Liberty Energy Inc.

10/22/2026 | Press release | Distributed by Public on 10/22/2026 14:18

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying unaudited condensed consolidated financial statements and related notes. The following discussion contains "forward-looking statements" that reflect our future plans, estimates, beliefs, and expected performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a variety of risks and uncertainties, including those described in "Cautionary Note Regarding Forward-Looking Statements," the Annual Report under the heading "Item 1A. Risk Factors," and in "Part II - Other Information, Item 1A. Risk Factors" included herein. We assume no obligation to update any of these forward-looking statements.
Overview
The Company, together with its subsidiaries, is a leading integrated energy services and technology company, and one of the largest providers of innovative completions services and related technologies to onshore oil, natural gas, and enhanced geothermal exploration and production ("E&P") companies. We offer customers completions services, which include hydraulic fracturing together with complementary services including wireline services, proppant delivery solutions, field gas processing and treating, compressed natural gas ("CNG") delivery, data analytics, related goods (including our sand mine operations), and technologies to facilitate lower emission completions, thereby helping our customers reduce their emissions profile. We have grown from one active hydraulic fracturing fleet in December 2011 to approximately 40 active fleets as of September 30, 2026. We provide our services primarily in the major oil and gas shale basins in North America and in the Northern Territory of Australia.
We also own and operate Liberty Power Innovations LLC ("LPI"), providing advanced distributed power and energy storage solutions, serving the commercial and industrial, data center, energy and mining industries. LPI was formed with the initial focus on supporting Liberty's transition towards our next generation digiFleets℠ and dual fuel fleets, by providing consistent and reliable power generation solutions and natural gas fueling services, which are critical to maintaining highly efficient well site operations. In January 2025, we announced LPI's expansion into the distributed power business. On March 3, 2025, we completed the acquisition of IMG Energy Solutions (the "IMG Acquisition"), a leading developer of distributed power systems, for cash consideration of approximately $19.6 million. The IMG Acquisition augmented our portfolio with advanced engineering, design, and development capabilities for the development of power systems, enhanced software control systems, power marketing and utility interconnection experience, and operations and maintenance experience. During 2025, LPI was primarily focused on the planning and development of our power service platform to pursue projects supporting the power demand created by new data center development and other commercial and industrial applications. LPI is actively marketing its integrated power and fuel solutions offering, developing engineered solutions, and, as described in further detail below under "Liquidity and Capital Resources", ordering equipment and long-lead time items for these expected projects. LPI also expanded its natural gas fueling services to support larger scale distributed power installations.
We believe technical innovation and strong relationships with our customer and supplier bases distinguish us from our competitors and are the foundations of our business. We expect that E&P companies will continue to focus on technological innovation as completion complexity and fracture intensity of horizontal wells increases, particularly as customers are increasingly focused on reducing emissions from their completions operations. We remain proactive in developing innovative solutions to industry challenges, including developing: (i) our databases of U.S. unconventional wells to which we apply our proprietary multi-variable statistical analysis technologies to provide differential insight into fracture design optimization; (ii) our Liberty Quiet Fleet® design which significantly reduces noise levels compared to conventional hydraulic fracturing fleets; (iii) hydraulic fracturing fluid systems tailored to the specific reservoir properties in the basins in which we operate; (iv) our dual fuel dynamic gas blending ("DGB") fleets that allow our engines to run diesel or a combination of diesel and natural gas, to optimize fuel use, reduce emissions and lower costs; (v) our digiFleets℠, comprising of digiFrac℠ and digiPrime℠ pumps and other complementary equipment, including power generation units (together "digiTechnologies℠"), our innovative, purpose-built electric and hybrid frac pumps that have approximately 25% lower CO2e emission profile than the Tier IV DGB; (vi) our wet sand handling technology and piped sand slurry solution which eliminate the need to dry sand, enabling the deployment of mobile mines nearer to wellsites; (vii) the launch of LPI to support the transition to our digiFleets as well as the transition to lower costs and emissions in the oilfield; and (viii) a suite of internally developed software solutions incorporating advanced analytics to support operations, maintenance and logistics management. In addition, our integrated supply chain includes proppant, chemicals, equipment, natural gas fueling services, logistics and integrated software which we believe promotes wellsite efficiency and leads to more pumping hours and higher productivity during completions services jobs to better service our customers.
