Liberty Energy Inc. (LBRT) Q2 2026 Earnings Report, Transcript and Summary

Welcome to the Liberty Energy Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Anjali Voria, Vice President of Investor Relations. Please go ahead.

Thank you, Nick. Good morning, and welcome to the Liberty Energy Second Quarter 2026 Earnings Conference Call. Joining us on the call are Ron Gusek, Chief Executive Officer; and Michael Stock, Chief Financial Officer. Before we begin, I would like to remind all participants that some of our comments today may include forward-looking statements, reflecting the company's views about future prospects, revenues, expenses or profits. These matters involve risks and uncertainties that could cause actual results to differ materially from our forward-looking statements. These statements reflect the company's beliefs based on current conditions that are subject to certain risks and uncertainties that are detailed in our earnings release and other public filings. Our comments today also include non-GAAP financial and operational measures. These non-GAAP measures, including EBITDA, adjusted EBITDA, adjusted net income, adjusted net income per diluted share, adjusted pretax return on capital employed and cash return on capital invested are not a substitute for GAAP measures and may not be comparable to similar measures of other companies. A reconciliation of net income to EBITDA and adjusted EBITDA net income to adjusted net income and adjusted net income per diluted share and the calculation of adjusted pretax return on capital employed and cash return on capital invested as discussed on this call are available on our Investor Relations website. I will now turn the call over to Ron.

