EXHIBIT 99.3
MAMMOTH ENERGY SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
TABLE OF CONTENTS



MAMMOTH ENERGY SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION


On March 20, 2017, the Company entered into three definitive contribution agreements, one such agreement with MEH Sub LLC, a Delaware limited liability company managed by Wexford Capital LP (“MEH Sub”), Gulfport Energy Corporation, a Delaware corporation (“Gulfport”), Rhino Exploration LLC, a Delaware limited liability company, and Mammoth Energy Partners LLC, a Delaware limited liability company (“Mammoth Partners LLC”), and the other two agreements with MEH Sub, Gulfport and Mammoth Partners LLC (collectively, the “Contribution Agreements”), pursuant to which the Company agreed to acquire, through Mammoth Partners LLC, all outstanding membership interests in Sturgeon Acquisitions LLC, a Delaware limited liability company ("Sturgeon"), Stingray Energy Services LLC, a Delaware limited liability company ("Stingray Energy"), and Stingray Cementing LLC, a Delaware limited liability company ("Stingray Cementing") (collectively, the “Targets”). The Targets will be acquired pursuant to the Contribution Agreements for aggregate consideration consisting of 7,000,000 shares (the “Stock Consideration”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), valued at approximately $133.4 million, based on the closing price of $19.06 per share for the Common Stock on March 20, 2017 (collectively, the “Transaction”). The Transaction is expected to close in the second quarter of 2017.

The unaudited pro forma condensed consolidated financial statements have been prepared to show the effect of the acquisition of Stingray Energy and Stingray Cementing (together, “Stingray”) and Sturgeon on Mammoth Energy Services, Inc.'s (collectively with its consolidated subsidiaries, the “Company”) results of operations and financial position for the periods and as of the dates indicated.

Sturgeon and the Company are under common control and it is required under accounting principles generally accepted in the United States of America ("US GAAP") to account for this common control acquisition in a manner similar to pooling of interest method of accounting. The acquisition of Stingray (the "Stingray Acquisition") is being accounted for by application of the acquisition method in accordance with FASB ASC 805, Business Combinations. Under the acquisition method assets acquired and liabilities assumed in connection with the acquisition are generally recorded at their fair values as of the effective date of the acquisition.

The unaudited pro forma condensed consolidated financial statements have been prepared as if the Transaction occurred on September 13, 2014, in the case of the unaudited pro forma condensed consolidated statements of comprehensive (loss) income for the years ended December 31, 2016, 2015 and 2014. The unaudited pro forma condensed consolidated balance sheet has been prepared as if the transaction occurred on December 31, 2016. The unaudited pro forma condensed consolidated financial statements have also been prepared based on certain pro forma adjustments, as described in Note 2—Pro forma adjustments and are qualified in their entirety by reference to and should be read in conjunction with the following historical financial statements and related notes contained in those financial statements: (i) Stingray's audited financial statements as of and for years ended December 31, 2016 and 2015 set forth in Exhibit 99.1 of this Information Statement; (ii) Sturgeon’s audited consolidated financial statements as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended and the period September 13, 2014 to December 31, 2014 set forth in Exhibit 99.2 of this Information Statement; and (iii) the Company’s audited consolidated financial statements as of and for years ended December 31, 2016, 2015 and 2014 set forth in its Annual Report on Form 10-K and filed with the U.S. Securities and Exchange Commission which are incorporated by reference in this Information Statement.

The pro forma adjustments reflected in the pro forma condensed consolidated financial statements are based upon currently available information and certain assumptions and estimates; therefore, the actual effects of the Transaction will differ from the pro forma adjustments. However, the Company’s management considers the applied estimates and assumptions to provide a reasonable basis for the presentation of the significant effects of that the Transaction is expected to have on the Company. In addition, the Company’s management considers the pro forma adjustments to be factually supportable and to appropriately represent the expected impact of items that are directly attributable to the purchase of the Targets by the Company.