LPI's technology platform for distributed power generation includes (a) the ForteSM solution, which uses a modular, standardized construction approach for generation sites to reduce the risk of project execution, (b) the TempoSM power quality management system to manage high-amplitude, cyclical load variations associated with artificial intelligence workloads and (c)
when a grid interconnection is requested by the customer and available, the ChorusSM solution to optimize power costs through the use of a mix of co-located generation and grid power.
In order to achieve our technological objectives, we carefully manage our liquidity and debt position to promote operational flexibility and invest in the business throughout the full commodity cycle in the regions we operate.
Recent Trends and Outlook
Global oil and refined product prices strengthened during the quarter amid ongoing geopolitical conflicts and disruptions to energy infrastructure. These conditions have contributed to uncertainty regarding global energy supplies and reinforced the strategic importance of North American oil and natural gas resources. Market expectations for prolonged supply disruptions, coupled with the potential for eventual replenishment of strategic petroleum reserves, have sustained the oil risk premium and supported stronger forward prices heading into 2027. North American natural gas fundamentals remain more balanced, as strong summer demand was outpaced by record production and ample inventories. Over the longer term LNG exports and growing power consumption from AI and data center development are expected to drive North American natural gas demand growth.
North American frac market conditions improved during the quarter, supported by modestly higher completions activity and stronger producer economics. Ongoing fleet attrition, equipment cannibalization, and industry underinvestment have constrained available capacity and supported continued improvement in service pricing. For the fourth quarter of 2026, we expect typical weather and holiday seasonality in our frac activity to be partially offset by activity deferred from the third quarter and continued strength in demand.
Related to power markets, demand continues to be driven by AI data center development and other large-load applications. As power projects increase in scale and complexity, customers are expected to seek infrastructure providers capable of delivering co-located integrated solutions across power generation, energy management, and long-term operations.
During the third quarter of 2026, the posted WTI price traded at an average of $87.12 per barrel ("Bbl"), as compared to the third quarter 2025 average of $65.78 per Bbl, and the second quarter of 2026 average of $95.65 per Bbl. In addition, during the third quarter of 2026, the Henry Hub price traded at an average of $2.87 per one million British thermal units ("MMBtu"), as compared to the third quarter of 2025 average of $3.03 per MMBtu, and the second quarter of 2026 average of $2.95 per MMBtu. Subsequent to September 30, 2026, the Henry Hub traded at an average of $3.13 per MMBtu and the WTI price traded at an average of $99.97 per Bbl through October 20, 2026. The average domestic onshore rig count for the United States and Canada was 782 rigs reported in the third quarter of 2026, up from the average in the third quarter 2025 of 703 and the second quarter of 2026 of 688, according to a report from Baker Hughes.
Business Developments
Senior Convertible Notes Activity
In February 2026, we issued $770 million aggregate principal amount of 0% convertible senior notes due March 2031 (the "2031 Notes"), and in March 2026, we issued $525 million aggregate principal amount of 0% convertible senior notes due March 2032 (the "2032 Notes"). Net proceeds from the offerings of the 2031 Notes and the 2032 Notes were $746 million and $511.3 million, respectively, after deducting the initial purchasers' discounts and commissions and offering expenses paid by us. Additionally, we entered into privately negotiated capped call transactions with respect to each of the 2031 Notes and the 2032 Notes with certain of the initial purchasers or their respective affiliates and certain other financial institutions at a cost of approximately $109.3 million and $77.2 million, respectively. For more information on the 2031 Notes and the 2032 Notes, see Note 7-Debt to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Supply Contracts for Power Generation Equipment
During the nine months ended September 30, 2026, we entered into supply contracts with various global suppliers for the purchase of power generation equipment, including engines and certain balance of plant equipment, for the Company's prospective data center and other distributed power projects. For more information regarding these supply contracts, see below under "Liquidity and Capital Resources."
