four or five.
Speaker Change: did you fleece into the market about just about 10% kind of or be a replacement.
Speaker Change: So we've probably end 14 to 15 or closing in on 40% of the end of the year with the technology. Just depending on how the fleet configuration does.
Speaker Change: between Sidal Freight Fleet and others. So I think that's about where we are on that. And then the LPI investments obviously you know kind of early days in looking at the power opportunities, got a lot of discussions going on there that are quite interesting and you know reasonable advanced status, but you know that will come clear and probably a lot clearer by our January call of what those numbers would look like. But we like to kind of think about it for investors to say you know we're generating far more cash, we're going to be generating more cash next year. Next year at our completions business, which is where we're doing at the moment. That also includes the, you know that number that I gave for the CAPEX also includes the base molecule management here kind of the, you know any expansion that we need for delivery.
Speaker Change: is delivering natural gas to support those freight fleets as well. So that's included in what I consider the completions business side of that, you know, an eventually any sort of outside of freight power generation. Will be something we talk about in January.
Speaker Change: and then just to follow up on the near-term dynamics.
Speaker Change: I guess one has to be think about the decrymanals.
Speaker Change: and Ford, Kew on that low-team's revenue decline. And too, can you often early thoughts on the one-q recovery from a revenue and incremental standpoint? A couple of moving pieces there in terms of a positive seasonal trend.
Speaker Change: I would assume those two fleets, so you're laying down, you know, probably stand the sidelines for a bit.
Speaker Change: and then, you know, could be some additional pricing headwinds.
Speaker Change: Trying to level set how we should think about where Liberty starts 2025 from a revenue-need-to-death standpoint.
Speaker Change: Yeah, so, um, Scott Lemme.
Speaker Change: Take that one. I think the revenue decline, it will be similar compared to last year in the fourth quarter, I think decamentals will be a little higher. That's where we've sort of looked at the slow decreasing pricing and the dynamics at the end of this year, this is the dynamics at the end of last year, so he's looking at revenue and the revenue of the decamentals there. I think we'll have activity recovery coming into Q1 and won't be back to Q3 levels. It'll be between Q4 and you know...
Speaker Change: I'm trying to forward to three and to stand at incremental side of the site from there We'll get closer and closer. We're still in the early part of our PCs and etc. We have a reasonable look at where things are at the moment.
Speaker Change: Thank you, thanks God.
Speaker Change: i
Speaker Change: Next question comes from Adi Murak with Goldman Sachs, please go ahead.
Adi Murak: Hi, good morning team. Can you talk about the pricing pressure dynamic in the market? Do you think industry pricing discipline is breaking down is there? A profitability level or a return level on your streets that we should think of in trying to understand where pricing can go.
Speaker Change: Yeah, I wouldn't, I think this is what breaking down is definitely too strong of a statement, but you get to the year end and you know there's a number of fleets going down, people's programs are just running out maybe they may now have gone down yet, but they know they're going to get out late in the vanburg early December after this pad or the next pad.
Speaker Change: and we do see people trying to fill that gap and keep that, is keep that fleet working.
Speaker Change: So, for extra pickup work, pricing is very rough and unusually rough even. Normally that's not great pricing but that's particularly rough. And we're just not going to play that game. We're just not going to run a fleet at pricing that doesn't justify what an athlete.
Speaker Change: And so it took me two years ago the market condition peak and it's been sort of a slow, gradual decline. We've used technology and improving our efficiency and services to try to swim against that tide, offsetting it. I think we've obviously continued to do that.
Speaker Change: but Re-count is plateaued. I think operators probably feel we're at our near-up pricing bottom.
Speaker Change: And so yeah, look, we stay tight to our partners, we, you know, we're going to keep our profitability up on our, and, and if we can't, we're going to take the actions we're taking right now, which is, you know, idle, idle, some capacity, we're flying, doing that.
Speaker Change: Well, you know what conditions are great today but I don't, this is an normal downturn where it's about to drop and you know it's, you know, this is just a first leg down. I probably pricing wise at or near the bottom would be my guess.
Speaker Change: God, if that's very helpful. Then you mentioned efficiency. You also mentioned that it's at the highest levels, but there is room for some incremental changes, which will be slower from your maybe. Can you help us understand those changes that would take that efficiency even higher and what that means for the competitive advantage?
