Business Context and Reporting Period
This Form 8-K was filed by Mammoth Energy Services, Inc. on May 26, 2018. The report details a material definitive agreement entered into by Cobra Acquisitions LLC, a wholly-owned subsidiary of Mammoth, with the Puerto Rico Electric Power Authority (PREPA).
Key Financial Metrics and Contract Details
- New Contract Value: The "New PREPA Contract" provides for total payments not to exceed $900.0 million.
- Contract Term: One year, ending May 25, 2019.
- Scope: Restoration of electrical transmission and distribution components damaged by Hurricane Maria and support for the initial phase of reconstruction.
- Capital Budget Adjustment: Mammoth increased its 2018 capital budget by $35 million to approximately $160 million to fund additional equipment, trucks, and tools.
- Workforce Expansion: Cobra increased its resource count from approximately 1,000 people (as of March 31, 2018) to an expected 1,250 people within 60 days.
Material Changes
The primary material change is the execution of the new master services agreement, which is in addition to an existing contract Cobra entered into in October 2017 for restoration services. The company is scaling up operations in Puerto Rico to meet the demands of the new contract.
Outlook and Management Commentary
Management expects to deploy approximately 1,250 personnel to the island within the next 60 days. The contract was awarded following a request for proposal (RFP) bid process that began in February 2018. A press release regarding this agreement was issued on May 29, 2018.
Investor Verification Points
- Verify the specific terms and conditions of the Master Service Contract filed as Exhibit 10.1.
- Monitor the execution of the $35 million capital budget increase for equipment and tools.
- Track the timeline for workforce expansion to 1,250 personnel in Puerto Rico.
- Review the status of the original October 2017 contract to understand total exposure to PREPA.