Good morning. The second quarter demonstrated strong operational execution as our team continued to deliver proven quality services amidst commodity price volatility and heightened geopolitical uncertainty. We delivered revenue of $1.2 billion and adjusted EBITDA of $151 million, leveraging the benefits of our strategic investments and AI-driven technology advancements as the industry modestly strengthened from early year cyclical lows. The success of our DigiPrime platform in the United States has translated into a notable milestone with an upcoming fleet deployment in Canada alongside a key cross-border customer. We believe customers increasingly value partners that can deliver innovative technology, service quality and execution, creating deeper alignment and stronger long-term customer relationships over time. The next-generation fleet deployment in Canada demonstrates our ability to scale across North America while reinforcing how continuous technology innovation creates sustainable differentiation across our business. We also commenced commercial operations of slurry, our proprietary last mile sand system, redefining how sand is delivered to the well site. Across our first 3 deployments, the system has demonstrated meaningful benefits for customers and local communities. At a current Rockies Basin deployment, nearly 8 miles of slurry pipe replace up to 200 truckloads of sand per day that would otherwise traverse 24 miles of county and lease roads. This project alone is expected to transport approximately 1.5 billion pounds of slurry sand while eliminating nearly 30,000 truck trips over a 7-month period. The result is a safer transport system that reduces logistics costs, improves delivery consistency and decreases road congestion, dust, emissions from trucking and road maintenance. We believe slurry demonstrates how innovation can create value across the entire energy supply chain from customers and operations to landowners and the communities where we work. More broadly, our investments in AI and digital technologies continue to create value in ways that extend beyond their initial design objectives. Tools like Forge, our distributed Agentx system for fuel optimization, are increasingly identifying opportunities to enhance fleet design, asset utilization and overall operational performance while optimizing fuel consumption. The ability to uncover and act on these secondary insights highlights the power of combining Liberty's operational expertise with continuously learning digital systems, creating benefits that compound across our fleet over time. Turning to power. Our recently announced JV with PowerBridge, a 5-point infrastructure portfolio company, represents an important step in expanding Liberty's participation in digital infrastructure and large load power markets. By combining PowerBridge's powered campus development platform with LPI's integrated power generation, energy management expertise and operational capabilities, we are creating a differentiated offering for hyperscale, AI and other large load customers. The venture is designed to create a scalable framework that aligns both organizations across the full infrastructure stack, enabling a more integrated approach to delivering powered campuses for next-generation digital infrastructure. PowerBridge's planned portfolio of gigawatt scale West Texas campuses expands our opportunities to deploy Liberty's power solutions at scale. The JV's current scope is focused on PowerBridge's Alpha Digital campus, a planned 2-gigawatt powered campus in West Texas. The initial phase of campus development is expected to include over 300 megawatts of generation capacity with the first power anticipated in the fourth quarter of 2027 and development expected to continue through the first half of 2028. Discussions with prospective data center tenants regarding future power offtake opportunities for this client-ready platform are already underway. We are encouraged by the strong interest and look forward to advancing these discussions toward long-term commercial power offtake agreements. Last week, we announced a strategic alliance with SLB, bringing together Liberty's integrated power solutions with SLB's modular infrastructure capabilities and global market presence in a seamless solution to help address the growing need for scalable power and electrical infrastructure solutions, both inside and outside the walls of the data center with a unified interface for the customer. This collaboration enhances our ability to pursue larger and more diverse opportunities while advancing our technology road map and supporting the rapid build-out of infrastructure required for AI and high-performance computing. The alliance builds on a long-standing relationship between our 2 organizations, providing a strong foundation for execution and a streamlined customer experience. The company also plan to collaborate on future technology initiatives focused on hybrid power systems, digital energy management, advanced power architectures and waste heat recovery to support evolving data center energy requirements. Our LPI platform sets a new standard, combining power system architecture and energy market optimization. During the quarter, we secured multiple agreements to purchase power generation equipment with Bergen Engines, Wärtsilä and other global suppliers. Our technology architecture and advantage proprietary control systems are designed to integrate multiple leading manufacturers, enabling us to leverage the favorable attributes unique to each engine type for the optimization of the generation stack. We also recently announced the formation of Liberty Wholesale Commodities, extending Liberty's CORIS offering through direct participation in ERCOT power markets. This capability allows us to combine on-site generation, retail electricity supply and market optimization within a single integrated solution, dynamically optimizing between grid power and on-site generation to improve project economics while supporting load balancing on the grid based on real-time operating conditions. We are now able to integrate on-site generation with both ERCOT and PJM market participation for large load customers, positioning us to leverage favorable grid attributes while providing grid resilience within local communities. By managing the intersection of generation assets, grid supply and market participation, we can deliver greater flexibility, enhanced economics and a differentiated customer value proposition as power requirements continue to grow. We believe this integrated approach enables large load development to support rather than strain the electrical grid in the communities in which it operates. The opportunities in front of Liberty today are broader and more diverse than at any point in our history. Our Completions business continues to benefit from years of disciplined investment in technology, execution and customer relationships, while our power platform continues to advance through commercial engagement, strategic relationships and the development of differentiated capabilities across the energy infrastructure value chain. We remain focused on disciplined capital allocation, operational excellence and investing in opportunities that strengthen our competitive position and create long-term value for our shareholders. The most enduring consequence of the Middle East energy disruption has been a renewed focus on energy security and supply diversification. Heightened geopolitical risk, damage to regional energy infrastructure and continued uncertainty surrounding key export corridors have reinforced the strategic importance of North American oil and natural gas resources. This shift is increasingly evident in commercial activity with international buyers pursuing longer-term agreements for U.S. petroleum products and LNG, while also seeking greater direct participation in upstream supply. Planned storage expansions across Southeast Asia and Australia, together with the need to replenish depleted strategic reserves are expected to support incremental demand for North American energy over time. As a result, U.S. and Canadian oil, natural gas and refined products are becoming increasingly important to meeting global energy needs, supporting a constructive long-term outlook for North American energy. Global oil and gas markets experienced significant volatility during the quarter. The conflict in Iran and related energy supply disruption drove oil prices to levels not seen since 2022 before moderating as softer Chinese demand tempered some of the resulting supply uncertainty. While it remains too early to fully assess the long-term impact of recent developments, including the trajectory of Chinese demand, recent events have reinforced the complexity and interconnected nature of global energy markets. Although the acute phase of the crisis moderated following the June cease fire and partial reopening of the Strait of Hormuz, renewed U.S. Iran tensions highlighted the fragility of the recovery. Early signs of normalization in physical oil flows, LNG exports and shipping logistics proved short-lived as transit through the straight disrupted supply chains once again. Frac markets improved modestly alongside a gradual increase in North American producer activity, providing greater transparency into the underlying availability of frac fleets impacted by years of fleet attrition and equipment cannibalization. Improved market conditions are supporting a modest recovery in service prices from cyclical lows earlier in the year. Next-generation technologies remain in high demand as current commodity prices reinforce both the economic value of the diesel to natural gas fuel arbitrage and the benefits of AI-enhanced systems that reduce total fuel consumption. However, large U.S. and Canadian producers remain cautious toward increasing activity levels given continued price volatility and broader macroeconomic uncertainty, although recent developments in Canada are encouraging for the longer-term outlook. Power demand fundamentals remain strong, driven by the continued expansion of AI data center development and broader industrial power demand. As project requirements increase in scale and complexity, customers are prioritizing infrastructure partners capable of coordinating power supply, site readiness, energy management and long-term operations through a unified development approach. At the same time, hyperscalers continue to expand their internal technical and commercial capabilities, enabling a more comprehensive evaluation of long-term power and infrastructure strategies. This evolution is creating greater opportunities for power providers capable of delivering integrated solutions across the infrastructure value chain while helping hyperscale customers address a diverse range of development strategies, site characteristics, power markets and speed-to-power objectives. Liberty's DNA is rooted in solving customer challenges through innovation, technical expertise and a culture of execution, which are attributes that align closely with the needs of today's largest energy and technology companies. Our customers are becoming increasingly aware that successful power solutions require dedicated partners capable of delivering integrated solutions and long-term operational support. This dynamic is familiar to Liberty as our large oil and gas customers have long relied on trusted partners to unlock incremental value year after year. Looking ahead to the third quarter, we are encouraged by the momentum in the second quarter, while recognizing the uncertainties associated with global geopolitical developments and the potential effects on our customers' end markets. We remain focused on executing against the broader opportunities emerging across the energy ecosystem. I will now turn the call over to Michael to discuss our financial results and outlook.

