Mammoth Announces Payoff and Termination of Term Credit Facility and Increase in 2024 Capital Expenditure Guidance

Rhea-AI Summary

Mammoth Energy Services, Inc. (NASDAQ: TUSK) has announced the payoff and termination of its term credit facility with Wexford Capital LP. The company used a portion of the proceeds from the first installment payment of the Puerto Rico Electric Power Authority settlement to pay off all outstanding amounts, totaling $50.9 million, including accrued and unpaid interest.

As a result, Mammoth is now debt-free. In light of this development, the company's board of directors has authorized an increase in the 2024 capital expenditure budget to $23 million, an $11 million increase from the previous guidance. The additional funds will be allocated as follows: $6 million for growing and adding crews in the infrastructure division, and $5 million for maintenance of the current infrastructure fleet.

Positive

• Payoff and termination of $50.9 million term credit facility
• Company is now debt-free
• $11 million increase in 2024 capital expenditure budget to $23 million
• Allocation of $6 million for growth in infrastructure division
• Investment of $5 million in maintenance of current infrastructure fleet

Negative

• None.

Insights

Financial Analyst

The payoff and termination of Mammoth Energy's $50.9 million term credit facility marks a significant financial milestone, transforming the company's balance sheet to a debt-free status. This move enhances financial flexibility and reduces interest expenses, potentially improving profitability.

The increased capital expenditure budget, now at $23 million for 2024, signals a strategic shift towards growth and maintenance. Allocating $6 million for crew expansion in the infrastructure division suggests anticipated revenue growth, while the $5 million for fleet maintenance indicates a focus on operational efficiency.

This financial restructuring, funded by the PREPA settlement, positions Mammoth for improved financial health and potential market expansion. Investors should monitor how effectively the company deploys this capital to drive growth and maintain its competitive edge in the energy services sector.

Market Research Analyst

Mammoth Energy's debt clearance and increased capital expenditure guidance present a bullish signal for the company's near-term prospects. The 91.67% increase in capex from the previous guidance demonstrates management's confidence in growth opportunities, particularly in the infrastructure segment.

The strategic allocation of funds between growth ($6 million) and maintenance ($5 million) balances expansion with operational stability. This approach could lead to improved market share and service quality, potentially translating to higher revenues and margins.

Investors should view this development positively, as it indicates a stronger financial position and a proactive growth strategy. However, it's important to monitor the execution of these plans and their impact on future financial performance, especially in the context of the broader energy services market dynamics.

OKLAHOMA CITY, Oct. 3, 2024 /PRNewswire/ -- Mammoth Energy Services, Inc. ("Mammoth" or the "Company") (NASDAQ: TUSK) today announced the payoff and termination of its term credit facility with Wexford Capital LP. On October 2, 2024, the Company used a portion of the proceeds received from the first installment payment from the previously disclosed settlement agreement with the Puerto Rico Electric Power Authority to pay off all outstanding amounts under its term credit facility, including accrued and unpaid interest, in the aggregate amount of $50.9 million, and terminated the facility.  

Mark Layton, Chief Financial Officer, commented, "We are excited to announce the payoff and termination of our term credit facility and are now debt free. In connection with the debt payoff, our board of directors has authorized an increase in our 2024 capital expenditure budget to $23 million, representing an increase of $11 million from our previously announced capex guidance. Of the $11 million increase, we plan to use $6 million to grow and add crews in our infrastructure division and $5 million for maintenance to our current infrastructure fleet."

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; higher 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 the remaining payments under the settlement agreement with 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; 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.

 

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SOURCE Mammoth Energy Services, Inc.

FAQ

What did Mammoth Energy Services (TUSK) announce regarding its term credit facility?

Mammoth Energy Services (TUSK) announced the payoff and termination of its term credit facility with Wexford Capital LP, using proceeds from the Puerto Rico Electric Power Authority settlement.

How much did Mammoth Energy Services (TUSK) pay to settle its term credit facility?

Mammoth Energy Services (TUSK) paid $50.9 million to settle all outstanding amounts under its term credit facility, including accrued and unpaid interest.

What changes did Mammoth Energy Services (TUSK) make to its 2024 capital expenditure guidance?

Mammoth Energy Services (TUSK) increased its 2024 capital expenditure budget by $11 million to a total of $23 million, with $6 million allocated for infrastructure division growth and $5 million for fleet maintenance.

How will Mammoth Energy Services (TUSK) use the increased capital expenditure budget?

Mammoth Energy Services (TUSK) will use $6 million to grow and add crews in its infrastructure division and $5 million for maintenance of its current infrastructure fleet.