tusk-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File No. 001-37917

Mammoth Energy Services, Inc.

(Exact name of registrant as specified in its charter)

Delaware

32-0498321

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

14201 Caliber Drive,

Suite 300

Oklahoma City,

Oklahoma

(405)

608-6007

73134

(Address of principal executive offices)

(Registrant’s telephone number, including area code)

(Zip Code)

Securities registered pursuant to Section 12(b) of The Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

TUSK

The Nasdaq Stock Market LLC

NASDAQ Global Select Market

______________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2024, there were 48,127,369 shares of common stock, $0.01 par value, outstanding.

MAMMOTH ENERGY SERVICES, INC.

TABLE OF CONTENTS




		Page
	Glossary of Oil and Natural Gas and Electrical Infrastructure Terms	i
	Cautionary Note Regarding Forward-Looking Statements	iv

PART I. FINANCIAL INFORMATION		1
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Comprehensive (Loss) Income	2
	Condensed Consolidated Statements of Changes in Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	51

PART II. OTHER INFORMATION		53
Item 1.	Legal Proceedings	53
Item 1A.	Risk Factors	53
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54

SIGNATURES		55

GLOSSARY OF OIL AND NATURAL GAS AND ELECTRICAL INFRASTRUCTURE TERMS


The following is a glossary of certain oil and natural gas and natural sand proppant industry terms used in this Quarterly Report on Form 10-Q (this “report” or “Quarterly Report”):
Acidizing			To pump acid into a wellbore to improve a well’s productivity or injectivity.
Blowout			An uncontrolled flow of reservoir fluids into the wellbore, and sometimes catastrophically to the surface. A blowout may consist of salt water, oil, natural gas or a mixture of these. Blowouts can occur in all types of exploration and production operations, not just during drilling operations. If reservoir fluids flow into another formation and do not flow to the surface, the result is called an underground blowout. If the well experiencing a blowout has significant open-hole intervals, it is possible that the well will bridge over (or seal itself with rock fragments from collapsing formations) down-hole and intervention efforts will be averted.
Bottomhole assembly			The lower portion of the drillstring, consisting of (from the bottom up in a vertical well) the bit, bit sub, a mud motor (in certain cases), stabilizers, drill collar, heavy-weight drillpipe, jarring devices (“jars”) and crossovers for various threadforms. The bottomhole assembly must provide force for the bit to break the rock (weight on bit), survive a hostile mechanical environment and provide the driller with directional control of the well. Oftentimes the assembly includes a mud motor, directional drilling and measuring equipment, measurements-while-drilling tools, logging-while-drilling tools and other specialized devices.
Cementing			To prepare and pump cement into place in a wellbore.
Coiled tubing			A long, continuous length of pipe wound on a spool. The pipe is straightened prior to pushing into a wellbore and rewound to coil the pipe back onto the transport and storage spool. Depending on the pipe diameter (1 in. to 4 1/2 in.) and the spool size, coiled tubing can range from 2,000 ft. to 23,000 ft. (610 m to 6,096 m) or greater length.
Completion			A generic term used to describe the assembly of down-hole tubulars and equipment required to enable safe and efficient production from an oil or gas well. The point at which the completion process begins may depend on the type and design of the well.
Directional drilling			The intentional deviation of a wellbore from the path it would naturally take. This is accomplished through the use of whipstocks, bottomhole assembly (BHA) configurations, instruments to measure the path of the wellbore in three-dimensional space, data links to communicate measurements taken down-hole to the surface, mud motors and special BHA components and drill bits, including rotary steerable systems, and drill bits. The directional driller also exploits drilling parameters such as weight on bit and rotary speed to deflect the bit away from the axis of the existing wellbore. In some cases, such as drilling steeply dipping formations or unpredictable deviation in conventional drilling operations, directional-drilling techniques may be employed to ensure that the hole is drilled vertically. While many techniques can accomplish this, the general concept is simple: point the bit in the direction that one wants to drill. The most common way is through the use of a bend near the bit in a down-hole steerable mud motor. The bend points the bit in a direction different from the axis of the wellbore when the entire drillstring is not rotating. By pumping mud through the mud motor, the bit turns while the drillstring does not rotate, allowing the bit to drill in the direction it points. When a particular wellbore direction is achieved, that direction may be maintained by rotating the entire drillstring (including the bent section) so that the bit does not drill in a single direction off the wellbore axis, but instead sweeps around and its net direction coincides with the existing wellbore. Rotary steerable tools allow steering while rotating, usually with higher rates of penetration and ultimately smoother boreholes.
Down-hole			Pertaining to or in the wellbore (as opposed to being on the surface).
Down-hole motor			A drilling motor located in the drill string above the drilling bit powered by the flow of drilling mud. Down-hole motors are used to increase the speed and efficiency of the drill bit or can be used to steer the bit in directional drilling operations. Drilling motors have become very popular because of horizontal and directional drilling applications and the day rates for drilling rigs.
Drilling rig			The machine used to drill a wellbore.
Drillpipe or Drill pipe			Tubular steel conduit fitted with special threaded ends called tool joints. The drillpipe connects the rig surface equipment with the bottomhole assembly and the bit, both to pump drilling fluid to the bit and to be able to raise, lower and rotate the bottomhole assembly and bit.
Drillstring or Drill string			The combination of the drillpipe, the bottomhole assembly and any other tools used to make the drill bit turn at the bottom of the wellbore.
Flowback			The process of allowing fluids to flow from the well following a treatment, either in preparation for a subsequent phase of treatment or in preparation for cleanup and returning the well to production.
Horizontal drilling			A subset of the more general term “directional drilling,” used where the departure of the wellbore from vertical exceeds about 80 degrees. Note that some horizontal wells are designed such that after reaching true 90-degree horizontal, the wellbore may actually start drilling upward. In such cases, the angle past 90 degrees is continued, as in 95 degrees, rather than reporting it as deviation from vertical, which would then be 85 degrees. Because a horizontal well typically penetrates a greater length of the reservoir, it can offer significant production improvement over a vertical well.
Hydraulic fracturing			A stimulation treatment routinely performed on oil and gas wells in low permeability reservoirs. Specially engineered fluids are pumped at high pressure and rate into the reservoir interval to be treated, causing a vertical fracture to open. The wings of the fracture extend away from the wellbore in opposing directions according to the natural stresses within the formation. Proppant, such as grains of sand of a particular size, is mixed with the treatment fluid to keep the fracture open when the treatment is complete. Hydraulic fracturing creates high-conductivity communication with a large area of formation and bypasses any damage that may exist in the near-wellbore area.


Hydrocarbon			A naturally occurring organic compound comprising hydrogen and carbon. Hydrocarbons can be as simple as methane, but many are highly complex molecules, and can occur as gases, liquids or solids. Petroleum is a complex mixture of hydrocarbons. The most common hydrocarbons are natural gas, oil and coal.
Mesh size			The size of the proppant that is determined by sieving the proppant through screens with uniform openings corresponding to the desired size of the proppant. Each type of proppant comes in various sizes, categorized as mesh sizes, and the various mesh sizes are used in different applications in the oil and natural gas industry. The mesh number system is a measure of the number of equally sized openings per square inch of screen through which the proppant is sieved.
Mud motors			A positive displacement drilling motor that uses hydraulic horsepower of the drilling fluid to drive the drill bit. Mud motors are used extensively in directional drilling operations.
Natural gas liquids			Components of natural gas that are liquid at surface in field facilities or in gas processing plants. Natural gas liquids can be classified according to their vapor pressures as low (condensate), intermediate (natural gasoline) and high (liquefied petroleum gas) vapor pressure.
Nitrogen pumping unit			A high-pressure pump or compressor unit capable of delivering high-purity nitrogen gas for use in oil or gas wells. Two basic types of units are commonly available: a nitrogen converter unit that pumps liquid nitrogen at high pressure through a heat exchanger or converter to deliver high-pressure gas at ambient temperature, and a nitrogen generator unit that compresses and separates air to provide a supply of high pressure nitrogen gas.
Plugging			The process of permanently closing oil and gas wells no longer capable of producing in economic quantities. Plugging work can be performed with a well servicing rig along with wireline and cementing equipment; however, this service is typically provided by companies that specialize in plugging work.
Plug			A down-hole packer assembly used in a well to seal off or isolate a particular formation for testing, acidizing, cementing, etc.; also a type of plug used to seal off a well temporarily while the wellhead is removed.
Pounds per square inch			A unit of pressure. It is the pressure resulting from a one pound force applied to an area of one square inch.
Pressure pumping			Services that include the pumping of liquids under pressure.
Producing formation			An underground rock formation from which oil, natural gas or water is produced. Any porous rock will contain fluids of some sort, and all rocks at considerable distance below the Earth’s surface will initially be under pressure, often related to the hydrostatic column of ground waters above the reservoir. To produce, rocks must also have permeability, or the capacity to permit fluids to flow through them.
Proppant			Sized particles mixed with fracturing fluid to hold fractures open after a hydraulic fracturing treatment. In addition to naturally occurring sand grains, man-made or specially engineered proppants, such as resin-coated sand or high-strength ceramic materials like sintered bauxite, may also be used. Proppant materials are carefully sorted for size and sphericity to provide an efficient conduit for production of fluid from the reservoir to the wellbore.
Resource play			Accumulation of hydrocarbons known to exist over a large area.
Shale			A fine-grained, fissile, sedimentary rock formed by consolidation of clay- and silt-sized particles into thin, relatively impermeable layers.
Tight oil			Conventional oil that is found within reservoirs with very low permeability. The oil contained within these reservoir rocks typically will not flow to the wellbore at economic rates without assistance from technologically advanced drilling and completion processes. Commonly, horizontal drilling coupled with multistage fracturing is used to access these difficult to produce reservoirs.
Tight sands			A type of unconventional tight reservoir. Tight reservoirs are those which have low permeability, often quantified as less than 0.1 millidarcies.
Tubulars			A generic term pertaining to any type of oilfield pipe, such as drill pipe, drill collars, pup joints, casing, production tubing and pipeline.
Unconventional resource/unconventional well			A term for the different manner by which resources are exploited as compared to the extraction of conventional resources. In unconventional drilling, the wellbore is generally drilled to specific objectives within narrow parameters, often across long, lateral intervals within narrow horizontal formations offering greater contact area with the producing formation. Typically, the well is then hydraulically fractured at multiple stages to optimize production.
Wellbore			The physical conduit from surface into the hydrocarbon reservoir.
Well stimulation			A treatment performed to restore or enhance the productivity of a well. Stimulation treatments fall into two main groups, hydraulic fracturing treatments and matrix treatments. Fracturing treatments are performed above the fracture pressure of the reservoir formation and create a highly conductive flow path between the reservoir and the wellbore. Matrix treatments are performed below the reservoir fracture pressure and generally are designed to restore the natural permeability of the reservoir following damage to the near wellbore area. Stimulation in shale gas reservoirs typically takes the form of hydraulic fracturing treatments.
Wireline			A general term used to describe well-intervention operations conducted using single-strand or multi-strand wire or cable for intervention in oil or gas wells. Although applied inconsistently, the term commonly is used in association with electric logging and cables incorporating electrical conductors.
Workover			The process of performing major maintenance or remedial treatments on an oil or gas well. In many cases, workover implies the removal and replacement of the production tubing string after the well has been killed and a workover rig has been placed on location. Through-tubing workover operations, using coiled tubing, snubbing or slickline equipment, are routinely conducted to complete treatments or well service activities that avoid a full workover where the tubing is removed. This operation saves considerable time and expense.


The following is a glossary of certain electrical infrastructure industry terms used in this report:
Distribution			The distribution of electricity from the transmission system to individual customers.
Substation			A part of an electrical transmission and distribution system that transforms voltage from high to low, or the reverse.
Transmission			The movement of electrical energy from a generating site, such as a power plant, to an electric substation.

iii

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in this report that express a belief, expectation, or intention, or that are not statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. In particular, the factors discussed in this report and detailed under Part II, Item 1A. Risk Factors in this report and our Annual Report on Form 10–K for the year ended December 31, 2023 could affect our actual results and cause our actual results to differ materially from expectations, estimates or assumptions expressed, forecasted or implied in such forward-looking statements.

Forward-looking statements may include statements about:

•the levels of capital expenditures by our customers and the impact of reduced drilling and completions activity on utilization and pricing for our oilfield services;

•the volatility of oil and natural gas prices and actions by OPEC members and other oil exporting nations, or OPEC+, affecting commodity price and production levels;

•employee retention and competitive labor market;

•general economic, business or industry conditions and concerns over a potential economic slowdown or recession;

•conditions in the capital, financial and credit markets;

•conditions of U.S. oil and natural gas industry and the effect of U.S. energy, monetary and trade policies;

•U.S. and global economic conditions and political and economic developments, including the energy and environmental policies;

•inflationary pressure on the cost of services, equipment and other goods in our industries and other sectors;

•our ability to comply with the applicable financial covenants and other terms and conditions our revolving credit facility;

•our ability to execute our business and financial strategies;

•our plans with respect to any stock repurchases under the board of directors’ authorized stock repurchase program;

•our ability to grow our infrastructure services segment or recommence certain of our suspended oilfield services;

•any loss of one or more of our significant customers and its impact on our revenue, financial condition and results of operations;

•asset impairments;

•our ability to identify, complete and integrate acquisitions of assets or businesses;

•our ability to receive, or delays in receiving, permits and governmental approvals, and to comply with applicable governmental laws and regulations;

•the failure to receive or delays in receiving the remaining payments under the settlement agreement with the Puerto Rico Electric Power Authority (“PREPA”);

•the outcome or settlement of our pending litigation matters discussed in this report on our financial condition and cash flows;

•any future litigation, indemnity or other claims;

•regional supply and demand factors, delays or interruptions of production, and any governmental order, rule or regulation that may impose production limits on our customers;

•sustained weakness in the natural gas basins in which we operate and adverse impact on demand for our well completion and natural sand proppant services;

•shortages, delays in delivery and interruptions in supply of major components, replacement parts, or other equipment, supplies or materials;

•extreme weather conditions, wild fires and other natural disasters in areas where we provide well completion, sand proppant, drilling and infrastructure services;

•access to and restrictions on use of sourced or produced water;

•technology;

•civil unrest, war, military conflicts or terrorist attacks;

•cyberattacks and any resulting loss of information;

•competition within the energy services industry;

•payment of any future dividends;

•future operating results; and

•capital expenditures and other plans, objectives, expectations and intentions.

All of these types of statements, other than statements of historical fact included in this quarterly report, are forward-looking statements. These forward-looking statements may be found in the “Business,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other sections of this quarterly report. In some

cases, you can identify forward-looking statements by terminology such as “may,” “will,” “could,” “should,” “would,” “expect,” “plan,” “project,” “budget,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “seek,” “objective,” “continue,” “will be,” “will benefit,” or “will continue,” the negative of such terms or other comparable terminology.

