Liberty Oilfield Services (NYSE:LBRT) Q1 2019 Earnings Conference Call May 1, 2019 10:00 AM ET Company Participants Chris Wright - Chief Executive Officer Michael Stock - Chief Financial Officer Conference Call Participants Sean Meakim - JPMorgan John Daniel - Simmons Energy George O’Leary - Tudor, Pickering, Holt Angie Sedita - Goldman Sachs Vebs Vaishnav - Howard Weil Stephen Gengaro - Stifel Operator Good morning and welcome to the Liberty Oilfield Services First Quarter 2019 Earnings Conference Call. [O ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File No. 001-38081 Liberty Oilfield Services Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 81-4891595 (State or Other Jurisdiction of Incorporation or Orga ...

PART I [Business](index=5&type=section&id=Item%201.%20Business) Liberty Oilfield Services provides hydraulic fracturing services to North American E&P companies, covering its corporate structure, services, assets, customer relations, and regulatory environment [Overview and Corporate Structure](index=5&type=section&id=Overview%20and%20Corporate%20Structure) The company, an independent hydraulic fracturing provider, grew to 22 fleets by 2019, adopted a holding company structure post-2018 IPO, and initiated TRAs, share repurchases, and dividends - The company is an independent provider of hydraulic fracturing services in major North American basins, including the **Permian, Eagle Ford, DJ, Williston, and Powder River Basins**[18](index=18&type=chunk) - Liberty grew organically from one active hydraulic fracturing fleet in December 2011 to **22 active fleets by February 2019**[29](index=29&type=chunk) - Following its January 2018 IPO, the company adopted a holding company structure, with Liberty Inc.'s primary asset being its equity interest in Liberty LLC[19](index=19&type=chunk)[178](index=178&type=chunk) - The company entered into Tax Receivable Agreements (TRAs) to pay legacy owners **85% of net cash savings** from certain tax benefits, potentially leading to substantial future payments[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk) - In 2018 and early 2019, the company authorized two separate **$100 million share repurchase programs** and initiated a quarterly cash dividend of **$0.05 per share**[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [Our Services and Technology](index=8&type=section&id=Our%20Services%20and%20Technology) The company provides advanced hydraulic fracturing services, differentiating through custom solutions, proprietary data, and innovative technologies like Liberty Quiet Fleet® and custom fluid systems - The core service is hydraulic fracturing, stimulating production by pumping a pressurized fluid mixture into a well to crack underground formations[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - The company utilizes proprietary databases and multi-variable data analysis to optimize fracture design and well completions for customers[52](index=52&type=chunk) - Key technological innovations include the **Liberty Quiet Fleet®** for noise reduction and custom fluid systems like **Liberty Spirit™** for specific basins[31](index=31&type=chunk)[39](index=39&type=chunk)[53](index=53&type=chunk) [Properties and Equipment](index=11&type=section&id=Properties%20and%20Equipment) The company operates 22 hydraulic fracturing fleets from leased headquarters and owned/leased facilities, with a focus on Quiet Fleet® technology and dual-fuel capability Principal Properties | District Facility Location | Size | Leased or Owned | | :--- | :--- | :--- | | Odessa, TX | 77,500 sq. ft on 47 acres | Owned | | Henderson, CO | 50,000 sq. ft on 13 acres | Leased | | Williston, ND | 30,000 sq. ft on 15 acres | Owned | | Gillette, WY | 32,757 sq. ft on 15 acres | Leased | | Cibolo, TX | 90,000 sq. ft on 34 acres | Owned | | Sedalia, CO | 11,805 sq. ft on 112 acres | Owned | - As of 2019, the company operates **22 hydraulic fracturing fleets**, with **eight utilizing Liberty Quiet Fleet® technology** and approximately **40% having dual-fuel capability**[56](index=56&type=chunk) [Marketing, Customers, Suppliers, and Competition](index=11&type=section&id=Marketing%2C%20Customers%2C%20Suppliers%2C%20and%20Competition) The company manages sales regionally, has concentrated customer revenue (42% from top five in 2018), diversified suppliers, and competes in a fragmented market Top 5 Customer Revenue Concentration | Year | % of Revenues | | :--- | :--- | | 2018 | 42% | | 2017 | 53% | | 2016 | 59% | - **Extraction Oil & Gas, Inc.