Cobra Acquisitions LLC Announces Receipt of $150 Million

Rhea-AI Summary

Cobra Acquisitions , a subsidiary of Mammoth Energy Services (NASDAQ: TUSK), has received $150 million from the Commonwealth of Puerto Rico as part of a Settlement Agreement with the Puerto Rico Electric Power Authority (PREPA). This is the first installment of a total $188.4 million settlement. CEO Arty Straehla stated that the company plans to use this initial payment to clear all outstanding obligations under their term credit facility by October 16, 2024.

The remaining $38.4 million will be paid in two installments: $20 million following PREPA's plan of adjustment, and $18.4 million in Withheld FEMA Funds. Mammoth intends to strategically deploy this capital to pursue value-enhancing opportunities and strengthen the company's future position.

Positive

• Receipt of $150 million initial settlement payment
• Total settlement amount of $188.4 million to be received
• Plan to extinguish all outstanding obligations under term credit facility
• Significant improvement in cash position on balance sheet
• Opportunity for strategic capital deployment and value-enhancing initiatives

Negative

• Remaining $38.4 million settlement payment subject to certain conditions and potential delays

Insights

Financial Analyst

The receipt of $150 million by Cobra Acquisitions is a significant positive development for Mammoth Energy Services. This influx of cash will have immediate and long-term benefits:

• Debt Reduction: The company plans to extinguish all outstanding obligations under its term credit facility, which will strengthen its balance sheet and reduce interest expenses.
• Improved Liquidity: With $98.8 million remaining from this installment and an additional $38.4 million expected, Mammoth's cash position will be substantially bolstered.
• Strategic Opportunities: The company intends to pursue "accretive, value-enhancing opportunities," which could include acquisitions, investments in growth initiatives, or expansion into new markets.

The settlement's total value of $188.4 million represents a significant portion of Mammoth's current market cap of $196.8 million, highlighting the transformative nature of this cash infusion. Investors should monitor how management deploys this capital, as it could reshape the company's future prospects and financial health.

Legal Expert

The settlement agreement with PREPA represents a successful resolution of a complex legal dispute. Key points to consider:

• Court Approval: The settlement has been approved by Judge Laura Taylor Swain, providing legal certainty to the agreement.
• Structured Payments: The phased payment structure ($150 million initial, $20 million tied to PREPA's plan of adjustment and $18.4 million in withheld FEMA funds) mitigates risk and ensures a steady cash flow.
• Contingencies: The final $18.4 million payment is subject to potential appeals, which could delay receipt but is unlikely to jeopardize the overall settlement.

This resolution not only provides immediate financial benefits but also removes a significant legal overhang for Mammoth Energy. The structured nature of the payments and the court's approval provide a high degree of certainty for investors regarding the company's future cash flows from this settlement.

OKLAHOMA CITY, Oct. 1, 2024 /PRNewswire/ --Cobra Acquisitions LLC ("Cobra"), a wholly owned subsidiary of Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK), today announced the receipt of $150 million from the Commonwealth of Puerto Rico in accordance with the Settlement Agreement with the Puerto Rico Electric Power Authority ("PREPA").

Arty Straehla, Chief Executive Officer, commented, "We are happy to have received the initial $150 million in settlement proceeds. With this first installment, we intend to extinguish all outstanding obligations under our term credit facility on or before October 16, 2024 and we expect the remaining amount of approximately $98.8 million, along with the $38.4 million still owed to us through the remaining installments, will have a transformative impact on our business going forward. We now maintain a significant cash position on our balance sheet, and we will take a meticulous and strategic approach when deploying this capital. We intend to pursue accretive, value-enhancing opportunities as we strive to strengthen Mammoth for the future."

Under the terms of the Settlement Agreement, which was approved by Judge Laura Taylor Swain, Cobra will receive total settlement proceeds of $188.4 million. Of the $38.4 million still owed to Cobra, $18.4 million relates to funds PREPA has received from the Federal Emergency Management Agency ("FEMA") but are currently withholding. These funds are to be paid out according to the terms of the Settlement Agreement, which can be found below.

Settlement Agreement Terms
The proceeds of the Settlement Agreement will be paid to Cobra through three installments: (i) $150.0 million on the later of (A) ten business days following approval of the Settlement Agreement by the Title III Court and (B) August 31, 2024; (ii) $20.0 million within seven days following the effective date of PREPA's plan of adjustment; and (iii) $18.4 million in the Withheld FEMA Funds within either (A) ten business days after the deadline for appealing the entry of the settlement order by the Title III Court under the applicable bankruptcy rules of procedure if no such appeal is filed, or (B) if the provisions of the settlement order allowing PREPA to release the Withheld FEMA Funds to Cobra without retaining any liability to the Specified Municipalities are appealed by the Specified Municipalities, within ten business days of the filing of the notice of such appeal.