The forward-looking statements contained in this report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors, which are difficult to predict and many of which are beyond our control. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, our management’s assumptions about future events may prove to be inaccurate. Our management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to many factors including those described in our Annual Report on Form 10–K for the year ended December 31, 2023 and Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. All forward-looking statements speak only as of the date of this report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

MAMMOTH ENERGY SERVICES, INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAMMOTH ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)


ASSETS	September 30,		December 31,
	2024		2023
CURRENT ASSETS	(in thousands)
Cash and cash equivalents	$	4,165	$	16,556
Restricted cash	2,000		7,742

Accounts receivable, net	232,032		447,202

Inventories	13,498		12,653
Prepaid expenses	2,912		12,181
Other current assets	581		591

Total current assets	255,188		496,925

Property, plant and equipment, net	109,394		113,905
Sand reserves, net	57,497		58,528
Operating lease right-of-use assets	5,010		9,551


Goodwill	9,214		9,214
Deferred income tax asset	—		1,844
Other non-current assets	6,675		8,512
Total assets	$	442,978	$	698,479
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts payable	$	30,065	$	27,508

Accrued expenses and other current liabilities	35,433		86,713
Accrued expenses and other current liabilities - related parties	—		1,241
Current operating lease liability	3,428		5,771

Income taxes payable	44,512		61,320
Total current liabilities	113,438		182,553


Long-term debt from related parties, net	49,009		42,809
Deferred income tax liabilities	2,272		628
Long-term operating lease liability	1,556		3,534
Asset retirement obligations	4,244		4,140
Other long-term liabilities	3,781		4,715
Total liabilities	174,300		238,379

COMMITMENTS AND CONTINGENCIES (Note 19)

EQUITY
Equity:
Common stock, $0.01 par value, 200,000,000 shares authorized, 48,127,369 and 47,941,652 issued and outstanding at September 30, 2024 and December 31, 2023	481		479
Additional paid in capital	540,213		539,558
Accumulated deficit	(268,163)		(76,317)
Accumulated other comprehensive loss	(3,853)		(3,620)
Total equity	268,678		460,100
Total liabilities and equity	$	442,978	$	698,479

The accompanying notes are an integral part of these condensed consolidated financial statements.

MAMMOTH ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
REVENUE	(in thousands, except per share amounts)
Services revenue	$	34,069	$	54,025	$	119,653	$	221,140
Services revenue - related parties	1,037		252		1,171		841
Product revenue	4,909		10,682		13,908		34,729

Total revenue	40,015		64,959		134,732		256,710

COST AND EXPENSES
Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $4,495, $15,149, $8,394, and $30,426, respectively, for the three and nine months ended September 30, 2024 and three and nine months ended September 30, 2023)	34,468		45,082		107,914		178,905
Services cost of revenue - related parties	118		120		355		360
Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $1,688, $4,105, $2,836, and $6,395, respectively, for the three and nine months ended September 30, 2024 and three and nine months ended September 30, 2023)	3,386		7,615		14,130		22,796

Selling, general and administrative (Note 12)	8,702		10,411		114,961		29,151

Depreciation, depletion, amortization and accretion	6,184		11,233		19,256		36,839
Gains on disposal of assets, net	(293)		(2,450)		(2,496)		(3,284)
Impairment of goodwill	—		1,810		—		1,810

Total cost and expenses	52,565		73,821		254,120		266,577
Operating loss	(12,550)		(8,862)		(119,388)		(9,867)

OTHER INCOME (EXPENSE)
Interest expense and financing charges, net	(8,088)		(2,876)		(15,730)		(9,385)
Interest expense and financing charges, net - related parties	(1,642)		—		(4,670)		—
Other (expense) income, net (Note 2)	(1,122)		14,088		(64,658)		31,051

Total other (expense) income, net	(10,852)		11,212		(85,058)		21,666
(Loss) income before income taxes	(23,402)		2,350		(204,446)		11,799
Provision (benefit) for income taxes	640		3,438		(12,600)		9,006
Net (loss) income	$	(24,042)	$	(1,088)	$	(191,846)	$	2,793

OTHER COMPREHENSIVE (LOSS) INCOME
Foreign currency translation adjustment, net of tax of $0, $0, $0, and $0, respectively, for the three and nine months ended September 30, 2024 and three and nine months ended September 30, 2023)	125		(275)		(233)		(45)
Comprehensive (loss) income	$	(23,917)	$	(1,363)	$	(192,079)	$	2,748

Net (loss) income per share (basic) (Note 15)	$	(0.50)	$	(0.02)	$	(3.99)	$	0.06
Net (loss) income per share (diluted) (Note 15)	$	(0.50)	$	(0.02)	$	(3.99)	$	0.06
Weighted average number of shares outstanding (basic) (Note 15)	48,127		47,942		48,044		47,721
Weighted average number of shares outstanding (diluted) (Note 15)	48,127		47,942		48,044		47,973

The accompanying notes are an integral part of these condensed consolidated financial statements.

MAMMOTH ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (unaudited)


	Three Months Ended September 30, 2024
								Accumulated
						Additional		Other
	Common Stock			Accumulated		Paid-In		Comprehensive
	Shares	Amount		Deficit		Capital		Loss		Total
	(in thousands)
Balance at June 30, 2024	48,127	$	481	$	(244,121)	$	539,994	$	(3,978)	292,376
Stock based compensation	—	—		—		219		—		219

Net loss	—	—		(24,042)		—		—		(24,042)

Other comprehensive income	—	—		—		—		125		125
Balance at September 30, 2024	48,127	$	481	$	(268,163)	$	540,213	$	(3,853)	$	268,678

	Three Months Ended September 30, 2023
								Accumulated
						Additional		Other
	Common Stock			Accumulated		Paid-In		Comprehensive
	Shares	Amount		Deficit		Capital		Loss		Total
	(in thousands)
Balance at June 30, 2023	47,941	$	479	$	(69,273)	$	539,121	$	(3,611)	466,716
Stock based compensation	—	—		—		219		—		219

Net loss	—	—		(1,088)		—		—		(1,088)

Other comprehensive loss	—	—		—		—		(275)		(275)
Balance at September 30, 2023	47,941	$	479	$	(70,361)	$	539,340	$	(3,886)	$	465,572

	Nine Months Ended September 30, 2024
								Accumulated
						Additional		Other
	Common Stock			Accumulated		Paid-In		Comprehensive
	Shares	Amount		Deficit		Capital		Loss		Total
	(in thousands)
Balance at December 31, 2023	47,941	$	479	$	(76,317)	$	539,558	$	(3,620)	$	460,100
Stock based compensation	186	2		—		655		—		657

Net loss	—	—		(191,846)		—		—		(191,846)

Other comprehensive loss	—	—		—		—		(233)		(233)
Balance at September 30, 2024	48,127	$	481	$	(268,163)	$	540,213	$	(3,853)	$	268,678

	Nine Months Ended September 30, 2023
								Accumulated
						Additional		Other
	Common Stock			Accumulated		Paid-In		Comprehensive
	Shares	Amount		Deficit		Capital		Loss		Total
	(in thousands)
Balance at December 31, 2022	47,312	$	473	$	(73,154)	$	539,138	$	(3,841)	$	462,616

Stock based compensation	795	8		—		1,119		—		1,127
Shares repurchased	(166)	(2)		—		(917)		—		(919)
Net income	—	—		2,793		—		—		2,793

Other comprehensive income	—	—		—		—		(45)		(45)
Balance at September 30, 2023	47,941	$	479	$	(70,361)	$	539,340	$	(3,886)	$	465,572

The accompanying notes are an integral part of these condensed consolidated financial statements.

MAMMOTH ENERGY SERVICES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


	Nine Months Ended September 30,
	2024		2023
	(in thousands)
Cash flows from operating activities:
Net (loss) income	$	(191,846)	$	2,793
Adjustments to reconcile net (loss) income to cash provided by operating activities:

Stock based compensation	657		1,127
Depreciation, depletion, accretion and amortization	19,256		36,839

Amortization of debt origination costs	1,076		565
Change in provision for expected credit losses	171,108		(414)
Gains on disposal of assets	(2,496)		(3,284)
Gains from sales of equipment damaged or lost down-hole	(160)		(335)
Impairment of goodwill	—		1,810

Gain on sale of business	—		(2,080)

Deferred income taxes	3,488		(70)
Other	724		(273)
Changes in assets and liabilities:
Accounts receivable, net	43,107		1,445

Inventories	(845)		(2,896)
Prepaid expenses and other assets	9,252		8,990

Accounts payable	1,938		(7,537)

Accrued expenses and other liabilities	(3,796)		(19,679)
Accrued expenses and other liabilities - related parties	4,647		—
Income taxes payable	(16,809)		7,950
Net cash provided by operating activities	39,301		24,951

Cash flows from investing activities:
Purchases of property and equipment	(10,967)		(15,265)


Business divestitures, net of cash transferred	—		3,276

Proceeds from disposal of property and equipment	5,047		4,304

Net cash used in investing activities	(5,920)		(7,685)

Cash flows from financing activities:
Borrowings on long-term debt	—		168,800

Repayments of long-term debt	—		(183,291)


Payments on financing transaction (Note 9)	(46,837)		—

Payments on sale leaseback transaction	(3,206)		(3,711)
Principal payments on financing leases and equipment financing notes	(1,403)		(4,872)

Debt issuance costs	(37)		—
Other	—		(919)
Net cash used in financing activities	(51,483)		(23,993)
Effect of foreign exchange rate on cash	(31)		(28)
Net decrease in cash, cash equivalents and restricted cash	(18,133)		(6,755)
Cash, cash equivalents and restricted cash at beginning of period	24,298		17,282
Cash, cash equivalents and restricted cash at end of period	$	6,165	$	10,527

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,096	$	8,951
Cash paid for income taxes, net of refunds received	$	716	$	788
Supplemental disclosure of non-cash transactions:
Interest paid in kind - related parties	$	5,888	$	—
Purchases of property and equipment included in accounts payable and accrued expenses	$	3,964	$	4,197
Right-of-use assets obtained for financing lease liabilities	$	2,971	$	507

The accompanying notes are an integral part of these condensed consolidated financial statements.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Organization and Nature of Business

Mammoth Energy Services, Inc. (“Mammoth Inc.”, “Mammoth” or the “Company”), together with its subsidiaries, is an integrated, growth-oriented company serving both the oil and gas and the electric utility industries in North America and US territories. Mammoth Inc.’s infrastructure division provides engineering, design, construction, upgrade, maintenance and repair services to various public and private owned utilities. Its oilfield services division provides a diversified set of services to the exploration and production industry including well completions, natural sand proppant and drilling services. Additionally, the Company provides aviation services, equipment rentals, remote accommodation services and equipment manufacturing. The Company was incorporated in Delaware in June 2016.

Operations

The Company’s well completion services include equipment and personnel used in connection with the completion and early production of oil and natural gas wells. The Company’s infrastructure services include engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry as well as repair and restoration services in response to storms and other disasters. The Company’s natural sand proppant services include the distribution and production of natural sand proppant that is used primarily for hydraulic fracturing in the oil and gas industry. The Company’s drilling services provided drilling rigs and directional tools for both vertical and horizontal drilling of oil and natural gas wells. The Company also provides other services, including aviation, equipment rentals, remote accommodations and equipment manufacturing.

The Company’s operations are concentrated in North America. The Company operates its oil and natural gas businesses in the Permian Basin, the Utica Shale, the Eagle Ford Shale, the Marcellus Shale, the Granite Wash, the SCOOP, the STACK, the Cana-Woodford Shale, the Cleveland Sand and the oil sands located in Northern Alberta, Canada. The Company’s oil and natural gas business depends in large part on the conditions in the oil and natural gas industry and, specifically, on the amount of capital spending by its customers. Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development and production activity, as well as the entire health of the oil and natural gas industry. Decreases in the commodity prices for oil and natural gas would have a material adverse effect on the Company’s results of operations and financial condition. During the periods presented in this report, the Company provided its infrastructure services primarily in the northeastern, southwestern, midwestern and western portions of the United States. The Company’s infrastructure business depends on infrastructure spending on maintenance, upgrade, expansion and repair and restoration. Any prolonged decrease in spending by electric utility companies, delays or reductions in government appropriations or the failure of customers to pay their receivables could have a material adverse effect on the Company’s results of operations and financial condition.

2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries and the variable interest entities (“VIE”) for which the Company is the primary beneficiary. See

Note 11. Variable Interest Entities to our unaudited condensed consolidated financial statements included elsewhere in

this report for additional information regarding these entities. All material intercompany accounts and transactions have been eliminated.

This report has been prepared in accordance with the rules and regulations of the Securities and Exchange Commission, and reflects all adjustments, which in the opinion of management are necessary for the fair presentation of the results for the interim periods, on a basis consistent with the annual audited consolidated financial statements. All such adjustments are of a normal, recurring nature. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) have been omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the summary of significant accounting policies and notes thereto included in the Company’s most recent annual report on Form 10-K.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. Previously, the Company included its wholly-owned subsidiary Bison Trucking LLC (“Bison Trucking”) in

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

its drilling services segment. The Company now presents Bison Trucking in the “All Other” reconciling column. See Note 20 for additional detail regarding our reporting segments. There was no impact on previously reported total assets, total liabilities, net (loss) income or equity for the periods presented.

Change in Accounting Estimate

The Company is party to sale leaseback agreements whereby it has the option to purchase the assets at the end of the lease terms. During the three months ended September 30, 2024, the Company changed its estimate of the purchase price at the end of a portion of the leases. The effect of this change in estimate for the three months ended September 30, 2024 was a decrease to net income of $7.1 million, or $0.15 per both basic and diluted share.

Cash, Cash Equivalents and Restricted Cash

All highly liquid investments with an original maturity of three months or less are considered cash equivalents. Restricted cash as of September 30, 2024 consisted of amounts held by a current creditor as collateral for bonds. Restricted cash as of December 31, 2023 consisted of amounts held by our previous creditor as collateral for letters of credit and credit card program.

Accounts Receivable

Accounts receivable include amounts due from customers for services performed or goods sold. The Company grants credit to customers in the ordinary course of business and generally does not require collateral. Prior to granting credit to customers, the Company analyzes the potential customer’s risk profile by utilizing a credit report, analyzing macroeconomic factors and using its knowledge of the industry, among other factors. Most areas in the continental United States in which the Company operates provide for a mechanic’s lien against the property on which the service is performed if the lien is filed within the statutorily specified time frame. Customer balances are generally considered delinquent if unpaid by the 30th day following the invoice date and credit privileges may be revoked if balances remain unpaid. Interest on delinquent accounts receivable is recognized in other income when chargeable and collectability is reasonably assured.

