11-K 1 libertyoilfieldservices11-k.htm 11-K Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2018
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-38081
___________________________________________________________________________________________________

A.    Full title of the plan and the address of the plan, if different from that of the issuer named below:

Liberty Oilfield Services 401(k) Savings Plan

B.    Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Liberty Oilfield Services Inc.
950 17th Street, Suite 2400
Denver, Colorado 80202

 
___________________________________________________________________________________________________
 



TABLE OF CONTENTS




Report of Independent Registered Public Accounting Firm


To the Plan Administrator and Plan Participants
Liberty Oilfield Services 401(k) Savings Plan
Opinion on the Financial Statements
We have audited the accompanying statements of net assets available for benefits of the Liberty Oilfield Services 401(k) Savings Plan (the “Plan”) as of December 31, 2018 and 2017, and the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets of the Plan as of December 31, 2018 and 2017, and the changes in its net assets for the year ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis of Opinion
The Plan’s management is responsible for these financial statements. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Plan’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Supplemental Information
The supplemental information in the accompanying schedules of assets held at end of year as of December 31, 2018 and nonexempt transactions for the year ended December 31, 2018 of have been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information. In forming our opinion on the supplemental information, we evaluated whether the supplemental information, including its form and content, is presented in conformity with Department of Labor’s Rules and Regulations for Reporting under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information is fairly stated, in all material respects, in relation to the financial statements as a whole.
We have served as the Plan’s auditor since 2014.
/s/ Plante & Moran, PLLC
Denver, Colorado
June 26, 2019


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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


Statements of Net Assets Available for Benefits
 
 
December 31,
Assets
 
2018
 
2017
Investments, at fair value
 
 
 
 
Liberty Oilfield Services common stock fund
 
$
173,179

 
$
—

Common/collective trust
 
39,793,009

 
23,101,742

Mutual funds
 
11,528,613

 
8,577,360

Pooled separate account
 
322,092

 
250,809

Total investments, at fair value
 
51,816,893

 
31,929,911

Receivables
 
 
 
 
Participant notes receivable
 
3,315,088

 
1,207,455

Employer contribution
 
229,975

 
—

Total receivables
 
3,545,063

 
1,207,455

Net assets available for benefits
 
$
55,361,956

 
$
33,137,366



See notes to financial statements
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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


Statement of Changes in Net Assets Available for Benefits
 
 
Year Ended December 31,
Additions to net assets
 
2018
Investment income
 
 
Net depreciation in fair value
 
$
(5,041,319
)
Interest and dividend income
 
199,842

Total investment loss
 
(4,841,477
)
Interest on participant notes receivable
 
119,901

Contributions
 
 
Employer
 
14,233,566

Employee
 
16,463,894

Rollover
 
2,018,368

Total contributions
 
32,715,828

Total additions to net assets
 
27,994,252

Deductions from net assets
 
 
Benefits paid to participants
 
5,558,251

Administrative fees
 
211,411

Total deductions from net assets
 
5,769,662

Net increase
 
$
22,224,590

Net assets available for benefits
 
 
Beginning of year
 
$
33,137,366

End of year
 
$
55,361,956


See notes to financial statements
- 3 -
LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN
Notes to Financial Statements
December 31, 2018