Speaker Change: Yeah, look, we, and I would say are industry, but I would say led by literally, or just passionate innovators, right? We're always looking to do something different, to do something better, and that won't stop. But think of the huge changes.
Speaker Change: You know, in just the last, you know, 12 to 18 months, you know, we've had some consolidation of significant size companies. What happens then?
Speaker Change: You know, you know, maybe together they were running 12 rigs and now they're running 9 and all 9 of those are running on the bat to acreage in the combined portfolio.
Speaker Change: That increases productivity per well or swims against a long-term degradation in average well productivity that's been going on for six, seven, eight years now.
Speaker Change: People are going to, when there's excess to pass the impricing bill saw, people go more to Simon Frack, which is really more than one free fleet on operation. So you know, it gets counted as one fleet, but really that's 1.6 fleet, so 1.7 fleet.
Speaker Change: So these factors have allowed in the last couple years and baby is actually in the last nine months.
Speaker Change: is a great increase in efficiency and productivity. This is great for our industry, great for the economics of the whole pie. But obviously, in the short term, it's pricing pressure on rocket equipment. We're getting more done with the same amount of horse power. But the client is fleet count.
Speaker Change: is roughly half offset by growth in the average fleet count size. So horse power that's being run has not declined by as much as fractal count has declined.
Speaker Change: Yeah, I would say what makes us feel better about the marketplace is the differential and the profitability say of liberty.
Speaker Change: vs. you know, small and private, you don't even know that are out there in their part of the marketplace. They are truly struggling. Some of those companies are drying up, shutting down operations, going into bankruptcy, or just sort of folding their cards and selling their assets away to someone else, or shutting them down.
Speaker Change: So we see that generation that shrinkage in capacity in the marketplace, that's what it takes to fix a market where supply and demand are a little bit out of whack.
Speaker Change: and I'd probably acted addressed, not as much on your technology thing, I don't know if long wants to add into that, but optimizing supply chain AI for routing, truck delivery, how do we maximize the life of an engine, how do we increase?
Speaker Change: Gas Substitution, so we can bring a greater fuel cost savings to ourselves and to our customers. A lot of technical efforts going on. I've got talking too long. Why don't you want to add anything or we move on?
Speaker Change: I think you hit all the high points, Chris.
Speaker Change: Good afternoon.
Speaker Change: Thanks for morning everybody.
Speaker Change: Two for me, I start just back on the pricing question. When you talk about dedicated fleets with customers,
Speaker Change: Do these prices roll at this time of year, or are they rolled throughout the year and just says it out as an add-on to that, you expect any material deterioration in pricing for that part of the business?
Speaker Change: You know, those are all different. Some of them is fixed for a year.
Speaker Change: Some of them had twice a year or even quarterly adjustments based on some factors. Those adjustments aren't big and there's usually caps.
Speaker Change: on how much that can move up or down, so there can be movements, but they're not huge.
Speaker Change: There is some re-bitting going on now to get a first a new contract starting in January. Not everybody does it on the calendar year but a lot do.
Speaker Change: So, there's, and that's the negotiations and dialogue we're having right now with our customers. You know, we have long-term partners, they appreciate the efficiency and the quality of us working together. Those relationships are going to continue, but are other bids coming in that are, you know, that are lower that pressure, that dialogue a little bit, sure. But that's been going on for two years now.
Speaker Change: Great thanks and the other one is when you're all about
Speaker Change: you know energy demand for AI data centers, et cetera. And I know about the investment of partnership with Ockloan.
Speaker Change: and then you sort of think about the LPI business.
Speaker Change: or is the LPI?
Speaker Change: to the end market similar to sort of where we're as the Mars we're playing.
Speaker Change: or is there any way that you can help us sort of start thinking about what kind of end market you'd be after on the LP I said.
Speaker Change: You bet, the bolt of a more aimed at what I would call 10-plus years and in some states, more than that, of just sort of bad electricity policy.
Speaker Change: that has driven up the price of electricity and driven down the stability of the grid. You know, that is, you know, you look at California's electricity prices. You know, they doubled with actually no increase in demand at all. High prices just pushed the industry out of California, but they still driven up their prices. Now nationwide, we're about to see the first meaningful growth in demand in electricity.
