Hello everybody. Welcome to the Energy Newsbeat podcast. My name is Du Turley, president CEO of the Sandstone Group. I'll tell you what, right now in the United States energy area, we have several critical things that have to happen. And becoming energy dominant starts at home. And today I am visiting with Ron Gusek. He is the CEO over at Liberty Energy. Thank you for stopping by the podcast, Ron.
Great to be here, Stu. Appreciate you having me on.
Hey, you just got through with a great investor presentation. Tell us about that.
Yeah, just over at Intercom. You know, of course, always exciting to have an event in Denver. More often than not, we're traveling elsewhere to do those things, but still have a great energy presence in Denver, and so love to have a home event here. It was, I think, huge turnout for them. So great to see everybody there and share a bit of the Liberty story.
Fantastic. I'll tell you, I thoroughly enjoyed working at Intercom over the years. In fact, that's where I met Chris Wright a long time ago and he formed actually helped form the podcast because his presentation on humanitarian needs really changed how I think the our podcast has become and that is we need to deliver the lowest cost kilowatt per hour to everyone on the planet with the least impact on the environment. That only happened because of Chris Wright. So you being there to carry that forward is pretty darn cool.
That is great that you mentioned that. Of course, the bettering human lives story has been an important one for us now since 2021, I guess, was when we first launched that initiative. And we carry on that legacy today. We'll continue to publish that book that supports all of that work. And I'm excited to continue to carry on that message. And even more excited that we now have Chris in the Secretary of Energy's role and being able to share that message from a much much bigger pulpit.
I'm going to go out on a limb. You've got some pretty big shoes to fill, Ron. And I'll tell you right now, I think we have the single greatest secretary of energy, but we now have the three horsemen of the energy dominance apocalypse with Lee Zeldin as well as Doug Burgum. You put those three animals together and we will achieve energy dominance.
Yes. I think great things are happening up there and fantastic to watch from afar and look forward to seeing what the next couple of years holds with them together.
But you know what, Ron, we would not they would be not able to make energy dominance without great oil field companies like Liberty Energy. Tell us what's going on at Liberty. And before we get started there, I want to give you a shout out for continuing the great Liberty branding for your employees. I was in Shreveport, Louisiana, and this was cool. I'm just I pull up and there's actually four Liberty trucks pulling into the hotel at the same time. So, I'm just checking in behind them, and I've been in around the oil field a long time and I know what oil field people are like. They're good and bad. And they were classy. Their trucks were clean. They were happy employees. They were talking professionally. I had a great conversation. And that is when they don't know that an investor is actually looking at them. And as an investor, I like investing in Liberty and I like seeing quality people just checking in off duty. I just wanted to share that with you.
Well, thanks. That is a great story and I really appreciate hearing that. You know, certainly if you know the Liberty history, the whole foundation of the company was around creating that culture where we would attract and retain great individuals and have those individuals all feel like they were contributing to a very important mission together and we were all aligned in that. And so it's awesome to hear that you see that out in the field firsthand. That's pretty cool.
And again, congratulations because you are doing a fabulous job. And I've always had a saying when I look for investments in companies, good management equals good numbers. You're going through some tough times right now, but you're still at a free cash flow from what I understood after I wrote an article on your Q2 earnings report and was going through there. So tell us about what you got going on there.
Yeah, lots of exciting stuff. Of course, we're now 14 going on 15 years old, I guess. We've been through a couple of pretty good downturns in a bit of a soft patch again right now. But, you know, I think one of the great things about where we find Liberty today is we've worked awfully hard to figure out a way to make the company more resilient through these ups and downs. And if you think back 15, 16, we had the opportunity to acquire Sanel, the COVID downturn, we completed the Schlumberger transaction. Those things along with a number of other things have built for us a more resilient company. We've got some vertical integration, a little more breadth in our business with wireline services and things like that. And that ultimately means that each time we go through one of these more challenging stretches, the company's just a bit more resilient and better prepared to weather it. And so even today when pricing is not ideally where it would be, there's a bit more white space on the calendar. Our financial position is really quite strong. And so that's a testament to the hard work of everybody at Liberty and the work the team's done to put the company in a different spot from an oil field services standpoint. We're embarking on some other exciting chapters too. Of course, we're never a company that wants to stand still. We've done a huge amount of work on the technology side on the frack side of our business. Taking some of the learnings from that specifically around power generation for electric fleets and leveraging that expertise, that supply chain, that capability to start a power generation business for non-oil services applications. Primarily, it's going to be data centers and things like that. Of course, you read about that in the news today, all the gigawatts of incremental power we are going to need and we see ourselves as naturally positioned to play a role in that. So, that's going to be a big new chapter for us.