During the period October 2017 through March 2019, the Company provided infrastructure services in Puerto Rico under master services agreements entered into by Cobra Acquisitions LLC (“Cobra”), one of the Company’s subsidiaries, with the Puerto Rico Electric Power Authority (“PREPA”) to perform repairs to PREPA’s electrical grid as a result of Hurricane Maria. During the nine months ended September 30, 2024 and the three and nine months ended September 30, 2023, the Company charged interest on delinquent accounts receivable pursuant to the terms of its agreements with PREPA totaling $20.8 million, $11.4 million and $33.9 million, respectively. As discussed in more detail below, on July 22, 2024, Cobra entered into a release and settlement agreement with PREPA and the Financial Oversight and Management Board for Puerto Rico (the “FOMB”), in its capacity as Title III representative for PREPA, to settle all outstanding matters between Cobra and PREPA (the “Settlement Agreement”). As a result of the Settlement Agreement, Cobra recognized a charge to interest on delinquent accounts receivable totaling $81.5 million during the three months ended June 30, 2024 to reduce its accounts receivable balance to the amount expected to be collected in relation to interest charged to PREPA. These amounts are included in “other (expense) income, net” on the unaudited condensed consolidated statements of comprehensive (loss) income. Included in “accounts receivable, net” on the unaudited condensed consolidated balance sheets as of September 30, 2024 and December 31, 2023 were interest charges of $136.8 million and $197.5 million, respectively. See below for a full description of the Settlement Agreement and its impact on the Company’s financial statements for the nine months ended September 30, 2024.

The Company regularly reviews receivables and provides for expected losses through an allowance for expected credit losses. In evaluating the level of established reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors. As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for expected credit losses may be required. In the event the Company expects that a customer may not be able to make required payments, the Company would increase the allowance through a charge to income in the period in which that determination is made. If it is determined that previously reserved amounts are collectible, the Company would decrease the allowance through a credit to income in the period in which that determination is made. Uncollectible accounts receivable are periodically charged against the allowance for expected credit losses once a final determination is made regarding their collectability.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Following is a roll forward of the changes in our allowance for expected credit losses for the year ended December 31, 2023 and the nine months ended September 30, 2024 (in thousands):


Balance, January 1, 2023	$	3,587
Change in provision for expected credit losses	47




Recoveries of receivables previously charged to credit loss expense	(638)
Write-offs charged against the provision	(2,831)
Balance, December 31, 2023	165
Change in provision for expected credit losses	171,121

Recoveries of receivables previously charged to credit loss expense	(13)
Write-offs charged against the provision	(274)
Balance, September 30, 2024	$	170,999

The Company has made specific reserves consistent with Company policy which resulted in additions to allowance for expected credit losses totaling $171.1 million and a nominal amount for the nine months ended September 30, 2024 and 2023, respectively. These additions were charged to credit loss expense and other expense based on the factors described above.

PREPA

On October 19, 2017, one of our subsidiaries, Cobra, and PREPA entered into an emergency master services agreement for repairs to PREPA’s electrical grid as a result of Hurricane Maria. The one-year contract, as amended, provided for payments of up to $945 million (the “first contract”). On May 26, 2018, Cobra and PREPA entered into a second one-year, $900 million master services agreement to provide additional repair services and begin the initial phase of reconstruction of the electrical power system in Puerto Rico (the “second contract”). PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the United States District Court for the District of Puerto Rico (the “Title III Court”). As a result, PREPA’s ability to meet its payment obligations under the above-referenced agreements was largely dependent upon funding from the Federal Emergency Management Agency (“FEMA”) or other sources. Since September 30, 2019, Cobra has been pursuing litigation in the Title III Court and other dispute resolution efforts seeking recovery of the amounts owed to Cobra by PREPA for restoration services in Puerto Rico, which proceedings are discussed in more detail in the Company’s prior reports filed with the SEC. PREPA was holding approximately $18.4 million in funds (the “Withheld FEMA Funds”) received from FEMA and considered payable to Cobra but for purported garnishments in this amount asserted by three Puerto Rican municipalities (the “Specified Municipalities”) for certain municipal tax claims discussed in Mammoth’s filings with the SEC (the “Specified Municipal Tax Claims”) and for which Cobra disputes any valid garnishment.

On July 22, 2024, Cobra entered into a release and settlement agreement with PREPA and the FOMB, in its capacity as Title III representative for PREPA, to settle all outstanding matters between Cobra and PREPA.

Under the terms of the Settlement Agreement, Cobra was allowed an administrative expense claim against PREPA of $170.0 million, plus the $18.4 million in the Withheld FEMA Funds. Cobra’s allowed claim will be paid through three installments: (i) $150.0 million on the later of (A) ten business days following approval of the Settlement Agreement by the Title III Court and (B) August 31, 2024; (ii) $20.0 million within seven days following the effective date of PREPA’s plan of adjustment; and (iii) $18.4 million (subject to providing one or more indemnity letters of credit) in the Withheld FEMA Funds within either (A) ten business days after the deadline for appealing the entry of the settlement order by the Title III Court under the applicable bankruptcy rules of procedure if no such appeal is filed, or (B) if the provisions of the settlement order allowing PREPA to release the Withheld FEMA Funds to Cobra without retaining any liability to the Specified Municipalities are appealed by the Specified Municipalities, within ten business days of the filing of the notice of such appeal.

The Settlement Agreement was approved by the Company’s Board of Directors on July 22, 2024, and was also approved

by the PREPA Board and by the FOMB. On September 18, 2024, the Settlement Agreement was approved by the Title III Court overruling all objections thereto and an order was entered the same day (the “Settlement Order”). On October 1, 2024, Cobra received the first installment payment of $150.0 million from the Commonwealth of Puerto Rico in connection with the Settlement Agreement with PREPA. Also on October 1, 2024, certain Puerto Rico municipalities and

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Foreman Electric Services Inc. that had objected to approval of the Settlement Order each filed timely notices of appeal of the Settlement Order to the United States Court of Appeals for the First Circuit. None of the foregoing parties have sought a stay of the Settlement Order pending such appeals. Although the ultimate outcome of these appeals cannot be predicted with certainty, Cobra believes that the appeals are without merit.

On October 18, 2024, Cobra received a payment from PREPA totaling $18.4 million under the terms of the Settlement Agreement. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank, National Association (“Fifth Third Bank”) to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit.

As a result of the Settlement Agreement, the Company recorded a non-cash, pre-tax charge of approximately $170.7 million in the second quarter of 2024 to reduce its accounts receivable balance from PREPA of $359.1 million,

representing the amount owed to Cobra by PREPA in relation to these agreements as of June 30, 2024, including the

accrued but unpaid interest, prior to the Settlement Agreement, to the amount expected to be received from the Settlement Agreement. Of the $170.7 million, $89.2 million was charged to credit loss expense, which is included in “selling, general and administrative” on the unaudited condensed consolidated statements of comprehensive (loss) income, and $81.5 million was charged to interest on delinquent accounts receivable, which is included in “other (expense) income, net” on the unaudited condensed consolidated statements of comprehensive (loss) income.

Concentrations of Credit Risk and Significant Customers

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents in excess of federally insured limits and trade receivables. Following is a summary of our significant customers based on percentages of total accounts receivable balances at September 30, 2024 and December 31, 2023 and percentages of total revenues derived for the three and nine months ended September 30, 2024 and 2023:


	REVENUES								ACCOUNTS RECEIVABLE
	Three Months Ended September 30,				Nine Months Ended September 30,				At September 30,		At December 31,
	2024		2023		2024		2023		2024		2023
Customer A(a)	—	%	8	%	—	%	11	%	—	%	—	%
Customer B(b)	—	%	—	%	—	%	—	%	81	%	90	%

a.Customer A is a third-party customer. Revenues and the related accounts receivable balances earned from Customer A were derived from the Company’s well completion services segment.

b.Customer B is a third-party customer. The accounts receivable balances with Customer B was derived from the Company’s infrastructure services segment. Accounts receivable for Customer B also includes receivables due for interest charged on delinquent accounts receivable.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value. The Company’s assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The Company uses appropriate valuation techniques based on available inputs to measure the fair values of its assets and liabilities.

Level 1 - Observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active markets as of the reporting date.

Level 2 - Observable market-based inputs or unobservable inputs that are corroborated by market data. These are inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

Level 3 - Unobservable inputs that are not corroborated by market data and may be used with internally developed methodologies that result in management’s best estimate of fair value.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into an assignment agreement (the “Assignment Agreement”) with SPCP Group, LLC (“SPCP Group”), as purchaser. The Company elected the fair value option for measuring the liability of the Assignment Agreement. To estimate the fair value of the liability, the Company used inputs that are not observable in the market (Level 3) based on an income approach. The Company used the contractual settlement amount, imputed interest rate and expected timing of cash flows to estimate the liability using the discounted cash flow model. See Notes 9 and 19.

The carrying amount of cash and cash equivalents, restricted cash, trade receivables, trade payables and receivables and payables from related parties approximates fair value because of the short-term nature of the instruments. The fair value of debt approximates its carrying value because the cost of borrowing fluctuates based upon market conditions.

New Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280)”, which is intended to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The amendment requires disclosure of significant segment expenses regularly provided to the chief operating decision maker (“CODM”) as well as other segment items, extends certain annual disclosures to interim periods, clarifies the applicability to single reportable segment entities, permits more than one measure of profit or loss to be reported under certain conditions and requires disclosure of the title and position of the CODM. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 31, 2024. We expect to adopt the new disclosures for the year ended December 31, 2024. The Company is currently evaluating the impact that adoption of ASU 2023-07 will have on its disclosures.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures”, which requires the annual financial statements to include consistent categories and greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, with a retrospective option. The Company is currently evaluating the impact that adoption of ASU 2023-09 will have on its disclosures.

3. Revenue

The Company’s primary revenue streams include well completion services, infrastructure services, natural sand proppant services, drilling services and other services, which includes aviation, equipment rentals, remote accommodations and equipment manufacturing. See Note 20 for the Company’s revenue disaggregated by type.

Certain of the Company’s customer contracts include provisions entitling the Company to a termination penalty when the customer invokes its contractual right to terminate prior to the contract’s nominal end date. The termination penalties in the customer contracts vary, but are generally considered substantive for accounting purposes and create enforceable rights and obligations throughout the stated duration of the contract. The Company accounts for a contract cancellation as a contract modification in the period in which the customer invokes the termination provision. The determination of the contract termination penalty is based on the terms stated in the related customer agreement. As of the modification date, the Company updates its estimate of the transaction price using the expected value method, subject to constraints, and recognizes the amount over the remaining performance period.

Well Completion Services

Well completion services are typically provided based upon a purchase order, contract or on a spot market basis. Services are provided on a day rate, contracted or hourly basis. Generally, the Company accounts for well completion services as a single performance obligation satisfied over time. In certain circumstances, the Company supplies proppant that is utilized for pressure pumping as part of the agreement with the customer. The Company accounts for these pressure pumping agreements as multiple performance obligations satisfied over time. Jobs for these services are typically short-term in nature and range from a few hours to multiple days. Generally, revenue is recognized over time upon the completion of each segment of work based upon a completed field ticket, which includes the charges for the services performed, mobilization of the equipment to the location and personnel.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Additional revenue is generated through labor charges and the sale of consumable supplies that are incidental to the service being performed. Such amounts are recognized ratably over the period during which the corresponding goods and services are consumed.

Infrastructure Services

Infrastructure services are typically provided pursuant to master service agreements, repair and maintenance contracts or fixed price and non-fixed price installation contracts. Pricing under these contracts may be unit priced, cost-plus/hourly (or time and materials basis) or fixed price (or lump sum basis). Generally, the Company accounts for infrastructure services as a single performance obligation satisfied over time. In certain circumstances, the Company supplies materials that are utilized during the jobs as part of the agreement with the customer. The Company accounts for these infrastructure agreements as multiple performance obligations satisfied over time. Revenue is recognized over time as work progresses based on the days completed or as the contract is completed. Under certain customer contracts in our infrastructure services segment, the Company warranties equipment and labor performed for a specified period following substantial completion of the work.

Natural Sand Proppant Services

The Company sells natural sand proppant through sand supply agreements with its customers. Under these agreements, sand is typically sold at a flat rate per ton or a flat rate per ton with an index-based adjustment. The Company recognizes revenue at the point in time when the customer obtains legal title to the product, which may occur at the production facility, rail origin or at the destination terminal.

Certain of the Company’s sand supply agreements contain a minimum volume commitment related to sand purchases whereby the Company charges a shortfall payment if the customer fails to meet the required minimum volume commitment. These agreements may also contain make-up provisions whereby shortfall payments can be applied in future periods against purchased volumes exceeding the minimum volume commitment. If a make-up right exists, the Company has future performance obligations to deliver excess volumes of product in subsequent months. In accordance with ASC 606, if the customer fails to meet the minimum volume commitment, the Company will assess whether it expects the customer to fulfill its unmet commitment during the contractually specified make-up period based on discussions with the customer and management’s knowledge of the business. If the Company expects the customer will make-up deficient volumes in future periods, revenue related to shortfall payments will be deferred and recognized on the earlier of the date on which the customer utilizes make-up volumes or the likelihood that the customer will exercise its right to make-up deficient volumes becomes remote. If the Company does not expect the customer will make-up deficient volumes in future periods, the breakage model will be applied and revenue related to shortfall payments will be recognized when the model indicates the customer’s inability to take delivery of excess volumes. The Company recognized shortfall revenue totaling $1.2 million and $2.3 million during the three and nine months ended September 30, 2024 and did not have any deferred revenue related to shortfall payments. The Company did not recognize any shortfall revenue during the three and nine months ended September 30, 2023 and did not have any deferred revenue related to shortfall payments.

In certain of the Company’s sand supply agreements, the customer obtains control of the product when it is loaded into rail cars and the customer reimburses the Company for all freight charges incurred. The Company has elected to account for shipping and handling as activities to fulfill the promise to transfer the sand. If revenue is recognized for the related product before the shipping and handling activities occur, the Company accrues the related costs of those shipping and handling activities.

Drilling Services

Directional drilling services, including motor rentals, are provided on a day rate or hourly basis, and revenue is recognized as work progresses. Performance obligations are satisfied over time as the work progresses based on the measure of output.

Other Services

The Company also provided aviation, equipment rentals, remote accommodations and equipment manufacturing, which are reported under other services. The Company’s other services are typically provided based upon a purchase order, contract or on a spot market basis. Services are provided on a day rate, contracted or hourly basis. Performance obligations for these services are satisfied over time and revenue is recognized as the work progresses based on the measure of output. Jobs for these services are typically short-term in nature and range from a few hours to multiple days.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Practical Expedients

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts in which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied distinct good or service that forms part of a single performance obligation.

Contract Balances

Following is a rollforward of the Company’s contract liabilities (in thousands):


Balance, December 31, 2022	7,550
Deduction for recognition of revenue	(7,042)
Deduction for rebate credit recognized	(375)
Increase for deferral of customer prepayments	530
Balance, December 31, 2023	663
Deduction for recognition of revenue	(58)
Deduction for rebate credit recognized	(506)

Increase for deferral of customer prepayments	1,043
Balance, September 30, 2024	$	1,142

The Company did not have any contract assets as of September 30, 2024 or December 31, 2023.