The unaudited pro forma condensed consolidated financial information is provided for illustrative purposes only and does not purport to represent what our actual results of operations or our financial position would have been had the transactions occurred on the respective dates assumed, nor is it indicative of our future operating results or financial position.



1
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 2016
(Unaudited)


 
 
 
 
 
 
 
 
Pro Forma Adjustments
 
 
ASSETS
 
Mammoth
 
Stingray
 
Sturgeon
 
Stingray
 
Sturgeon
 
 
 
Mammoth
 
 
Historical
 
(A)
 
(B)
 
Adjustments
 
Adjustments
 
 
 
Pro Forma
CURRENT ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
28,693,985

 
$
1,930,065

 
$
544,633

 
$
(5,437,849
)
 
$
—

 
c, e
 
$
25,730,834

Accounts receivable, net
 
20,602,962

 
625,914

 
564,520

 
—

 
—

 
 
 
21,793,396

Receivables from related parties
 
28,059,565

 
5,634,618

 
2,232,918

 
(1,135,484
)
 
(2,502,801
)
 
a, b
 
32,288,816

Inventories
 
4,355,088

 
265,671

 
1,769,113

 
—

 
—

 
 
 
6,389,872

Prepaid Expenses
 
4,254,148

 
185,403

 
171,724

 
(3,192
)
 
—

 
b
 
4,608,083

Other current assets
 
391,599

 
—

 
—

 
—

 
—

 
 
 
391,599

Total current assets
 
86,357,347

 
8,641,671

 
5,282,908

 
(6,576,525
)
 
(2,502,801
)
 
 
 
91,202,600

 
 
 
 
 
 
 
 
 
 
 
 
 
 


Property, plant and equipment, net
 
221,247,228

 
13,948,660

 
20,872,435

 
3,443,064

 
—

 
d
 
259,511,387

Sand reserves, net
 
—

 
—

 
55,367,295

 
—

 
—

 
 
 
55,367,295

Intangible assets, net - customer relationships
 
15,949,772

 
—

 
—

 
—

 
—

 
 
 
15,949,772

Intangible assets, net - trade names
 
5,617,057

 
—

 
—

 
—

 
—

 
 
 
5,617,057

Goodwill
 
86,043,148

 
—

 
2,683,727

 
10,483,929

 
—

 
d
 
99,210,804

Other non-current assets
 
5,339,283

 
7,715

 
303,377

 
(7,715
)
 
(306,477
)
 
e
 
5,336,183

Total assets
 
$
420,553,835

 
$
22,598,046

 
$
84,509,742

 
$
7,342,753

 
$
(2,809,278
)
 
 
 
$
532,195,098

 
 
 
 
 
 
 
 


 
 
 
 
 


LIABILITIES AND EQUITY
 
 
 
 
 
 
 


 


 
 
 


CURRENT LIABILITIES
 
 
 
 
 
 
 
 
 
 
 
 
 


Accounts payable
 
$
18,480,325

 
$
3,327,009

 
$
1,982,812

 
$
—

 
$
—

 
 
 
$
23,790,146

Payables to related parties
 
2,434,031

 
1,362,324

 
476,687

 
(1,534,343
)
 
(2,704,842
)
 
a, f, g
 
33,857

Accrued expenses and other current liabilities
 
8,396,968

 
254,752

 
311,568

 
—

 
—

 
 
 
8,963,288

Income taxes payable
 
28,156

 
—

 
—

 
195,886

 
—

 
h
 
224,042

Current maturities of long-term debt
 
—

 
870,885

 
—

 
(870,885
)
 
—

 
e
 
—

Total current liabilities
 
29,339,480

 
5,814,970

 
2,771,067

 
(2,209,342
)
 
(2,704,842
)
 
 
 
33,011,333

 
 
 
 
 
 
 
 
 
 
 
 
 
 


Long-term debt
 
—

 
4,566,964

 
—

 
(4,566,964
)
 
