COBRA ACQUISITIONS LLC ANNOUNCES SETTLEMENT AGREEMENT WITH PREPA

Total settlement proceeds are expected to be approximately $188 million

OKLAHOMA CITY, July 22, 2024 /PRNewswire/ — Cobra Acquisitions LLC (“Cobra”), a wholly owned subsidiary of Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ: TUSK), announced today that it has entered into a waiver and settlement agreement with the Puerto Rico Electric Power Authority (“PREPA”) and the Financial Oversight and Management Board regarding Puerto Ricoacting as PREPA’s Title III Matter Representative (“FOMB”), to resolve all outstanding issues between Cobra and PREPA (the “Settlement”).

Arty Straehla, CEO, commented, “We are pleased to have reached this agreement with PREPA and look forward to receiving funding for the work we completed over five years ago. We plan to use some of the $188.4 million as part of the settlement, which will be used to repay our term loan, the balance of which was approximately $49.3 million as of 30 June 2024. The remaining amount of approx. $139.1 million will be cash on our balance sheet that will be used to invest in our business and for general corporate purposes.”

Cobra and PREPA have previously entered into two agreements to assist in the rehabilitation and reconstruction of Puerto Rico power grid in response to damage caused by Hurricane Maria in 2017. PREPA is currently the subject of a bankruptcy proceeding that was filed in July 2017 and is currently pending in the United States District Court for the District of Puerto Rico (“Title III Court”). As a result, PREPA’s ability to meet its payment obligations under the aforementioned agreements is largely dependent on funding from the Federal Emergency Management Agency (“FEMA”) or other sources. Since September 30, 2019, Mammoth has been pursuing litigation in the Title III Court and other resolution actions seeking to recover amounts owed to Cobra by PREPA for restaurant services in Puerto Ricowhich proceedings are discussed in more detail in Mammoth’s filings with the Securities and Exchange Commission (the “SEC”). As of June 30, 2024, Cobra had outstanding receivables from PREPA totaling approximately $359.1 million in connection with these agreements. PREPA currently has approximately $18.4 million in funds (the “FEMA Withheld Funds”) received from FEMA for purported foreclosures in this amount asserted by three Puerto Rican municipalities (the “Certain Municipalities”) in connection with certain municipal tax claims that were set forth in Mammoth’s filings with the SEC and for which Cobra is challenging the validity of the foreclosures.

Under the terms of the settlement agreement, Cobra will be entitled to recover administrative costs from PREPA in the amount of $170.0 million (and $18.4 million in withheld FEMA funds). Cobra’s eligible claim will be paid in three installments: (i) $150.0 million on the later of: (A) ten business days after the Title III Court approves the Settlement Agreement; and (B) August 31, 2024; $20.0 million within seven days of the effective date of the PREPA corrections plan; and (iii) $18.4 million in the case of FEMA withheld funds, within (A) ten business days of the deadline for appealing the settlement order entered by the Title III Court under the applicable bankruptcy rules, if no appeal is filed, or (B) if the provisions of the settlement order permitting PREPA to release FEMA withheld funds to Cobra without any liability to the Specified Municipalities are appealed by the Specified Municipalities, within ten business days of the filing of notice of such appeal.

The Settlement Agreement was approved by the Company’s Board of Directors on July 22, 2024, and by the PREPA Board and FOMB. The Settlement Agreement is subject to approval by the Title III Court, which will likely consider the Settlement Agreement motion at a non-omnibus hearing to be held in August 2024 or at a subsequent omnibus hearing to be held on September 18, 2024.

As a result of the Settlement Agreement, the Company will record a non-cash pre-tax charge of approximately $170.7 million in the second quarter of 2024 to reduce the balance due from PREPA to the amount expected under the Settlement Agreement.

About Mammoth Energy Services, Inc.
Mammoth is an integrated, growth-oriented energy services company focused on providing products and services that enable the exploration and development of North America’s onshore unconventional oil and gas reserves, and the construction and repair of the electric grid to privately owned utilities, publicly owned utilities and cooperatives through its infrastructure services businesses. Mammoth’s service and product offerings include: well completion services, infrastructure services, natural sand and backfill services, drilling services and other energy services. For more information, visit www.mammothenergy.com.

Forward-looking statements and warnings
This press release (and any oral statements made regarding the subjects herein, including on the conference call announced herein) contain certain statements and information that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 fact, that address actions, events or developments that Mammoth expects, believes or anticipates will or may occur in the future are forward-looking statements. The words “anticipate,” “believe,” “assert,” “expect,” “if,” “intend,” “plan,” “estimate,” “project,” “forecast,” “predict,” “outlook,” “target,” “will,” “could,” “should,” “potential,” “could,” “likely,” “probably” and similar expressions and the negatives thereof are intended to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements in this press release include, but are not limited to, statements, estimates and forecasts regarding the Company’s business prospects and plans, future financial condition, liquidity and capital resources, operations, results, acquisitions, returns, capital expenditure budgets, share repurchase plans under the share repurchase program, costs and other indications of future events. Forward-looking statements are not assurances of future results. These forward-looking statements are based on management’s current expectations and beliefs, projections regarding the Company’s current operations, experience and perception of historical trends, current conditions, anticipated future events and their impact 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 of the date they were made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in whole or in full). In addition, 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 with the SEC, including those relating to the Company’s acquisitions and contracts, many of which are beyond the Company’s control, which could cause actual results to differ materially from historical experience and current expectations or projections that are implied or expressed in the forward-looking statements. Important factors that could cause actual results to differ materially from those contained in the forward-looking statements include, among others: demand for our services; volatility in the prices of crude oil and natural gas and the actions of members of OPEC and other exporting nations affecting commodity prices and production levels; the impact of war in Ukraine and Israel’s war with Hamas on global energy and capital markets and global stability; contract execution and supply chain disruptions; inflationary pressures; high interest rates and their impact on the cost of capital; volatility in the banking and financial services sectors; the outcome of ongoing governmental investigations and other legal proceedings, including those related to contracts awarded by PREPA to Cobra’s subsidiary; failure to receive or delay in receiving Court approval of Title III of the Settlement Agreement to resolve all outstanding matters between Cobra and PREPA and/or payments thereunder discussed in this press release; the Company’s inability to replace previous levels of work in its business segments, including its infrastructure and well completion services segments; risks related to economic conditions, including concerns about a potential economic downturn or recession; the impact of the recent federal infrastructure bill on the infrastructure industry and our infrastructure services business; the loss or interruption of one or more significant suppliers or customers of Mammoth; loss of management and/or personnel; the outcome or resolution of our litigation and the impact on our financial condition and results of operations; the effects of governmental regulations, permits and other legal requirements; operational risks; adequacy of capital resources and liquidity; Mammoth’s ability to comply with applicable financial covenants and other covenants under its revolving credit facility and Mammoth’s term loan; weather; natural disasters; litigation; volatility in the commodity markets; competition in the oil and natural gas and infrastructure industries; and resource costs and availability.

We caution investors not to place undue reliance on any forward-looking statement, which speaks only as of the date on which such statement is made. We do not undertake any obligation to revise, adjust or update any forward-looking statement after the date on which 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.