Performance Obligations

Revenue recognized in the current period from performance obligations satisfied in previous periods was a nominal amount for the three and nine months ended September 30, 2024 and 2023. As of September 30, 2024, the Company had unsatisfied performance obligations totaling $7.7 million, which will be recognized over the next 4 months.

4. Divestitures

On July 13, 2023, the Company sold all of the equity interest in its subsidiary Air Rescue Systems Corporation (“ARS”) for $3.3 million in cash. The Company recognized a gain of $2.1 million on the sale, which is included in “other (expense) income, net” on the unaudited condensed consolidated statements of comprehensive (loss) income.

5. Inventories

Inventories consist of raw sand and processed sand available for sale, chemicals and other products sold as a bi-product of completion and production operations and supplies used in performing services. Inventory is stated at the lower of cost or net realizable value on an average cost basis. The Company assesses the valuation of its inventories based upon specific usage, future utility, obsolescence and other factors. A summary of the Company’s inventories is shown below (in thousands):


	September 30,		December 31,
	2024		2023
Supplies	$	7,361	$	6,757
Raw materials	661		872
Work in process	4,259		3,955
Finished goods	1,217		1,069
Total inventories	$	13,498	$	12,653

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

6. Property, Plant and Equipment

Property, plant and equipment include the following (in thousands):


		September 30,		December 31,
	Useful Life	2024		2023
Pressure pumping equipment	3-5 years	$	251,363	$	251,111
Drilling rigs and related equipment	3-15 years	97,372		97,207
Machinery and equipment	7-20 years	151,344		155,921
Buildings	15-39 years	37,789		40,869
Vehicles, trucks and trailers	5-10 years	90,051		92,257
Coil tubing equipment	4-10 years	7,237		6,954
Land	N/A	12,349		12,393
Land improvements	15 years or life of lease	10,090		10,066
Rail improvements	10-20 years	13,793		13,793
Other property and equipment(a)	3-12 years	15,303		15,171
		686,691		695,742
Deposits on equipment and equipment in process of assembly(b)		16,154		8,670
		702,845		704,412
Less: accumulated depreciation(c)		593,451		590,507
Total property, plant and equipment, net		$	109,394	$	113,905

a. Included in Other property and equipment are costs of $3.1 million at each of September 30, 2024 and December 31, 2023, respectively, related to assets leased to customers under operating leases.

b. Deposits on equipment and equipment in process of assembly represents deposits placed with vendors for equipment that is in the process of assembly and purchased equipment that is being outfitted for its intended use. The equipment is not yet placed in service.

c. Includes accumulated depreciation of $2.6 million and $2.3 million at September 30, 2024 and December 31, 2023, respectively, related to assets under operating leases.

Disposals

Proceeds from customers for horizontal and directional drilling services equipment damaged or lost down-hole are reflected in revenue with the carrying value of the related equipment charged to cost of service revenues and are reported as cash inflows from investing activities in the unaudited condensed consolidated statements of cash flows. For each of the three and nine months ended September 30, 2024, proceeds from the sale of equipment damaged or lost down-hole were $0.3 million, and gains from the sale of equipment damaged or lost down-hole were $0.2 million. For each of the three and nine months ended September 30, 2023, proceeds from the sale of equipment damaged or lost down-hole were $0.4 million, and gains from the sale of equipment damaged or lost down-hole were $0.3 million.

Proceeds from assets sold or disposed of as well as the carrying value of the related equipment are reflected in “gains on disposal of assets, net” on the unaudited condensed consolidated statements of comprehensive (loss) income. For the three and nine months ended September 30, 2024 and 2023, total cash and accrued proceeds from the sale of equipment were $0.6 million, $3.9 million, $3.1 million and $4.0 million, respectively, and gains from the sale or disposal of equipment were $0.3 million, $2.5 million, $2.4 million and $3.3 million, respectively.

Depreciation, depletion, amortization and accretion

A summary of depreciation, depletion, amortization and accretion expense is below (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Depreciation expense	$	5,229	$	9,240	$	17,522	$	33,097
Amortization expense	193		193		580		583
Accretion and depletion expense	762		1,800		1,154		3,159
Depreciation, depletion, amortization and accretion	$	6,184	$	11,233	$	19,256	$	36,839

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

7. Goodwill and Intangible Assets

Goodwill

Changes in the net carrying amount of goodwill by reporting segment (see Note 20) for the nine months ended September 30, 2024 and year ended December 31, 2023 are presented below (in thousands):


	Well Completions		Other		Total
Balance as of January 1, 2023
Goodwill	$	86,043	$	14,830	$	100,873
Accumulated impairment losses	(76,829)		(12,327)		(89,156)
	9,214		2,503		11,717
Acquisitions	—		—		—
Impairment losses	—		(1,810)		(1,810)
Dispositions	—		(693)		(693)
Balance as of December 31, 2023
Goodwill	86,043		14,137		100,180
Accumulated impairment losses	(76,829)		(14,137)		(90,966)
	9,214		—		9,214
Acquisitions	—		—		—
Impairment losses	—		—		—
Dispositions	—		—		—
Balance as of September 30, 2024
Goodwill	86,043		14,137		100,180
Accumulated impairment losses	(76,829)		(14,137)		(90,966)
	$	9,214	$	—	$	9,214

Impairment of Goodwill

As a result of the ARS sale, we performed an impairment assessment of our goodwill during the third quarter of 2023. Under GAAP, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing. However, if the Company concludes otherwise, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.

Based on the qualitative assessment, the Company concluded that it was more likely than not that the carrying value of the Aviation reporting unit was greater than its fair value at September 30, 2023. To determine fair value of the Aviation reporting unit at September 30, 2023, the Company used the income approach. The income approach estimates the fair value based on anticipated cash flows that are discounted using a weighted average cost of capital. As a result, the Company impaired goodwill associated with Cobra Aviation, resulting in a $1.8 million impairment charge during the third quarter of 2023.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Intangible Assets

The Company had the following finite lived intangible assets recorded, which are included in “other non-current assets” on the unaudited condensed consolidated balance sheets (in thousands):


	September 30,		December 31,
	2024		2023
Trade names	7,730		7,730
Less: accumulated amortization - trade names	(7,397)		(6,817)
Intangible assets, net	$	333	$	913

Amortization expense for intangible assets was $0.2 million and $0.6 million for each of the three and nine months ended September 30, 2024 and 2023, respectively. The original life of trade names is 10 years as of September 30, 2024 with a remaining weighted average useful life of 2.0 years.

Aggregated expected amortization expense for the future periods is expected to be as follows (in thousands):


Remainder of 2024	$	124
2025	85
2026	85
2027	39
2028	—
Thereafter	—
	$	333

8. Equity Method Investment

On December 21, 2018, Cobra Aviation Services LLC (“Cobra Aviation”) and Wexford Partners Investment Co. LLC (“Wexford Investment”), a related party, formed a joint venture under the name of Brim Acquisitions LLC (“Brim Acquisitions”) to acquire all outstanding equity interest in Brim Equipment Leasing, Inc. (“Brim Equipment”) for a total purchase price of approximately $2.0 million. Cobra Aviation owns a 49% economic interest and Wexford Investment owns a 51% economic interest in Brim Acquisitions, and each member contributed its pro rata portion of Brim Acquisitions’ initial capital of $2.0 million. Brim Acquisitions, through Brim Equipment, owns three commercial helicopters and leases two commercial helicopters for operations, which it uses to provide a variety of services, including short haul, aerial ignition, hoist operations, aerial photography, fire suppression, construction services, animal/capture/survey, search and rescue, airborne law enforcement, power line construction, precision long line operations, pipeline construction and survey, mineral and seismic exploration, and aerial seeding and fertilization.

The Company uses the equity method of accounting to account for its investment in Brim Acquisitions, which had a carrying value of approximately $3.5 million and $4.2 million at September 30, 2024 and December 31, 2023, respectively. The investment is included in “other non-current assets” on the unaudited condensed consolidated balance sheets. The Company recorded equity method adjustments to its investment of $0.4 million and ($0.7) million for the three and nine months ended September 30, 2024, respectively, and $0.7 million and $0.3 million for the three and nine months ended September 30, 2023, respectively, which is included in “other (expense) income, net” on the unaudited condensed consolidated statements of comprehensive (loss) income.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

9. Accrued Expenses and Other Current Liabilities and Other Long-Term Liabilities

Accrued expenses and other current liabilities and other long-term liabilities included the following (in thousands):


	September 30,		December 31,
	2024		2023
State and local taxes payable	$	13,260	$	13,111
Sale-leaseback liability(a)	11,380		4,754
Accrued compensation and benefits	5,028		5,558
Financing leases	1,572		1,702
Insurance reserves	1,372		1,277
Deferred revenue	1,142		663
Financed insurance premiums(b)	—		9,807
Financing arrangement, net(c)	—		48,943
Other	1,679		2,139


Total accrued expenses and other current liabilities	$	35,433	$	87,954

Other Long-Term Liabilities
Financing leases	$	3,592	$	2,138
Sale-leaseback liability(a)	—		2,555


Other	189		22
Total other long-term liabilities	$	3,781	$	4,715

a.On December 30, 2020, the Company entered into an agreement with First National Capital, LLC (“FNC”) whereby the Company agreed to sell certain assets from its infrastructure segment to FNC for aggregate proceeds of $5.0 million. Concurrent with the sale of assets, the Company entered into a 36-month lease agreement whereby the Company agreed to lease back the assets at a monthly rental rate of $0.1 million. On December 30, 2023, this lease was extended 12 months. On June 1, 2021, the Company entered into another agreement with FNC whereby the Company sold additional assets from its infrastructure segment to FNC for aggregate proceeds of $9.5 million and entered into a 42-month lease agreement whereby the Company agreed to lease back the assets at a monthly rental rate of $0.2 million. On June 1, 2022, the Company entered into another agreement with FNC whereby the Company sold additional assets from its infrastructure segment to FNC for aggregate proceeds of $4.6 million and entered into a 42-month lease agreement whereby the Company agreed to lease back the assets at a monthly rental rate of $0.1 million. Under the agreements, the Company has the option to purchase the assets at the end of the lease terms. The Company recorded liabilities for the proceeds received and will continue to depreciate the assets. The Company has imputed an interest rate so that the carrying amount of the financial liabilities will be the expected repurchase price at the end of the lease terms. During the three months ended September 30, 2024, the Company changed its estimate of the purchase price at the end of a portion of the leases, resulting in a charge to interest expense and financing charges, net of $7.1 million.

b.Financed insurance premiums are due in monthly installments, are unsecured and mature within the twelve-month period following the close of the year. As of December 31, 2023, the applicable interest rates associated with financed insurance premiums ranged from 6.60% to 7.05%.

c.On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into the Assignment Agreement with SPCP Group. Under the terms and conditions of the Assignment Agreement, Cobra transferred to SPCP Group all of its rights, title and interest in $54.4 million of outstanding accounts receivable with PREPA. The Company elected the fair value option for measuring the liability. As of December 31, 2023, the fair value of the liability was approximately $48.9 million. On February 26, 2024, PREPA paid $50.6 million with respect to its outstanding receivable to Cobra. This amount was in addition to $13.4 million paid by PREPA in January 2024. Of the $64.0 million paid by PREPA in 2024, $9.6 million was paid to Cobra and $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement. Following such payment, all of Cobra’s and Mammoth’s obligations under the Assignment Agreement were fully extinguished and the Assignment Agreement was terminated effective as of February 28, 2024. See Note 19 for additional information regarding this transaction.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

10. Debt

Debt included the following (in thousands):


	September 30,		December 31,
	2024		2023
Revolving credit facility	$	—	$	—
Term credit facility, including interest paid-in-kind	50,888		45,000
Unamortized debt issuance costs and discount	(1,879)		(2,191)
Total debt	49,009		42,809
Less: current portion	—		—
Total long-term debt	$	49,009	$	42,809

As of September 30, 2024 and December 31, 2023, there were deferred financing costs on our revolving credit facility totaling $2.9 million and $3.4 million, respectively, included in “other non-current assets” in the accompanying consolidated balance sheets.

New Revolving Credit Facility and New Term Credit Facility

On October 16, 2023, the Company entered into the new revolving credit facility and the new term credit facility (each as defined below), which refinanced in full the Company’s indebtedness outstanding under, and terminated, the amended and restated revolving credit facility, dated as of October 19, 2018, as amended (the “existing revolving credit facility.”), with us and certain of our direct and indirect subsidiaries, as borrowers, the lenders party thereto from time to time, and PNC Bank, National Association, as a lender and as administrative agent for the lenders.

On October 16, 2023, the Company, as borrower, and certain of its direct and indirect subsidiaries, as guarantors, entered into a revolving credit agreement with the lenders party thereto and Fifth Third Bank, National Association, as a lender and as administrative agent for the lenders, as may be subsequently amended (the “new revolving credit facility”). The new revolving credit facility provides for revolving commitments in an aggregate amount of up to $75 million. Borrowings under the new revolving credit facility are secured by the Company’s assets, inclusive of the subsidiary companies, and are subject to a borrowing base calculation prepared monthly which includes a requirement to maintain certain reserves as specified in the new revolving credit facility. The new revolving credit facility also contains various affirmative and restrictive covenants. Interest under the new revolving credit facility equals the Tranche Rate (as defined in the new revolving credit facility) plus (i) 1.75%, if the Average Excess Availability Percentage (as defined in the new revolving credit facility) is greater than 66 2/3%, (ii) 2.00% if the Average Excess Availability Percentage is greater than 33 1/3% and less than or equal to 66 2/3%, and (iii) 2.25% if the Average Excess Availability Percentage is less than or equal to 33 1/3%.

As of September 30, 2024 and December 31, 2023, the financial covenant under the new revolving credit facility was the fixed coverage ratio of 1.0 to 1.0 which applies only during the period from the date that excess availability under the new revolving credit facility is less than the greater of (i) 10% of total availability under the new revolving credit facility and (ii) $5 million until the date in which the excess availability is equal to the greater of (i) 10% of excess availability and (ii) $5 million for 30 consecutive days (such period, a “Financial Covenant Period”). A Financial Covenant Period was not in effect as of each of September 30, 2024 and the filing date of this report.

At September 30, 2024, the new revolving credit facility was undrawn, the borrowing base was $20.4 million, and there was $13.7 million of borrowing capacity under the facility, after giving effect to $6.7 million of outstanding letters of credit. At December 31, 2023, the new revolving credit facility was undrawn, the borrowing base was $27.0 million, and there was $20.7 million of borrowing capacity under the facility, after giving effect to $6.3 million of outstanding letters of credit.