—

 
e
 
—

Deferred income taxes
 
47,670,789

 
—

 
—

 
1,871,970

 
3,238,079

 
h
 
52,780,838

Other liabilities
 
2,501,886

 
—

 
—

 
—

 
—

 
 
 
2,501,886

Total liabilities
 
79,512,155

 
10,381,934

 
2,771,067

 
(4,904,336
)
 
533,237

 
 
 
88,294,057

 
 
 
 
 
 
 
 
 
 
 
 
 
 


EQUITY
 
 
 
 
 
 
 
 
 


 
 
 


Equity:
 
 
 
 
 
 
 
 
 
 
 
 
 


Common stock
 
375,000

 
—

 
—

 
13,925

 
56,075

 
i
 
445,000

Additional paid in capital
 
400,205,921

 
—

 
—

 
26,528,039

 
81,884,641

 
i
 
508,618,601

Member's equity
 
—

 
12,216,112

 
81,738,675

 
(12,216,112
)
 
(81,738,675
)
 
i
 
—

Accumulated Deficit
 
(56,322,878
)
 
—

 
—

 
(2,078,763
)
 
(3,544,556
)
 
e, h
 
(61,946,197
)
Accumulated other comprehensive loss
 
(3,216,363
)
 
—

 
—

 
—

 
—

 
 
 
(3,216,363
)
Total equity
 
341,041,680

 
12,216,112

 
81,738,675

 
12,247,089

 
(3,342,515
)
 
 
 
443,901,041

Total liabilities and equity
 
$
420,553,835

 
$
22,598,046

 
$
84,509,742

 
$
7,342,753

 
$
(2,809,278
)
 
 
 
$
532,195,098




2
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
YEAR ENDED DECEMBER 31, 2016
(Unaudited)



 
 
 
 
 
 
 
Pro Forma Adjustments
 
 
 
Mammoth
 
Stingray
 
Sturgeon
 
Stingray
 
Sturgeon
 
 
 
Mammoth
 
Historical
 
(A)
 
(B)
 
Adjustments
 
Adjustments
 
 
 
Pro Forma
REVENUE
 
 
 
 
 
 
 
 
 
 
 
 
 
Services revenue
$
89,642,899

 
$
2,873,700

 
$
—

 
$
—

 
$
—

 
 
 
$
92,516,599

Services revenue - related parties
107,599,378

 
21,544,441

 
—

 
(758,696
)
 
(452,378
)
 
a, b
 
127,932,745

Product revenue
5,433,141

 
—

 
2,619,304

 
—

 
—

 
 
 
8,052,445

Product revenue - related parties
28,323,303

 
—

 
24,853,721

 
—

 
(27,393,771
)
 
a, b
 
25,783,253

Total Revenue
230,998,721

 
24,418,141

 
27,473,025

 
(758,696
)
 
(27,846,149
)
 
 
 
254,285,042

 
 
 
 
 
 
 
 
 
 
 
 
 
 
COST AND EXPENSES
 
 
 
 
 
 
 
 
 
 
 
 
 
Services cost of revenue
139,807,987

 
21,920,807

 
—

 
473,172

 
255,029

 
a, f, g
 
162,456,995

Services cost of revenue - related parties
5,575,092

 
507,895

 
—

 
(1,231,868
)
 
(4,511,861
)
 
a, f, g
 
339,258

Product cost of revenue
7,577,660

 
—

 
24,096,338

 
—

 
218,047

 
a, f, g
 
31,892,045

Product cost of revenue - related parties
20,589,170

 
—

 
3,220,649

 
—

 
(23,807,364
)
 
a, f, g
 
2,455

Selling, general and administrative
15,836,165

 
567,074

 
781,536

 
722,105

 
672,922

 
a, f, g
 
18,579,802

Selling, general and administrative - related parties
894,810

 
733,995

 
536,004

 
(722,105
)
 