Good morning, everyone. I'm pleased to share we delivered a solid second quarter marked by outstanding execution and disciplined investment. Building on the momentum exiting the first quarter, our team safely achieved record operational performance, setting new highs for pump hours, horsepower hours and proppant pumps, helping customers capitalize on the more constructive oil and natural gas environment. We also took deliberate steps to strengthen Liberty's future position, increasing our investment in critical long lead power generation equipment while building teams to address an expanding set of power customer opportunities. Let's turn to our earnings results. In the second quarter of 2026, revenue was $1.2 billion compared to $1 billion in the prior quarter. The 16% sequential increase reflected record utilization and a modest pricing uplift along with higher product sales that represented the largest contribution as customers increasingly turned to Liberty's industrial-leading ability to source, move and deliver product at scale. Second quarter net income of $43 million compared to $23 million in the prior quarter. Adjusted net income of $14 million compared to $10 million in the prior quarter excludes $29 million of tax-effected gains on investments, partially offset by transaction and other costs. The fully diluted net income per share in the second quarter was $0.26 compared to $0.14 in the prior quarter, and adjusted net income per diluted share was $0.09 compared to $0.06 in the prior quarter. Second quarter adjusted EBITDA was $151 million. General and administrative expenses totaled $67 million in the second quarter compared to $60 million in the prior quarter and included noncash stock-based compensation of $6 million. Excluding stock-based compensation, G&A increased $7 million, primarily due to higher variable compensation associated with better-than-expected second quarter results and higher IT-related costs. The other income items totaled $40 million for the quarter, inclusive of $43 million of gains on investments, offset by interest expense of approximately $3 million. Unrealized gains primarily reflected the appreciation of Liberty's investment in Servo following its second quarter IPO. The second quarter tax expense was $9 million, approximately 18% of pretax income, and we expect tax expense rate in the remainder of 2026 to be approximately 25% of pretax income and do not expect to pay material cash taxes in the year. We ended the quarter with a cash balance of $559 million and net debt of $736 million. Net debt increased by $157 million from the prior quarter. Total liquidity at the end of the quarter and including availability under the credit facility was approximately $1 billion. Second quarter uses of cash included capital expenditures and $15 million in cash dividends. Net capital expenditures and long-term deposits were $221 million in the second quarter, which included investments in the power generation fleets, capitalized maintenance spending and other projects, including $71 million in power generation deposits. We had approximately $2 million of proceeds from asset sales in the quarter. Entering the second half of 2026, we are encouraged by the opportunities across our business. We continue to see a constructive backdrop for our completions business supported by deep customer relationships, strong execution and technology advancements. At the same time, commercial opportunities are accelerating as customers seek reliable integrated solutions. Given the increasing depth of our commercial pipeline, we now anticipate approximately $1.5 billion in capital expenditures in 2026, primarily reflecting an increase in deposit payments to secure long lead time power generation. This investment reflects our conviction in the opportunities ahead and our commitment to generating attractive returns over time. I will now turn it back to the operator for Q&A, after which Ron will have some closing comments at the end of the call.

[Operator Instructions] The first question will come from Arun Jayaram with JPMorgan.

Ron and Michael, I was wondering if you could talk about how the commercial pipeline is evolving and maybe elaborate on your commentary that power requirements in terms of increasing in scale and complexity and how you think Liberty is positioned given the shift in market dynamics?

Thanks for the question. I'll add a few comments and then maybe Michael might jump in with a few things on top of that. I would say that we are seeing the commercial pipeline evolve a little bit just in terms of the complexity and scale of the opportunities that are in front of us. If you look at things over the last 12 to 18 months, we've seen, I'd say, a pretty consistent migration from what were going to be a larger number of smaller projects now to a smaller number of larger opportunities. We're seeing more and more campuses that are at that gigawatt-plus scale and ultimate build-out, that are going to have a number of phases involved in them where they started maybe a few hundred megawatts and grow to several gigawatts in scale over a period of time. And in some cases, with those located relatively close to 1 another. I think people are recognizing that there are -- there are places in the United States that are going to be easier to move ahead with this sort of construction that leverage the local attributes that are present there and the support of the community. And we're going to see some focus in those areas, and they're going to leverage I think, some additional scale in that. So we're certainly seeing a larger number of campuses that talk about this gigawatt scale potential, that's ultimately made our sales pipeline larger and larger and larger. We continue to share that with the Board. And you've seen their confidence expressed in that through our continued addition of generation -- inbound generation capacity in the contracts we announced this year or this past quarter. So lots of excitement there and looking forward to the coming months and years in this world. Michael, do you want to add some things on top of that?

Yes. I think when we look at it, these larger campuses are sort of stage build-out. As we've said before, we think the vast majority of our campuses or our power generation facilities will eventually be integrated with the grid. They'll start behind the meter, then they will expand from there with the grid integration. And so looking at that grid integration and sort of as you've seen, probably a rapidly set of changing rules and clarifications around different areas of the grid between PJM and especially ERCOT. I think when you see a lot of the projects in ERCOT at the moment, you've seen this kind of, I would say, probably a little bit of a holding pattern over the last 3 or 4 months and exactly sort of the location of where build-outs are going to happen and sort of the timing around the batch zero process, sort of when those first they've sort of batch their interconnections into groups and sort of which projects will be in batch 0, so which projects may get interconnection in the next 3 years, what that might look like, et cetera. So a lot of planning around that. You've also seen a lot of planning and discussion around community engagement and the need for sort of kind of a deep community engagement as you start down the early stages of these projects, and you're starting to see that happening across the board. So yes, a lot of complexity around that and then sort of defining sort of how this generation will grow over time and what those campuses will look like, a little clarification around the mode cases, you're moving along from these AI training loads sort of were being modeled with early-stage white papers from the chip manufacturers to folks getting to the point where they're standardizing the size of their build of their data halls to make it far more efficient to build these campuses out. So there's been a lot of, I would say, a lot of work being done in the background in the whole industry. And I think kind of you see some of the partnerships that we've announced and some of the ones that we're talking to like the SLP partnership, they build a lot of modular equipment. They've got like 3.25 million square feet under one roof in Shreveport. And when you see the size of that, and that's because massive amounts of building are going on. And I think standardizing that and standardizing the solutions is coming into focus across all areas of the value chain.

Great. My follow-up is on the PowerBridge JV. This is in addition to the Vantage agreement you previously signed. Can you maybe help investors talk about these development partnerships? And how would you compare and contrast these towards a traditional ESA type of agreement with an end customer?

So I would say they're not the same thing at all. Ultimately, even with this PowerBridge JV, we will end up with an ESA with a hyperscaler. What the JV does for us is offer a couple of things. First of all, to the points Michael was making around a more straightforward approach for the hyperscalers, modularity and simplicity. This offers them a single point to come and sign on for a power data campus. It allows them to, through a single entity, take care of the land and associated infrastructure that goes with that along with the power generation capabilities. We are aligned in that message. It allows us to share together in some of the opportunities there. So we have a joint venture platform that has us with a bit of an interest on the land side of things and our partner in PowerBridge with a bit of an interest in the power generation side of things. So we are aligned and in lockstep as we talk with the potential hyperscale customers for this particular opportunity. It's also a platform on which we can go beyond this campus. It is designed as a premise that we could scale to additional opportunities beyond the initial Alpha Digital site. Michael, do you want to add some other thoughts there?