About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy services company focused on the providing products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserves as well as the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through its infrastructure services businesses. Mammoth's suite of services and products include: well completion services, infrastructure services, natural sand and proppant services, drilling services and other energy services. For more information, please visit www.mammothenergy.com.

Contacts:
Mark Layton, CFO
Mammoth Energy Services, Inc
investors@mammothenergy.com

Rick Black / Ken Dennard
Dennard Lascar Investor Relations
TUSK@dennardlascar.com

Forward-Looking Statements and Cautionary Statements
This news release (and any oral statements made regarding the subjects of this release, including on the conference call announced herein) contains certain statements and information that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts that address activities, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words "anticipate," "believe," "ensure," "expect," "if," "intend," "plan," "estimate," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "potential," "would," "may," "probable," "likely" and similar expressions, and the negative thereof, are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this news release specifically include statements, estimates and projections regarding the Company's business outlook and plans, future financial position, liquidity and capital resources, operations, performance, acquisitions, returns, capital expenditure budgets, plans for stock repurchases under its stock repurchase program, costs and other guidance regarding future developments. Forward-looking statements are not assurances of future performance. These forward-looking statements are based on management's current expectations and beliefs, forecasts for the Company's existing operations, experience and perception of historical trends, current conditions, anticipated future developments and their effect on Mammoth, and other factors believed to be appropriate. Although management believes that the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Moreover, the Company's forward-looking statements are subject to significant risks and uncertainties, including those described in its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings it makes with the SEC, including those relating to the Company's acquisitions and contracts, many of which are beyond the Company's control, which may cause actual results to differ materially from historical experience and present expectations or projections which are implied or expressed by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: demand for our services; the volatility of oil and natural gas prices and actions by OPEC members and other exporting nations affecting commodities prices and production levels; the impact of the war in Ukraine and the Israel-Hamas war on the global energy and capital markets and global stability; performance of contracts and supply chain disruptions; inflationary pressures; high interest rates and their impact on the cost of capital; instability in the banking and financial services sectors; the outcome of ongoing government investigations and other legal proceedings; the failure to receive or delays in receiving payments discussed in this news release to settle all outstanding matters between Cobra and PREPA; the Company's inability to replace the prior levels of work in its business segments, including its infrastructure and well completion services segments; risks relating to economic conditions, including concerns over a potential economic slowdown or recession; impacts of the recent federal infrastructure bill on the infrastructure industry and our infrastructure services business; the loss of or interruption in operations of one or more of Mammoth's significant suppliers or customers; the loss of management and/or crews; the outcome or settlement of our litigation matters and the effect on our financial condition and results of operations; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; Mammoth's ability to comply with the applicable financial covenants and other terms and conditions under Mammoth's revolving credit facility and term loan; weather; natural disasters; litigation; volatility in commodity markets; competition in the oil and natural gas and infrastructure industries; and costs and availability of resources.

Investors are cautioned not to place undue reliance on any forward-looking statement which speaks only as of the date on which such statement is made. We undertake no obligation to correct, revise or update any forward-looking statement after the date such statement is made, whether as a result of new information, future events or otherwise, except as required by applicable law.

View original content:https://www.prnewswire.com/news-releases/cobra-acquisitions-llc-announces-receipt-of-150-million-302264700.html

SOURCE Mammoth Energy Services, Inc.

FAQ

What is the total settlement amount Cobra Acquisitions (TUSK) will receive from PREPA?

Cobra Acquisitions will receive a total settlement amount of $188.4 million from the Puerto Rico Electric Power Authority (PREPA).

How much of the settlement has Cobra Acquisitions (TUSK) received as of October 1, 2024?

As of October 1, 2024, Cobra Acquisitions has received $150 million of the total $188.4 million settlement from PREPA.

When does Cobra Acquisitions (TUSK) plan to clear its term credit facility obligations?

Cobra Acquisitions plans to extinguish all outstanding obligations under its term credit facility on or before October 16, 2024.

How will the remaining settlement payments to Cobra Acquisitions (TUSK) be structured?

The remaining payments will be made in two installments: $20 million following PREPA's plan of adjustment, and $18.4 million in Withheld FEMA Funds subject to certain conditions.