** was the only customer accounting for more than **10% of revenues in 2018**[60](index=60&type=chunk) - The company competes in a highly fragmented market against large integrated companies and specialized hydraulic fracturing providers[63](index=63&type=chunk) [Environmental and Occupational Safety and Health Matters](index=13&type=section&id=Environmental%20and%20Occupational%20Safety%20and%20Health%20Matters) The company's operations are subject to stringent federal, state, and local environmental and safety regulations, particularly concerning hydraulic fracturing and climate change - Operations are subject to stringent regulations from agencies like the **EPA and OSHA**, potentially imposing significant compliance costs and penalties[67](index=67&type=chunk) - Worker health and safety is regulated under **OSHA**, including standards for hazardous materials and respirable crystalline silica[70](index=70&type=chunk) - The company operates as a motor carrier, subject to **DOT regulations** governing safety, hours of service, and hazardous materials transport[72](index=72&type=chunk) - Hydraulic fracturing faces increased regulatory oversight at federal, state, and local levels, potentially leading to new restrictions or bans that could reduce demand[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk) - Climate change regulations, including those limiting **GHG and methane emissions**, could increase operating costs for the company and its customers[86](index=86&type=chunk)[87](index=87&type=chunk) [Risk Factors](index=20&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks from industry cyclicality, competition, and regulations, alongside stock-related risks from its holding company structure and TRA obligations [Risks Related to Our Business](index=20&type=section&id=Risks%20Related%20to%20Our%20Business) Business risks include dependence on E&P spending, commodity price volatility, intense competition, customer credit risk, operational hazards, capital requirements, and extensive environmental and safety regulations - The business is directly dependent on the capital spending of oil and natural gas companies, highly sensitive to volatile commodity prices[101](index=101&type=chunk)[104](index=104&type=chunk) - The company has significant customer concentration, with the **top five customers representing 42% of revenue in 2018**, posing a risk of loss or non-payment[113](index=113&type=chunk) - Federal, state, and local initiatives on hydraulic fracturing and induced seismicity could limit oil and gas activities, reducing demand for services[123](index=123&type=chunk)[124](index=124&type=chunk) - The business is subject to numerous environmental and safety laws, such as those concerning silica exposure, water disposal, air emissions, and climate change, imposing significant costs and liabilities[131](index=131&type=chunk)[134](index=134&type=chunk)[148](index=148&type=chunk) [Risks Related to Our Class A Common Stock](index=34&type=section&id=Risks%20Related%20to%20Our%20Class%20A%20Common%20Stock) Stock risks stem from the holding company structure, dependence on Liberty LLC distributions, controlled company status, substantial TRA obligations, and potential stock price volatility - Liberty Inc. is a holding company dependent on distributions from Liberty LLC to cover taxes, corporate expenses, and TRA payments[178](index=178&type=chunk) - The company is a **"controlled company"** due to majority voting power by Principal Stockholders, exempting it from certain NYSE corporate governance requirements[187](index=187&type=chunk) - The **Tax Receivable Agreements (TRAs)** require Liberty Inc. to pay **85% of certain tax savings** to legacy owners, with payments potentially accelerating upon a change of control[203](index=203&type=chunk)[206](index=206&type=chunk) - Estimated TRA termination payments were approximately **$67.3 million** as of December 31, 2018, potentially impacting liquidity negatively[207](index=207&type=chunk) [Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[217](index=217&type=chunk) [Properties](index=42&type=section&id=Item%202.%20Properties) Property information is incorporated by reference from the 'Business' section (Item 1) of this report - This section incorporates property information by reference from **Item 1. Business**[218](index=218&type=chunk) [Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) A patent infringement lawsuit by SandBox Logistics, LLC was dismissed in December 2018, and other legal matters are not expected to be material - A patent infringement and breach of contract lawsuit by **SandBox Logistics, LLC** was dismissed with prejudice on **December 19, 2018**[219](index=219&type=chunk) - The company does not expect other ordinary course legal matters to materially impact its financial condition[220](index=220&type=chunk) [Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable[221](index=221&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A Common Stock began trading on NYSE in January 2018, initiated a $0.05 quarterly dividend, and repurchased $29.0 million in shares in Q4 2018 - The company's Class A Common Stock trades on the NYSE under **"LBRT"** following its **January 17, 2018 IPO**[224](index=224&type=chunk) - A quarterly cash dividend of **$0.05 per share** of Class A Common Stock was initiated and paid in September and December 2018[226](index=226&type=chunk) Q4 2018 Share Repurchases | Period | Total number of shares purchased | Average price paid per share | Total value of shares purchased as part of publicly announced plans or programs | | :--- | :--- | :--- | :--- | | October | — | $ — | $ — | | November | 191,712 | $ 18.83 | $3,610,000 (approx) | | December | 1,558,778 | $ 16.25 | $25,340,000 (approx) | | **Total Q4** | **1,750,490** | **$ 16.53** | **$29,000,000 (approx)** | - As of December 31, 2018, **$17.1 million** remained available for future repurchases under the **$100 million share repurchase program** authorized in September 2018[228](index=228&type=chunk) [Selected Financial Data](index=44&type=section&id=Item%206.