Oil costs are their lowest for the reason that pandemic, revenues are falling, and earnings are shrinking, however some frackers and oilfield gamers are abruptly thriving within the inventory market as they put money into energy era for knowledge facilities and trip the AI wave.
Liberty Vitality—the fracking firm cofounded by U.S. Vitality Secretary Chris Wright—noticed its inventory leap 30% after saying on October 17 it might greater than double its deliberate energy era capability for knowledge facilities. Halliburton’s inventory is up about 15% this month since revealing its 20% possession stake in VoltaGrid and its plans to companion on powering knowledge facilities worldwide. Different main oilfield gamers similar to Baker Hughes, business chief SLB, and Solaris Vitality Infrastructure are investing large within the knowledge middle energy rush as effectively.
“The demand for energy and for AI is like nothing I’ve ever seen by way of demand progress,” stated Halliburton chairman and CEO Jeff Miller throughout an Oct. 21 earnings name. “We additionally know that, not solely within the U.S., however around the globe [AI] is a extremely large alternative set for a similar stage of progress.”
The AI energy push from some drillers and fracking corporations comes as they face the double whammy of weak oil costs and years of declining exercise due to elevated effectivity from drilling rigs and hydraulic fracturing, or frac, fleets.
U.S. oil manufacturing is at an all-time excessive of 13.6 million barrels per day—though it’s believed to have plateaued—despite the fact that the variety of frac fleets required within the U.S. dipped more than 50% in six years as bigger wells had been accomplished extra shortly. For AI, most corporations are utilizing on-site pure gasoline generator units or modestly sized gas-fired generators.
Tom Curran, power know-how analyst with Seaport Analysis Companions, informed Fortune the facility alternative is an rising brilliant spot in an business struggling by means of a hunch.
“It’s very actual, it’s early, and it’s to be decided which kind of approaches and kinds of contracts show to be probably the most aggressive,” Curran stated. “Buyers are nonetheless ascending the training curve and making an attempt to get comfy with the risk-reward profiles of this new area of interest that’s arisen.”
Considerably surprisingly, the largest criticism of Liberty CEO Ron Gusek was directed on the boss of his former boss—President Trump—particularly on the metal and aluminum wanted for energy gear.
“The secretary of power (former Liberty CEO Chris Wright) has known as the race for AI dominance our subsequent Manhattan Mission,” Gusek stated in his Oct. 17 earnings name. “Profitable this race requires entry to large quantities of recent energy era capability and related {hardware}, together with many different subtle elements. A lot of that is at present made abroad, and far of it’s now topic to tariffs.”
“Is that this a path to successful a race the administration has recognized as so crucial to our nation’s future? I might argue, no. It’s a path to mediocrity at greatest. I hope we shortly pivot to a special course, one which places us firmly on the trail to power and AI dominance right here within the U.S.”
Various approaches to catch the AI bump
Liberty Vitality already had invested large in pure gasoline generator gear to affect and energy its fracking providers within the oilfield, and now it’s adapting the digiPower know-how for knowledge facilities. Thankfully, the timing matches effectively with the general business development of electrifying the oilfield and transitioning away from dirtier diesel energy.
Liberty is growing its energy era capability from a deliberate 400 megawatts to greater than 1 gigawatt—sufficient to energy about 750,000 properties—by means of 2027. Additional will increase are anticipated to fulfill the rising demand, Gusek stated.
“My expectation is we in all probability find yourself with the next share of our capability with knowledge middle prospects than possibly we had anticipated on the outset of our foray into this enterprise,” he stated. “We’re assured within the progress trajectory of our energy enterprise and are increasing our energy deliveries in anticipation of buyer conversions from our expansive pipeline of alternatives.”
Liberty and Halliburton—partnered with VoltaGrid—are each leaning on variations of reciprocating pure gasoline generator units lined up one after one other at knowledge facilities. VoltaGrid simply introduced a cope with Oracle to ship 2.3 gigawatts of energy for knowledge facilities.
Whether or not the on-site energy is a brief or long-term resolution for hyperscalers, Liberty has a solution. Liberty additionally partnered with nuclear energy startup Oklo for corporations to transition to Oklo’s small modular nuclear reactors in 5 years, as soon as they’re prepared to return on-line.
Halliburton, with its bigger international footprint, together with within the oil-dependent and tech-hungry Center East, goals to take its energy partnership worldwide on a “international industrial scale,” as CEO Miller described it on a current name with analysts.
Different oilfield gamers, similar to Baker Hughes, SLB, and Solaris, are centered on growing gasoline turbine manufacturing for knowledge facilities. Solaris is working with xAI at its Memphis, Tenn., complicated. SLB is rising its “knowledge middle options” enterprise centered on cooling programs and different crucial {hardware}.
The important thing to long-term success, Seaport Analysis’s Curran stated, isn’t just velocity however consistency.
“It’s one factor to exit and put collectively the capex and plow it into constructing a fleet of those property and ship them, set them up, and switch them on; it’s one other factor to fulfill the requirements of 24-7 energy reliability,” Curran stated.
Gloomier present realities
Whereas the facility alternatives are brilliant, the present earnings experiences are way more dour because the oil sector slogs together with weakened exercise.
Liberty posted third-quarter web revenue of $43 million, down 42% 12 months on 12 months, whereas quarterly revenues fell 17%.
Likewise, Halliburton’s web revenue plunged all the way down to a barely worthwhile $18 million—together with hefty impairment prices—from $571 million, though revenues solely fell 2%.
“Oil and gasoline business frac exercise has now fallen under ranges required to maintain North American oil manufacturing,” Gusek stated. “Oil producers, which comprise a overwhelming majority of North American frac exercise, opted to average completions towards the backdrop of macroeconomic uncertainty and after exceeding manufacturing targets in the course of the first half of the 12 months.”
The businesses are reducing their 2026 capex plans, retiring gear, slicing jobs, and doing as a lot belt tightening as they will.
There’s rising optimism that the worldwide oil glut—exacerbated by ongoing OPEC manufacturing hikes—will peak within the first half of 2026, permitting for the business to rebound within the again half of subsequent 12 months, CEOs stated.
Curran sees that sentiment as bullish, even when it means a number of extra months of a downturn.
“We’re lastly reaching the top of what has been this lengthy, outstanding, continued enhance in U.S. oil manufacturing whereas we’ve had an ongoing contraction in U.S. oilfield exercise,” Curran stated. “That’s been due to this actually miraculous continued upturn in productiveness. Properly, that lastly appears to be reaching its finish. Meaning, even when they need to maintain oil manufacturing flat, they’re going to have to start out choosing up exercise subsequent 12 months.”
