Cobra Acquisitions secures $150 million from Puerto Rico By Investing.com

OKLAHOMA CITY – Cobra Acquisitions LLC, a subsidiary of Mammoth Energy Services Inc . (NASDAQ: NASDAQ:), confirmed today that it has received $150 million from the Commonwealth of Puerto Rico. This payment is in line with the terms of a Settlement Agreement with the Puerto Rico Electric Power Authority (PREPA).

Arty Straehla, CEO of Mammoth, stated that the funds will be used to clear all outstanding obligations under their term credit facility by October 16, 2024. Straehla anticipates that the initial payment, along with an additional $98.8 million expected and $38.4 million in subsequent installments, will significantly impact the company’s future operations. The CEO highlighted a strategic approach to deploying the capital, focusing on accretive and value-enhancing opportunities.

The total settlement proceeds amount to $188.4 million, with the remaining $38.4 million including $18.4 million of FEMA funds currently held by PREPA. These funds will be disbursed according to the settlement conditions approved by Judge Laura Taylor Swain.

Mammoth Energy Services, based in Oklahoma City, is an integrated energy services company catering to North American onshore unconventional oil and reserves. Their services span well completion, infrastructure, natural sand and proppant, drilling, and other energy services.

The settlement proceeds will be paid in three installments: the initial $150 million, $20 million following the effective date of PREPA’s plan of adjustment, and the final $18.4 million contingent on the resolution of specific legal conditions related to FEMA funds.

This news is based on a press release statement and includes forward-looking statements subject to risks and uncertainties. The company’s future performance may differ materially from current expectations due to various factors, including market volatility, regulatory changes, and operational challenges.

In other recent news, Mammoth Energy Services, through its subsidiary Cobra Acquisitions, is set to receive $188.4 million from a settlement agreement with the Puerto Rico Electric Power Authority (PREPA). The court-approved agreement obligates PREPA to disburse an initial amount of $150 million to Cobra, with the remaining $38.4 million to be paid in two parts, contingent on certain conditions. This recent development follows Mammoth Energy’s Q2 financial results, which showed a sequential improvement over the previous quarter despite a challenging industry environment. The company reported a net loss of $156 million, primarily due to the PREPA settlement, with an adjusted EBITDA of negative $160.7 million. Looking ahead, Mammoth Energy anticipates flat activity levels for the remainder of 2024, with a potential increase in 2025. The settlement funds are expected to be used for paying off their term credit facility and reinvesting in the business. This recent news provides insight into the company’s current financial situation and future plans.

InvestingPro Insights

The recent $150 million payment to Cobra Acquisitions LLC, a subsidiary of Mammoth Energy Services Inc. (NASDAQ: TUSK), marks a significant financial milestone for the company. This influx of capital comes at a crucial time, as InvestingPro data reveals that Mammoth Energy has been facing some financial challenges.

According to InvestingPro, Mammoth Energy’s revenue for the last twelve months as of Q2 2023 stood at $212.46 million, with a concerning revenue growth decline of -47.13% over the same period. This context makes the settlement proceeds even more critical for the company’s financial health and future operations.

An InvestingPro Tip highlights that Mammoth Energy has a strong return over the last three months, with the 3-month price total return at an impressive 25.46%. This positive market sentiment aligns with the recent settlement news and could indicate investor optimism about the company’s future prospects.

Another relevant InvestingPro Tip notes that Mammoth Energy’s liquid assets exceed its short-term obligations. This financial stability, combined with the incoming settlement funds, positions the company well for CEO Arty Straehla’s stated plans to clear outstanding obligations and pursue value-enhancing opportunities.

For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and insights that could provide a deeper understanding of Mammoth Energy’s financial position and future potential. The InvestingPro product includes 6 more tips for TUSK, which could be valuable for those looking to make informed investment decisions in the energy services sector.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.