On October 16, 2024, the Company entered into (i) an amendment to the new revolving credit agreement (the “Credit

Agreement Amendment”) and (ii) a letter of credit reimbursement agreement (the “Reimbursement Agreement”), each

with Fifth Third Bank. The Credit Agreement Amendment, among other things, permits the transactions contemplated by the Reimbursement Agreement, including the issuance of one or more letters of credit to satisfy Cobra’s obligations under the Settlement Agreement relating to one or more indemnity letters of credit. The aggregate amount of all such letters of

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

credit shall not exceed $18.4 million. Under the terms of the Reimbursement Agreement, the Company agreed to hold cash funds totaling at least 105% of the stated amount of all letters of credit in an account maintained by Fifth Third Bank and to which Fifth Third Bank has a first priority security interest.

On October 18, 2024, Cobra received a payment from PREPA totaling $18.4 million under the terms of the Settlement Agreement. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit.

On October 16, 2023, the Company, as borrower, and certain of its direct and indirect subsidiaries, as guarantors, also entered into a loan and security agreement with the lenders party thereto and Wexford Capital LP, an affiliate of the Company, as administrative agent for the lenders (“Wexford”), as may be subsequently amended (the “new term credit facility”). The new term credit was approved by the audit committee of the Company’s board of directors, consisting entirely of independent directors, as a transaction with a related party. The new term credit facility provided for term commitments in an aggregate amount equal to $45 million. Borrowings under the new term credit facility were secured by the Company’s assets, inclusive of the subsidiary companies. The new term credit facility contained various affirmative and restrictive covenants. Interest under the new term credit facility equaled the SOFR Interest Rate (as defined in the new term credit facility) plus 7.50%; provided that the Company may elect to pay all or a portion of the accrued interest due with respect to any Interest Period (as defined in the new term credit facility) ending on or before April 16, 2025, in kind by adding such accrued interest to the principal amount of the outstanding loans thereunder. As of September 30, 2024, borrowings outstanding under the new term credit facility bore interest at 12.9%.

In particular, under the new term credit facility, the Company was required, among other things, to mandatorily remit to Wexford up to 50% of all amounts that constitute PREPA Claim Proceeds, as such term is defined in the new term credit facility, which will be used to reduce outstanding borrowings under the new term credit facility, as required under the terms thereof. Wexford waived this requirement in connection with the Assignment Agreement and the $9.6 million received by Cobra from PREPA in February 2024.

At September 30, 2024 and December 31, 2023, there were outstanding borrowings, including interest paid-in-kind, under the term credit facility of $50.9 million and $45.0 million, respectively.

In connection with the receipt of the first installment amount under the Settlement Agreement on October 1, 2024, the Company paid, in full, all amounts owed under the term credit facility, including the accrued and unpaid interest, in the aggregate amount of $50.9 million, and terminated the facility on October 2, 2024. In connection with the payoff of the term credit facility, Wexford waived the 1% early termination penalty.

If an event of default occurs under the new revolving credit facility and remains uncured, it could have a material adverse effect on the Company’s business, financial condition, liquidity and results of operations. The lenders, as applicable, (i) would not be required to lend any additional amounts to the Company, (ii) could elect to increase the interest rate by 200 basis points, (iii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, (iv) may have the ability to require the Company to apply all of its available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of the Company’s assets. The new revolving credit facility is currently scheduled to mature on the earlier of (x) July 17, 2028, unless the indebtedness under the new term credit facility is refinanced in accordance with terms of the intercreditor agreement, and (y) October 16, 2028.

11. Variable Interest Entities

Dire Wolf Energy Services LLC (“Dire Wolf”) and Predator Aviation LLC (“Predator Aviation”), wholly owned subsidiaries of the Company, are party to Voting Trust Agreements with TVPX Aircraft Solutions Inc. (the “Voting Trustee”). Under the Voting Trust Agreements, Dire Wolf transferred 100% of its membership interest in Cobra Aviation and Predator Aviation transferred 100% of its membership interest in Leopard to the respective Voting Trustees in exchange for Voting Trust Certificates. Dire Wolf and Predator Aviation retained the obligation to absorb all expected returns or losses of Cobra Aviation and Leopard. Prior to the transfer of the membership interest to the Voting Trustee, Cobra Aviation was a wholly owned subsidiary of Dire Wolf and Leopard was a wholly owned subsidiary of Predator Aviation. Cobra Aviation owns one helicopter and support equipment and 49% of the equity interest in Brim Acquisitions. Leopard owns one helicopter. Dire Wolf and Predator Aviation entered into the Voting Trust Agreements in order to meet certain registration requirements.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Dire Wolf’s and Predator Aviation’s voting rights are not proportional to their respective obligations to absorb expected returns or losses of Cobra Aviation and Leopard, respectively, and all of Cobra Aviation’s and Leopard’s activities are conducted on behalf of Dire Wolf and Predator Aviation, which have disproportionately fewer voting rights; therefore, Cobra Aviation and Leopard meet the criteria of a VIE. Cobra Aviation and Leopard’s operational activities are directed by Dire Wolf’s and Predator Aviation’s officers and Dire Wolf and Predator Aviation have the option to terminate the Voting Trust Agreements at any time. Therefore, the Company, through Dire Wolf and Predator Aviation, is considered the primary beneficiary of the VIEs and consolidates Cobra Aviation and Leopard at September 30, 2024.

12. Selling, General and Administrative Expense

Selling, general and administrative (“SG&A”) expense includes of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cash expenses:
Compensation and benefits	$	3,173	$	3,392	$	10,394	$	11,665
Professional services	3,503		4,684		9,016		10,889
Other(a)	1,775		2,105		5,249		5,884
Total cash SG&A expense	8,451		10,181		24,659		28,438
Non-cash expenses:
Change in provision for expected credit losses charged to bad debt expense(b)	32		11		89,645		(414)

Stock based compensation	219		219		657		1,127
Total non-cash SG&A expense	251		230		90,302		713
Total SG&A expense	$	8,702	$	10,411	$	114,961	$	29,151

a. Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

b. Included in the nine months ended September 30, 2024 amounts is a charge of $89.2 million related to Cobra’s Settlement Agreement with PREPA. See Note 2. Basis of Presentation and Significant Accounting Policies—Accounts Receivable and —Concentrations of Credit Risk and Significant Customers and Note 19. Commitments and Contingencies—Litigation included elsewhere in this report for additional information.

13. Income Taxes

The Company recorded income tax benefit of $12.6 million for the nine months ended September 30, 2024 compared to income tax expense of $9.0 million for the nine months ended September 30, 2023. The Company’s effective tax rates were 6% and 76% for the nine months ended September 30, 2024 and 2023, respectively.

The effective tax rates for the nine months ended September 30, 2024 and 2023 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico, changes in the valuation allowance and interest and penalties. Additionally, as a result of the Settlement Agreement with PREPA, during the nine months ended September 30, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.

14. Leases

Lessee Accounting

The Company recognizes a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with a term in excess of 12 months. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term, while finance leases include both an operating expense and an interest expense component. For all leases with a term of 12 months or less, the Company has elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company’s operating leases are primarily for rail cars, real estate, and equipment and its finance leases are primarily for machinery and equipment. Generally, the Company does not include renewal or termination options in its assessment

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

of the leases unless extension or termination of certain assets is deemed to be reasonably certain. The accounting for some of the Company’s leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options. Lease agreements that contain a lease and non-lease component are generally accounted for as a single lease component.

The rate implicit in the Company’s leases is not readily determinable. Therefore, the Company uses its incremental borrowing rate based on information available at the commencement date of its leases in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Lease expense consisted of the following for the three and nine months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Operating lease expense	$	1,575	$	1,928	$	5,135	$	5,568
Short-term lease expense	16		37		70		476
Finance lease expense:
Amortization of right-of-use assets	398		445		1,229		1,579
Interest on lease liabilities	95		38		212		135
Total lease expense	$	2,084	$	2,448	$	6,646	$	7,758

Supplemental balance sheet information related to leases as of September 30, 2024 and December 31, 2023 is as follows (in thousands):


	September 30,		December 31,
	2024		2023
Operating leases:
Operating lease right-of-use assets	$	5,010	$	9,551
Current operating lease liability	3,428		5,771
Long-term operating lease liability	1,556		3,534
Finance leases:
Property, plant and equipment, net	$	5,345	$	3,966
Accrued expenses and other current liabilities	1,572		1,702
Other liabilities	3,592		2,138

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Other supplemental information related to leases for the three and nine months ended September 30, 2024 and 2023 and as of September 30, 2024 and December 31, 2023 is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,521	$	1,826	$	4,904	$	5,419
Operating cash flows from finance leases	95		38		212		135
Financing cash flows from finance leases	412		869		1,359		3,547
Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	50	$	1,338	$	136	$	5,554
Finance leases	1,602		201		2,971		507


	September 30,		December 31,
	2024		2023
Weighted-average remaining lease term:
Operating leases	2.4 years		2.5 years
Finance leases	2.7 years		2.2 years
Weighted-average discount rate:
Operating leases	9.1	%	8.7	%
Finance leases	8.4	%	6.3	%

Maturities of lease liabilities as of September 30, 2024 are as follows (in thousands):


	Operating Leases		Finance Leases
Remainder of 2024	$	1,509	$	489
2025	2,783		1,858
2026	726		2,141
2027	175		977
2028	15		192
Thereafter	467		265
Total lease payments	5,675		5,922
Less: Present value discount	691		758
Present value of lease payments	$	4,984	$	5,164

Subsequent to September 30, 2024, the Company entered into 14 additional finance leases for trucks. These agreements provide for aggregate fixed lease payments totaling $3.6 million with varying lease terms ranging from three to six years.

Lessor Accounting

Certain of the Company’s agreements with its customers for other services, aviation services and remote accommodation services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use. The Company has elected to apply the practical expedient provided to lessors to combine the lease and non-lease components of a contract where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease. The practical expedient also allows a lessor to account for the combined lease and non-lease components

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

under ASC 606, Revenue from Contracts with Customers, when the non-lease component is the predominant element of the combined component.

The Company’s lease agreements are generally short-term in nature and lease revenue is recognized over time based on a monthly, daily or hourly rate basis. The Company does not provide an option for the lessee to purchase the rented assets at the end of the lease and the lessees do not provide residual value guarantees on the rented assets. The Company recognized lease revenue of $0.5 million and $1.7 million during the three and nine months ended September 30, 2024, respectively, and $0.8 million and $2.4 million during the three and nine months ended September 30, 2023, which is included in “services revenue” and “services revenue - related parties” on the unaudited condensed consolidated statements of comprehensive (loss) income.

15. (Loss) Earnings Per Share

Reconciliations of the components of basic and diluted net (loss) earnings per common share are presented in the table below (in thousands, except per share data):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Basic (loss) earnings per share:
Allocation of (loss) earnings:
Net (loss) income	$	(24,042)	$	(1,088)	$	(191,846)	$	2,793
Weighted average common shares outstanding	48,127		47,942		48,044		47,721
Basic (loss) earnings per share	$	(0.50)	$	(0.02)	$	(3.99)	$	0.06

Diluted (loss) earnings per share:
Allocation of (loss) earnings:
Net (loss) income	$	(24,042)	$	(1,088)	$	(191,846)	$	2,793
Weighted average common shares, including dilutive effect(a)	48,127		47,942		48,044		47,973
Diluted (loss) earnings per share	$	(0.50)	$	(0.02)	$	(3.99)	$	0.06

a. No incremental shares of potentially dilutive restricted stock awards were included for the three and nine months ended September 30, 2024 and the three months ended September 30, 2023 as their effect was antidilutive under the treasury stock method.

16. Equity Based Compensation

Upon formation of certain operating entities by Wexford and Gulfport Energy Corporation, specified members of management (the “Specified Members”) and certain non-employee members (the “Non-Employee Members”) were granted the right to receive distributions from the operating entities after the contribution member’s unreturned capital balance was recovered (referred to as “Payout” provision).

On November 24, 2014, the awards were modified in conjunction with the contribution of the operating entities to Mammoth. These awards were not granted in limited or general partner units. The awards are for interests in the distributable earnings of the members of MEH Sub, Mammoth’s majority equity holder.

On the closing date of Mammoth Inc.’s initial public offering (“IPO”), the unreturned capital balance of Mammoth’s majority equity holder was not fully recovered from its sale of common stock in the IPO. As a result, Payout did not occur and no compensation cost was recorded.

Payout for the remaining awards is expected to occur as the contributing member’s unreturned capital balance is recovered from additional sales by MEH Sub of its shares of the Company’s common stock or from dividend distributions, which is not considered probable until the event occurs. For the Specified Member awards, the unrecognized amount, which represents the fair value of the award as of the modification dates or grant date, was $5.6 million.

For the Company’s Non-Employee Member awards, the unrecognized amount, which represents the fair value of the awards as of the date of adoption of ASU 2018-07 was $18.9 million.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

17. Stock Based Compensation

On April 29, 2024, the Board of Directors of Mammoth adopted the Mammoth Energy Services, Inc. 2024 Equity Incentive Plan (the “2024 Plan”), subject to stockholder approval, which approval was obtained at Mammoth’s 2024 Annual Meeting of Stockholders on June 12, 2024. The 2024 Plan authorizes the Company’s Board of Directors or the compensation committee of the Company’s Board of Directors to grant restricted stock, restricted stock units, stock appreciation rights, stock options and performance awards. There are a maximum of 2.1 million shares of common stock reserved for issuance under the 2024 Plan, of which 1.9 million shares of common stock remain available for future grants under the 2024 Plan as of September 30, 2024. No new awards will be granted under the Company’s previous equity incentive plan after June 12, 2024.

Restricted Stock Units

The fair value of restricted stock unit awards was determined based on the fair market value of the Company’s common stock on the date of the grant. This value is amortized over the vesting period.

A summary of the status and changes of the unvested shares of restricted stock is presented below.


	Number of Unvested Restricted Shares	Weighted Average Grant-Date Fair Value
Unvested shares as of January 1, 2023	728,310	$	1.32
Granted	369,050	5.17
Vested	(794,977)	1.69
Forfeited	—	—
Unvested shares as of December 31, 2023	302,383	5.06
Granted	139,280	3.59
Vested	(185,717)	4.71
Forfeited	—	—
Unvested shares as of September 30, 2024	255,946	$	4.52

As of September 30, 2024, there was $0.8 million of total unrecognized compensation cost related to the unvested restricted stock. The cost is expected to be recognized over a weighted average period of approximately 1.1 years.

The total fair value of shares vested was $0.7 million and $4.1 million during the nine months ended September 30, 2024, and 2023, respectively. Included in cost of revenue and selling, general and administrative expenses is stock-based compensation expense of $0.2 million and $0.7 million for the three and nine months ended September 30, 2024, respectively, and $0.2 million and $1.1 million for the three and nine months ended September 30, 2023, respectively.