Speaker Change: in 25 years. So, yeah, they're both targeted at that. But think of O'Clo, they're going to be fixed on location. They're going to be built somewhere and could be on the grid that could be behind the grid, but they're going to be fixed. So, data center is a huge target market for that, other industrial facilities.
Speaker Change: LPI and our natural gas generating assets, you know, they're on wheels.
Speaker Change: They could be supplying a data center that's, you know, 18 months behind or 24 months until it gets a grid connection But they're not likely to be parked somewhere for 20 years or the nuclear power plant's going to be there forever So they could be in some of those same markets, but they also have the flexibility to move where there's power dislocations
Speaker Change: So we're figuring that out, the interesting, I mean, it's just tremendous. When we've got to figure out is, yeah, we only got a limited amount of assets, and we only get a build, a limited amount of capacity.
Speaker Change: is the best and highest use of those fleets. So there's some overlap, but there's very different capabilities between the two. So I think the overlap will probably be more the exception than the rule.
Speaker Change: Thanks very much, my apologies from both from both.
Speaker Change: Now great, thank you for the call.
Speaker Change: and I'll throw further. You know, electric generating capacity from next generation geothermal, they're plugging into that same market. Those are more long-term contracts to utilities. But that's another business that Liberty is a partner in that I think has got pretty bright prospects addressing the same problem, but in a slightly deeper way.
Speaker Change: Thank you.
Speaker Change: The next question comes in for our pen with BOA. Please go ahead.
Speaker Change: Hi, good morning. Good morning.
Speaker Change: Chris, maybe I will dig in a little bit on your comment on the pricing pressure as inconsistent with the...
Speaker Change: and the super its supply demand balance next year, right, so I'm just...
Speaker Change: Thinking forward from there and thinking if that's the case that's your view then how do we think you approach your contracting strategy for 2025? Basically saying do you want shorter term contracts with more re-opiners just to get the upside potential in the back half of 25 or do you look to sign up contracts with relatively fixed stable pricing again relative is the word right for most of 2025. How do you approach that? [inaudible]
Speaker Change: So great, great, great question. So we're going to build a new fleet for someone. That's going to have, that's going to have lost in pricing that, that guarantees it makes sense to deploy the capital and build this fleet. It may have re-opener that can move that price up, but it'll certainly be structured in a way that that price will not degrade to make that investment, a bad investment for us. But there's a lot of interest with producers right now. Of course, for new fleet, we're not, they're not going out at, you know.
Speaker Change: Poor pricing, none of them, zero of them. But the legacy equipment, there is some tough pricing going on in that world. We do have some assets like that. So it's possible with partners there, we would make price adjustments for a dedicated fleet that would just be structured such that they move up as the market firms. You know, a slow and gradual partnership way that we've been doing since we started the company. [inaudible]
Speaker Change: So, yeah, depends on appetite, depends on customer, depends on duration.
Speaker Change: So it is a wide range of things going on, and that's part of the Liberty thing. Different customers have different needs and different priorities, and what we do is just engage with them candidly and find out the right way to structure it that we're comfortable with that works for them. And if we can't, again, we're fine to idle capacity, but there aren't many players out there that want to move away from their partnership with Liberty. That's a vanishingly small list.
Speaker Change: Now, that makes a lot of sense, Chris, thanks for that and Michael, maybe you want for you in the press to leave you mentioned healthy free cash flow for 2020, if I wish you can help us think through the pieces as we think about 2025, some of free cash flow perspective what things should be mindful of as we try to build that up.
Speaker Change: Yes, so in answer to talk about we're going to be managing Catholics now in our completions business.
Speaker Change: will look at replacing for the four to 85.
Speaker Change: DigiFleeds, kind of the 10% attrition cycle, the kind of natural cycle maintenance capital in that business. A lot of our investments in dual fuel, they've all been completely completed in the fourth quarter, a number of others, so new blender technologies, et cetera, some of the investment we made with Prophex and the wet pile handling to support clients there. So, you know, we'll see that Capix comes down, which obviously is the biggest part of it, is it offsets
Speaker Change: You know, kind of a decline in EBITDA. You know, I think all you'll see is you're going to see kind of a slight raise in cash taxes. You know, we're running about 50% of our tax rate. We'll run I think about 100% of our book tax rate next year by the looks of things. Interest domain remain relatively flat. You know, given the fact we're going to have a quiet issue for, you're going to see working capital fluctuate during the year, but I would expect. That's right. [inaudible]
Speaker Change: that over the whole year next year working capital, we've relatively flabbed on that side of the business. Obviously, their largest portion of our free cash flow at the moment, and very much goes forward. You know, we've, we can easily support the same strong return of capital to shareholders that we're doing now. And we'll expect that to continue.