Note 1—Description of the Plan and Significant Accounting Policies
The following description of Liberty Oilfield Services 401(k) Savings Plan (the “Plan”) provides only general information. Participants and all others should refer to the Plan document for a more complete description of the Plan’s provisions.
General    
The Plan is a defined contribution plan established January 15, 2013 and was last amended effective July 1, 2018. The Plan is available to all employees age 18 years or older upon hire. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).
An Investment Committee comprised of officers and employees of Liberty Oilfield Services LLC (the “Company”) administers the Plan. Principal Trust Company (“Principal”) serves as the third‑party administrator, recordkeeper, custodian, and trustee; manages Plan assets; and maintains the Plan’s records. Principal offers Plan participants a variety of investment options through various funds in accordance with provisions of the service and trust agreements with the Company. Individual accounts are invested in the various investment options at the direction of the participants.
Basis of Presentation    
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.
Contributions    
Participants may make before‑tax contributions up to 100% of their annual eligible compensation, as limited by the IRS, which is adjusted annually by the Secretary of the Treasury for inflation. This maximum percentage may be reduced by the Plan administrator in certain circumstances. Eligible employees who have reached age 50 during the Plan year may elect to make catch‑up contributions, as limited by the IRS. The Plan also permits rollover contributions from other qualified retirement plans. Employee contributions to the Plan are made through regular payroll deductions. Effective October 6, 2017, the Company began making discretionary matching contributions of 100% of elective deferrals up to 6% of eligible compensation. Matching contributions are funded each pay period. The Company has the right to designate all or a portion of the matching contributions as qualified. To the extent matching contributions are so designated, they are non‑forfeitable and may not be withdrawn from the Plan prior to separation from service or attainment of age 59½.
Once eligibility requirements are met, employees are automatically enrolled in the Plan, and 6% of each employee’s compensation is automatically withheld and contributed to the Plan unless the employee makes another election.
The Company may make discretionary or profit‑sharing contributions. Discretionary matching contributions made by the Company totaled $14,233,566 for the year ended December 31, 2018.
Participants’ Accounts    
Each participant’s account is credited or debited with the participant’s contributions and withdrawals, as applicable, and an allocation of the Company’s contributions, Plan earnings or losses, forfeitures, and Plan expenses. Allocations are based upon Plan earnings or losses and account balances, as defined by the Plan. The benefit to which a participant is entitled is the vested portion of the participant’s account.
Vesting    
Participants are vested immediately in their contributions, qualified employer contributions, employer discretionary matching contributions, and employer profit‑sharing contributions plus actual earnings, less losses thereon.
Participant Notes Receivable    
Participants may borrow from their accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their vested account balances. Participants may have a maximum of one loan outstanding at any given time. The notes receivable are secured by the balances in the participants’ accounts and bear interest at The Wall Street Journal prime rate plus 1.00% (6.50% as of December 31, 2018), which is commensurate with local prevailing rates as determined quarterly by the Plan administrator at loan origination. Notes receivable have a maximum term of five years, unless such loan is for the purchase of the participant’s primary residence, in which case the repayment period may not exceed thirty years from the date of the loan origination. Principal and interest are paid ratably through payroll deductions. Participant notes receivable are

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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN
Notes to Financial Statements
December 31, 2018

recorded in the financial statements at amortized cost (which represents unpaid principal plus accrued interest). Upon termination of a participant from employment, the participant’s loan shall continue to be payable in accordance with the provisions of the participant’s loan or be due in full.
Payment of Benefits    
Upon death, disability, retirement, or termination of service, a participant may receive a lump sum payment in the amount equal to the participant’s vested account balance within a reasonable period of time after termination of employment upon election by the participant. Accounts with balances less than $5,000 may be immediately distributed upon a distribution event. If the participant’s total vested balance is greater than $5,000, the participant may elect not to receive a distribution until required by law to receive required minimum distributions. The Plan allows hardship withdrawals in the event of undue financial hardship. Such withdrawal is limited to the participants’ pre‑tax or Roth elective deferral contributions and earnings thereon. Benefits are recorded as distributions to participants when paid.
Valuation of Investments and Income Recognition    
Investments are recorded at fair value as reported to the Plan by the trustee. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion of fair value measurements.

The net realized and unrealized investment gain or loss (net appreciation or depreciation in fair value of investments) is reflected on the accompanying statement of changes in net assets available for benefits and is determined as the difference between fair value at the beginning of the year (or date purchased if during the year) and selling price (if sold during the year) or year‑end fair value. Purchases and sales of investments are recorded on a trade‑date basis. Interest income is recognized on the accrual basis. Dividends are recognized on the ex‑dividend date.
Use of Estimates    
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes in net assets available for benefits and disclosures. Accordingly, actual results could differ from those estimates.
Risks, Uncertainties, and Concentrations    
The Plan provides for various investments that, in general, are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investments, it is reasonably possible that changes in the value of investments will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported on the statements of net assets available for benefits.
Additionally, some investments held by Principal are invested in the securities of foreign companies, which involve special risks and considerations not typically associated with investing in companies in the United States of America. These risks include devaluation of currencies, less reliable information about issuers, different securities transaction clearance and settlement practices, and possible adverse political and economic developments. Moreover, securities of many foreign companies and their markets may be less liquid and their prices more volatile than those of securities of comparable U.S. companies.
During the year ended December 31, 2018, four investments accounted for 56% of investment loss. At December 31, 2018 and 2017, four investments accounted for 55% and 52% of total investments at fair value, respectively.
Subsequent Events    
The Plan administrator has evaluated all subsequent events through the auditors’ report date, which is the date these financial statements were available to be issued. There were no material subsequent events that required recognition or additional disclosure in these financial statements.

