Related Party Transactions

3 Months Ended

Mar. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

As of March 31, 2021 Schlumberger owned 66,326,134 shares of Class A Common Stock of the Company, or approximately 37.0% of the issued and outstanding shares of common stock of the Company, including Class A Common Stock and Class B Common Stock. Under the Transaction Agreement, to the extent the net working capital, as defined in the Transaction Agreement, of the Transferred Business is less than $54.6 million, the difference shall be payable in cash to the Company. Additionally, the Company and Schlumberger agreed to an $8.0 million true-up payment related to the estimated costs to bring certain assets to full working condition, which was collected during the three months ended March 31, 2021. As of March 31, 2021 and December 31, 2020, the Company recorded an estimated receivable from Schlumberger of $4.4 million and $24.7 million related to these true-up payments, respectively. Additionally, in conjunction with closing the OneStim Acquisition, the Company entered into a transition services agreement with Schlumberger under which Schlumberger provides certain administrative transition services until the Company fully integrates the acquired business. The Company incurred $5.2 million of fees payable to Schlumberger for such transaction services during the three months ended March 31, 2021, and expects expenses incurred after March 31, 2021 to be immaterial.

Following the OneStim Acquisition, in the normal course of business, the Company purchases chemicals, proppant and other equipment and maintenance parts from Schlumberger and its subsidiaries. During the three months ended March 31, 2021 total purchases from Schlumberger were approximately $11.1 million, and as of March 31, 2021 amounts due to Schlumberger were $1.7 million and $2.8 million included in accounts payable and accrued liabilities, respectively, in the unaudited condensed consolidated balance sheet.

Prior to the Corporate Reorganization, one of the members of Liberty Holdings contributed a portion of its member interest in Liberty Holdings to R/C IV. Subsequently, in conjunction with the Corporate Reorganization, R/C IV was contributed to Liberty LLC. R/C IV had net operating loss carryforwards for federal and state income tax purposes which resulted in the recognition of a $2.9 million payable pursuant to the TRAs. During the three months ended March 31, 2021, R/C IV Liberty Holdings, L.P. exercised its redemption right and redeemed 10,269,457 shares of Class B Common Stock resulting in an increase in tax basis, as described under “Tax Receivable Agreements” in Note—12 Income Taxes, and recognition of $25.8 million in amounts payable under the TRAs. During the year ended December 31, 2020, R/C IV Liberty Holdings, L.P. exercised its redemption right and redeemed 4,016,965 shares of Class B Common Stock resulting in an increase in tax basis, as described under “Tax Receivable Agreements” in Note—12 Income Taxes, and recognition of $6.1 million in amounts payable under the TRAs. As of March 31, 2021 and December 31, 2020, the Company’s liabilities under the TRAs payable to R/C IV Liberty Holdings, L.P. and R/C IV were $53.0 million and $27.2 million, respectively, included in payable pursuant to tax receivable agreements in the accompanying unaudited condensed consolidated balance sheets.

Liberty Resources LLC, an oil and gas exploration and production company, and its successor entity (collectively, the “Affiliate”) has certain common ownership and management with the Company. The amounts of the Company’s revenue related to hydraulic fracturing services provided to the Affiliate for the three months ended March 31, 2021 and 2020 was $1.2 million and $0.0 million, respectively.

As of March 31, 2021 and December 31, 2020, $0.1 million and $0.0 million, respectively, of the Company’s accounts receivable—trade was with the Affiliate. On June 24, 2019 (the “Agreement Date”), the Company entered into an agreement with the Affiliate to amend payment terms for outstanding invoices due as of the Agreement Date to be due on July 31, 2020. On September 30, 2019, the agreement was amended to extend the due date of the remaining amounts outstanding to October 31, 2020 subject to interest at 13% annual yield. Amounts outstanding from the Affiliate as of the Agreement Date were $15.6 million. The amounts outstanding, including all accrued interest, was paid in full in January 2020. As of March 31, 2021 and December 31, 2020, no amounts were outstanding under the amended payment terms from the Affiliate. During the three months ended March 31, 2021 and 2020, interest income from the Affiliate was $0 and $0.2 million, respectively, and accrued interest as of March 31, 2021 and December 31, 2020 was $0. Receivables earned for services performed after the Agreement Date continue to be subject to normal 30-day payment terms, provided that any amount unpaid after 60 days is subject to 13% interest.

During 2016, Liberty Holdings entered into a future commitment to invest and become a non-controlling minority member in Proppant Express Investments, LLC (“PropX Investments”), the owner of Proppant Express Solutions, LLC (“PropX”), a provider of proppant logistics equipment. LOS is party to a services agreement (the “PropX Services Agreement”) whereby LOS is to provide certain administrative support functions to PropX, and LOS is to purchase and lease proppant logistics equipment from PropX. The PropX Services Agreement was terminated on May 29, 2018; however the Company continues to lease equipment from PropX. During the three months ended March 31, 2021 and 2020, the Company leased proppant logistics equipment for $2.0 million and $2.6 million, respectively.

Payables to PropX as of March 31, 2021 and December 31, 2020 were $0.8 million and $0.8 million, respectively.