On August 9, 2024, Mammoth Energy Services Inc (TUSK, Financial) released its 8-K filing detailing the financial and operational results for the second quarter ended June 30, 2024. Mammoth Energy Services Inc is an integrated, growth-oriented energy services company engaged in 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 infrastructure services businesses.
Performance Overview
For the second quarter of 2024, Mammoth Energy Services Inc reported total revenue of $51.5 million, surpassing the analyst estimate of $42.97 million. This marks an increase from the $43.2 million reported in the first quarter of 2024. However, the company faced a significant net loss of $156.0 million, or $3.25 per diluted share, compared to a net loss of $11.8 million, or $0.25 per diluted share, in the previous quarter. The substantial loss was primarily due to a $170.7 million expense related to a settlement agreement between Mammoth’s subsidiary Cobra Acquisitions LLC and the Puerto Rico Electric Power Authority (PREPA).
Settlement Agreement Impact
On July 22, 2024, Cobra entered into a release and settlement agreement with PREPA, resulting in a non-cash, pre-tax charge of approximately $170.7 million for the second quarter. Despite this, the company expects to receive $188.4 million in total settlement proceeds, which will be used to pay off its term credit facility and invest back into the business.
Segment Performance
Mammoth’s well completion services division reported revenue of $10.0 million for the second quarter, up from $8.3 million in the first quarter. The infrastructure services division saw revenue increase to $31.4 million from $25.0 million. The natural sand proppant services division contributed $4.7 million in revenue, slightly up from $4.3 million. The drilling services division also saw a modest increase in revenue to $0.7 million from $0.5 million in the first quarter.
Financial Metrics and Liquidity
Adjusted EBITDA for the second quarter was ($160.7) million, compared to $4.5 million in the first quarter. Excluding the non-recurring settlement expense and interest income previously accrued on the receivable with PREPA, Adjusted EBITDA would have been ($0.3) million for the second quarter. As of June 30, 2024, Mammoth had cash on hand of $10.3 million and total liquidity of $24.6 million.
Commentary from Management
"We are pleased to report sequential improvement in our second quarter results, compared to the first quarter, despite continued challenges that persist due to industry activity softness, especially in the natural gas basins that we operate, constraining our Well Completion Services division and other oilfield services. Our Infrastructure Services business continues to perform well and is demonstrating growth both sequentially and year over year," said Arty Straehla, Chief Executive Officer of Mammoth.
Analysis
Mammoth Energy Services Inc's second-quarter results highlight the company's ability to generate revenue growth despite industry challenges. The significant net loss due to the settlement agreement with PREPA is a notable setback, but the anticipated settlement proceeds provide a positive outlook for the company's financial health. The infrastructure services division's strong performance is a key highlight, indicating potential growth opportunities in this segment.
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Explore the complete 8-K earnings release (here) from Mammoth Energy Services Inc for further details.