Speaker Change: Okay, perfect. No, that's all very useful. Call him. Thank you. I'll turn it back.
Speaker Change: i
Speaker Change: Next question comes from Mark Bianchi with TD Cohen, please go ahead.
Mark Bianchi: I thank you, maybe Michael just to follow up on the capital spending for next year. It wasn't clear to me, do you expect the CapEx dollars to be higher or lower for the total company?
Michael Stock: Lawyer for the completions business, obviously the power generation opportunity is still to be clarified. That we'll talk about. I mean, I would expect that within the realm, I think it probably would be slightly lower unless there's really exciting and very large power generation opportunity. But generally I'd say it will be down slightly, it will be down significantly in the completions business.
Michael Stock: is a good portion of that. May it may, I would say, until you can get made up in the outside of Brad Coward's generation business, that's still to be thought about and going to underside the pond, and you'll see announcements around that as we go through. The quarter into the January Court.
Speaker Change: Yeah, okay, that was going to be my next question. The other one that I had was just on the revenue progression here, so the activities down low double digits, but it sounds like your revenues down also low double digits, but there's some pricing weakness, so I would have thought that the revenue decline is more than the activity to decline. So maybe you could talk about that and how that progresses into one queue. I know you said activities up in one queue, but not quite to three queue levels. Yeah. But there's pricing, pricing component, we probably need to be considering to, right?
Speaker Change: is a lot of them.
Speaker Change: Next issues that happen when you look at an activity to climb versus the revenue to climb. So it depends on where things are going on, certain parts of the mix of the business. So it happens that those two will be pretty similar. In Q4, as you'll see, there's a pricing element in there. There are some offsets, obviously, because as I've said, the decremental will be slightly higher in Q4 this year, with a similar revenue drop that it was Q4 last year. So you can basically read through that there was a little bit of a pricing sort of element to that was kind of increasing those incremental.
Speaker Change: Yeah, and I think what we're going to see is we're going to see things come up two-one to come up between two-four and two-three, and I think you'll see we'll kind of get some clarity around that as we get through writing season, how that falls through to earnings. But I think kind of modeling it at that medium point, we should totally activity really for the whole industry. We're going to see what we're going to see.
Speaker Change: Now, you're kind of a pretty much equal lateral feet makes you a versus this year, right? And that's where Chris talks about this. You know, the thing that, you know, the pricing pressure at the moment is kind of inconsistent with the future demand.
Speaker Change: I mean, when you look at this thing, you know, kind of the amount of demand for this whole year, the whole of next year, is going to be similar. You know, so if you think about the limited number of supply, fractally, it's the increased.
Speaker Change: Attrition really is going on in the larger amount, you know, there's a little more complex breaks. You know, we have got a slightly tightening market. You know, hence the reason that we see that improving, probably improving on a pricing matrix as we go through the year. I think it's going to naturally happen. It is one, you know, I think we've talked about this with a number of folks. [inaudible]
Speaker Change: There's a, you know, a flavor of, you know, the end of 21, 22 in here, you know, I think you may have remembered, if you go to our September call, we had six fleets, we weren't working, and we said we would bring them out because the bit in the market was weaker than it should have been, and I think you can kind of look back at when we brought those fleets out in April , they came out at significant profitability increase, right, at a very short period of time, because market sentiment caught up with the realities of the underlying supply and demand. Now, it's not going to be that extreme next year, we don't think, but there is going to be a flavor of that in this, so yeah, so it's going to be a little dynamic as we go through the year.
Speaker Change: and the great thing about this is strategy, manage it, build up free cash flow, make sure then we will wish it on that side of it.
Speaker Change: Yeah, but strategy makes sense. If I could just squeeze one more in. How indicative do you think your experience here into year-end is for the broader industry? And I'm wondering if there's, you know, Liberty specific things you've got your sand business, you've got some wireline. Are there things happening in those parts of the businesses that, you know, might cause you to be different than sort of the broader frack industry as we think about the implications for other companies into 4Q? Thank you.