18. Related Party Transactions

Transactions between the subsidiaries of the Company, including Panther Drilling Systems LLC (“Panther Drilling”), Cobra Aviation, ARS and Leopard and the following companies are included in Related Party Transactions: Wexford, El Toro Resources LLC (“El Toro”), Elk City Yard LLC (“Elk City Yard”), Double Barrel Downhole Technologies LLC (“DBDHT”), Caliber Investment Group LLC (“Caliber”) and Brim Equipment. For the three and nine months ended September 30, 2024 and 2023, revenue from related party transactions was $1.0 million, $1.2 million, $0.3 million and $0.8 million, respectively, and costs incurred from related party transactions was $0.1 million, $0.4 million, $0.1 million and $0.4 million, respectively. At September 30, 2024 and December 31, 2023, accounts receivable from related party transactions was $0.9 million and a nominal amount, respectively, which is included in accounts receivable, net on the unaudited consolidated balance sheet. At September 30, 2024 accounts payable for related party transactions was $0.1 million, which is included in accounts payable on the unaudited consolidated balance sheet. There was no accounts payable for related party transactions at December 31, 2023.

On December 21, 2018, Cobra Aviation acquired all outstanding equity interest in ARS and purchased two commercial helicopters, spare parts, support equipment and aircraft documents from Brim Equipment. Following these transactions,

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and also on December 21, 2018, Cobra Aviation formed a joint venture with Wexford Investments named Brim Acquisitions to acquire all outstanding equity interests in Brim Equipment. Cobra Aviation owns a 49% economic interest and Wexford Investment owns a 51% economic interest in Brim Acquisitions, and each member contributed its pro rata portion of Brim Acquisitions’ initial capital of $2.0 million. Wexford Investments is an entity controlled by Wexford, which owns approximately 47% of the Company’s outstanding common stock. Cobra Aviation and Leopard each lease one helicopter to Brim Equipment under the terms of aircraft lease and management agreements. ARS was subsequently sold to a third party in July 2023. See Note 4 for further discussion.

On October 16, 2023, the Company entered into a loan and security agreement with Wexford, an affiliate of Mammoth. Under this agreement, the Company had outstanding debt, including interest paid-in kind and net of debt discount and debt issuance costs, of $49.0 million and $42.8 million as of September 30, 2024 and December 31, 2023, respectively. Additionally, the Company incurred interest expense under this agreement totaling $1.6 million and $4.7 million for the three and nine months ended September 30, 2024. On October 2, 2024, the Company paid, in full, all amounts owed under the term credit facility and terminated the facility. See Note 10 for additional detail on the agreement with Wexford.

19. Commitments and Contingencies

Commitments

From time to time, the Company may enter into agreements with suppliers that contain minimum purchase obligations and agreements to purchase capital equipment. The Company did not have any unconditional purchase obligations as of September 30, 2024.

Letters of Credit

The Company has various letters of credit that were issued under the Company’s revolving credit agreement which is collateralized by substantially all of the assets of the Company. The letters of credit are categorized below (in thousands):


	September 30,		December 31,
	2024		2023
Environmental remediation	$	4,228	$	3,782
Insurance programs	2,500		2,500


Total letters of credit	$	6,728	$	6,282

Insurance

The Company has insurance coverage for physical partial loss to its assets, employer’s liability, automobile liability, commercial general liability, workers’ compensation and insurance for other specific risks. The Company has also elected in some cases to accept a greater amount of risk through increased deductibles on certain insurance policies. At each of September 30, 2024 and December 31, 2023, the workers’ compensation and automobile liability policies require a deductible per occurrence of up to $0.3 million and $0.1 million, respectively. As of September 30, 2024 and December 31, 2023, the workers’ compensation and auto liability policies contained an aggregate stop loss of $5.4 million. The Company establishes liabilities for the unpaid deductible portion of claims incurred based on estimates. As of September 30, 2024 and December 31, 2023, accrued claims were $1.4 million and $1.3 million, respectively.

The Company also has insurance coverage for directors and officers liability. As of September 30, 2024 and December 31, 2023, the directors and officers liability policy had a deductible per occurrence of $1.0 million and an aggregate deductible of $10.0 million. As of September 30, 2024 and December 31, 2023, the Company did not have any accrued claims for directors and officers liability.

The Company also self-insures its employee health insurance. The Company has coverage on its self-insurance program in the form of a stop loss of $0.2 million per participant and an aggregate stop-loss of $5.8 million for the calendar year ending December 31, 2022. At September 30, 2024 and December 31, 2023, accrued claims were $2.2 million and $1.8 million, respectively. These estimates may change in the near term as actual claims continue to develop.

Warranty Guarantees

Pursuant to certain customer contracts in our infrastructure services segment, the Company warrants equipment and labor performed under the contracts for a specified period following substantial completion of the work. Generally, the warranty is for one year or less. No liabilities were accrued as of September 30, 2024 and December 31, 2023 and no expense was recognized during the nine months ended September 30, 2024 or 2023 related to warranty claims. However, if warranty

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

claims occur, the Company could be required to repair or replace warrantied items, which in most cases are covered by warranties extended from the manufacturer of the equipment. In the event the manufacturer of equipment failed to perform on a warranty obligation or denied a warranty claim made by the Company, the Company could be required to pay for the cost of the repair or replacement.

Bonds

In the ordinary course of business, the Company is required to provide bid bonds to certain customers in the infrastructure services segment as part of the bidding process. These bonds provide a guarantee to the customer that the Company, if awarded the project, will perform under the terms of the contract. Bid bonds are typically provided for a percentage of the total contract value. Additionally, the Company may be required to provide performance and payment bonds for contractual commitments related to projects in process. These bonds provide a guarantee to the customer that the Company will perform under the terms of a contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of September 30, 2024 and December 31, 2023, outstanding performance and payment bonds totaled $12.5 million and $10.0 million, respectively. The estimated cost to complete projects secured by the performance and payment bonds totaled $5.3 million as of September 30, 2024. There were $0.1 million in outstanding bid bonds as of September 30, 2024 and $0.2 million in outstanding bid bonds as of December 31, 2023.

Litigation

Cobra and PREPA previously entered into two agreements to aid in the restoration and reconstruction of Puerto Rico’s

power grid in response to damage caused by Hurricane Maria in 2017. PREPA is currently subject to bankruptcy

proceedings, which were filed in July 2017 and are currently pending in the Title III Court. As a result, PREPA’s ability to meet its payment obligations under the above-referenced agreements was largely dependent upon funding from FEMA or other sources. Since September 30, 2019, Cobra has been pursuing litigation in the Title III Court and other dispute

resolution efforts seeking recovery of the amounts owed to Cobra by PREPA for restoration services in Puerto Rico,

which proceedings are discussed in more detail in the Company’s prior reports filed with the SEC. PREPA was holding approximately $18.4 million in Withheld FEMA Funds received from FEMA and considered payable to Cobra but for purported garnishments in this amount asserted by three Puerto Rican municipalities for certain municipal tax claims discussed below and for which Cobra disputes any valid garnishment.

the Title III Court and (B) August 31, 2024; (ii) $20.0 million within seven days following the effective date of PREPA’s

plan of adjustment; and (iii) $18.4 million in the Withheld FEMA Funds within either (A) ten business days after the

deadline for appealing the entry of the settlement order by the Title III Court under the applicable bankruptcy rules of

procedure if no such appeal is filed, or (B) if the provisions of the settlement order allowing PREPA to release the

Withheld FEMA Funds to Cobra without retaining any liability to the Specified Municipalities are appealed by the

Specified Municipalities, within ten business days of the filing of the notice of such appeal. In exchange for the settlement

payments and conditioned upon the effectiveness and full implementation of the Settlement Agreement, Cobra has agreed

to release and waive any further claim against PREPA under its two agreements with PREPA. Further, if PREPA pays the

Withheld FEMA Funds to Cobra following the notice of appeal described above, Cobra agreed to indemnify and hold

PREPA harmless, as well as to provide PREPA with one or more indemnity letters of credit, solely for any payment(s) PREPA is subsequently required to make pursuant to the Specified Municipalities on account of the Specified Municipal Tax Claims if such order is entered as a result of (i) any reversal on appeal of the settlement order with respect to the FEMA Withheld Funds and/or (ii) the Puerto Rico Court of First Instance or other court of competent jurisdiction enters such order after a diligent challenge by PREPA (including through enforcement of the order approving Settlement Agreement if in effect). Any such indemnity obligation will in no event exceed the amount of the Withheld FEMA Funds paid to and received by Cobra.

The Settlement Agreement was approved by the Company’s Board of Directors on July 22, 2024, and was also approved

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

connection with the Settlement Agreement with PREPA. Also on October 1, 2024, certain Puerto Rico municipalities and Foreman Electric Services Inc. that had objected to approval of the Settlement Order each filed timely notices of appeal of the Settlement Order to the United States Court of Appeals for the First Circuit. None of the foregoing parties have sought a stay of the Settlement Order pending such appeals. Although the ultimate outcome of these appeals cannot be predicted with certainty, Cobra believes that the appeals are without merit.

On October 18, 2024, Cobra received a payment from PREPA totaling $18.4 million under the terms of the Settlement Agreement. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit.

representing the amount owed to Cobra by PREPA in relation to these agreements as of June 30, 2024, including the

On May 13, 2021, Foreman Electric Services, Inc. (“Foreman”) filed a petition against Mammoth Inc. and Cobra in the Oklahoma County District Court (Oklahoma State Court). The petition asserted claims against the Company and Cobra under federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) statutes and certain state-law causes of action. Foreman alleged that it sustained injuries to its business and property in the amount of $250 million due to the Company’s and Cobra’s alleged wrongful interference by means of inducements to a FEMA official. On May 18, 2021, the Company removed this action to the United States District Court for the Western District of Oklahoma and filed a motion to dismiss on July 8, 2021. On July 29, 2021, Foreman voluntarily dismissed the action without prejudice. On December 14, 2021, Foreman re-filed its petition against Mammoth Inc. and Cobra in the Oklahoma County District Court (Oklahoma State Court). On December 16, 2021, the Company again removed this action to the United States District Court for the Western District of Oklahoma. Foreman filed a motion to remand this action back to Oklahoma County District Court, which was granted on May 5, 2022. On September 28, 2023, the Company moved to dismiss the petition. On November 16, 2023, rather than respond to the motion, Foreman filed an Amended Petition naming Arty Straehla, Mark Layton and Wexford as additional defendants, added claims for fraudulent transfer arising out of the refinancing of certain debt and sought receivership over Mammoth and Cobra related to allegedly fraudulently transferred assets. The defendants moved to dismiss the Amended Petition, which was denied on March 12, 2024. On February 8, 2024, Foreman filed a Motion for Appointment of Receiver. On April 29, 2024, the Court denied that motion. Additionally, on February 6, 2023, Foreman moved to amend a complaint against the former president of Cobra filed in Florida State Court arising from facts similar to those in the pending Oklahoma action to add, as defendants, Arty Straehla and Mark Layton. On September 15, 2023, Straehla and Layton moved to dismiss the complaint. On January 18, 2024, Foreman voluntarily dismissed the Florida State Court action against Straehla and Layton. In a related matter, on January 12, 2022, a Derivative Complaint on behalf of nominal defendant Machine Learning Integration, LLC (“MLI”), which alleges it would have served as a sub-contractor to Foreman in Puerto Rico, was filed against the Company and Cobra in the U.S. District Court for the District of Puerto Rico alleging essentially the same facts as Foreman’s action and asserting violations of federal RICO statutes and certain non-federal claims. MLI alleges it sustained injuries to its business and property in an unspecified amount because the Company’s and Cobra’s wrongful interference by means of inducements to a FEMA official prevented Foreman from obtaining work, and thereby prevented MLI, as Foreman’s subcontractor, from obtaining work. The Company is not able to predict the outcome of these claims or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

The Company is routinely involved in state and local tax audits. During 2015, the State of Ohio assessed taxes on the purchase of equipment the Company believes is exempt under state law. The Company appealed the assessment and a hearing was held in 2017. As a result of the hearing, the Company received a decision from the State of Ohio, which the Company appealed. On February 25, 2022, the Company received an unfavorable decision on the appeal. The Company appealed the decision. On August 2, 2023, the Ohio Supreme court affirmed the ruling in part and reversed the ruling in part. The Company is currently awaiting the final assessment. It is not expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Cobra has been served with 13 lawsuits from municipalities in Puerto Rico alleging failure to pay construction excise and volume of business taxes. On November 14, 2022, the Court entered judgment against Cobra in connection with one of the lawsuits ordering payment of approximately $9.0 million. On January 9, 2023, Cobra appealed the judgment and, on March 20, 2023, the Court confirmed the imposition of approximately $8.5 million related to construction excise taxes. On April 10, 2023, Cobra appealed this judgment, which was denied on May 5, 2023. Cobra filed a motion for reconsideration on May 15, 2023, which was denied. Cobra filed a second motion for reconsideration on June 22, 2023 and is currently awaiting a decision. On December 18, 2023, the Humacao Superior Court issued an order to PREPA to withhold payment of approximately $9.0 million to Cobra. On January 17, 2024, Cobra filed a Writ of Certiorari requesting the Court of Appeals to reverse the order from the Humacao Superior Court. On February 15, 2024, Cobra’s request was granted by the Court of Appeals and the order instructing PREPA to withhold the $9.0 million payment from Cobra was revoked. The case was remanded to the lower Court for continuation of the proceedings in accordance with the Court of Appeals’ order. Cobra believes it is exempt from the construction excise taxes. In connection with the Settlement Agreement entered into with PREPA, PREPA (including through the Puerto Rico Fiscal Agency and Financial Advisory Authority, as fiscal agent for PREPA, and the FOMB) has agreed to cooperate with Cobra and assist in resolving the construction excise and volume of business taxes assessed against Cobra. There is no guarantee, however, that the Company, including with PREPA’s cooperation, will be successful in favorably resolving or mitigating these taxes. Accordingly, at this time, the Company is not able to predict the outcome of these matters or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

On April 16, 2019, Christopher Williams, a former employee of Higher Power Electrical, LLC, filed a putative class and collective action complaint titled Christopher Williams, individually and on behalf of all others similarly situated v. Higher Power Electrical, LLC, Cobra Acquisitions LLC, and Cobra Energy LLC in the U.S. District Court for the District of Puerto Rico. On June 24, 2019, the complaint was amended to replace Mr. Williams with Matthew Zeisset as the named plaintiff. The plaintiff alleges the defendant failed to pay overtime wages to a class of workers in compliance with the Fair Labor Standards Act and Puerto Rico law. On August 21, 2019, upon request of the parties, the Court stayed proceedings in the lawsuit and administratively closed the case pending completion of individual arbitration proceedings initiated by Mr. Zeisset and opt-in plaintiffs. Other claimants have subsequently initiated additional individual arbitration proceedings asserting similar claims. During 2023, the Company agreed to settlements in principle with a portion of the claimants. Arbitrations remain pending for the remaining claimants. The Company will continue to vigorously defend the arbitrations. During 2023 and 2024, the Company recognized an estimated liability related to these complaints, which is included in “accounts payable” in the accompanying consolidated balance sheets. The amount required to resolve these matters may ultimately increase or decrease from the Company’s estimated amount as the matters progress.