Yes. No, I think, Arun, you should just think about it as there is 3 sort of major players, right, in this AI development data center development, right? You need a data center, like basically a building and then you need kind of a user or offtake of that compute. And there's subtleties where that value chain gets broken down into many different ways. But if you think about it, our power is necessary to sort of build anything, you've got to bring your own power to build any data center. But on the powered land side, for the first part of that chain, we work with a large number of powered land developers, but we're very close with the PowerBridge, and we're now doing a JV with their multi-campuses in Texas, where they're building fiber rings and they're making this kind of the center for development for hyperscalers. So that's the first stage that needs to be. So they're a really strong partner there. you think about building data centers, we're working with a number of data center builds that everyone you know, but Vantage is one that we dedicated power. We've got a dedicated commercial relationship, and we're going to have dedicated power for their facilities. And they're building the data center and they're running it for the hyperscalers. And then ultimately, we will contract with modular developers where you've got hyperscalers that may build their own facility without someone like a Vantage or some one of those builders of data centers. And they may just contract directly with the powered land folks and ourselves for the power, and they will run the compute on their behalf. And then you've got a little bit of -- sort of in the middle there where you have the guys, the clouds who are running compute and they're selling that compute power to folks. So there's some breakdowns in the value chain. But as you see, we're picking great partners along that way who we directly integrate. And by having those partners, when you think about the work we do with PowerBridge, we're spending a lot of time. We -- our teams get very, very close to the design, development, distribution of power. These will have large-scale power coming on behind. And so ultimately, it allows us to build to expand our technical ability and build our modular solutions that can have greater expansive growth possibilities.

The next question will come from Stephen Gengaro with Stifel.

So I think 2 for me. I think the first, when we think about the power gen opportunity, can you talk a little bit about sort of the return hurdles that you're thinking about? And maybe how should we think about -- I know you talked about 300 megawatts, I think, by the end of '27. When we start to see kind of the impact kind of rolling through the income statement? I know it's kind of medium term, but how should we think about that the next couple of years?

Yes. Stephen, I don't think our view to a return on the invested capital has changed at all. We are still absolutely focused on a return profile that is a 5- to 6-year cash-on-cash payback, 17%, 18% unlevered rate of return. So I don't think we've wavered on that at all. I think we still see that as very reasonable in the market we're in today. And then as far as deployment, I think you you've colored it right, which is to say, yes, we're going to have some early stage generation running kind of the first part of that 300 megawatts by late '27. But that will build out over the early part of 28 as well. And so I would say you really don't start to feel meaningful impact on the income statement from the power generation business until 2028 proper, and then scaling from there.

And I think I would just couch that with the fact that you're going to see a buildup of G&A, I mean, sort of as you're building a business sort of between now and early '27, you're going to start seeing revenue and fall through late '27. And you're going to see by the end of '29, the full income statement fall through of that 3 gigawatts that we've talked about.

Okay. Great. No, that's helpful. And the other one, when we think about just the domestic frac business, I mean, clearly, things are tight for the higher-end equipment. We've heard pricing momentum. I know it takes time to kind of roll through the entire fleet. But what are you seeing kind of from a magnitude of price move? And what are -- how should we just think about the puts and takes in the second half of '26?

I would say we're certainly seeing positive traction there. The scale of the move is definitely -- that's hard to quantify on an overall basis given that it varies a little bit case by case. Of course, we didn't give up as much price on that next-generation equipment over time that had real durability to it. And so we didn't see quite the same dip into the trough as we did with maybe the more traditional diesel-fired equipment. And as a result, the pricing coming back off of the -- or out of the trough is going to look a little bit different for each of those cases. And I think as we've said, it's going to vary customer by customer. Of course, we have some customers where that's going to happen a little quicker than it is for others. And so there's a little bit of a balance there. We're -- the sales team continues to have positive traction there. We're out having those conversations on a daily basis, but we are navigating a little bit of complexity. You saw in the -- with the announcement of the MOU, WTI come all the way back down to under $70. And so -- we appreciate that our customers are navigating a little bit of complexity in the market right now. That's adding maybe a layer of uncertainty in their future, and we're feeling that as part of those conversations. So we're working closely with them. We continue to push for higher prices and expect you'll continue to feel that over the course of Q3 and maybe even into Q4 the commodity situation not quite as strong. While the market is a little tighter for equipment, the market for sand and chemical still hasn't resolved itself to any significant degree. And so we still continue to see while higher volumes going through there, challenge margins on that side of things.

The next question will come from Scott Gruber with Citigroup.

I wanted to inquire about the purchase agreements with Bergen and Wärtsilä and others. What's the total quantity of capacity that you've lined up from a construction slot standpoint kind of over what time frame do those construction slots spread? And I know there's been a thirst to secure kind of larger capacity gas receipts. So just want to get a sense of the size of the capacity that you secured.

Yes. Through -- if you add on what we'll kind of execute in the near term, we will have secured the 3 gigawatts through the end of that will be part of our plan through the end of '29. And then eventually, we'll have some early 2030 deliveries, late '29, early '30 deliveries that will support part of the potential growth into 2030.

Got it. And just coming back to the base business, just the color on revenue growth and incrementals into 3Q? And do you have any early indication on seasonality for 4Q, whether it could be lighter, heavier? Just any early indications from customers?

