If there’s gas to process out of a pipeline or field gas, we have technologies to process that gas on-site and use that, we can blend the two together. So, we just decided natural gas is so critical. It’s look, stepping back. It’s the fastest growing energy source on the planet and has been for the last 10-years and likely will be for the next 10-years. So we are talking here about that specific application of using natural gas to power frac fleets, which absolutely is the future for many reasons, costs, emission, efficient abundance of natural gas. Now we’re also – we want that expertise to build – you can call virtual pipelines, delivery and moving of natural gas to where we need or starting with our natural gas our frac fleets, digiFleets that without gas they don’t run.
Dual fuel fleets, if you don’t get gas, they still run, you just burn more diesel, more expensive, higher emissions, and you should have been. So, we’re building – LPI. First to power our frac fleets. But it’s also of course going to supply other people’s rigs, other operations in the field. There’s other oilfield applications for that. And ultimately as you look ahead, what is Liberty generating expertise in. We’re generating expertise, and having the highest thermal efficiency on wheels, mobile power generation there is. And we’re generating expertise in how to move natural gas, how to remotely or on-site process natural gas to deliver natural gas, wherever it’s needed and however it’s needed. So, natural gas is 40% of U.S. electricity generation.
And sadly, but unfortunately, we are driving our electricity grid prices up and our grid stability down. So expertise and moving, deploying natural gas and remote power generation is only going to grow in value.
Derek Podhaizer: Great, appreciate all the color. I’ll turn it back.
Operator: The next question is from Luke Lemoine with Piper Sandler. Please go ahead.
Luke Lemoine: Hi, good morning.
Chris Wright: Good morning, Luke.
Luke Lemoine: Good morning. The whole digi initiative seems like it’s going extremely well. And I guess specifically on digiPrime, this was just over testing a few months ago. It has now been in the field since September. You guys talked about this being the customer’s favorite technology on-site. But can you maybe just talk a little further about the feedback and maybe what you’ve learned as well of having it live – on our well location?
Ron Gusek: Yes, sure can Luke. Feedback has been extremely positive since day one. So you have to imagine what really is a pretty big step forward for not only our operations team, but also our customers in terms of what they’re seeing here. We’re basically talking about power density, that’s two for one relative to Tier 4 DGB. So you know where to optimize substitution on a Tier 4 DGB engine. Obviously, this is pressure dependent, but you might see that pump delivering maybe six barrels a minute or so. We’ve got digiPrime out there a single pump, effectively replacing two of those, delivering steady as she goes day-in and day-out 24 hours a day, at 12 barrels a minute. And it’s doing so burning less gas than those two pumps would have combined.
So remove the diesel and reduce the gas consumption. And we’re delivering twice the rate So it truly is an incredible step forward. It’s fully integrated with our pump control platform. And so to our operations team out there, it is seamless in its operation. But you could – think of it just like a nuclear power plant on our grid. Once it is up and running it is steady as she goes in. It has been delivering day-in and day-out since we put it out there. The first customer for that is extremely excited and cannot wait to see some more of them out on location.
Luke Lemoine: Okay. Great. Thanks, Ron. And then Chris, I know you don’t want to disclose customer’s for their remaining digi deployments later this year and early next in the Permian? Are these in a couple of different basins?
Chris Wright: Starting in a couple of different basins, for me is the biggest basin. So of course, the majority of digi deployment is in the Permian. We’ve got requests in pulling to several basins, but – at year end we’ll be running digi in just two basins and much room to grow in those two basins. But by the end of next year, that will certainly be more than two basins. That’s one of our big questions we’ve got inside the right partners, the right timing to continue the deployment.
Luke Lemoine: Okay, perfect. Thanks so much.
Chris Wright: Thank you.
Operator: The next question is from Waqar Syed with ATB Capital Markets. Please go ahead.
Waqar Syed: Thank you. And first of all congrats on a great quarter. My question is like in the Q3 results, how many digiFleets were active during the quarter on average?
Chris Wright: Probably [two in the weeds to quote] – two is probably a reasonable estimate but originally we feathering these pumps into existing fleet, that’s one of the key things. The fleet keeps running just like it did and we feather in this technology. It’s only more – and across multiple fleets. It’s only more recently that we have fleets running that are entirely digi.
Waqar Syed: Okay. And so, when you started running these entirely digiFleets, what the margin on those be accretive to the margins that you get on other fleets?
Chris Wright: They are. They are. There’s additional diesel displacement, there’s lower cost to our customers and a higher technology solution. So yes, that benefits Liberty as well as benefiting our customer.
Waqar Syed: So then taking that thought forward. So once you have, let’s say, six of those fleets running in Q2 of next year, if nothing else changes, this record high margin that we saw in Q3, 25.5% or so EBITDA margins, you could be higher – running higher margin than that in Q2 or Q3 next year?
Chris Wright: It’s absolutely possible Waqar and that is a – right, that’s the internal job. We call it self-improvement in Liberty. We have to always be in a position where if the market is flat, our profitability is growing. We’re growing by doing things better, by doing things more efficiently, by delivering premium technologies. So yes, if the market stayed flat for the next three years, would Liberty’s profitability continue to grow through those three years? Absolutely.
Waqar Syed: So you’re saying right now that 2024 could be modestly higher activity. So, when we translate that into Liberty’s profitability or EBITDA, given that LPI could be contributing or EBITDA given that you’ll have more of these digiFleets running with higher margins? How do you see 2024 EBITDA versus 2023?
Chris Wright: Look, again, in a flat market conditions, it will certainly rise. But you know, that bigger factor swings in what’s going on in the marketplace. But I think as you’ve seen over the last three quarters in a gradually softening market. Can our self-improvement offset that? It can, but the question is, how much is the market softened? Or how much is the market strengthened? Or does it stay flat? But I think the point is well taken Waqar that in a flat market, we have drivers of increased profitability. Absolutely, and we will always strive to have that. But you know that second factor is what is the market actually do? And we don’t control that. But we are – you get the feeling that the volatility in that in market conditions, is likely to be lower in the next few years than it’s been in the last few years. Thanks Waqar.
