Liberty Energy Inc. expresses confidence in the global oil market’s future, citing a favorable supply-demand balance. Looking ahead to the remainder of this year, the company anticipates an alignment between demand for frac fleets and recent rig count trends, with a slight time lag. The stabilization of the rig count is becoming apparent, leading oil and gas exploration and production (E&P) operators to enjoy reduced well costs from consumable inputs. As a result, some operators are considering accelerating their completions activity. However, it is expected that natural-gas markets will not experience significant growth until 2024, in anticipation of rising liquefied natural gas (LNG) exports and exports to Mexico.
On the global scale, the outlook for oil markets is promising. Recent supply cuts by OPEC+ are gradually taking effect, instilling confidence in a drawdown of global oil inventories. Furthermore, the United States is witnessing a decline in production growth, leading to a depletion of oil inventories. Additionally, there is a high likelihood of refilling the U.S.’s strategic petroleum reserves, which further supports a positive outlook. Despite potential risks of economic recession, the demand for oil remains resilient due to factors such as the gradual recovery of global travel towards pre-Covid levels, strong demand from India, and the robustness of emerging markets. Moreover, the underinvestment in global production capacity provides a solid foundation for a steady, multi-year cycle in the oil and gas industry.
Notably, the increasing industrialization of emerging economies, with their long-term need for reliable and affordable energy, is a significant driver of demand. In this regard, the North American land market holds a prominent position as the primary supplier of additional production capacity. Despite experiencing a modest contraction in oil prices compared to 2022 levels and temporary softness in natural-gas markets, the industry remains resilient. In response to the changing landscape, service companies are scaling back their fleets, creating a more balanced frac market and a price environment that is expected to remain relatively stable. Liberty Energy Inc. is confident in its ability to generate healthy free cash flow and will continue to prioritize returning capital to shareholders through strategic share repurchases and dividends.