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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN
Notes to Financial Statements
December 31, 2018

Note 2—Reconciliation of net assets available for benefit
The following is a reconciliation of net assets available for benefits per the financial statements to Form 5500 as of December 31, 2018
 
 
December 31, 2018
Net assets available for benefits per the financial statements
 
$
55,361,956

Employer contribution receivable
 
(229,975
)
Net assets available for benefits per the Form 5500
 
$
55,131,981


Note 3—Fair Value Accounting    
Generally accepted accounting principles require disclosure about how fair value is determined and establish a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
Level 1:
Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.
Level 2:
Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3:
Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The following tables set forth by level, within the fair value hierarchy, the Plan’s investments measured at fair value on a recurring basis.

As of December 31, 2018:
Description
Level 1
 
Level 2
 
Level 3
 
Total
Mutual funds
$
11,528,613

 
$
—

 
$
—

 
$
11,528,613

Company Stock
173,179

 
—

 
—

 
173,179

Total
11,701,792

 
—

 
—

 
11,701,792

 
 
 
 
 
 
 
 
Investments measured at net asset value*
 
 
 
 
 
 
$
40,115,101

Total investments at fair value
 
 
 
 
 
 
$
51,816,893

As of December 31, 2017:
   Description
   Level 1
 
   Level 2
 
   Level 3
 
   Total
Mutual funds
$
8,577,360

 
$
—

 
$
0

 
$
8,577,360

Investments measured at net asset value*
 
 
 
 
 
 
23,352,551

Total investments at fair value
 
 
 
 
 
 
$
31,929,911

*Investments measured at net asset value (“NAV”) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation to total investments at fair value.
The valuation technique used to measure the fair value of the mutual funds was based on quoted prices in active markets for identical assets that the Plan has the ability to access at the measurement date (market approach).
There were no changes to the valuation techniques used during the period.

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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN
Notes to Financial Statements
December 31, 2018

Reported Net Asset Values
The Plan’s investments in pooled separate account and common/collective investment trusts had a value of $40,115,101 and $23,352,551 as of December 31, 2018 and 2017, respectively, determined based upon the NAV of the underlying assets and securities, the majority of which have observable Level 1 pricing inputs, including publicly quoted prices and quoted prices for similar assets in active or non‑active markets (market approach). The NAV is used as a practical expedient to approximate fair value. The NAV investments have no unfunded commitments, can be redeemed daily, and have daily redemption notice periods.
Note 4—Income Taxes    
The Plan did not obtain a plan‑specific determination letter, as it operates with the trustee’s opinion letter, which was issued on the basic Plan document dated August 8, 2014. The Plan has been subsequently amended. The Plan administrator believes that the Plan continues to be operated and administered in compliance with the applicable requirements of the Internal Revenue Code.
Generally accepted accounting principles require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress.
Note 5—Administration of the Plan    
The Company provides, at no cost to the Plan, certain administrative, accounting, and legal services to the Plan and also pays the cost of certain outside services for the Plan.
Note 6—Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to terminate the Plan subject to the provisions of ERISA. If the Plan is terminated for any reason, all participants become 100% vested, and the Plan administrator is to distribute each participant’s interest to the participant or the participant’s beneficiary.
Note 7—Related Party and Party‑in‑Interest Transactions    
Certain Plan investments are managed by Principal. Principal is the asset trustee, as defined by the Plan; therefore, these transactions qualify as party‑in‑interest and are exempt from the prohibited transaction rules. In addition, the Plan provides for loans to participants, which are also party‑in‑interest transactions that are exempt from the prohibited transaction rules.

In 2018, there was an inadvertent loan between the Company and the Plan of $208. This is deemed a prohibited transaction in accordance with ERISA and the IRC. The Company has paid the Plan back as of May 2019.