%20Selected%20Consolidated%20Financial%20Data) This section presents selected historical financial and operational data for the years ended December 31, 2015 through 2018, including statements of operations, cash flows, balance sheet, non-GAAP measures, and operational metrics Selected Statement of Operations Data (in thousands) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Total revenue | $ 2,155,136 | $ 1,489,855 | $ 374,773 | | Operating income (loss) | $ 306,563 | $ 181,137 | $ (54,434) | | Net income (loss) | $ 249,033 | $ 168,501 | $ (60,560) | | Net income attributable to Liberty Inc. stockholders | $ 126,349 | $ — | $ — | Selected Other Financial & Operational Data (in thousands, except fleet data) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Capital expenditures | $ 258,835 | $ 311,794 | $ 102,428 | | Adjusted EBITDA | $ 438,234 | $ 280,728 | $ (5,588) | | Total Fleets at end of period | 22 | 19 | 10 | | Average Active Fleets | 21.3 | 15.1 | 7.4 | Selected Balance Sheet Data (at end of period, in thousands) | | 2018 | 2017 | | :--- | :--- | :--- | | Total assets | $ 1,116,501 | $ 852,103 | | Long-term debt (including current) | $ 106,524 | $ 196,357 | | Total equity | $ 740,814 | $ 392,766 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=47&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, revenue growth, market trends, non-GAAP measures, liquidity, capital resources, debt, contractual obligations, and critical accounting policies [Overview, Recent Trends and Outlook](index=47&type=section&id=Overview%2C%20Recent%20Trends%20and%20Outlook) Demand for hydraulic fracturing is tied to E&P activity and commodity prices, with WTI crude oil price declines impacting frac service pricing in late 2018, yet long-term trends like drilling efficiencies and increased completion intensity remain beneficial - **WTI crude oil prices averaged $65.23 in 2018** but fell significantly in the second half, reducing frac service pricing in late 2018[241](index=241&type=chunk)[242](index=242&type=chunk) - Long-term industry trends benefiting the company include improved drilling economics and increased complexity and service intensity of well completions[244](index=244&type=chunk)[246](index=246&type=chunk)[248](index=248&type=chunk) - The average proppant used per well more than doubled from **six million pounds in 2014 to over 13 million pounds in 2018**, indicating higher service intensity[248](index=248&type=chunk) [Results of Operations](index=50&type=section&id=Results%20of%20Operations) This section details financial results for 2018 vs 2017 and 2017 vs 2016, attributing significant revenue and income growth to fleet expansion and improved market conditions [Year Ended December 31, 2018, Compared to Year Ended December 31, 2017](index=50&type=section&id=Year%20Ended%20December%2031%2C%202018%2C%20Compared%20to%20Year%20Ended%20December%2031%2C%202017) In 2018, revenue increased 44.7% to $2.2 billion, driven by a 41.1% increase in average active fleets and a 2.5% increase in revenue per fleet, leading to significant growth in operating and net income Financial Performance Comparison (2018 vs. 2017) | (in thousands) | 2018 | 2017 | Change | | :--- | :--- | :--- | :--- | | Revenue | $ 2,155,136 | $ 1,489,855 | $ 665,281 | | Operating income | $ 306,563 | $ 181,137 | $ 125,426 | | Net income | $ 249,033 | $ 168,501 | $ 80,532 | - Revenue increased due to a **41.1% increase in average active fleets** (from 15.1 to 21.3) and a **2.5% increase in revenue per average active fleet**[260](index=260&type=chunk) - Cost of services increased by **42.0% to $1.6 billion**, primarily due to a **34.8% increase in material volumes** and a **39.4% increase in personnel costs**[261](index=261&type=chunk) [Year Ended December 31, 2017, Compared to Year Ended December 31, 2016](index=51&type=section&id=Year%20Ended%20December%2031%2C%202017%2C%20Compared%20to%20Year%20Ended%20December%2031%2C%202016) In 2017, revenue surged 297.5% to $1.5 billion, driven by a 104.0% increase in average active fleets and a 94.8% increase in revenue per fleet, leading to a significant swing to operating and net income Financial Performance Comparison (2017 vs. 2016) | (in thousands) | 2017 | 2016 | Change | | :--- | :--- | :--- | :--- | | Revenue | $ 1,489,855 | $ 374,773 | $ 1,115,082 | | Operating income (loss) | $ 181,137 | $ (54,434) | $ 235,571 | | Net income (loss) | $ 168,501 | $ (60,560) | $ 229,061 | - The revenue surge resulted from a **104.0% increase in average active fleets** and a **94.8% increase in revenue per average active fleet**, reflecting industry recovery[270](index=270&type=chunk) [Comparison of Non-GAAP Financial Measures](index=52&type=section&id=Comparison%20of%20Non-GAAP%20Financial%20Measures) Management uses EBITDA and Adjusted EBITDA to assess financial performance, with Adjusted