Mammoth Energy Announces Submission of Certified Claim to the Federal Emergency Management Agency

Rhea-AI Summary

Mammoth Energy Services (NASDAQ: TUSK) announced on January 24, 2023, that its subsidiary, Cobra Acquisitions LLC, has filed a certified claim for approximately $379 million with FEMA due to unpaid work related to the restoration of Puerto Rico's power grid after Hurricane Maria in 2017. Despite assurances from FEMA, Cobra has not received payment for its efforts made over five years ago. The CEO emphasized their expectation for payment and highlighted the company's readiness to pursue legal action if necessary. This development underscores ongoing financial challenges and operational complexities faced by Cobra in recovering owed funds.

Positive

• Cobra filed a certified claim for approximately $379 million with FEMA for work performed in Puerto Rico, reflecting the company's efforts to secure overdue payments.
• The claim emphasizes the completion of an urgent task in Puerto Rico's power restoration, demonstrating Cobra's capability to mobilize quickly under challenging conditions.

Negative

• Cobra has faced over five years of delays in receiving payment from FEMA, indicating persistent financial and operational hurdles.
• The prolonged payment dispute may adversely affect Mammoth's cash flow and financial stability moving forward.

OKLAHOMA CITY, Jan. 24, 2023 /PRNewswire/ -- Mammoth Energy Services, Inc. (NASDAQ: TUSK) ("Mammoth" or the "Company") today announced that its wholly owned subsidiary Cobra Acquisitions LLC ("Cobra") has submitted a certified claim for approximately $379 million to the Federal Emergency Management Agency ("FEMA") pursuant to the federal Contract Disputes Act.

In the aftermath of Hurricane Maria in 2017, Puerto Rico was without electricity, and the entire Island was declared a federal disaster zone. There was an urgent need to restore power to the Island as quickly as possible, but few companies had the ability to mobilize immediately to an island, particularly one that had just been devastated. Additionally, many companies were reticent about contracting with the Puerto Rico Electric Power Authority ("PREPA"), which had declared bankruptcy earlier in 2017. Nevertheless, Cobra agreed to mobilize immediately and restore the power grid in Puerto Rico based on assurances from the highest levels of FEMA that it would be paid for its work. Despite having successfully undertaken that Herculean task, and despite spending years attempting to work with FEMA and PREPA to collect this debt, more than five years after Hurricane Maria hit, Cobra still has not been paid over $379 million that it is owed. Cobra is hopeful that FEMA will agree to pay this claim, but Cobra is prepared to exercise its appellate rights, including seeking judicial review, if FEMA refuses to honor its commitment. 

Arty Straehla, Chief Executive Officer, commented, "Despite multiple affirmations of our work by FEMA itself, we remain unpaid for work we completed in Puerto Rico over three years ago. Our team answered FEMA's call for assistance when it was needed, and we deserve to be paid for the work we did."

Cobra is represented in this proceeding by Abbe Lowell and Christopher Man from Winston & Strawn LLP.

Mammoth Energy Services, Inc.

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

Contact: 
Mark Layton, Chief Financial Officer 
mlayton@mammothenergy.com  
(405) 608-6007

Investors: 
Rick Black 
rblack@dennardlascar.com  
(832) 435-0026

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 press 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, 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: any continuing impacts of the COVID-19 pandemic, related global and national health concerns and economic repercussions; 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 on the global energy and capital markets and global stability; operational challenges relating to the COVID-19 pandemic and efforts to mitigate the spread of the virus, including logistical challenges, protecting the health and well-being of our employees, remote work arrangements, performance of contracts and supply chain disruptions; inflationary pressures; rising interest rates and their impact on the cost of capital; the outcome of ongoing government investigations and other legal proceedings, including those relating to the contracts awarded to the Company's subsidiary Cobra Acquisitions LLC ("Cobra") by the Puerto Rico Electric Power Authority ("PREPA"); the failure to receive or delays in receiving governmental authorizations, approvals and/or payments, including payments with respect to the PREPA account receivable for prior services to PREPA performed by Cobra; 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; the effects of government regulation, permitting and other legal requirements; operating risks; the adequacy of capital resources and liquidity; Mammoth's ability to (i) continue to comply with or, if applicable, obtain a waiver of forecasted or actual non-compliance with certain financial covenants from its lenders and comply with other terms and conditions under its amended revolving credit facility, as amended, (ii) extend or refinance our revolving credit facility at or prior to maturity on the terms acceptable to Mammoth or at all and (iii) meet its financial projections associated with reducing its debt; 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 is the claim amount submitted by Mammoth Energy Services to FEMA?

Mammoth Energy Services submitted a certified claim of approximately $379 million to FEMA.

When was the claim submitted by Mammoth Energy Services?

The claim was submitted on January 24, 2023.

What was the reason for Mammoth Energy Services' claim to FEMA?

The claim is for unpaid work related to the restoration of Puerto Rico's power grid after Hurricane Maria in 2017.

What actions will Mammoth Energy Services take if FEMA does not pay the claim?

Mammoth Energy Services is prepared to exercise its appellate rights, including seeking judicial review if FEMA refuses to pay.