On September 10, 2019, the U.S. District Court for the District of Puerto Rico unsealed an indictment that charged the former president of Cobra Acquisitions LLC with conspiracy, wire fraud, false statements and disaster fraud. Two other individuals were also charged in the indictment. The indictment is focused on the interactions between a former FEMA official and the former president of Cobra. Neither the Company nor any of its subsidiaries were charged in the indictment. On May 18, 2022, the former FEMA official and the former president of Cobra each pled guilty to one-count information charging gratuities related to a project that Cobra never bid upon and was never awarded or received any monies for. On December 13, 2022, the Court sentenced the former Cobra president to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and one day and a fine of $25,000. The Court sentenced the FEMA official to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and a fine of $15,000. The Court also dismissed the indictment against the two defendants. The Company does not expect any additional activity in the criminal proceeding. Subsequent to the indictment, Cobra received a civil investigative demand (“CID”) from the United States Department of Justice (“DOJ”), which requests certain documents and answers to specific interrogatories relevant to an ongoing investigation it is conducting. The aforementioned DOJ investigation is in connection with the issues raised in the criminal matter. Cobra fully cooperated with the DOJ but is not able to predict the outcome of this investigation, or even if it still active, or if so, whether it will have a material impact on Cobra’s or the Company’s business, financial condition, results of operations or cash flows. With regard to the SEC investigation disclosed in previous filings, on July 6, 2022, the SEC sent a letter saying that it had concluded its investigation as to the Company and that based on information the SEC has as of this date, it does not intend to recommend an enforcement action against the Company.

The Company is involved in various other legal proceedings in the ordinary course of business. Although the Company cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material impact on the Company’s business, financial condition, results of operations or cash flows.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Assignment Agreement

On December 1, 2023, Cobra, as seller and Mammoth, as guarantor, entered into the Assignment Agreement with SPCP Group, as purchaser.

Under the terms and conditions of the Assignment Agreement, Cobra transferred to SPCP Group, at the purchase rate of 88.0% and free and clear of any liens and claims, all of its rights, title and interest in the first $63.0 million (the “Transferred Amount”) of the total outstanding accounts receivable that remained unpaid by PREPA as of October 6, 2023 (the “PREPA Claim”), received or to be received by Cobra on or after October 6, 2023. Between October 6, 2023 and December 1, 2023, Cobra received payments from PREPA with respect to the PREPA Claim totaling $8.6 million (the “Interim Payment Amount”), resulting in the net Transferred Amount of $54.4 million.

In connection with the entry into the Assignment Agreement, Mammoth and Cobra obtained the required consents from lenders under the Company’s revolving credit facility with Fifth Third Bank and the Company’s term loan and security agreement with Wexford. Further, under the term loan and security agreement with Wexford, Mammoth was required, among other things, to mandatorily remit to Wexford up to 50% of all amounts that constitute PREPA Claim proceeds, including the proceeds received by Cobra under the Assignment Agreement, to reduce outstanding borrowings under such term loan and security agreement. In connection with the Assignment Agreement, Wexford waived this requirement.

The net proceeds received by Cobra in connection with the Assignment Agreement were $46.1 million. The Company elected the fair value option for measuring the liability to simplify the accounting associated with the Assignment Agreement. As of December 31, 2023, the fair value of the liability was approximately $48.9 million, which is included in “accrued expenses and other current liabilities” in the accompanying consolidated balance sheet and the aggregate unpaid principal balance related to this liability was $54.4 million. During the year ended December 31, 2023, the Company recognized a financing charge totaling $2.8 million.

During the three months ended March 31, 2024, PREPA paid $64.0 million with respect to the outstanding PREPA receivable. Of the $64.0 million, $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group under the Assignment Agreement, and the Assignment Agreement was terminated. The Company recognized a financing charge totaling $5.5 million during the three months ended March 31, 2024 related to the termination of the Assignment Agreement, which is included in “interest expense and financing charges, net” in the accompanying consolidated statement of comprehensive loss. The remaining $9.6 million was paid to Cobra. Wexford waived the requirement to mandatorily remit to Wexford up to 50% of all PREPA Claim proceeds in relation to the $9.6 million.

Defined Contribution Plan

The Company sponsors a 401(k) defined contribution plan for the benefit of substantially all employees at their date of hire. The plan allows eligible employees to contribute up to 92% of their annual compensation, not to exceed annual limits established by the federal government. The Company makes discretionary matching contributions of up to 3% of an employee’s compensation and may make additional discretionary contributions for eligible employees. For the three and nine months ended September 30, 2024 and 2023, the Company paid $0.5 million, $1.5 million, $0.4 million and $1.5 million, respectively, in contributions to the plan.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

20. Reporting Segments

As of September 30, 2024, the Company’s revenues, income before income taxes and identifiable assets are primarily attributable to four reportable segments. The Company’s Chief Executive Officer and Chief Financial Officer comprise the Company’s CODM. Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions. Segment evaluation is determined on a quantitative basis based on a function of operating loss less impairment expense, as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

As of September 30, 2024, the Company’s four reportable segments include well completion services (“Well Completion”), infrastructure services (“Infrastructure”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). The Well Completion segment provides hydraulic fracturing and water transfer services primarily in the Utica Shale of Eastern Ohio, Marcellus Shale in Pennsylvania and the mid-continent region. The Infrastructure segment provides electric utility infrastructure services to government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities in the northeastern, southwestern, midwestern and western portions of the United States. The Sand segment mines, processes and sells sand for use in hydraulic fracturing. The Sand segment primarily services the Utica Shale, Permian Basin, SCOOP, STACK and Montney Shale in British Columbia and Alberta, Canada. During certain of the periods presented, the Drilling segment provided contract land and directional drilling services primarily in the Permian Basin and mid-continent region. During the three and nine months ended September 30, 2023, the Company included Bison Trucking in its Drilling segment. Based on its assessment of FASB ASC 280, Segment Reporting, guidance at December 31, 2023, the Company changed its presentation to move Bison Trucking to the reconciling column titled “All Other”. The results for the three and nine months ended September 30, 2023 have been retroactively adjusted to reflect these changes.

The Company also provided aviation services, equipment rental services, remote accommodations and equipment manufacturing. The businesses that provide these services are distinct operating segments, which the CODM reviews independently when making key operating and resource utilization decisions. None of these operating segments meet the quantitative thresholds of a reporting segment and do not meet the aggregation criteria set forth in ASC 280 Segment Reporting. Therefore, results for these operating segments are included in the column titled “All Other” in the tables below. Additionally, assets for corporate activities, which primarily include cash and cash equivalents, inter-segment accounts receivable, prepaid insurance and certain property and equipment, are included in the All Other column. Although Mammoth Energy Partners LLC, which holds these corporate assets, meets one of the quantitative thresholds of a reporting segment, it does not engage in business activities from which it may earn revenues and its results are not regularly reviewed by the Company’s CODM when making key operating and resource utilization decisions. Therefore, the Company does not include it as a reportable segment.

Sales from one segment to another are generally priced at estimated equivalent commercial selling prices. Total revenue and total cost of revenue amounts included in the Eliminations column in the following tables include inter-segment transactions conducted between segments. Receivables due for sales from one segment to another and for corporate allocations to each segment are included in the Eliminations column for total assets in the following tables. All transactions conducted between segments are eliminated in consolidation. Transactions conducted by companies within the same reporting segment are eliminated within each reporting segment. The following tables set forth certain financial information with respect to the Company’s reportable segments (in thousands):

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Three Months Ended September 30, 2024	Well Completion		Infrastructure		Sand		Drilling		All Other		Eliminations		Total
Revenue from external customers	$	2,124	$	26,043	$	4,909	$	1,557	$	5,382	$	—	$	40,015
Intersegment revenues	108		—		—		—		1,641		(1,749)		—
Total revenue	2,232		26,043		4,909		1,557		7,023		(1,749)		40,015
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	7,099		22,539		3,110		1,478		3,746		—		37,972
Intersegment cost of revenues	185		—		—		1		1,565		(1,751)		—
Total cost of revenue	7,284		22,539		3,110		1,479		5,311		(1,751)		37,972
Selling, general and administrative	887		5,557		1,211		230		817		—		8,702
Depreciation, depletion, amortization and accretion	2,546		626		1,688		587		737		—		6,184
Gains on disposal of assets, net	(60)		(41)		—		—		(192)		—		(293)


Operating (loss) income	(8,425)		(2,638)		(1,100)		(739)		350		2		(12,550)
Interest expense and financing charges, net	533		8,742		135		127		193		—		9,730
Other expense (income), net	1		1,491		3		—		(373)		—		1,122
(Loss) income before income taxes	$	(8,959)	$	(12,871)	$	(1,238)	$	(866)	$	530	$	2	$	(23,402)


Three Months Ended September 30, 2023	Well Completion		Infrastructure		Sand		Drilling		All Other		Eliminations		Total
Revenue from external customers	$	20,166	$	26,712	$	10,633	$	2,337	$	5,111	$	—	$	64,959
Intersegment revenues	161		—		—		—		909		(1,070)		—
Total revenue	20,327		26,712		10,633		2,337		6,020		(1,070)		64,959
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	17,528		22,042		6,977		2,194		4,076		—		52,817
Intersegment cost of revenues	325		10		—		—		735		(1,070)		—
Total cost of revenue	17,853		22,052		6,977		2,194		4,811		(1,070)		52,817
Selling, general and administrative	1,579		6,495		1,224		215		898		—		10,411
Depreciation, depletion, amortization and accretion	3,971		1,557		2,836		1,114		1,755		—		11,233
Gains on disposal of assets, net	(2,016)		(311)		—		—		(123)		—		(2,450)
Impairment of goodwill	—		—		—		—		1,810		—		1,810

Operating loss	(1,060)		(3,081)		(404)		(1,186)		(3,131)		—		(8,862)
Interest expense and financing charges, net	774		1,647		117		117		221		—		2,876
Other income, net	—		(11,348)		(6)		—		(2,734)		—		(14,088)
(Loss) income before income taxes	$	(1,834)	$	6,620	$	(515)	$	(1,303)	$	(618)	$	—	$	2,350

MAMMOTH ENERGY SERVICES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Nine Months Ended September 30, 2024	Well Completion		Infrastructure		Sand		Drilling		All Other		Eliminations		Total
Revenue from external customers	$	20,218	$	82,514	$	13,908	$	2,804	$	15,288	$	—	$	134,732
Intersegment revenues	331		—		27		—		5,005		(5,363)		—
Total revenue	20,549		82,514		13,935		2,804		20,293		(5,363)		134,732
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	25,533		68,704		13,540		3,683		10,939		—		122,399
Intersegment cost of revenues	638		26		—		4		4,695		(5,363)		—
Total cost of revenue	26,171		68,730		13,540		3,687		15,634		(5,363)		122,399
Selling, general and administrative	3,156		105,625		3,185		618		2,377		—		114,961
Depreciation, depletion, amortization and accretion	8,501		1,972		4,105		2,075		2,603		—		19,256
Loss (gains) on disposal of assets, net	85		(984)		(110)		—		(1,487)		—		(2,496)


Operating (loss) income	(17,364)		(92,829)		(6,785)		(3,576)		1,166		—		(119,388)
Interest expense and financing charges, net	1,624		17,417		408		377		574		—		20,400
Other expense, net	2		63,919		2		—		735		—		64,658
Loss before income taxes	$	(18,990)	$	(174,165)	$	(7,195)	$	(3,953)	$	(143)	$	—	$	(204,446)


Nine Months Ended September 30, 2023	Well Completion		Infrastructure		Sand		Drilling		All Other		Eliminations		Total
Revenue from external customers	$	114,810	$	83,308	$	34,643	$	6,501	$	17,448	$	—	$	256,710
Intersegment revenues	400		—		25		—		1,743		(2,168)		—
Total revenue	115,210		83,308		34,668		6,501		19,191		(2,168)		256,710
Cost of revenue, exclusive of depreciation, depletion, amortization and accretion	93,158		67,810		21,905		6,035		13,153		—		202,061
Intersegment cost of revenues	1,029		29		—		26		1,084		(2,168)		—
Total cost of revenue	94,187		67,839		21,905		6,061		14,237		(2,168)		202,061
Selling, general and administrative	5,847		17,091		2,682		554		2,977		—		29,151
Depreciation, depletion, amortization and accretion	13,288		7,366		6,397		3,497		6,291		—		36,839
Gains on disposal of assets, net	(2,016)		(439)		(16)		—		(813)		—		(3,284)
Impairment of goodwill	—		—		—		—		1,810		—		1,810

Operating income (loss)	3,904		(8,549)		3,700		(3,611)		(5,311)		—		(9,867)
Interest expense and financing charges, net	2,527		5,361		422		376		699		—		9,385
Other expense (income), net	1		(28,713)		(12)		—		(2,327)		—		(31,051)
Income (loss) before income taxes	$	1,376	$	14,803	$	3,290	$	(3,987)	$	(3,683)	$	—	$	11,799


	Well Completion		Infrastructure		Sand		Drilling		All Other		Eliminations		Total
As of September 30, 2024:
Total assets	$	48,399	$	251,697	$	115,764	$	12,287	$	65,813	$	(50,982)	$	442,978
As of December 31, 2023:
Total assets	$	50,965	$	462,429	$	121,162	$	13,492	$	69,005	$	(18,574)	$	698,479

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes thereto presented in this Quarterly Report and the consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in Item 1A. “Risk Factors” in our Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission, or the SEC, on March 1, 2024 and the section entitled “Forward-Looking Statements” appearing elsewhere in this Quarterly Report.

Overview

We are an integrated, growth-oriented energy services company focused on providing products and services to enable the exploration and development of North American onshore unconventional oil and natural gas reserve as well as the construction and repair of the electric grid for private utilities, public investor-owned utilities and co-operative utilities through our infrastructure services businesses. Our primary business objective is to grow our operations and create value for stockholders through organic growth opportunities and accretive acquisitions. Our suite of services includes well completion services, infrastructure services, natural sand proppant services, drilling services and other services. Our well completion services division provides hydraulic fracturing, sand hauling and water transfer services. Our infrastructure services division provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry. Our natural sand proppant services division mines, processes and sells natural sand proppant used for hydraulic fracturing. Our drilling services division currently provides rental equipment, such as mud motors and operational tools, for both vertical and horizontal drilling. In addition to these service divisions, we also provide aviation services, equipment rentals, remote accommodations and equipment manufacturing. We believe that the services we offer play a critical role in increasing the ultimate recovery and present value of production streams from unconventional resources as well as in maintaining and improving electrical infrastructure. Our complementary suite of services provides us with the opportunity to cross-sell our services and expand our customer base and geographic positioning.

We continue to focus on growing our industrial business. We offer infrastructure engineering services focused on the transmission and distribution industry and also have equipment manufacturing operations and offer fiber optic services. Our equipment manufacturing operations provide us with the ability to repair much of our existing equipment in-house, as well as the option to manufacture certain new equipment we may need in the future. Our fiber optic services include the installation of both aerial and buried fiber. We are continuing to explore other opportunities to expand our industrial business lines.