EBITDA increasing to $438.2 million in 2018, reflecting strong operational growth - **EBITDA and Adjusted EBITDA** are used by management to assess financial performance by removing capital structure, asset base, and non-recurring item effects[278](index=278&type=chunk)[279](index=279&type=chunk) Reconciliation of Net Income to Adjusted EBITDA (in thousands) | | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | Net income (loss) | $ 249,033 | $ 168,501 | $ (60,560) | | EBITDA | $ 431,673 | $ 262,610 | $ (13,072) | | Adjusted EBITDA | $ 438,234 | $ 280,728 | $ (5,588) | [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity stems from operations, IPO proceeds, and credit facilities, with $103.3 million cash and $224.3 million available under its ABL Facility as of December 31, 2018 Summary of Cash Flows (in thousands) | | 2018 | 2017 | | :--- | :--- | :--- | | Net cash provided by operating activities | $ 351,258 | $ 195,109 | | Net cash used in investing activities | $ (255,492) | $ (310,043) | | Net cash (used in) provided by financing activities | $ (8,775) | $ 119,771 | - As of December 31, 2018, the company had **$103.3 million in cash and cash equivalents**[286](index=286&type=chunk) - The company has a **$250 million ABL Facility with $224.3 million available** and a **Term Loan Facility with $111.7 million outstanding** as of year-end 2018[296](index=296&type=chunk)[297](index=297&type=chunk) [Contractual Obligations](index=58&type=section&id=Contractual%20Obligations) As of December 31, 2018, total contractual obligations were approximately $1.01 billion, primarily comprising purchase commitments, operating leases, and the Term Loan Facility Contractual Obligations as of December 31, 2018 (in thousands) | | Total | Less than 1 year | 1 – 3 years | 4 – 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Term Loan Facility | $ 111,715 | $ 1,750 | $ 3,500 | $ 106,465 | $ — | | Estimated interest payments | $ 41,533 | $ 11,407 | $ 22,307 | $ 7,819 | $ — | | Operating lease obligations | $ 153,930 | $ 42,717 | $ 81,075 | $ 10,396 | $ 19,742 | | Purchase commitments | $ 690,862 | $ 341,970 | $ 344,947 | $ 3,945 | $ — | | Obligations under the TRAs | $ 16,818 | $ — | $ 3,994 | $ 1,947 | $ 10,877 | | **Total** | **$ 1,014,858** | **$ 397,844** | **$ 455,823** | **$ 130,572** | **$ 30,619** | [Critical Accounting Policies and Estimates](index=59&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Management identifies critical accounting policies requiring significant judgment, including revenue recognition, allowance for doubtful accounts, inventory valuation, property and equipment depreciation/impairment, and Tax Receivable Agreements - Key areas requiring significant management judgment and estimates include Revenue Recognition, Allowance for doubtful accounts, Inventory valuation, Depreciation and impairment of property and equipment, and Accounting for Tax Receivable Agreements[309](index=309&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[315](index=315&type=chunk)[317](index=317&type=chunk) [Quantitative and Qualitative Disclosure about Market Risk](index=61&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20about%20Market%20Risk) The company faces market risks primarily from volatile oil and gas drilling activity, interest rate risk on variable-rate debt, and commodity price risk for materials and fuel - The company's primary market risk is its dependence on volatile U.S. oil and natural gas drilling and completion activity, driven by commodity prices[321](index=321&type=chunk) - The company is exposed to interest rate risk on its **$111.7 million of variable-rate debt**; a **1% change** would impact annual interest expense by about **$1.1 million**[323](index=323&type=chunk) - The company faces commodity price risk for materials and diesel fuel, managed through customer pass-throughs and fixed-price supply agreements[324](index=324&type=chunk) [Financial Statements and Supplementary Data](index=62&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates the company's audited consolidated and combined financial statements and supplementary data by reference, located at page F-1 - The company's financial statements and supplementary data are included beginning on **page F-1** of the report[326](index=326&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=62&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[327](index=327&type=chunk) [Controls and Procedures](index=62&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2018, having remediated a prior material weakness - Management concluded that the company's disclosure controls and procedures were effective as of **December 31, 2018**[328](index=328&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of **December 31, 2018**[333](index=333&type=chunk) - During the quarter ended December 31, 2018, the company remediated a previously identified material weakness related to segregation of duties[334](index=334&type=chunk) [Other Information](index=63&type=section&id=Item%209B.