Results of Operations
Three Months Ended September 30, 2026, Compared to Three Months Ended September 30, 2025
Three months ended September 30,
Description 2026 2025 Change
(in thousands)
Revenue $ 1,196,156 $ 947,397 $ 248,759
Cost of services (exclusive of depreciation, depletion, and amortization shown separately below) 995,049 769,761 225,288
General and administrative 69,479 58,284 11,195
Transaction and other costs (215) - (215)
Depreciation, depletion, and amortization 113,704 122,981 (9,277)
(Gain) loss on disposal of assets, net (1,165) (1,210) 45
Operating income (loss) 19,304 (2,419) 21,723
Other (income) expense, net 68,790 (57,451) 126,241
Net (loss) income before income taxes (49,486) 55,032 (104,518)
Income tax (benefit) expense (10,423) 11,977 (22,400)
Net (loss) income $ (39,063) $ 43,055 $ (82,118)
Revenue
Our revenue increased $248.8 million, or 26%, to $1.2 billion for the three months ended September 30, 2026 compared to $0.9 billion for the three months ended September 30, 2025. The increase in revenue was predominantly driven by increased activity levels and corresponding improvement in utilization and product sales.
Cost of Services
Cost of services (exclusive of depreciation, depletion, and amortization) increased $225.3 million, or 29%, to $995.0 million for the three months ended September 30, 2026 compared to $769.8 million for the three months ended September 30, 2025. The increase in expense was primarily related to increases in parts and material volumes and personnel costs commensurate with the increase in activity levels.
General and Administrative
General and administrative expenses increased $11.2 million, or 19%, to $69.5 million for the three months ended September 30, 2026 compared to $58.3 million for the three months ended September 30, 2025, primarily due to increased variable compensation costs and increased corporate costs to support higher activity levels and the expansion of our power business.
Transaction and Other Costs
The change in transaction and other costs during the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was not material.
Depreciation, Depletion, and Amortization
Depreciation, depletion, and amortization expense decreased $9.3 million, or 8%, to $113.7 million for the three months ended September 30, 2026 compared to $123.0 million for the three months ended September 30, 2025. The decrease during the three months ended September 30, 2026 was primarily due to equipment reaching the end of its depreciable life, partially offset by an increase in finance leases.
(Gain) loss on Disposal of Assets, net
The decrease in the gain on disposal of assets, net during the three months ended September 30, 2026 compared to the three months ended September 30, 2025 was not material.
Other (Income) Expense, net
The Company recognized other expense, net of $68.8 million for the three months ended September 30, 2026 compared to other income, net of $57.5 million for the three months ended September 30, 2025. The change was primarily attributable to a loss on investments, net of $62.9 million related to investments in equity securities measured at fair value for the three months ended September 30, 2026, compared to a gain on investments, net of $68.4 million during the three months ended September 30, 2025. Additionally, interest expense, net decreased $5.0 million primarily as a result of the paydown of the Company's balance on the Revolving Credit Facility in connection with the issuance of the 2031 Notes and 2032 Notes. Refer to "Liquidity and Capital Resources" below for further discussion of the Company's outstanding financing agreements.
Income Tax (Benefit) Expense
The Company recognized an income tax benefit of $10.4 million for the three months ended September 30, 2026, an effective rate of 21.1%, compared to income tax expense of $12.0 million for the three months ended September 30, 2025, an effective rate of 21.8%. The change in income tax expense was attributable to the net loss before income taxes for the three months ended September 30, 2026.
Nine Months Ended September 30, 2026, Compared to Nine Months Ended September 30, 2025
Nine months ended September 30,
Description 2026 2025 Change
(in thousands)
Revenue $ 3,405,936 $ 2,967,379 $ 438,557
Cost of services (exclusive of depreciation, depletion, and amortization shown separately below) 2,819,121 2,343,484 475,637
General and administrative 196,191 182,403 13,788
Transaction and other costs 7,476 811 6,665
Depreciation, depletion, and amortization 341,976 380,089 (38,113)
(Gain) loss on disposal of assets, net (13,126) 7,766 (20,892)
Operating income 54,298 52,826 1,472
Other (income) expense, net 19,646 (125,276) 144,922
Net (loss) income before income taxes 34,652 178,102 (143,450)
Income tax expense 8,036 43,920 (35,884)
Net (loss) income $ 26,616 $ 134,182 $ (107,566)
Revenue
Our revenue increased $438.6 million, or 15%, to $3.4 billion for the nine months ended September 30, 2026 compared to $3.0 billion for the nine months ended September 30, 2025. The increase in revenue was predominantly driven by increased activity levels and corresponding improvement in utilization and product sales.
Cost of Services
Cost of services (exclusive of depreciation, depletion, and amortization) increased $475.6 million, or 20%, to $2.8 billion for the nine months ended September 30, 2026 compared to $2.3 billion for the nine months ended September 30, 2025. The increase in expense was primarily related to increases in parts and material volumes and personnel costs commensurate with the increase in activity levels.
