Shareholder sues Liberty Oilfield Services, claiming misleading IPO info

DENVER — A shareholder is attempting to start a class action lawsuit against Denver-based Liberty Oilfield Services (NYSE: LBRT), days after it cut its staff by nearly 50% due to ongoing oil price crunches caused by the novel coronavirus and an ongoing crunch in oil prices.

In the suit filed late Friday in the U.S. District Court for Colorado, shareholder Marc Joseph claims Liberty and its underwriters oversold Liberty’s ability to compete in the energy industry in the months leading up to its $220 million initial public offering in January 2018.

He argues Liberty knew the fracking industry was producing more supply than what long-term demand prospects suggested was necessary, even though at the time Liberty was claiming it had an opportunity to capture market share from other bankrupt fracking equipment suppliers.

When Liberty reported earnings in early February, it said there was a “substantial oversupply” of fracking equipment in the market, causing a 23% drop in revenue compared to the previous quarter.

In his filing, Joseph believes he and others who participated in the IPO were misled on just how soft the demand for fracking equipment was, leading to a slide in its stock value.

Liberty’s stock has see-sawed but held a downward trajectory since Nov. 9, 2018, when its stock price closed at $20.51. It slid heavily during March as the effects of the COVID-19 virus dragged down U.S. and global economies, while an ongoing price war between Saudi Arabia and Russia, the world’s second and third-largest producers of oil, respectively, crashed oil prices to nearly $20 a barrel.

Liberty started the month at $6.47 per share and traded at $2.69 per share as of March 31’s close.

The suit does not mention COVID-19, which Liberty cited as the reason it laid off 183 employees last week.

A spokeswoman for Liberty did not respond to a request for comment Monday afternoon.

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