(672,922
)
 
a, f, g
 
769,782

Depreciation and amortization
69,910,858

 
4,896,620

 
2,404,540

 
1,501,663

 
—

 
d
 
78,713,681

Impairment of long-lived assets
1,870,885

 
—

 
—

 
—

 
—

 
 
 
1,870,885

Total cost and expenses
262,062,627

 
28,626,391

 
31,039,067

 
742,967

 
(27,846,149
)
 
 
 
294,624,903

Operating loss
(31,063,906
)
 
(4,208,250
)
 
(3,566,042
)
 
(1,501,663
)
 
—

 
 
 
(40,339,861
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER (EXPENSE) INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
(3,711,457
)
 
(292,061
)
 
(384,725
)
 
(10,907
)
 
(306,477
)
 
e
 
(4,705,627
)
Other, net
252,239

 
(33,409
)
 
(94,066
)
 
—

 
—

 
 
 
124,764

Total other expense
(3,459,218
)
 
(325,470
)
 
(478,791
)
 
(10,907
)
 
(306,477
)
 
 
 
(4,580,863
)
Loss before income taxes
(34,523,124
)
 
(4,533,720
)
 
(4,044,833
)
 
(1,512,570
)
 
(306,477
)
 
 
 
(44,920,724
)
Provision for income taxes
53,884,871

 
—

 
—

 
2,067,856

 
3,238,079

 
h
 
59,190,806

Net loss
$
(88,407,995
)
 
$
(4,533,720
)
 
$
(4,044,833
)
 
$
(3,580,426
)
 
$
(3,544,556
)
 
 
 
$
(104,111,530
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE LOSS
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
2,710,605

 
—

 
—

 
—

 
—

 
 
 
2,710,605

Comprehensive loss
$
(85,697,390
)
 
$
(4,533,720
)
 
$
(4,044,833
)
 
$
(3,580,426
)
 
$
(3,544,556
)
 
 
 
$
(101,400,925
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss per share (basic and diluted) (Note 3)
 
 
 
 
 
 
 
 
 
 
 
 
$
(2.70
)
Weighted average number of shares outstanding (Note 3)
 
 
 
 
 
 
 
 
 
 
 
 
38,500,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 


3
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
YEAR ENDED DECEMBER 31, 2015
(Unaudited)


 
 
 
 
 
Pro Forma Adjustments
 
 
 
Mammoth
 
Sturgeon
 
 
 
 
 
Mammoth
 
Historical
 
(B)
 
Adjustments
 
 
 
Pro Forma
REVENUE
 
 
 
 
 
 
 
 
 
Services revenue
$
172,012,405

 
$
—

 
$
—

 
 
 
$
172,012,405

Services revenue - related parties
132,674,989

 
—

 
(122,131
)
 
a, b
 
132,552,858

Product revenue
16,732,077

 
8,457,482

 
—

 
 
 
25,189,559

Product revenue - related parties
38,517,222

 
23,185,931

 
(23,521,183
)
 
a, b
 
38,181,970

Total Revenue
359,936,693

 
31,643,413

 
(23,643,314
)
 
 
 
367,936,792

 
 
 
 
 
 
 
 
 
 
COST AND EXPENSES
 
 
 
 
 
 
 
 
 
Services cost of revenue
225,820,450

 
—

 
123,818

 
a, f, g
 
225,944,268

Services cost of revenue - related parties
4,177,335

 
—

 
(2,798,502
)
 
a, f, g
 
1,378,833

Product cost of revenue
25,838,555

 
21,525,593

 
—

 
a, f, g
 
47,364,148

Product cost of revenue - related parties
20,510,977

 
457,653

 
(20,968,630
)
 
a, f, g
 
—

Selling, general and administrative
19,303,557

 
1,354,695

 
791,180

 
a, f, g
 
21,449,432

Selling, general and administrative - related parties
1,237,991

 
503,777

 
(791,180
)
 
a, f, g
 
950,588

Depreciation and amortization
72,393,882

 
2,104,692

 
—

 
 