Speaker Change: I think the short answer is we don't know. It's hard to say. There's just a lot of moving pieces. But I think what we're seeing is reasonably indicative of the whole marketplace, but definitely our business is dictated by our relationships with our customers and other people's businesses. So yeah, I don't think it's probably far off from the overall macro, but I guess we'll see in the coming weeks.
Speaker Change: Yep, Voria, Chris, thanks a lot.
Speaker Change: Next question comes from Keith and Maggie with RBC Capital Markets. Please go ahead.
Speaker Change: Hi, good morning. So it looks like CapEx for this year ends up at around 650 million. Could you maybe just talk a little bit about what the frack portion of that would be and what portion of that would be maintenance CapEx?
Speaker Change: Yeah, so I think this year probably maintenance capex, you know, obviously maintenance capsis is a big part of maintenance capex, but maintenance capex is probably, you know
Speaker Change: Below 200, say 175, you know, plus or minus, on that side of the business, you know, we've had a pre-significant investment in LPI, some in the wet scene, handling side of the world, and then we've had a significant amount of here, two fuel upgrades, Digifrack, and some other underlying technology on the blender and other side of upgrades that went on this year. That's the bulk of it.
Speaker Change: Okay, got it. And just to follow up, would it be fair to assume then that next year you're maintenance CapEx, the fact business is roughly similar to that. And then, yet four to five, did you, did you fleet, maybe 50 million each and your total frack capEx ends up 400 to 450 is that how we should be thinking about it at this point?
Speaker Change: Here is the general realm of capability there, yep.
Speaker Change: Okay, and just one more if I can, just to maybe put some of the commentary into numbers for Q4, it looks like with the revenue decline being similar year-to-year and the higher decremental, like we should be getting somewhere between 170 and 180 million of EBITDA, is that also in the right-ball park there, Michael?
Speaker Change: Please look away for Michael.
Speaker Change: i
Speaker Change: Good morning, Chris and team. Thank you for taking my questions. I just wanted to follow up on the comment on catfax of Q4 200 million.
Speaker Change: in this curious if you're following for our Kaffex from 2025 or what's causing the increase because I believe on the prior call, the estimate was $550 million for the full year.
Speaker Change: Thank you. Yeah, it's done the reason it's cut out a combination of sort of, you know, I think there's been a lot of the bottleneck in going on in some of our...
Speaker Change: Delivery Partners, I think they had some fairly significant issues around their assembly lines and so a lot of that default making was happening at the end, through the back end of summer, the early part of fall, and I think they've got that together, so I think the delivery cycle and there we go, the sort of where things were going to fall as expectation is reasonable. And then we've sort of had some extra wet sand additions and a few other things that kind of have added to the Q4 that are probably added, you know.
Speaker Change: Thank you very much. I'll turn the call back over to the operator.
Speaker Change: Thanks, Jeff!
Speaker Change: and our next question comes from Roger Reed with the Wells Fargo. Please go ahead.
Roger Reed: Good morning guys. I just wanted to kind of follow up on some of your comments about, you know, this call it a seasonality or capex exhaustion issues next month and into December.
Roger Reed: You know, one of the things we hear from the ENP companies is that they like to, you know, pursue this productivity and efficiency and it requires pretty consistent operations.
Speaker Change: Does the opening in, you know, call it activity levels or jobs reflect kind of a mix, is this mostly smaller, private E&Ps? Is it, you know, guys exposed more to gas when maybe it makes sense to take a little time off here, or are you seeing this across, you know, kind of the entire area of operations, meaning, you know, large E&Ps all the way down to the small privates? [inaudible]
Speaker Change: I think you've given a reasonable summary, Roger. It's mostly smaller. It could be small publics. The very biggest players, I would say for sure, are the most steadfast in keeping things going, keeping efficiency on track and not ceasing operations. But even those, occasionally there'll be two efficiencies, so there's a practicality, a brief break. But I would say, yeah, it's mostly smaller players. Definitely, it's gas players. Gas has been a hard thing to predict and plans have evolved a lot over the last 12 to 24 months with the gas players.
Speaker Change: See ya, I think your summary at the beginning was reasonable.
Speaker Change: So are you implying that it's going to become easier to forecast gas after 12 months?
Speaker Change: is a very good humor, but if it gets you've seen, we're probably at a level of gas activity right now. You know, this below even keeping production flat. So, no, it's not going to be easy to predict it, but instead of a bouncing trend down, it might be more of a bouncing trend up.