I would say probably too early to tell on Q4 at this point in time. We don't know what next week holds from a macro standpoint. And so I think that will continue to influence how our customers are looking at the remainder of the year and the activity levels that we're going to see there, particularly for the privates. As you can imagine, they have made up the lion's share of the additional activity we have seen this year. They have jumped to be a larger proportion of completions activity than we would typically see as the norm. And they are a group that reacts very, very quickly. They can -- that can be to the positive, that can also be to the downside. So probably too early to tell on Q4. On the move into Q3, of course, we continue to be out there having conversations around price. But as I said, we are navigating a bit of a volatile environment. There are going to be some puts and takes there for sure. It looks like the calendar continues to be quite strong. It looks like utilization is going to be very, very good through this quarter. And I hope that will continue to be supportive of a positive pricing environment. But I didn't anticipate $68 WTI post an MOU either. So I'm reluctant to be too firm or positive on exactly what the quarter is going to hold, given some puts and takes that are going to be at play in the market.

Is there still some openness in the calendar for 3Q that drives the uncertainty?

There -- I think there are operators that continue to evaluate their decisions there. I would say our utilization looks quite strong at this point in time. We have very, very modest white space in the calendar. We could maybe accommodate a tiny little bit of additional work. But at this point in time, from a utilization standpoint, Q3 looks good.

The next question will come from Josh Silverstein with UBS.

Just in regards to the power generation capacity additions, with the recent Bergen and Wärtsilä signings, do you guys now have line of sight to the 3 gigawatt target for 2029? And then just based on how you scheduled the capacity coming into you guys, how do you see CapEx trending over the next few years relative to the $1.5 billion you're now forecasting for this year?

I can take that one. Yes. So as you see, the 1.5, we're probably -- if you think about 3 gigawatts, right, that's going to be somewhere between $5 billion and $6 billion of CapEx to build that. So you think about that, we're probably through this year, we'll have spent about 1/4 of what will be needed to generate that -- the earnings from that 3 gigawatts. So that's about it. You'll see probably Masamino, 40% to 40% of it in the last year before operations and then everything will spread between now and then.

And as far as line of sight to the supply chain, we know where all of that power is coming from. We have line of sight to that inbound 3 gigawatts and even beyond that. We have our -- we have line of sight to our growth headed out into late '29 and early 2030. So very, very comfortable with where all that's coming from.

Got it. And then in addition to the new PowerBridge JV as well, I believe you guys are also working towards something in Wyoming as well. I think you have a permit filed there. Can you just talk a little bit more about that project and maybe some of the time lines or what you're thinking about doing there in the region?

I mean -- sorry, go ahead.

I was just saying, we're not going to talk specifically about those projects, right? As you've seen, the permits are filed, community engagement is underway. This is a process that is very collaborative with our data center builder up there and very collaborative with the community. And these things will evolve over time. Ron?

I think you covered it well, Michael.

The next question will come from Marc Bianchi with TD Cowen.

I wanted to ask about, first, the PowerBridge and this Alpha campus that they have. Can you say how much of that has been leased at this point? And then related to that, when will you get to a joint venture finalization with them and sort of firm offtake?

Yes. So discussions with clients are underway, as we've said in the release. The JV finalization will happen over the next little while, the near term as we walk through that. And we will announce customer leases when they're signed.

Got it. Okay. So at this point, it hasn't -- the site doesn't have any leases booked yet?

No, no. As we said in the press release, the negotiations are underway, discussions and negotiations are underway.

Okay. Okay. And then on the SLB agreement, can you maybe talk a little bit more about the value proposition to the customer? Like what is it that you're able to do being -- going in with SLB on these projects that the customer wouldn't be able to get if they procured things a la carte or separately?

I think you're fair in saying that they could go out and procure these things a la carte. What we are finding, and I think this is really a function of the growing complexity that they are experiencing around building the campuses at this pace and scale that they would like to is that the simpler the approach for them, the happier they are. A unified customer interface that checks a number of boxes versus having to go to a whole series of suppliers makes their life a lot simpler. And they can focus on the things that they need to focus on at that point in time, and we can take care of the other stuff. So it is our opinion that this unified approach that the ability to take care of some of the pieces of the puzzle, both outside the walls of the data center and also inside the walls of the data center is something that's going to be viewed quite positively by the hyperscalers, by the end-use customers there, given that it's going to make their jobs easier. I think if you look at how this has evolved over the last 18 months, I think there's been a recognition that, a, okay, the grid is not going to be there. We're going to have to build these power generation facilities ourselves. That's added maybe an unanticipated layer of complexity to their construction exercise to the path from getting to a desire for compute to ultimately having that compute running. And the easier we can make that path for them, the happier they're going to be and the better a partner we can be. So we really like it from that standpoint. Yes. And I think it's something that we can take not only to customers here in the United States and Canada, but also internationally. We're starting to hear a lot about data center opportunities in the Middle East, in Asia, in Australia. There was a big announcement just a couple of days ago about opportunities in the Beetaloo. And I think we have a great opportunity with the global reach of the organizations to be an active participant in those.

The next question will come from Joe Laetsch with Morgan Stanley.

So I wanted to follow up on the PowerBridge JV. So I know the initial phase is over 300 megawatts. But could you just talk about the signpost we should watch for around additional phases and how we should think about incremental power being added? And then as part of that is the 2 gigawatt opportunity at that West Texas data center. Is that exclusive to Liberty at this time?

Yes. So you're right. This will be announced in phase. This is kind of like the first phase that will get built out as these campuses expand. There's 2 sides to that campus, East North and South that will be over time. It's -- they've got multiple campuses that we will end up -- we may jointly develop. And there may well be other power generation on that site eventually, which we will partner in or not. It's just as we expand these things, it will have a growth path. But it's a very, very large opportunity set for us.