 
74,498,574

Impairment of long-lived assets
12,124,353

 
—

 
—

 
 
 
12,124,353

Total cost and expenses
381,407,100

 
25,946,410

 
(23,643,314
)
 
 
 
383,710,196

Operating (loss) income
(21,470,407
)
 
5,697,003

 
—

 
 
 
(15,773,404
)
 
 
 
 
 
 
 
 
 
 
OTHER (EXPENSE) INCOME
 
 
 
 
 
 
 
 
 
Interest income
98,492

 
—

 
—

 
 
 
98,492

Interest expense
(5,290,821
)
 
(173,726
)
 
—

 
 
 
(5,464,547
)
Other, net
(2,157,764
)
 
(111,294
)
 
—

 
 
 
(2,269,058
)
Total other expense
(7,350,093
)
 
(285,020
)
 
—

 
 
 
(7,635,113
)
(Loss) income before income taxes
(28,820,500
)
 
5,411,983

 
—

 
 
 
(23,408,517
)
Benefit for income taxes
(1,589,086
)
 
—

 
—

 
 
 
(1,589,086
)
Net loss
$
(27,231,414
)
 
$
5,411,983

 
$
—

 
 
 
$
(21,819,431
)
 
 
 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE (LOSS) INCOME
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
(4,814,819
)
 
—

 
—

 
 
 
(4,814,819
)
Comprehensive loss
$
(32,046,233
)
 
$
5,411,983

 
$
—

 
 
 
$
(26,634,250
)
 
 
 
 
 
 
 
 
 
 
Net loss per share (basic and diluted) (Note 3)
 
 
 
 
 
 
 
 
$
(0.59
)
Weighted average number of shares outstanding (Note 3)
 
 
 
 
 
 
 
 
37,000,000

 
 
 
 
 
 
 
 
 
 


4
MAMMOTH ENERGY SERVICES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, 2014
(Unaudited)

 
 
 
September 13 to December 31,
 
Pro Forma Adjustments
 
 
 
Mammoth
 
Sturgeon
 
 
 
 
 
Mammoth
 
Historical
 
(B)
 
Adjustments
 
 
 
Pro Forma
REVENUE
 
 
 
 
 
 
 
 
 
Services revenue
$
182,341,309

 
$
—

 
$
—

 
 
 
$
182,341,309

Services revenue - related parties
30,834,421

 
—

 
—

 
 
 
30,834,421

Product revenue
36,859,731

 
14,301,656

 
—

 
 
 
51,161,387

Product revenue - related parties
9,490,543

 
3,910,574

 
(2,008,800
)
 
a, b
 
11,392,317

Total Revenue
259,526,004

 
18,212,230

 
(2,008,800
)
 
 
 
275,729,434

 
 
 
 
 
 
 
 
 
 
COST AND EXPENSES
 
 
 
 
 
 
 
 
 
Services cost of revenue
150,482,793

 
—

 
—

 
 
 
$
150,482,793

Services cost of revenue - related parties
1,770,565

 
—

 
(1,029,974
)
 
a, f
 
740,591

Product cost of revenue
35,525,596

 
9,360,221

 
—

 
 
 
44,885,817

Product cost of revenue - related parties
3,289,947

 
111,398

 
(978,826
)
 
a, f
 
2,422,519

Selling, general and administrative
14,272,986

 
1,510,985

 
—

 
 
 
15,783,971

Selling, general and administrative - related parties
2,754,877

 
—

 
—

 
 
 
2,754,877

Depreciation and amortization
35,627,165

 
738,433

 
—

 
 
 
36,365,598

Impairment of long-lived assets
—

 
—

 
—

 
 
 
—

Total cost and expenses
243,723,929

 
11,721,037

 
(2,008,800
)
 
 
 
253,436,166

Operating income
15,802,075

 
6,491,193

 
—

 
 
 
22,293,268

 
 
 
 
 
 
 
 
