Liberty Oilfield Services shares pummeled on Q3 miss, supply chain woes

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Drilling rigs operate at sunset in Midland, Texas, U.S., February 13, 2019. Picture taken February 13, 2019. REUTERS/Nick Oxford/File Photo

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DENVER, Oct 27 (Reuters) - Shares of oil services firm Liberty Oilfield Services Inc (LBRT.N) fell as much as 14% on Wednesday, after third-quarter results missed analyst estimates on logistics problems and higher costs.

The hydraulic fracturing services company incurred $12 million in logistics expenses that it could not pass onto customers and maintenance costs were $8 million above normal. Despite increasing some fees, it does not expect to be able to fully raise prices until 2022's first quarter, executives said.

Shares were down about 12.8% in recent trading at $13.59. West Texas Intermediate crude futures were off about 1% to $83.8 a barrel.

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Oilfield firms this quarter have been hit by supply chain snags, including delays in raw materials, as the global economy recovers from the coronavirus pandemic and related shutdowns.

“We are actively addressing the supply chain and integration challenges,” said Chief Executive Chris Wright.

The company acquired rival Schlumberger’s North American hydraulic fracturing unit in January, and this week announced an acquisition of frack sand delivery company Proppant Express Investments LLC, or PropX.

Wall Street analysts said the results were negative, with adjusted EBITDA of $32 million below consensus estimates of $45 million. Some were lukewarm on the PropX acquisition.

“Generally speaking, we aren’t huge fans of pressure pumpers vertically integrating around last-mile proppant delivery solutions,” wrote analysts for Tudor, Pickering, Holt & Co, acknowledging that the strategic rationale could make sense given current logistics headwinds.

Liberty said labor shortages, including skilled personnel to operate its high tech hydraulic fracturing equipment, was "biggest pinch point" for increasing fracking activity.

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Reporting by Liz Hampton in Denver Editing by Marguerita Choy

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