Speaker Change: Yeah, I'm just checking you there. I was trying to make sure you were still standing on two feet. The other question, I know we understand completion capex will likely trend lower. But if we were to see, let's call it a solid move up or a solid move down at commodity prices, what is your flexibility to either defer spending or to pull spending forward as you look at the supply chains out there? Yeah.
Speaker Change: Yeah, we've got very strong ability to defer or bring spending forward. But that said, it really has three to five months window as far as deliveries goes. You can defer deliveries. We've done that before, you think about closes. We pushed off deliveries and we pushed those off nine to 12 months in partnership with our people. In extreme circumstances, but in rule, you've got a three to five month window there where it's not going to change. But you could many free-change topics within a 12 month period.
Speaker Change: Okay, great, appreciate it. Thanks guys.
Speaker Change: i
Speaker Change: Our next question comes from a car side with ATB Capital Markets, please go ahead.
Speaker Change: Thank you very much. Good morning. Chris, I just wanted to get a sense on you know by when do you think LPI could have a material impact on the revenue line that would be maybe you know something that 10% of revenues could be LPI. Is that like two to three years out or is it looking at five, six years out? Any guidance on that would be helpful. Thank you.
Speaker Change: Yeah, well, it's not five to six years. It's certainly faster than that. But, you know, for us, as with our core fact business, it's always more about doing it right than doing it big or doing it fast. So, but two to three years, it's probably not unreasonable expectation.
Speaker Change: and then from activity perspective, pumping activity perspective for next year, you are mentioning that you see activity, you need to go up to maintain crude or production.
Speaker Change: Where do you expect activity to pick up? Do you think it's going to be mostly Permian or do you think Bakken and Eagle Ferd also sees some activity increases? And then when do you expect Hainesville activity to kind of pick up? [inaudible]
Speaker Change: Wow, those are all the hard questions, but I think it will be a cross-basin for sure. You know, obviously, some of the northern areas, they slow down naturally in the wintertime. So, you know, Q1 is often a little bit slower in northern regions for weather, you know, in Q2 and Q3, or busier.
Speaker Change: from the Indian Desert really have a weather cycle per se.
Speaker Change: But you know, it certainly come out of the price dependent. You know, look if, you know, oil prices move, it doesn't wildly change things, but on the margin it does. We'll start a little earlier and we'll do this.
Speaker Change: So, in gas, look, I think in general across the Basins, where we look, we're in Q4 right now, in general, if we look at six months from now, I think the average level of activity in the oil basins, it'll be up from where it is today. How much is, is yes to be seen, but it'll be up from where we are today. [inaudible]
Speaker Change: And gas basin, that's probably a reasonable assumption as well. It's just activities very low right now. We've got some great competitive advantage there. So I mean like our market share, our gas activity is not insignificant, but it's not huge, but our market share is big. So if that gas activity is maybe a little higher, six months from now, maybe a little higher, 12 months from now, that's just a guess. That's just a guess. I shouldn't be predicting that too much. Thanks for watching.
Speaker Change: and then the pricing pressures that you're seeing is that now cross and tire fleet or is it still more on the tier 2's and maybe tier 2 do you feel as well or now it's permeated to e fleets and tier 4 dgb as well.
Speaker Change: You know, we're certainly strongest in legacy equipment, the least desirable equipment, that's where attrition's being driven, equipment being retired there as well. The high-end natural gas burning fleets are much more desirous, but yeah, when you've got a softness market, there's a little bit of pressure everywhere. A new build fleet, we wouldn't do a new build fleet, but now great economics, so yeah, not so much change at the top, but not zero.
Speaker Change: Thank you very much, appreciate the colour.
Speaker Change: Thanks for your time.
Speaker Change: Our next question comes from Tom Gern with the Seaport Research Partners. Please go ahead.
Speaker Change: Good morning, guys. Thanks for squeezing me in. Chris and Michael, in addition to everything you've accomplished via ever better execution and technology out in the field, as Chris gave a comprehensive overview earlier in the call, you've also been pulling different levers internally to protect and sustain your record profitability and miss this long grinding downtrend and infract pricing. At this point, which ongoing initiatives do you expect to provide the most support to margins? Have you identified any new efficiency or cost on opportunities that have yet to be uniquely realized?