%20Other%20Information) The company reports no other information in this section - None[336](index=336&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=64&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2019 proxy statement - Information is incorporated by reference from the **2019 proxy statement**[339](index=339&type=chunk) [Executive Compensation](index=64&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2019 proxy statement - Information is incorporated by reference from the **2019 proxy statement**[340](index=340&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=64&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information on security ownership is incorporated by reference from the 2019 proxy statement - Information is incorporated by reference from the **2019 proxy statement**[341](index=341&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=64&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2019 proxy statement - Information is incorporated by reference from the **2019 proxy statement**[342](index=342&type=chunk) [Principal Accountant Fees and Services](index=64&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2019 proxy statement - Information is incorporated by reference from the **2019 proxy statement**[343](index=343&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=65&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides an index to financial statements and lists all exhibits filed, noting that schedules are omitted as information is presented elsewhere - This item provides an index to the financial statements and a list of exhibits filed with the report[346](index=346&type=chunk)[347](index=347&type=chunk) [Form 10-K Summary](index=66&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for its Form 10-K - None[350](index=350&type=chunk)

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Financial Data and Key Metrics Changes - Revenue for 2018 increased by 45% to $2.16 billion from $1.49 billion in 2017, driven by a 41% increase in average frac fleets and improved efficiency [24][8] - Net income before taxes rose 72% to $289 million, with adjusted EBITDA increasing by 56% to $438 million [8][25] - Fourth quarter revenue decreased by 15% to $473 million from $559 million in the third quarter, with net income totaling $34 million compared to $66 million in the previous quarter [31][12] - Adjusted EBITDA for the fourth quarter decreased to $72 million from $117 million in the third quarter [32] Business Line Data and Key Metrics Changes - The fourth quarter saw a challenging environment with customer project deferrals impacting fleet utilization, leading to a decrease in revenue and EBITDA [12][31] - Despite challenges, the company pumped the highest monthly volume of sand in its history in January 2019, indicating strong operational performance [14] Market Data and Key Metrics Changes - The company noted a rapid drop in commodity prices in November and December 2018, which led to customers deferring completions [12] - The market is expected to stabilize as operators focus on capital discipline, potentially leading to less volatile activity levels [12] Company Strategy and Development Direction - The company aims to maintain a strong balance sheet while investing in technology and returning capital to shareholders [21][19] - Liberty is focused on operational excellence, technology innovations, and building long-term partnerships with customers to drive efficiency and returns [10][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term outlook for the shale revolution and the company's ability to generate strong returns despite current market challenges [22][40] - The company anticipates a clearer picture of 2019 completions demand by the end of the first quarter, as customers finalize budgets [15][30] Other Important Information - Capital expenditures for 2019 are projected to be approximately $175 million, a decrease of 36% from 2018 [19] - The company plans to continue its quarterly dividend of $0.05 per share and has authorized an additional $100 million for share repurchases [37][36] Q&A Session Summary Question: Market behavior and competitor actions - Management noted a significant decline in the number of active frac fleets, with many competitors rationalizing their operations in response to market conditions [51][53] Question: Consolidation in the industry - Management acknowledged the potential for consolidation among less efficient players, which could improve market dynamics [56] Question: First quarter guidance and pricing - Management indicated that pricing has declined by more than 10% due to market conditions, but they expect to stabilize and potentially improve pricing later in the year [64][67] Question: Visibility for 2019 - Management expressed confidence in fleet utilization and demand, indicating that they are fully booked for the near term [84] Question: Technology investments - Management highlighted that approximately 40% of the capital budget is allocated to new technology initiatives aimed at improving efficiency and safety [118] Question: Capital return strategy - Management stated that they will evaluate capital return strategies throughout the year, maintaining a focus on balance sheet strength and shareholder returns [120]