OKLAHOMA CITY - Cobra Acquisitions LLC, a subsidiary of Mammoth Energy Services, Inc. (NASDAQ: NASDAQ:TUSK), has received $18.4 million from the Puerto Rico Electric Power Authority (PREPA) as part of a settlement agreement, the company announced today. This payment is in line with the terms of a previously disclosed accord related to PREPA's bankruptcy proceedings.
Arty Straehla, CEO of Mammoth, stated that the company is looking forward to the final installment of $20 million, which is expected upon the confirmation of PREPA's plan of adjustment. Straehla emphasized the company's strong cash position and debt-free status, indicating a strategic approach to capital deployment aimed at enhancing value.
In conjunction with the payment, Mammoth has amended its revolving credit agreement and entered a letter of credit reimbursement agreement with Fifth Third Bank. These agreements facilitate the issuance of letters of credit to meet Cobra's obligations under the settlement. Mammoth has agreed to maintain cash collateral at 105% of the value of all letters of credit, resulting in $19.3 million being transferred to a restricted account as security.
The settlement agreement, sanctioned by the United States District Court for the District of Puerto Rico, entitles Cobra to $188.4 million in total. To date, Cobra has received $168.4 million, with the remaining $20 million due within seven days following the effective date of PREPA's adjustment plan.
Mammoth Energy Services is an integrated energy service company engaged in supporting North American onshore unconventional oil and natural gas exploration, as well as electric grid construction and repair. The company offers a broad range of services, including well completion, infrastructure, natural sand and proppant, drilling, and other energy services.
This payment marks a progression in the settlement process between Cobra Acquisitions and PREPA, providing financial inflow and reinforcing Mammoth's fiscal strategies. The information is based on a press release statement.
In other recent news, Mammoth Energy Services has made significant strides in improving its financial health. The company recently paid off its term credit facility with Wexford Capital LP, using proceeds from a settlement with the Puerto Rico Electric Power Authority (PREPA), to achieve a debt-free status. Following this, Mammoth's CFO, Mark Layton, announced an increase in the 2024 capital expenditure budget to $23 million.
In line with this, the company's subsidiary, Cobra Acquisitions, confirmed the receipt of $150 million from the Commonwealth of Puerto Rico, as part of a settlement agreement with PREPA. The total settlement proceeds amount to $188.4 million, with the remaining $38.4 million to be paid in two parts, contingent on certain conditions.
In their Q2 financial results, Mammoth Energy reported a net loss of $156 million, primarily due to the PREPA settlement, with an adjusted EBITDA of negative $160.7 million. Despite the challenging industry environment, the company showed a sequential improvement over the previous quarter. Looking ahead, Mammoth Energy anticipates flat activity levels for the remainder of 2024, with a potential increase in 2025. These recent developments highlight the company's strategic financial management and its efforts to optimize its service delivery in the energy sector.
InvestingPro Insights
The recent $18.4 million payment from PREPA to Cobra Acquisitions, a subsidiary of Mammoth Energy Services (NASDAQ: TUSK), aligns with several key financial indicators from InvestingPro.
According to InvestingPro data, Mammoth Energy Services has a market capitalization of $217.54 million, which puts the recent payment into perspective as a significant cash influx. This payment, along with the expected final $20 million installment, could have a substantial impact on the company's financial position.
An InvestingPro Tip indicates that Mammoth Energy Services "operates with a moderate level of debt," which is consistent with CEO Arty Straehla's statement about the company's debt-free status. This financial prudence may position the company well for future growth and capital deployment.
Another relevant InvestingPro Tip suggests that the company's "liquid assets exceed short-term obligations." This aligns with the company's ability to maintain cash collateral for the letters of credit issued as part of the settlement agreement.
It's worth noting that InvestingPro offers 7 additional tips for Mammoth Energy Services, providing investors with a more comprehensive view of the company's financial health and market performance. These additional insights could be valuable for those looking to understand the full impact of this settlement on TUSK's future prospects.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.