Speaker Change: I'm going to look at so many incremental things. I'm going to turn it over to Ron and he can do a medium-term project and long-term projects. But you're right and I appreciate you pointing about that that is always an effort for us. We don't control the marketplace but we do drive our own self-improvement. And that's always in two buckets. That's how can we deliver a better service to our customers and how can we use the same thing more efficiently and cheaper.
Speaker Change: Yeah, I mean, certainly a number of areas of focus, therefore, obviously on the digi-plete side of things, the main that's not looked changes pretty meaningfully. We're building an asset there that is longer lived.
Speaker Change: and that's through on both the Digi Prime and the Digi Prak side of things. If you think about the electric side of things, of course the maintenance profile looks very different they're both on the pump side and on the...
Speaker Change: and on the power generation side of things. And the same is true in the Digi Prime World. We're building an asset there that has a very different maintenance profile than our historical diesel assets. And so a lot of work that's been going on in that regard. And we're certainly taking those learnings and applying them throughout the fleet as we advance our machine learning capabilities around our ability to understand how an asset is performing. And respond to that in the field.
Speaker Change: A lot of other work going on that ultimately changes our outcomes automation has been a big thing. We've been focused on automating the operation of our fleet all the way from the sand handling side of things through the chemistry side of things and into the pump side of things. And so, an immense amount of work going there, you can imagine that.
Speaker Change: As we continue to automate these things, we improve operations out there, you see that both in our efficiency, but you also see that in the maintenance profile for the...
Speaker Change: Assets.
Speaker Change: I use a amount of work on the logistics side of things we've got sentinel out and running across the board from a sand handling standpoint. That has dramatically changed our efficiencies from a sand handling and trucking.
Speaker Change: Measure, we're probably down about 30% in the number of trucks required to move sand to a location versus a pre-scent on the deployment. We're rolling that out across our LPI division as well. We're using that same technology to...
Speaker Change: has managed our gas deliveries and improved the efficiencies there at the same time.
Speaker Change: You're going to see us, our percentage of fleets working in the Cycle Frax based climb over the coming year as well. We probably just by virtue of our customer base, not as high a percentage of our fleets working in that space as some others have, but that's climbing for us in the coming year as well. And so of course we've seen deficiencies come as a result of that on a bilateral foot per hour completed basis and we're going to feel the benefit of that as we head into next year or two. Thank you.
Speaker Change: Got it. A lot to chew on there. Thanks Ron. And then just with LPI, you guys have once again skated to where the pockets headed in terms of the need for technology solution. In this case, you know, for next year in power, supporting logistics out in the field. Looking to 2025, could you share any quantified targets or expectations you have for LPI, be they operational or financial?
Speaker Change: You know, I mean, it's coming clarification over the Q4 bound. I mean, that is as we've said. You know, this is something that we'll discuss in the January course, so, you know, we'll kind of look at that and I think, you know, kind of a more of a holistic view of what that business will look like.
Speaker Change: Okay, but it sounds like there is more coming that we can afford to do there, Michael.
Speaker Change: There certainly is, we're very excited about it, but as you know, you know, we're not in a debate for where we very much, you know, we talk about things, where the tortoise not be here, we talk about things when they're ready to go and we always, we may not be first to market, but we always seem to end up winning.
Speaker Change: I appreciate that. Thank you for taking my questions.
Speaker Change: Thanks!
Speaker Change: The next question comes from Eddie Kim with Park Place. Please go ahead.
Eddie Kim: Good morning, just thanks for squeezing me in here. I'll just keep it to one question. But just wanted to dig into the softness you're seeing in 4Q a bit more. It just feels like the market.
Eddie Kim: Has softened pretty substantially over the past three months. So could you talk about what's really surprised you or what got much worse than you initially expected back in July ? Is it mainly kind of the volatility and oil prices that's causing operator uncertainty, as you mentioned, or operators reaching their production targets for the year earlier than expected? Just any color on what the main negative surprise was for you guys over the past three months.
Speaker Change #101: I say a little bit of both. You know, think of consolidation, you bring acreages together and now you were mostly drilling two miles and now you've by early this year to start drilling a lot of three and full of my alladdles and they worked, they worked well, efficiency got done quickly, production came on strong. So I think part of it is...
Speaker Change #101: Park, some positive.