Great. That's helpful. And then on the frac side, could you just talk to the latest trends you're seeing in gas basin activity? We're back below $3 on Henry Hub, and there's some concerns around higher associated gas given where oil prices sit and some pipelines coming on in the Permian. So just your latest thoughts on activity in the oil versus gas basins here would be great.

Yes. I would say the gas basins activity continues to be strong there. We continue to see very positive forward looks from our customer base in the pure gas basins. I think they're taking a long view to this, recognizing there's going to be some volatility along the way. The macro situation still looks quite positive. We have both the incremental growth in demand here onshore North America from a power generation standpoint. We see the amount of generation capacity that is going to be constructed over the coming years. And the math around the gas that's going to consume is relatively straightforward. So we have that tailwind onshore North America. I think the tailwinds globally are also positive, again, not without some bumps along the way, but -- we -- I think we'll continue to see challenges from LNG export out of the Middle East. And as a result, a trend towards leveraging the supply out of the United States and Canada as longer-term opportunities going forward. So I'd say quite positive from that standpoint. Yes, we're going to get associated gas that's going to come from those oily basins as well, and that is absolutely going to be part of the supply stack and will have an impact on pricing over time as capacity comes on and then is filled and comes on and is filled. But I think our gas customers are used to that. They're used to seeing some of this up and down. But my sense is they're focused on the long term and the value proposition that they see there for the development of their assets.

The next question will come from Saurabh Pant with Bank of America.

Ron, Michael, maybe, Michael, you want to spend some time on this. I was trying to think through the $1.5 billion CapEx that you said for this year. What's remaining in the second half is a little above $1.1 billion. I'm trying to line it up with your delivery schedule, your deployment expectations and just the liquidity that you have, right? So ultimately, how are you thinking your latest thoughts on funding as we make our way through the progress payments and delivery and everything around that?

So yes, as we see kind of a large portion of that is deposits on long lead equipment. Our thoughts on funding really haven't changed as we sign the ESAs. These projects will be dropped into SPVs and then done with some version of project financing that will be nonrecourse back to the corporate balance sheet. That cash will get recycled back on to the corporate balance sheet and then be put down for further deposits. So that's the funding cycle of these, Saurabh.

Okay. Okay. I got it. Has anything changed in terms of the payment terms and conditions, Michael, as you go ahead and secure more equipment, are you having to pay more upfront? Because I was also trying to tie it all into -- I think you said $5 billion to $6 billion for the total 3 gigawatt. I'm wondering if that's a little higher than what you were thinking initially?

Yes, I think it's a little higher. I mean this kind of banking in, we've got inflation that goes out through the deliveries in 2029. As you -- I think everybody has pointed out, I mean, generation is an incredibly short supply. So obviously, that makes a good position for the suppliers, the OEMs of this equipment, which allows them to be -- to negotiate terms that works for them and a lot of them are expanding their capacity. So they are sort of also looking for their own cash flow. So I'd say, generally, earlier deposits were if we modeled it in January versus the way the contracts have got finalized, they are a little bit higher in the early year deposit than we probably would have initially thought. Costs are the same. We've baked in inflation, potential inflationary costs and construction costs. and that in our general in my sort of overarching number that I gave you in that. And that will include BES and that will include sort of as we're looking at sort of an average for our data center clients at 50% BES, et cetera. So yes, it's an all-in cost.

Right. No, that makes sense. Everything is tight, right? So we've got to see some inflation. Okay. That makes sense. And just a quick one on the frac side of things, Michael, Ron, I'm just thinking about the 2027 RFP season, right? So I'm thinking about the bigger customers, the more stable customers that you have. Typically, we start seeing that in the fall, still a little early for that, but any early thoughts on how you think your customers might be thinking about the RFP season, how you might be thinking about the RFP season. I know it's a very dynamic market. But any early thoughts on what we should expect out of that? And just even on the timing, do you think it's normal? Do you think it's later than normal this year? Do you think it could be pulled forward? Just any color on that?

So Saurabh, I would say our outlook for 2027 remains quite positive. We still have the underpinnings of a significant structural disruption in the supply of oil over this past number of months. We've had 1 billion-plus barrels of oil taken out of the market, and there is going to have to be a path to navigating back out of that. We -- as we noted in our comments, are hearing about increased storage capacity being built in Asia and in Australia. We saw countries that faced really challenged supply situations earlier this year to the point where they were having to restrict usage of petroleum products. And that's not a situation any country wants to find themselves in. And so I think we're going to see them working to build up resilience to that. Never mind beginning to refill the strategic petroleum reserves that were drawn down over the course of this to help mute the impact of the disruption. So I think we have positive underpinnings for a solid 2027. And I think that will be reflected in the RFP season when that comes. I suspect it comes at a normal time. I don't think we're going to see it earlier or later than normal. I think we're going to see a positive tone from our customers there that will be reflective of the demand for North American product. And as a result, that's why I think we feel positive about headed through the rest of this year and out into 2027. We are certainly going to be in a better position than we were coming into the start of 2026.

The next question will come from Derek Podhaizer with Piper Sandler.

I just wanted to go back to the PowerBridge announcement for the Alpha Digital campus. I guess maybe help us understand what really gives you that confidence for the delivery date to start in the fourth quarter of 2027. And then maybe is this expected to be island in power? Or if not, what's the expectation for it to be put on the grid? Michael, I think you talked about the batch dynamic. So maybe just a little bit more on that and how that could potentially impact this project with PowerBridge.