General and Administrative
General and administrative expenses increased $13.8 million, or 8%, to $196.2 million for the nine months ended September 30, 2026 compared to $182.4 million for the nine months ended September 30, 2025, primarily due to increased variable compensation costs and increased corporate cost to support higher activity levels and the expansion of our power business, partially offset by lower stock-based compensation expense as the prior year period included stock-based compensation in connection with the resignation of the Company's previous Chief Executive Officer upon his confirmation to the Secretary of Energy of the United States.
Transaction and Other Costs
Transaction and other costs increased to $7.5 million during the nine months ended September 30, 2026, compared to $0.8 million for the nine months ended September 30, 2025. The increase was due to tariffs and duties assessed during the year on certain pump components imported from other countries. We have adjusted our supply chain strategy to reduce our tariff exposure on such components in future periods.
Depreciation, Depletion, and Amortization
Depreciation, depletion, and amortization expense decreased $38.1 million, or 10%, to $342.0 million for the nine months ended September 30, 2026 compared to $380.1 million for the nine months ended September 30, 2025. The decrease during the nine months ended September 30, 2026 was primarily due to equipment reaching the end of its depreciable life, partially offset by an increase in finance leases.
(Gain) loss on Disposal of Assets, net
The Company recorded a gain on disposal of assets, net of $13.1 million for the nine months ended September 30, 2026 compared to a $7.8 million loss for the nine months ended September 30, 2025, as the Company disposed of used equipment that is no longer in use as part of normal course fleet and equipment management in the third quarter of 2025. Additionally, during the nine months ended September 30, 2026, the Company received insurance proceeds related to losses recorded in prior periods.
Other (Income) Expense, net
The Company recognized other expense, net of $19.6 million for the nine months ended September 30, 2026 compared to other income, net of $125.3 million for the nine months ended September 30, 2025. Other (income) expense, net is comprised of loss on investments, net of $2.7 million related to investments in equity securities measured at fair value for the nine months ended September 30, 2026, compared to gain on investments, net of $155.9 million during the nine months ended September 30, 2025. Additionally, interest expense, net decreased $13.6 million primarily as a result of the paydown of the Company's balance on the Revolving Credit Facility in connection with the issuance of the 2031 Notes and 2032 Notes. Refer to "Liquidity and Capital Resources" below for further discussion of the Company's outstanding financing agreements.
Income Tax Expense
The Company recognized income tax expense of $8.0 million for the nine months ended September 30, 2026, an effective rate of 23.2%, compared to $43.9 million for the nine months ended September 30, 2025, an effective rate of 24.7%. The decrease in income tax expense was primarily attributable to the decrease in net income before income taxes as well as a decrease in the effective tax rate.
Comparison of Non-GAAP Financial Measures
We view EBITDA and Adjusted EBITDA as important indicators of performance. We define EBITDA as net income before interest, income taxes, and depreciation, depletion, and amortization. We define Adjusted EBITDA as EBITDA adjusted to eliminate the effects of items such as non-cash stock-based compensation, new fleet or new basin start-up costs, fleet lay-down costs, gain or loss on the disposal of assets, net, bad debt reserves, transaction and other costs, the gain or loss on remeasurement of liability under our tax receivable agreements, the gain or loss on investments, net, and other expenses that management does not consider in assessing ongoing performance.
Our Board of Directors (the "Board"), management, investors, and lenders use EBITDA and Adjusted EBITDA to assess our financial performance because it allows them to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense), asset base (such as depreciation, depletion, and amortization) and other items that impact the comparability of financial results from period to period. We present EBITDA and Adjusted EBITDA because we believe they provide useful information regarding the factors and trends affecting our business in addition to measures calculated under GAAP.