 
 
OTHER (EXPENSE) INCOME
 
 
 
 
 
 
 
 
 
Interest income
214,141

 
—

 
—

 
 
 
$
214,141

Interest expense
(4,603,595
)
 
—

 
—

 
 
 
(4,603,595
)
Interest expense - related parties
(184,479
)
 
—

 
 
 
 
 
(184,479
)
Other, net
(5,724,496
)
 
(2,668
)
 
—

 
 
 
(5,727,164
)
Total other expense
(10,298,429
)
 
(2,668
)
 
—

 
 
 
(10,301,097
)
Income before income taxes
5,503,646

 
6,488,525

 
—

 
 
 
11,992,171

Provision for income taxes
7,514,194

 
—

 
—

 
 
 
$
7,514,194

Net (loss) income
$
(2,010,548
)
 
$
6,488,525

 
$
—

 
 
 
$
4,477,977

 
 
 
 
 
 
 
 
 
 
OTHER COMPREHENSIVE (LOSS) INCOME
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
472,714

 
—

 
—

 
 
 
$
472,714

Comprehensive (loss) income
$
(1,537,834
)
 
$
6,488,525

 
$
—

 
 
 
$
4,950,691

 
 
 
 
 
 
 
 
 
 
Net earnings per share (basic and diluted) (Note 3)
 
 
 
 
 
 
 
 
$
0.16

Weighted average number of shares outstanding (Note 3)
 
 
 
 
 
 
 
 
28,056,073

 
 
 
 
 
 
 
 
 
 


5
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. Basis of presentation

The unaudited pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements of the Company and the historical financial statements of the Targets. The unaudited pro forma condensed consolidated financial statements present the impact of the Transaction, which is described in the introduction to the unaudited pro forma condensed consolidated financial statements, on the Company's results of operations, and present the impact of the Transaction on the unaudited pro forma condensed consolidated financial position.
(A)
See Exhibit 99.1 to this Information Statement.
(B)
See Exhibit 99.2 to this Information Statement.

2. Pro forma adjustments

The following adjustments to the Company's historical financial statements have been prepared as if the Transaction occurred on September 13, 2014:
 
a.
Adjustment column reflects both the revenue (cost) generated (incurred) for the Target and the Company. See b, f and g for breakouts between the Targets and the Company as well as references to the audited financial statements.

b.
Revenue and accounts receivable elimination activity incorporating the Transaction included the following:
 
 
REVENUES
 
ACCOUNTS RECEIVABLE
 
 
Year Ended December 31,
 
At December 31,
 
 
2016
2015
2014
 
2016
Sturgeon and Muskie
(i)
$
20,586,715

$
20,510,977

$
867,428

 
$
2,119,083

Sturgeon and Pressure Pumping
(i)
4,256,830

2,642,693

1,029,974

 
—

Sturgeon and Barracuda
(i)
10,176

—

—

 
110,438

Sturgeon and SR Logistics
(i)
—

32,261

—

 
—

Sturgeon and Energy Services
(i)
—

—

—

 
3,397

 
 
$
24,853,721

$
23,185,931

$
1,897,402

 
$
2,232,918

 
 
 
 
 
 
 
Muskie and Sturgeon
(ii)
$
2,540,050

$
335,252

$
111,398

 
$
70,470

Barracuda and Sturgeon
(ii)
452,378

122,131

—

 
199,413

 
 
$
2,992,428

$
457,383

$
111,398

 
$
269,883

 Sturgeon pro forma adjustment, net
 
$
27,846,149

$
23,643,314

$
2,008,800

 
$
2,502,801

 
 
 
 
 
 
 
Stingray Energy and SR Logistics
(iii)
$
7,246

 
 
 
$
12,671

Stingray Energy and Sturgeon
(iii)
—

 
 
 
—

Stingray Energy and Pressure Pumping
(iii)
672,431

 
 
 
146,054

Stingray Energy and Silverback
(iii)
27,178

 
 
