Liberty Energy shares dip on concerns of U.S. frac market slowdown

Illustration shows U.S. flag and natural gas pipeline
A 3D printed natural gas pipeline is placed in front of displayed U.S. flag in this illustration taken February 8, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

DENVER, Jan 26 (Reuters) - Shares of U.S. hydraulic fracturing firm Liberty Energy (LBRT.N) fell more than 5% on Thursday, despite a fourth-quarter earnings beat, on concerns that fracking activity was slowing.

The company said that while the pressure pumping market is tight in all U.S. shale basins, there could be a pullback in response to lower natural gas prices, which were trading down 7.8% to roughly $2.8 per mmBTU on Thursday .

The company anticipates moving its equipment to oilier areas if gas activity slows.

Oil and gas companies have been focused on capital discipline after years of over-spending and low returns drove investors from energy markets. As oil prices and demand have rebounded from the COVID-19 pandemic, U.S. fracking equipment is mostly sold out, setting firms like Liberty up for record earnings.

Liberty's EBITDA of roughly $292 million topped analysts' expectations of around $272 million, Wall Street firms said on Thursday, calling the results "positive."

But shares were down 4.2% to $14.52 in morning trading, after falling more than 5% earlier in the session. Benchmark U.S. oil prices were around $81.3 up about 1.45% .

Liberty's stock is down about 10% since the start of the year, while rival U.S. fracker NexTier Oilfield Solutions is down 3.25%. Top U.S. hydraulic fracturing firm Halliburton (HAL.N), which has a large international business, is up about 2% over that same period.

"While the company posted a strong quarter, it is becoming increasingly obvious that the U.S. land market rate of change is slowing and activity levels could plateau in 2023 as operators continue to demonstrate capital discipline," James West, a managing director for investment firm Evercore ISI, said of Liberty's share price.

This week Liberty said it was doubling its share repurchase authorization to $500 million.

Reporting by Liz Hampton in Denver; Editing by Josie Kao

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