Note Regarding Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA are not financial measures presented in accordance with GAAP. We believe that the presentation of these non-GAAP financial measures will provide useful information to investors in assessing our financial performance and results of operations. Net income is the GAAP financial measure most directly comparable to EBITDA and Adjusted EBITDA. Our non-GAAP financial measures should not be considered as alternatives to the most directly comparable GAAP financial measure. Each of these non-GAAP financial measures has important limitations as an analytical tool due to exclusion of some but not all items that affect the most directly comparable GAAP financial measures. You should not consider EBITDA or Adjusted EBITDA in isolation or as substitutes for an analysis of our results as reported under GAAP. Because EBITDA and Adjusted EBITDA may be defined differently by other companies in our industry, our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
The following tables present a reconciliation of EBITDA and Adjusted EBITDA to our net income, which is the most directly comparable GAAP financial measure for the periods presented:
Three and Nine Months Ended September 30, 2026, Compared to Three and Nine Months Ended September 30, 2025: EBITDA and Adjusted EBITDA
Three Months Ended September 30, Nine Months Ended September 30,
Description 2026 2025 Change 2026 2025 Change
(in thousands)
Net (loss) income $ (39,063) $ 43,055 $ (82,118) $ 26,616 $ 134,182 $ (107,566)
Depreciation, depletion, and amortization 113,704 122,981 (9,277) 341,976 380,089 (38,113)
Interest expense, net 5,898 10,902 (5,004) 16,983 30,607 (13,624)
Income tax (benefit) expense (10,423) 11,977 (22,400) 8,036 43,920 (35,884)
EBITDA $ 70,116 $ 188,915 $ (118,799) $ 393,611 $ 588,798 $ (195,187)
Stock-based compensation expense 10,002 7,301 2,701 28,001 33,482 (5,481)
(Gain) loss on disposal of assets, net (1,165) (1,210) 45 (13,126) 7,766 (20,892)
(Gain) loss on investments, net 62,892 (68,353) 131,245 2,663 (155,883) 158,546
Transaction and other costs (215) - (215) 7,476 811 6,665
Provision for credit losses - 1,026 (1,026) - 1,653 (1,653)
Adjusted EBITDA $ 141,630 $ 127,679 $ 13,951 $ 418,625 $ 476,627 $ (58,002)
EBITDA was $70.1 million for the three months ended September 30, 2026 compared to $188.9 million for the three months ended September 30, 2025. Adjusted EBITDA was $141.6 million for the three months ended September 30, 2026 compared to $127.7 million for the three months ended September 30, 2025.
The decrease in EBITDA was primarily attributable to an unrealized mark-to-market loss on investments in the Company's portfolio, partially offset by an increase in operating income, driven by increases in revenue out pacing the increase in operating expenses during the three months ended September 30, 2026 compared to the same period in 2025.
The increase in Adjusted EBITDA was primarily due an increase in operating income, driven by increases in revenue out pacing the increase in operating expenses during the three months ended September 30, 2026 compared to the same period in 2025.
EBITDA was $393.6 million for the nine months ended September 30, 2026 compared to $588.8 million for the nine months ended September 30, 2025. Adjusted EBITDA was $418.6 million for the nine months ended September 30, 2026 compared to $476.6 million for the nine months ended September 30, 2025.
The decrease in EBITDA was primarily attributable to a $158.5 million decrease in gains on investments, net, and a $57.5 million decrease in operating income, excluding depreciation, depletion, and amortization and gain or loss on disposal of assets, net, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025. The decrease in Adjusted EBITDA was primarily attributable to a $57.5 million decrease in operating income, excluding depreciation, depletion, and amortization and gain or loss on disposal of assets, net, during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025.
Liquidity and Capital Resources
Overview
Our primary sources of liquidity consist of proceeds from the offering of the 2031 Notes and the 2032 Notes, cash flows from operations, borrowings under our credit facilities, and finance leases for certain equipment. While we believe that these sources are adequate for our current liquidity needs, we monitor the availability and cost of capital resources such as equity, debt, and lease financings that could be leveraged for current or future financial obligations including those related to organic growth, acquisitions, capital expenditures, working capital, and other liquidity requirements. Working capital is the amount by which current assets exceed current liabilities. While various other factors may impact our working capital requirements from period to period, our working capital requirements have typically been, and we expect will continue to be, driven by changes in accounts receivable and unbilled revenue, inventories, prepaid and other assets and accounts payable and accrued liabilities.
During the nine months ended September 30, 2026, we issued the 2031 Notes and the 2032 Notes for net proceeds of $746.0 million and $511.3 million, respectively, after deducting the initial purchasers' discount and commissions and offering expenses paid by us. We also entered into privately negotiated capped call transactions with respect to each of the 2031 Notes and the 2032 Notes with certain of the initial purchasers or their respective affiliates and certain other financial institutions at a cost of approximately $109.3 million and $77.2 million, respectively. Refer to Note 7-Debt to the accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to the 2031 Notes and the 2032 Notes.