 
6,279

Stingray Energy and Barracuda
(iii)
13,701

 
 
 
6,801

 
 
$
720,556

 
 
 
$
171,805

 
 
 
 
 
 
 
MRI and Stingray Cementing
(ii)
$
820

 
 
 
$
820

Coil Tubing and Stingray Energy
(ii)
18,600

 
 
 
—

Pressure Pumping and Stingray Cementing
(ii)
7,364

 
 
 
950,678

Silverback and Stingray Energy
(ii)
11,356

 
 
 
12,181

 
 
$
38,140

 
 
 
$
963,679

Stingray pro forma adjustment, net
 
$
758,696

 
 
 
$
1,135,484

(i)
See Exhibit 99.1 to this Information Statement.
(ii)
See Note 15 of Item 15 in the Company's Annual Report Form 10-K filed with the SEC on February 24, 2017 incorporated by reference into this Information Statement.
(iii)
See Exhibit 99.2 to this Information Statement.

c.
The Company assumes that for 2015 and 2016 it would have maintained the long-term debt of Stingray and allowed Sturgeon to maintain its own revolving credit facility thereby preserving cash, however, subsequent to the Company's initial public offering (the "IPO"), an immediate recognition of deferred loan costs associated with the long-term debt that will be retired and/or revolving credit facility that will be extinguished.



6
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


d.
The Stingray Acquisition qualifies as a business combination for accounting purposes and, as such, the Company has estimated the fair value of the acquired properties. The fair value of the consideration transferred at the closing date of the Stingray Acquisition is allocated in the following preliminary purchase price allocation:
 
(in $ thousands)
Total consideration transferred ($19.06 per share, 1,392,548 shares)
$
26,541,965

 

Estimated Book Value at December 31, 2016:
$
12,216,112

Fair value adjustments to:
 
Fixed Assets
3,443,064

Goodwill
10,483,929

Transfer of related party receivables, net
398,860

Total estimated fair value
$
26,541,965

 
 
Depreciation expense associated with the fixed asset fair value adjustment is incorporated for the year ended December 31, 2016.

e.
Assumes that for 2016, subsequent to the IPO, the Company would have used its cash proceeds from the IPO to retire the long-term debt of the Targets and retire Sturgeon's revolving credit facility which would have required an immediate recognition of deferred loan costs associated with the long-term debt.
f.
Expense and accounts payable elimination activity incorporating Sturgeon included the following:
 
 
COST OF REVENUE
 
ACCOUNTS PAYABLE
 
 
Year Ended December 31,
 
At December 31,
 
 
2016
2015
2014
 
2016
Sturgeon and Barracuda
(i)
$
452,558

$
122,131

$
—

 
$
199,413

Sturgeon and Mammoth
(i,ii)
35,856

—

—

 
155,208

Sturgeon and Muskie
(i)
2,540,050

335,522

111,398

 
70,470

Sturgeon and Pressure Pumping
(i,ii)
192,035

—

—

 
45,475

Sturgeon and Stingray Energy
(i,ii)
150

—

—

 
—

 
 
$
3,220,649

$
457,653

$
111,398

 
$
470,566

 
 
 
 
 
 
 
Pressure Pumping and Sturgeon
(iii)
$
4,256,832

$
2,685,202

$
1,029,974

 
$
—

Muskie and Sturgeon
(iii)
20,586,715

20,510,977

867,428

 
2,119,084

Barracuda and Sturgeon
(ii, iii)
255,029

81,039

—

 
111,738

Stingray Entities and Sturgeon
(iii)
—

32,261

—

 
—

 
 
$
25,098,576

$
23,309,479

$
1,897,402

 
$
2,230,822

 Sturgeon pro forma adjustment, net
 
$
28,319,225

$
23,767,132

$
2,008,800

 

 
 
 
 
 
 
 
 
