Firm profits after keeping workers on in downturn
When Chris Wright launched what would become Denver-based Liberty Oilfield Services in 2012, he wanted to create a petroleum services company with a different kind of culture, one that kept employees around for the long haul.
Turnover on hydraulic fracturing crews can run 40 percent or more, with the average tenure for workers in the field running two years, Wright said.
“Who would have the best ideas? It is the guys in the field,” said Wright, who has a background in mechanical and electrical engineering.
His previous firm, Pinnacle Technologies, was a leader in hydraulic fracturing technology, which applies fluids under high pressure to break up shale formations to release the oil and gas they hold.
But Wright saw a business opportunity not just in the technology, but in its application, and in using the expertise, field work-
ers were gaining.
Wright’s commitment to his then-600 workers was severely tested during the oil and gas downturn, which took oil prices from above $100 in mid-2014 to the mid-$20s in early 2016.
Drilling activity cratered and giant competitors such as Halliburton and Schlumberger laid off employees in large numbers. But in town hall meetings, Wright promised his workers that they would keep their jobs.
The company found a way to not just survive but to grow revenues 80 percent through the downturn. When oil prices and drilling activity rebounded last year, Liberty Oilfield had the workers and the reputation in place to take advantage.
Liberty Oilfield went public Jan. 12, raising nearly $250 million, far above the $170 million initially expected. The offering, which gave the company a $2.7 billion market value, allowed early investors to make a return, while also providing a currency that will make it easier for employees to own a share.
The stock started trading at $17 and rose to $21.75 on its first day. On Friday, it closed at $22.65.
The company relies on the cash flow it generates to fund new fracking crews and isn’t weighed down with borrowed money, Wright said. And it has more work than it can handle in the basins from Montana to Colorado to Texas where it operates.
A missing paycheck is what set Wright, whose initial interests were in fusion energy research, to go down a career path that would result in Liberty Oilfield.
Wright, who is 53 and grew up in metro Denver, graduated from Massachusetts Institute of Technology at age 20 and enrolled at the University of California Berkeley for graduate school.
He went to pick up his first check as a grad student, and it wasn’t there. He called a friend, got on with a geology firm and went back to MIT, where he teamed with a professor there to develop a model for fracking called FracPro.
Innovation remains another way the company sets itself apart, Wright said. Using heavy engines to pump fluids at high pressure can be noisy. But Liberty has developed quiet fleets, which lowers noise to background levels at 500 feet, the buffer Colorado requires between new wells and households.
Speeding up the fracturing work is another way to reduce impacts and save customers money. The company can complete fracks in 20 days versus competitors running at 50 days, Wright said.