We plan to raise funds, and may incur additional debt, through project specific financing including non-recourse debt, and co-investments or equity to support the expansion of our distributed power business. Our primary uses of capital have been capital expenditures to support growth for our completions business, both organic and through acquisitions, and funding ongoing operations, including purchasing long-lead time equipment for our distributed power solutions business, and maintenance and fleet upgrades, as well as the repurchases of, and dividends on, shares of our Class A Common Stock (the "Class A Common Stock").
Cash and cash equivalents increased by $91.4 million to $119.0 million as of September 30, 2026 compared to $27.6 million as of December 31, 2025, while working capital excluding cash and current liabilities under debt and lease arrangements increased $8.4 million.
As of September 30, 2026, the Company was party to that certain Credit Agreement, dated July 24, 2025 (as amended, restated, supplemented or otherwise modified, the "Credit Agreement"), which provides for a revolving line of credit up to $750.0 million (the "Revolving Credit Facility"). The Credit Agreement is subject to certain borrowing base limitations based on a percentage of eligible accounts receivable, inventory and certain power generating assets available to finance working capital needs. In the first quarter of 2026 the Company used a portion of the net proceeds from the offering of the 2031 Notes to repay all indebtedness outstanding under the Revolving Credit Facility, excluding letters of credit. As of September 30, 2026, the borrowing base was calculated to be $580.1 million. As of September 30, 2026, the Company had no borrowings outstanding, and had letters of credit in the amount of $30.2 million, with $549.9 million of remaining availability.
The Credit Agreement contains financial covenants that we are required to maintain, in addition to covenants that restrict our ability to take certain actions. On October [20], 2026, the Company entered into the second amendment to the Credit Agreement (the "Second Amendment"), which, among other things, temporarily increases the maximum permitted leverage ratio under the Credit Agreement as of September 30, 2026. For additional information regarding the Second Amendment, see "Part II - Other Information, Item 5. Other Information." As of September 30, 2026, we were in compliance with all debt covenants.
See Note 7-Debt to the accompanying unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for further details.
Share Repurchase Program
Under our share repurchase program, the Company was authorized to repurchase up to $750.0 million of outstanding Class A Common Stock through and including July 31, 2026. The Company did not repurchase or retire any shares of Class A Common Stock under the share repurchase program during the three or nine months ended September 30, 2026.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Nine Months Ended September 30,
Description 2026 2025 Change
(in thousands)
Net cash provided by operating activities
$ 364,308 $ 414,163 $ (49,855)
Net cash used in investing activities
(986,539) (302,327) (684,212)
Net cash provided by (used in) financing activities
714,280 (118,588) 832,868
Analysis of Cash Flow Changes Between the Nine Months Ended September 30, 2026 and 2025
Operating Activities. Net cash provided by operating activities was $364.3 million for the nine months ended September 30, 2026, compared to $414.2 million for the nine months ended September 30, 2025. The $49.9 million decrease in cash from operating activities is attributable to a $33.2 million decrease in cash from changes in working capital for the nine months ended September 30, 2026, compared to a $34.0 million decrease in cash from changes in working capital for the nine months ended September 30, 2025. Additionally cash from operating activities decreased due to a $489.3 million increase in cash operating expenses, interest expense, net, and income tax expense, offset by a $438.6 million increase in revenues.
Investing Activities. Net cash used in investing activities was $986.5 million for the nine months ended September 30, 2026, compared to $302.3 million for the nine months ended September 30, 2025. Cash used in investing activities was higher during the nine months ended September 30, 2026, compared to the nine months ended September 30, 2025 primarily due to a $616.7 million increase in equipment purchases, capitalized maintenance, and capital deposits, a decrease in the proceeds on sale of equity securities of $80.8 million, and an increase of $9.7 million for shares purchased in Tamboran. These increases in cash used in investing activities were partially offset by a decrease from the acquisition of IMG Energy Solutions of $15.2 million in the nine months ended September 30, 2025, and an increase of $7.8 million in cash proceeds from the sale of assets. Refer to Note 2-Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to the IMG Acquisition.