- 7 -


SUPPLEMENTAL SCHEDULES


- 8 -

LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


Schedule G, Part III, Nonexempt Transactions
As of December 31, 2018

Employer Identification Number ‑ 45‑3073116
Plan Number – 001
(a) Identity of party involved
 
(b) Relationship to plan, employer, or other party-in-interest
 
(c) Description of transaction including maturity date, rate of interest, collateral, par or maturity value
 
(f) Lease rental*
Liberty Oilfield Services LLC
 
Plan Sponsor
 
Inadvertent loan to plan sponsor
 
$208

* Columns (d), (e), and (g) through (j) are not shown as they are not applicable

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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


Schedule H, Part IV, Line 4i ‑ Schedule of Assets (Held at End of Year)
As of December 31, 2018

Employer Identification Number ‑ 45‑3073116
Plan Number ‑ 001
(a)
 
   (b) Identity of Issue, Borrower, Lessor, or Similar Party
 
   (c) Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par, or Maturity Value
 
   (e) Current Value
      
 
Mutual funds
 
 
 
 
      
 
Vanguard
 
500 Index
 
$
2,019,503

      
 
Vanguard
 
Growth Index
 
1,110,424

      
 
T. Rowe Price
 
New Horizons
 
1,032,057

      
 
MFS
 
Value
 
813,405

      
 
PIMCO
 
Investment Grade Corporate Bond
 
747,377

      
 
Vanguard
 
Wellington
 
671,160

      
 
Goldman Sachs
 
Financial Square Treasury Solutions
 
662,005

      
 
Vanguard
 
Small‑Cap Index
 
574,704

      
 
Oppenheimer
 
International Growth
 
571,880

      
 
Vanguard
 
Mid-Cap Growth Index
 
466,337

      
 
Oppenheimer
 
Developing Markets
 
446,156

      
 
MassMutual
 
Mid-Cap Growth Institutional
 
426,873

      
 
Vanguard
 
Energy
 
403,893

      
 
Vanguard
 
Short-Term Federal
 
391,175

      
 
Victory Sycamore
 
Established Value
 
386,327

      
 
Vanguard
 
Small-Cap Value Index
 
342,728

      
 
Prudential Investments
 
High Yield
 
207,989

      
 
American Century
 
Inflation-Adjusted Bond
 
169,216

      
 
American Funds
 
U.S. Government Securities
 
83,421

      
 
Vanguard
 
Wellington
 
1,983

 
 
Total mutual funds
 
$
11,528,613

      
 
Common/collective investment trusts
 
 
   *
 
Principal
 
Target 2050 Fund
 
$
8,698,685

   *
 
Principal
 
Target 2055 Fund
 
7,087,685

   *
 
Principal
 
Target 2045 Fund
 
6,708,987

   *
 
Principal
 
Target 2040 Fund
 
5,748,540

   *
 
Principal
 
Target 2035 Fund
 
3,151,540

   *
 
Principal
 
Target 2030 Fund
 
3,148,859

   *
 
Principal
 
Target 2060 Fund
 
2,220,226

   *
 
Principal
 
Target 2025 Fund
 
1,343,884

   *
 
Principal
 
Target 2020 Fund
 
764,096

   *
 
Principal
 
Target 2015 Fund
 
453,582

   *
 
Principal
 
Income Fund
 
400,408

   *
 
Principal
 
Target 2065 Fund
 
42,925

   *
 
Principal
 
Target 2010 Fund
 
23,592

 
 
Total common/collective investment trusts
 
$
39,793,009





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LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


(Continued from the previous page)
      
Pooled separate account
 
 
 
   *
Principal
Real Estate Securities Separate Account
 
$
322,092

 
Total pooled separate account
 
322,092

   
Common stock
 
 

   *
Liberty Oilfield Services Inc.
Liberty Oilfield Services Inc.
 
173,179

 
Total common stock
 
173,179

   *
Participant notes receivable
Participant notes receivable, interest rate of 4.25% to 6.50%, collateralized by participants’ vested account balances
 
3,315,088

 
 
 
 
$
55,131,981

* Party‑in‑interest

- 11 -

LIBERTY OILFIELD SERVICES 401(K) SAVINGS PLAN


INDEX TO EXHIBITS
Exhibit
No.
 
Description
 
 
23.1
 
* Filed herewith.

- 12 -


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the plan administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
LIBERTY OILFIELD SERVICES 401(k) Savings Plan
 
 
 
 
Dated: June 26, 2019
 
 
By:
 
/s/ Michael Stock
 
 
 
 
 
Michael Stock
 
 
 
 
 
Chief Financial Officer of Liberty Oilfield Services LLC and Member of Investment Committee


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