And one of the reasons we're excited about working with the Power Bridge teams, the technical teams are very, very close is that we're able to sort of put in flight both the long lead time engineering and integration and then we'll start with permitting, which in Texas is a relatively efficient process -- and so yes, this probably will start -- this will definitely start behind the meter. They'll likely to be in a batch 0. They're in a batch o area there. So it will likely have a grid interconnection sometime in '28, but we shall see of what size. And given the dynamics of the West Texas market, it could probably be an export grid interconnection because there's very little spare power in that region. So there's a lot of building going on. So I think that's where it is. But yes, that will be a batch 0 site, but I think '28, international will be there.

Okay. Got it. That's helpful. Then on the frac side, just looking at what we saw in 2Q, you had a really big step-up in revenues, but a clear lack of flow-through with the 15% incrementals. I think you touched on the chemicals and proppant market. But maybe just a little bit of color there. And I know we've already discussed frac pricing, but just the confidence level to push that through. I mean, I understand that WTI pulled back pretty hard, but where we're sitting today looks attractive, the 27 strip looks attractive. We've seen this significant frac attrition. You have a high-graded fleet, just the ability to push price and what incrementals could look like as we get towards the back half of the year.

Yes. I would say, Derek, we continue to remain positive on that. For sure, on the service side of things, the opportunity to push prices there. The value for the technology proposition is absolutely there. And you'll certainly feel that headed through Q3, and we'll see what Q4 looks like, but ideally through that as well. So I would say we remain positive on that outlook, tempered by the macro uncertainty, whatever that may hold. But on that side of things, things are good. The commodity side, the product side, as I mentioned, a little more challenged. We still aren't in a position where sand prices are recovering meaningfully or things like that. And so we are doing a lot more simul-frac this year. That means we're moving a lot more product in a 24-hour window. We've got fleets that are putting away record levels of sand. We announced -- we announced a record with a 24-hour record with a customer again this past quarter. So we're moving a lot of product. But as you've noted, that isn't coming with the margin uplift we'd love to see there. Hopefully, that resolves itself in the not-too-distant future as well.

The next question will come from Keith MacKey with RBC Capital Markets.

Can you just start off with giving us a bit more color on your power generation unlevered returns targets. As you've detailed, the CapEx has gone up significantly, which I think something that doesn't necessarily surprise people at this point. And yet you're still targeting mid- to high teens unlevered return for that business. So can you just comment on how you're able to maintain that level of return while facing the CapEx inflation you're facing?

Yes. So I mean the prices have gone up. But I mean, I think it's the complete scope. And I think the demand is still within economic returns for the grid. And so we're still driving those strong returns. We don't see pushback on the pricing for us to get to that long-term pricing.

Okay. Got it. So you're able to raise prices commensurately?

Yes.

Okay. Okay. And then just going to the frac market, Ron, I don't think I've heard you talk about Canada so much on a call before. So good to see that you're -- you have confidence in the market there. Can you just comment on kind of what you're seeing in Canada relative to the U.S. and ultimately, what underpins your confidence to bring this new DigiPrime fleet to Canada? Will that be -- will that fleet be incremental to what you're currently running? Or will there be some retirements to keep overall capacity the same?

Yes. I would say, certainly have been excited to see developments in Canada over the last 6 months. It had been a challenged, I'll call it, decade up there during which the industry was in a pretty tough spot. But I think we've got some supportive outcomes going on there. The announcements around the pipeline, quite positive. I think that has some real optimism amongst the E&P community in Canada. We've seen some dollars come back to the country in the form of Shell buying Arc. So these are all exciting developments that have us, I'd say, looking very positively at the country and the opportunities in the Western Canadian Sedimentary Basin. You're starting to see the acquisition environment there put companies in a place where they have real scale to operate a program that's probably more closely aligned with what we often see in the U.S., that being the full utilization of a fleet from January through December. And that's also a positive development. That just leads to improved efficiencies and utilization of equipment. And it was that outlook that had us in a place where we were excited to put this next-generation equipment to work up there. So we're shipping DigiPrime up there. It's going to work for a customer that we work with on both sides of the border that we've had a long partnership with that has line of sight to a pretty meaningful program and high levels of utilization for that. It will be a replacement fleet for us and not additive at this point in time. I wouldn't say that the market is in a place where it would support additional capacity up there. I hope that changes in the not-too-distant future. But today, we're planning for it to be replacement for some older Tier 2 dual fuel equipment or Tier 2 diesel equipment that we have up there, I'm sorry.

The next question will come from Caitlin Donohue with Goldman Sachs.

I wanted to touch on LWC. Can you walk us through how you plan to leverage the business and the participation in the power markets? How you see it aiding in Liberty's long-term power strategy?

Yes. I would say, Caitlin, that it offers us a wide range of opportunities, but there are really a couple that we are quite focused on. We -- and I think we said a little bit about this in the past. But if you think about an environment like West Texas, where there has been meaningful deployment of wind and solar on the grid, you have these environments, a hot sunny day where the wind is blowing, where there is abundant power available on the grid and wholesale prices are pushed down to quite low levels. We have the opportunity to leverage that for the benefit of the economics of the project over the long term. So we wanted to put ourselves in a position where we're absolutely able to do that, where when the grid was in a situation where they might otherwise have to curtail power and that's pushing prices down that we could wind down our generation, procure power at low prices off the grid, maybe help them avoid some curtailment, hold the capacity factor for the grid up a little bit and boost our economics at the same point in time, while ultimately saving our customers some fuel because, of course, fuel is a pass-through for them. But on the flip side of that, there are also some other opportunities to make sure that we are supportive of the grid. Communities want to know and understand that the hyperscalers are bringing to the table not only their own generation, but ideally support for the grid. a means by which to help hold power prices down. They are very concerned about their electricity prices with good reason. I think they're focused on the wrong issues for why prices are going up. But we want to make sure that we can provide confidence that as a generation partner there, we are able to provide some assistance in that regard to leverage the additional generation capacity that we have on location to aid the grid in times of tightness where power prices are climbing. And so we see that as kind of a means that we can play the grid in 2 ways. My guess is that it will probably be primarily the one where we are leveraging lower cost power on the grid for economic benefit, but we are absolutely committed to delivering the message that we are there to support the grid as well in cases where that's needed.