Financing Activities. Net cash provided by financing activities was $714.3 million for the nine months ended September 30, 2026, compared to net cash used in financing activities of $118.6 million for the nine months ended September 30, 2025. The $832.9 million increase in cash provided by financing activities was primarily due to an increase in net borrowing activities of $796.4 million which includes the initial $1.3 billion of cash received from the 2031 Notes and the 2032 Notes, and net borrowings under the Caterpillar Agreement, partially offset by $186.5 million purchase of capped calls, an increase of $292.5 million net repayments on the Revolving Credit Facility, and $32.1 million increase in payments of debt issuance costs. Additionally, there was a $32.9 million decrease in cash paid under the TRA liability and a $24.9 million decrease in share repurchases , offset by a $14.3 million increase in cash paid for finance leases, a $5.1 million increase dividends paid and a $1.8 million increase in tax withholdings for RSUs.
Cash Requirements
Our material uses of cash consist primarily of obligations under long-term debt including the 2032 Notes, 2031 Notes and the Revolving Credit Facility, TRAs, finance and operating leases for property and equipment, cash used to pay for repurchases of, and dividends on, shares of our Class A Common Stock, and purchase obligations as part of normal operations and our expansion into the distributed power business. During the nine months ended September 30, 2026, the Company issued $770.0 million aggregate principal amount and $525.0 million aggregate principal amount of the 2031 Notes and the 2032 Notes, respectively. See Note 7-Debt to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.
Certain amounts included in our contractual obligations as of September 30, 2026 are based on our estimates and assumptions about these obligations, including pricing, volumes, and duration. We have no material off balance sheet arrangements as of September 30, 2026, except for purchase commitments under sand supply agreements of which $22.9 million is payable within 2026 and there are no amounts payable thereafter, and for generation assets to support our distributed power business.
During the year, we entered into various equipment supply contracts for the purchase of power generation equipment, including engines, balance of plant equipment, and related services for our distributed power solutions business for an aggregate price of approximately $2.1 billion. As of September 30, 2026, the total remaining commitments under these contracts was $1.6 billion. These remaining payments are to be made in installments in connection with the scheduling, delivery, performance testing, and takeover of the equipment. We expect to receive the equipment currently on order under these supply contracts beginning in 2027 through 2030. The timing and amount of these obligations may change as a result of supplier manufacturing and delivery schedules, site readiness, transportation, customs-clearance requirements, governmental
approvals, performance testing, force majeure events, change orders and contractual modifications, or other circumstances. We could incur significant additional capital expenditures if activity levels or opportunities increase during the course of the year. We intend to fund these capital expenditures using the primary sources of liquidity described above.
As of September 30, 2026, we had outstanding finance lease obligations of $253.1 million and operating lease obligations of $59.9 million.
Income Taxes
The Company is a corporation and is subject to U.S. federal, state, and local income tax. The Company is also subject to Canada and Australia federal and provincial income tax on its foreign operations.
The effective global income tax rate applicable to the Company for the nine months ended September 30, 2026 was 23.2% compared to 24.7%, for the period ended September 30, 2025. The Company's effective tax rate is greater than the statutory federal income tax rate of 21.0% due to state income taxes in the states the Company operates, nondeductible executive compensation, as well as GILTI inclusions from the Company's foreign operations, partially offset by U.S. federal income tax credits. The Company recognized an income tax benefit of $10.4 million and income tax expense of $8.0 million during the three and nine months ended September 30, 2026, respectively. The Company recognized an income tax expense of $12.0 million and $43.9 million during the three and nine months ended September 30, 2025, respectively.
Deferred income tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax bases of assets and liabilities, and are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. As of September 30, 2026 and December 31, 2025, the Company's net deferred tax liabilities were $159.6 million and $195.6 million, respectively.
Refer to Note 11-Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to income tax expense.
Tax Receivable Agreements
Refer to Note 11-Income Taxes to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional information related to tax receivable agreements.
Critical Accounting Estimates
The Company's unaudited condensed consolidated financial statements are prepared in accordance with GAAP, which require us to make estimates and assumptions (see Note 2-Significant Accounting Policies to the unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report and Note 2-Significant Accounting Policies and Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," included in the Annual Report). A critical accounting estimate is one that requires our most difficult, subjective or complex estimates and assessments and is fundamental to our results of operations. We base our estimates on historical experience and on various other assumptions we believe to be reasonable according to the current facts and circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.
There have been no material changes in our evaluation of our critical accounting policies and estimates since our Annual Report.
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