Speaker Change #101: and Productivity Efficiency Games from bigger operators.
Speaker Change #101: is focusing in the in the sweet spot. So I think that's a good chunk of it. Definitely to softening in oil prices on a margin like when we're going to kind of hang here, take a little break, maybe we're going to take a little break. So it's a little bit of both of those.
Speaker Change #101: But when you think of the productivity gains of the wells, a lot of that's kind of one time big year shifts.
Speaker Change #101: in general.
Speaker Change #101: Next year, the average quality of the drilling location is going to be lower than it was this year, and three or four years from now, it's going to be lower still. That doesn't mean shell revolutions over ending. It just means we'll see a continued migration up in track intensity, or maybe another way to say it is. We'll see a continued migration in that more pounds of sand have to be pumped underground on an annual basis to get the same amount of oil out of the ground on an annual basis.
Speaker Change #102: So we have a longer term macro trend that sort of modestly positive, but in the short term, we reserve victims of already six facts, a little bit increased well productivity and the pricing as well. A little bit of all.
Speaker Change #103: got it understood. Thanks for all that color Chris. I'll turn it back.
Speaker Change #104: And our next question comes from John Daniel with Daniel Energy Partners, please go ahead.
John Daniel: Hey, good morning. Thanks for including me. Chris, as you probably know, there are a number of MP management teams that now have private equity backing and should probably start up in 25. I'm just curious if that is factored into your 25 outlook and presumably that would drop upside to your spot market views.
Chris Wright: Yeah, they're definitely not driven into our views right now. We're certainly are in dialogues, but lots of them are people we know. Yeah, and you know, it's smaller number teams, but there's a fair amount of dry capital powder looking for investors and opportunities to get assets.
Chris Wright: So, yeah, look as a lifelong entrepreneur, that's exciting.
Chris Wright: But John, no, not baking in any of that happening, but yeah, some of that's eventually going to happen absolutely.
Speaker Change #106: and then Michael you touched on.
Michael Stock: The possibility of pricing improvements in the next year and I think the attrition stores is real bankruptcies liquidations are happening.
Michael Stock: for some consolidation and then a rising spot market activity as new players emerge. It would seem to me that when that all happens, all those being equal, it's the pricing recovery is probably not the most single digit, but something perhaps more substantial at least in the spot market is that it's here.
Michael Stock: Osasman.
Speaker Change #107: You know, there's certainly one way you can look at it. If you look at the 21-22 example, we've got some historical, some recent historical kind of evidence of that. So yeah, so I think we'll see what it is when it comes. As you'd like to see, I think as we said, you know, it's unnaturally soft in the market at the moment. The animal spirits will take hold and I think we'll see an improvement next year.
Speaker Change #108: Okay, and this is probably a leading question, so I apologize I guess, maybe not, but if I were modeling 2026, which I'm not, doesn't this float through coupled with lower R&M, the rise in LPI, and eventually it's higher call and it'll affect activity, given lower quality rock, it seems that you could have a material improvement in 26 vs 25.
Speaker Change #109: That certainly would be a very reasonable assumption. Okay, and in the last one from May, sorry to be a question hog. But I think there's a question early on the power generation capex. As we talk to people on that side of the business it would seem that, you know, those that capex would likely be back with contract for support, perhaps longer term than what you normally see in the frac mark, is that a fair assessment?
Speaker Change #110: Yeah, that is a fear assessment.
Speaker Change #110: Okay, that's all I got. Thanks for including me.
Speaker Change #111: Don't appreciate it, you guys have not visited everyone in the field. That's much appreciated by everyone. Well, thank you.
Speaker Change #112: This concludes our question and answer session. I would like to turn the conference back over to Chris Wright for any closing remarks.
Chris Wright: Thank you. Thanks for joining us today. Since the first edition of our Better Inhuman Lives Report, we have raised awareness of the energy security.
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Chris Wright: The American Shell Revolution has dramatically increased waterborne global propane supplies. Our aim is to bring the benefits of this surge in new supply to those desperately in need of clean cooking fuels.
Chris Wright: My heartfelt thank you to all of our existing and future partners in this life-changing endeavor.
Speaker Change #113: and if you're in color, why don't this weekend? Please join us for our inaugural 5K Run, supporting the Veteran Human Life Foundation this weekend.
Speaker Change #113: have a great day everyone.
Speaker Change #114: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.