That makes sense. And just one last one for me. Regionally, I know you've been talking about this opportunity in West Texas. How are you seeing other opportunities across the U.S., whether you're speaking with customers in PJM, just kind of level setting what you're seeing in terms of demand from other regions outside of ERCOT.

Yes. Pretty strong way. I mean we've got a diverse -- customers are looking at a diverse set of opportunities from the West Far West is Nevada through Utah, Wyoming, Texas, obviously, I think the largest portion of power generation and data centers will be built and then sort of bringing down through the South and even as far as Mississippi, some of the comps there and then up into PJM Ohio and even discussions in the Northeast in some sites that are reclaimed industrial sites in Michigan. So yes, there's a lot of interest across the whole country.

The next question will come from Eddie Kim with Barclays.

Just one question from me. Just circling back to PowerBridge and the Alpha Digital campus. What's your confidence level that the project will qualify for baseload categorization in ERCOT's batch 0 process? Because if it doesn't qualify for baseload, I would think that, that would -- that might put the 4Q '27 or even the 2028 time line at risk.

So 2 things. Yes, I think it will be batch 0. I think power is going to be short in that region. And the early generation is going to be behind the meter, so that won't be at risk from the batch 0. The time line won't be at risk. So the early generation is going to be behind the meter for will end up being a dedicated campus.

The next question will come from John Daniel with Daniel Energy Partners.

Just a quick follow-up to Keith's question on the fleet that went to Canada. Was that some of the new capacity that you built? Or was that a transfer from the U.S.? And then can you just speak broadly to like your '27 thoughts, early thoughts on further DigiPrime build-out?

John, that will be new capacity we're building. It will be built and delivered over the back half of this year. Unfortunately, the requirements for trailers in Canada are not aligned with the requirements for trailers in the United States from an axle design standpoint. And so it is equipment that is designed specifically for transport on the roads in Canada. and as a result, sits on a unique trailer for that. So we're building that as we speak. I would say that as far as continued demand for Digi Prime, as you can imagine, with the crack spread where it is and diesel prices remaining elevated, natural gas as a fuel source remains very, very attractive, and we continue to have significant inbound demand for DigiPrime as a result. We haven't made decisions around the CapEx program for 2027 at this point in time, but we'll be working through that with the Board, sharing with them our customers' desires and what we think ultimately is going to be a reasonable path forward. But you can certainly, I think, almost certainly expect us to build some DigiPrime in 2027, barring a change in things.

Do you think the demand -- if oil prices stay where they are now and just the outlook stays robust, do you think we could return to the days of take-or-pay contracts for equipment like DigiPrime in '27?

Well, John, for us, of course, we've never really asked for a take-or-pay per se. We -- that generally hasn't been in our DNA. But our outlook or expectation around putting Digi Prime to work has not changed even in these challenged environments. If we're going to deliver Digi Prime, we want line of sight to a couple of years of work and an appropriate payback time frame for that. And that's been true in '23, '24, '25, '26, and it will be true in '27 again as well.

I will now turn it back to Ron for closing remarks. .

Our mission at Liberty is a simple one, to better human lives, the lives of those who work here, the lives of those in the communities within which we work and the lives of those around the world who rely on the abundant, affordable, reliable energy we help to produce each and every day. This year, we are proud to celebrate 15 years in service of that mission. Jim Brady, our SVP of Operations and Employee #1 at Liberty started on May 2, 2011. We were a small company with one fleet operating out of a tent in Williston, North Dakota. We were built around a simple vision that Chris and Jim shared from the very beginning, to build the best dam frac company, period. We hired 51 people that first year. 33 of them are still working here today, and we've added almost 6,000 more. The scale of what we've built together is extraordinary, but the shared culture and values that brought us together in those early days have not changed. Our success is thanks, first and foremost, to the 6,000 individuals at Liberty who come to work every day with the goal of delivering excellence in everything that we do. There is no such thing as a commoditized business when people are involved. People matter. Safety matters, service quality matters, relationships matter. And I want to thank all of you in the Liberty family, especially the men and women who are at the tip of the spear out in the field for ensuring that everyone you work alongside every one of our customers and every one of our supply partners experience our values every day. You are what makes Liberty so special. There are so many highlights to celebrate from 15 years, certainly more than I can name in this short time, but there are a few that stand out. We grew from a tent in the Bakken to operations across 10 basins, including Canada and Australia. We completed the transformational acquisitions of Sandl's U.S. assets and Schlumberger's North American OneStim assets, became a publicly traded company listed on the NYSE and grew to more than $4 billion in annual revenue. Along the way, we published 3 additions of Bettering Human Lives and launched the Bettering Human Lives Foundation. We introduced great technologies like the Quiet Fleet, the entire Digi platform, novel sand handling systems and expanded through vertical integration and equipment packaging and CNG fuel supply and most recently entered into the distributed power generation business. We've accomplished a lot in our first 15 years, but we're just getting started as we continue to build the best Dam Energy company, period. So to the entire Liberty family and to our partners and friends on this journey, thank you for all that you do. It is a privilege to work alongside you all. Liberty forever.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.