 
SELLING, GENERAL AND ADMINSTRATIVE
 
 
Sturgeon and Mammoth
(i,ii)
$
405,552

$
401,859

$
—

 
$
—

Sturgeon and Muskie
(i,ii)
51,483

19,344

—

 
—

Sturgeon and Pressure Pumping
(i,ii)
44,901

82,574

—

 
—

Sturgeon and Energy Services
(i,ii)
10,364

—

—

 
3,454

 
 
$
512,300

$
503,777

$
—

 
$
3,454

 
 
 
 
 
 
 
Mammoth and Sturgeon
(ii, iii)
$
160,622

$
287,403

$
—

 
$
—

 Sturgeon pro forma adjustment, net
 
$
672,922

$
791,180

$
—

 
$
—

 Sturgeon pro forma adjustment, net
 

 
 
 
$
2,704,842

(i)
See Exhibit 99.1 to this Information Statement.
(ii)
Predominantly cost reimbursement that is not reflected as revenue recognition in the offsetting party
(iii)
See Note 15 of Item 15 in the Company's Annual Report on Form 10-K filed with the SEC on February 24, 2017 incorporated by reference into this Information Statement.



7
MAMMOTH ENERGY SERVICES, INC.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


g.
Expense and accounts payable elimination activity incorporating Stingray included the following:
 
 
COST OF REVENUE
 
ACCOUNTS PAYABLE
 
 
Year Ended December 31,
 
At December 31,
 
 
2016
 
2016
Stingray Energy and Mammoth
(i,ii)
$
367,353

 
$
—

Stingray Cementing and Mammoth
(i,ii)
140,542

 
—

 
 
$
507,895

 
$
—

 
 
 
 
 
Barracuda and Stingray Energy
(iii)
$
30,722

 
$
6,279

Stingray Entities and Stingray Energy
(iii)
679,550

 
161,065

Silverback and Stingray Energy
(iii)
13,701

 
6,801

 
 
$
723,973

 
$
174,145

Stingray Energy pro forma adjustment, net
 
$
1,231,868

 
 
 
 
 
 
 
 
 
SELLING, GENERAL AND ADMINSTRATIVE
 
 
Stingray Energy and Mammoth
(i,ii)
$
536,805

 
$
1,152,271

Stingray Cementing and Mammoth
(i,ii)
185,300

 
207,927

 
 
$
722,105

 
$
1,360,198

Stingray Energy pro forma adjustment, net
 
$
722,105

 
$
1,360,198

Stingray Energy pro forma adjustment, net
 
 
 
$
1,534,343

(i)
See Exhibit 99.2 to this Information Statement.
(ii)
Predominantly cost reimbursement that is not reflected as revenue recognition in the offsetting party
(iii)
See Note 15 of Item 15 in the Annual Report on Form 10-K filed with the SEC on February 24, 2017 incorporated by reference into this Information Statement.

h.
Prior to October 2016, the Company was a partnership and not subject to federal income taxes with the exception of its foreign subsidiary. In connection with the IPO, the Company became subject to federal income taxes. 2016 incorporates the current and deferred tax liability associated with incorporating the Targets.
i.
Issuance as consideration for the Targets of 7,000,000 shares of common stock (valued at $133.4 million based on the closing share price of $19.06 on March 20, 2017) and $6.4 million of assumed debt. Subsequent to the IPO we have assumed that the long-term debt of Stingray would be paid off and the revolving credit facility of Sturgeon would be extinguished.
3. Pro forma net income per common share

Pro forma net income per common share is determined by dividing the pro forma net income that would have been allocated to the common stockholders by the number of shares of common stock outstanding. In the Company's audited financial statements, the reported weighted average shares outstanding for the years ended December 31, 2016, 2015 and 2014 were 31,500,000, 30,000,000 and 21,056,073, respectively. For purposes of this pro forma calculation, the Company assumed that shares of common stock outstanding were 38,500,000, 37,000,000 and 28,056,073 for the years ended December 31, 2016, 2015 and 2014.

8