This is exciting because the great Department of Energy speaking of Chris Wright as we were talking just they put out a really eye-opening report just a little while ago where we've got 22 gigawatts of nuclear and natural gas power coming online but we need 200 gigawatts. So there's a delta. And you know, I'm sitting here, I went to Oklahoma State and so I'm actually in Texas but the math was not mathing up. I'm like, we need a lot more power.
The delta is phenomenal. And I mean, you've heard Chris and probably others in the administration call this AI race the next Manhattan Project for us. Something that we cannot lose. We've got to be in first place there. And, you know, of course, for all of the tech companies to do their work, they need electricity. We've had some arguably some policy decisions in the past that probably haven't put the grid in the best spot to support this growth going forward. And you know that's not a great situation but for us that's opportunity that provides a path for us to take the skill set expertise capability we have leverage that and play an important role in delivering more energy and the dominance that we require there. So excited to be a piece of that puzzle.
So on your Liberty Energy piece of your financial statements, you've got a new group now that is looking at building micro grids for businesses so that you can put data centers behind the meter. Did I say that correctly?
You absolutely did. So we launched Liberty Power Innovations a few years ago. The first part of that just to support ourselves of course as you transition to primarily natural gas fueled frack fleet and in some cases electric pumps, the power generation and the fuel to supply those are critical inputs and we viewed those as so important that we felt we should control them. So we've spent a few years now, four or five years really building up that expertise. And now you take that and you extend it beyond our core world of oil field services and apply that to data centers, commercial and industrial opportunities, remote mining as we think about reshoring critical minerals mining. All of those things are opportunities that require massive amounts of power. And we have a I would argue maybe a different approach to building the grid up than has historically been the case. We've traditionally thought about big large power plants and using wires to get electrons where they're needed and now to your point we have this idea of behind the meter maybe more modular more nimble approach. The construction time frames are not as long. And so rather than 3 or 4 years to see a power plant get built and come online, 12 to 18 months and we can have a data center up and running with a few hundred megawatts of power to supply it and ultimately when the grid gets there provide not only support for the data center but also some additional support to the grid. So it's a pretty exciting story that the oil and gas industry I think is going to play a big role in.
This is huge because I've been writing I've been basically saying that there will be those that have the micro grid and their own destiny in energy outlined. And if you're a CEO of a organization and you don't understand that you got to have a backup generator for your core infrastructure business lined up, you could end up being failed by some piece of the failure of the grid because I believe there was something like a 200% increase in potential blackouts coming on the grid thanks to previous management and Chris is trying to put band-aids on the grid.
Yeah, I think that's absolutely right. And I think now you're seeing some of those big companies recognize that even the commercial proposition in terms of their long-term cost of energy looks pretty attractive if you control the power supply yourselves. Of course, when you're on the grid, you're subject to whatever decisions get made there, whether or not they make your life better or not. Everybody shares the cost of a big transmission line being built or whatever additional infrastructure is coming online. When you make a decision to put power behind the meter, once that power plant is built, really your only variable is the cost of fuel. And certainly there are opportunities to lock that in as well. And so I think if you think about the idea from the prospect or from the position of the data center holder, you really have an opportunity to ensure you know your power price for the next 5, 10, maybe even 15 or 20 years. That looks pretty compelling, I think, versus, I'd argue power prices on the grid certainly climbing faster than the rate of inflation today. And so I see it as a real growing opportunity and something that's going to be a big piece of power generation in the United States going forward.
Wow. Now, who are your potential customers that when you Ron as a CEO, you're telling your sales guys, 'Go get me new data center clients.' Who would some of your guys go after?
Well, there's a pretty big range there. I'm learning quickly, too, how just how big this data center market is and how variable it is. You have opportunities that are small, very modular data centers where somebody has packaged maybe a half a megawatt or a megawatt of compute power in effectively a container and they can bring those wherever you need them and maybe layer up three or four or five of those. And so in that case you have a very small application 5 or 10 megawatts or something like that. And then at the opposite end of that scale, of course, what you often read about in the news in these gigawatt scale many thousand acre campuses and then you have everything in between. And so our customers, the people we're having conversations with range from those very small more modular applications to much larger permanent installations of large data center campuses. And of course all over the place, Texas is a hot spot for these conversations. The Northeast also a popular target. I think the end users are recognizing we don't need to go where the power is, we need to go where the natural gas is. And with access to natural gas comes access to electricity. And so of course those two areas attracting a lot of attention. But gosh, Utah, Nevada, North and South Dakota, I mean all over the place there are interesting conversations going on around getting data centers built. So it's exciting.