We continue to address the external challenges in today’s economic environment as we remain disciplined with our spending and are focused on continuing to improve our operational efficiencies and cost structure and on enhancing value for our stockholders.

Overview of Our Industries

Oil and Natural Gas Industry

The oil and natural gas industry has traditionally been volatile and is influenced by a combination of long-term, short-term and cyclical trends, including the domestic and international supply and demand for oil and natural gas, current and expected future prices for oil and natural gas and the perceived stability and sustainability of those prices, production depletion rates and the resultant levels of cash flows generated and allocated by exploration and production companies to their drilling, completion and related services and products budgets. The oil and natural gas industry is also impacted by general domestic and international economic conditions, political instability in oil producing countries, government regulations (both in the United States and elsewhere), levels of customer demand, the availability of pipeline capacity, storage capacity, shortages of equipment and materials and other conditions and factors that are beyond our control.

Demand for most of our oil and natural gas products and services depends substantially on the level of expenditures by companies in the oil and natural gas industry. The levels of capital expenditures of our customers are driven by many factors, including the prices of oil and natural gas. Throughout 2023, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion activities for our customers, in particular, in the Utica and Marcellus Shale natural gas plays, and, as a result, reduced demand for our well completion services. Throughout the first three quarters of 2024, we continued to experience persistent challenges in our well completion business and other oilfield services associated with lower

U.S. onshore activity and sustained weakness in the natural gas basins in which we operate. However, we recently activated one pressure pumping fleet and expect to activate a second pressure pumping fleet in the coming weeks. We believe activity will remain flat throughout the first half of 2025 and expect to see a ramp in activity in the second half of 2025 as several macroeconomic tailwinds are expected to materialize and support incremental natural gas production. We will be strategically positioned to capitalize on this anticipated demand if and when it ramps up.

In response to market conditions and reduced demand, we temporarily shut down our cementing and acidizing operations and flowback operations beginning in July 2019, our contract drilling operations beginning in December 2019, our rig hauling operations beginning in April 2020, our coil tubing, pressure control and full service transportation operations beginning in July 2020 and our crude oil hauling operations beginning in July 2021. We continue to monitor the market to determine if and when we can recommence these services.

Natural Sand Proppant Industry

As discussed above, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion activities and adversely impacted demand for our sand proppant services in the second half of 2023. Although we experienced increased demand for our natural sand proppant services and more favorable pricing during the first nine months ended September 30, 2024 relative to the fourth quarter of 2023, activity has remained suppressed. We expect that this trend will continue into the fourth quarter of 2024.

As a result of adverse market conditions, production at our Muskie sand facility in Pierce County, Wisconsin has been temporarily idled since September 2018. Our contracted capacity has provided a baseline of business, which has kept our Taylor and Piranha plants operating and our costs competitive.

Energy Infrastructure Industry

Our infrastructure services business provides engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry. We offer a broad range of services on electric transmission and distribution, or T&D, networks and substation facilities, which include engineering, design, construction, upgrade, maintenance and repair of high voltage transmission lines, substations and lower voltage overhead and underground distribution systems. Our commercial services include the installation, maintenance and repair of commercial wiring. We also provide storm repair and restoration services in response to storms and other disasters. We provide infrastructure services primarily in the northeast, southwest, midwest and western portions of the United States. We currently have agreements in place with private utilities, public IOUs and Co-Ops.

Our average crew count declined slightly from approximately 83 crews throughout 2023 to approximately 77 crews during the nine months ended September 30, 2024. With the Infrastructure Investment and Jobs Act funds being released for infrastructure projects, we remain encouraged about the potential for growth in this sector. We are currently seeing an uptick in bidding opportunities related to engineering, fiber, and transmission and distribution, all of which are areas we believe we have differentiated and specialized capabilities. We continue to focus on operational execution and pursue opportunities within this sector as we strategically structure our service offerings for growth, intending to increase our infrastructure services activity and expand both our geographic footprint and depth of projects, especially in fiber maintenance and installation projects.

We work for multiple utilities primarily across the northeastern, southwestern, midwestern and western portions of the United States. We believe that we are well-positioned to compete for new projects due to the experience of our infrastructure management team, combined with our vertically integrated service offerings. We are seeking to leverage this experience and our service offerings to grow our customer base and increase our revenues in the continental United States over the coming years.

Settlement Agreement with PREPA

As discussed elsewhere in this report, on July 22, 2024, Cobra entered into a release and settlement agreement with PREPA and the FOMB, in its capacity as Title III representative for PREPA, to settle all outstanding matters between Cobra and PREPA (the “Settlement Agreement”).

Under the terms of the Settlement Agreement, Cobra was allowed an administrative expense claim against PREPA of $170.0 million, plus the $18.4 million in the Withheld FEMA Funds that PREPA was holding and considered payable to Cobra but for purported garnishments in this amount asserted by three Puerto Rican municipalities (the “Specified Municipalities”) for

certain municipal tax claims discussed elsewhere in this report and for which Cobra disputes any valid garnishment. Cobra’s allowed claim is payable through three installments: (i) $150.0 million on the later of (A) ten business days following approval of the Settlement Agreement by the Title III Court and (B) August 31, 2024; (ii) $20.0 million within seven days following the effective date of PREPA’s plan of adjustment; and (iii) $18.4 million in the Withheld FEMA Funds within either (A) ten business days after the deadline for appealing the entry of the settlement order by the Title III Court under the applicable bankruptcy rules of procedure if no such appeal is filed, or (B) if the provisions of the settlement order allowing PREPA to release the Withheld FEMA Funds to Cobra without retaining any liability to the Specified Municipalities are appealed by the Specified Municipalities, within ten business days of the filing of the notice of such appeal. As a result of the Settlement Agreement, we recorded a non-cash, pre-tax charge of approximately $170.7 million in the second quarter of 2024 to reduce our accounts receivable balance from PREPA of $359.1 million, representing the amount owed to Cobra by PREPA in relation to these agreements as of June 30, 2024, including the accrued but unpaid interest, prior to the Settlement Agreement, to the amount expected to be received from the Settlement Agreement. On September 18, 2024, the Settlement Agreement was approved by the Title III Court overruling all objections thereto and an order was entered the same day (the “Settlement Order”). On October 1, 2024, Cobra received the first installment payment of $150.0 million from the Commonwealth of Puerto Rico in connection with the Settlement Agreement with PREPA. Also on October 1, 2024, certain Puerto Rico municipalities and Foreman Electric Services Inc. that had objected to approval of the Settlement Order each filed timely notices of appeal of the Settlement Order to the United States Court of Appeals for the First Circuit. None of the foregoing parties have sought a stay of the Settlement Order pending such appeals. Although the ultimate outcome of these appeals cannot be predicted with certainty, Cobra believes that the appeals are without merit. On October 18, 2024, Cobra received a payment from PREPA totaling $18.4 million under the terms of the Settlement Agreement. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit. See Note 2. Basis of Presentation and Significant Accounting Policies—Accounts Receivable and —Concentrations of Credit Risk and Significant Customers and Note 19. Commitments and Contingencies—Litigation included elsewhere in this report for additional information.

We used a portion of the proceeds received from the first installment payment to pay, in full, all amounts owed under our term credit facility, including accrued and unpaid interest, and terminated the facility. The remaining settlement proceeds will be cash on our balance sheet to be used to invest back into our business and for general corporate purposes.

Third Quarter 2024 Financial Overview and Recent Developments

•Received the first two installment payments under the settlement agreement with PREPA, with $150 million paid to Cobra on October 1, 2024 and, subject to Cobra having provided the indemnity letter of credit to PREPA, $18.4 million paid to Cobra on October 18, 2024

•Paid, in full, all amounts owed under our term credit facility and terminated the facility on October 2, 2024

•Revenue for the third quarter of 2024 decreased by $25.0 million, or 38%, to $40.0 million from $65.0 million for the third quarter of 2023. The decrease in total revenue is primarily attributable to a decline in well completions services and natural sand proppant services revenue.

•Net loss for the third quarter of 2024 was $24.0 million, or $0.50 loss per diluted share, as compared to net loss of $1.1 million, or $0.02 loss per diluted share, for the third quarter of 2023. The increase in net loss is primarily attributable to declines in utilization for our well completion services and our natural sand proppant services, coupled with the recognition of interest on the PREPA receivable during the third quarter of 2023, while not recognizing any during the third quarter of 2024.

•Adjusted EBITDA (as defined and reconciled below) for the third quarter of 2024 was ($6.4) million as compared to $13.4 million for the third quarter of 2023. See “Non-GAAP Financial Measures” below for a reconciliation of net loss to Adjusted EBITDA.

Results of Operations

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023


	Three Months Ended
	September 30, 2024		September 30, 2023
	(in thousands)
Revenue:
Well completion services	$	2,232	$	20,327
Infrastructure services	26,043		26,712
Natural sand proppant services	4,909		10,633
Drilling services	1,557		2,337
Other services	7,023		6,020
Eliminations	(1,749)		(1,070)
Total revenue	40,015		64,959

Cost of revenue:
Well completion services (exclusive of depreciation and amortization of $2,546 and $3,970, respectively, for the three months ended September 30, 2024 and 2023)	7,284		17,853
Infrastructure services (exclusive of depreciation and amortization of $626 and $1,555, respectively, for the three months ended September 30, 2024 and 2023)	22,539		22,052
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $1,688 and $2,836, respectively, for the three months ended September 30, 2024 and 2023)	3,110		6,977
Drilling services (exclusive of depreciation and amortization of $587 and $1,114, respectively, for the three months ended September 30, 2024 and 2023)	1,479		2,194
Other services (exclusive of depreciation and amortization of $737 and $1,755, respectively, for the three months ended September 30, 2024 and 2023)	5,311		4,811
Eliminations	(1,751)		(1,070)
Total cost of revenue	37,972		52,817
Selling, general and administrative expenses	8,702		10,411
Depreciation, depletion, amortization and accretion	6,184		11,233
Gains on disposal of assets, net	(293)		(2,450)
Impairment of goodwill	—		1,810

Operating loss	(12,550)		(8,862)
Interest expense and financing charges, net	(9,730)		(2,876)
Other (expense) income, net	(1,122)		14,088
(Loss) income before income taxes	(23,402)		2,350
Provision for income taxes	640		3,438
Net loss	$	(24,042)	$	(1,088)

Revenue. Revenue for the three months ended September 30, 2024 decreased $25.0 million, or 38%, to $40.0 million from $65.0 million for the three months ended September 30, 2023. The decrease in total revenue is primarily attributable to a decrease in utilization in our well completions services division as well as a decline in tons sold in our natural sand proppant services division during the three months ended September 30, 2024. Revenue by operating division was as follows:

Well Completion Services. Well completion services division revenue decreased $18.1 million, or 89%, to $2.2 million for the three months ended September 30, 2024 from $20.3 million for the three months ended September 30, 2023. The decrease in our well completion services revenue was primarily driven by a decrease in

pressure pumping services utilization due to the continued softness in the natural gas basins in which we operate. During the three months ended September 30, 2024, we had one pump down fleet active and no pressure pumping fleets active, as compared to an average utilization of 1.2 pressure pumping fleets during the three months ended September 30, 2023.

Infrastructure Services. Infrastructure services division revenue decreased $0.7 million, or 3%, to $26.0 million for the three months ended September 30, 2024 from $26.7 million for the three months ended September 30, 2023. The decrease in revenue was primarily due to a decline in average crew count from 81 crews for the three months ended September 30, 2023 to 77 crews for the three months ended September 30, 2024. The decrease was partially offset by an increase in transmission revenue.

Natural Sand Proppant Services. Natural sand proppant services division revenue decreased $5.7 million, or 54%, to $4.9 million for the three months ended September 30, 2024 from $10.6 million for the three months ended September 30, 2023 primarily due to a 54% decrease in tons of sand sold from 352,276 tons for the three months ended September 30, 2023 to 163,297 tons for the three months ended September 30, 2024, coupled with a 24% decline in the average price per ton of sand sold from $30.18 per ton during the three months ended September 30, 2023 to $22.89 per ton during the three months ended September 30, 2024. The decrease was partially offset by $1.2 million of shortfall revenue recognized during the three months ended September 30, 2024.

Drilling Services. Drilling services division revenue decreased $0.7 million, or 30%, to $1.6 million for the three months ended September 30, 2024 as compared to $2.3 million for the three months ended September 30, 2023. The decrease is primarily due to decreased utilization for our directional drilling business from 37% for the three months ended September 30, 2023 to 28% for the three months ended September 30, 2024.

Other Services. Other services revenue, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing businesses, increased approximately $1.0 million, or 17%, to $7.0 million for the three months ended September 30, 2024, from $6.0 million for the three months ended September 30, 2023. Inter-segment revenue, consisting primarily of equipment manufacturing revenue derived from our well completion segment, was $1.6 million and $0.9 million for the three months ended September 30, 2024 and 2023, respectively.

On average, 222 rooms were utilized during the three months ended September 30, 2024 as compared to 128 for the three months ended September 30, 2023, resulting in an increase in remote accommodations revenue. An average of 249 pieces of equipment were rented to customers during the three months ended September 30, 2024, an increase of 19% from an average of 210 pieces of equipment rented to customers during the three months ended September 30, 2023.

Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $14.8 million from $52.8 million, or 81% of total revenue, for the three months ended September 30, 2023 to $38.0 million, or 95% of total revenue, for the three months ended September 30, 2024. The decrease is primarily due to a decline in activity in our well completions division. Cost of revenue by operating division was as follows:

Well Completion Services. Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $10.6 million, or 59%, to $7.3 million for the three months ended September 30, 2024 from $17.9 million for the three months ended September 30, 2023, primarily due to a decrease in utilization of our fleets. As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $2.5 million and $4.0 million for the three months ended September 30, 2024 and 2023, respectively, was 332% and 88% for the three months ended September 30, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decline in utilization of our pressure pumping services, resulting in a higher ratio of fixed costs to variable costs.

Infrastructure Services. Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, increased $0.4 million, or 2%, to $22.5 million for the three months ended September 30, 2024 from $22.1 million for the three months ended September 30, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $0.6 million and $1.6 million for the three months ended September 30, 2024 and 2023, respectively, was 87% and 83% for the three months ended September 30, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decrease in storm restoration work.

Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $3.9 million to $3.1 million for the three months ended September 30, 2024 from $7.0 million for the three months ended September 30, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $1.7 million and $2.8 million for the three months ended September 30, 2024 and 2023, respectively, was 63% and 66% for the three months ended September 30, 2024 and 2023, respectively. The decrease as a percentage of revenue is primarily due to declines in freight charges and repairs and maintenance expense.

Drilling Services. Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.7 million, or 32%, to $1.5 million for the three months ended September 30, 2024 from $2.2 million for the three months ended September 30, 2023. As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $0.6 million and $1.1 million for the three months ended September 30, 2024 and 2023, respectively, was 94% and 96% for the three months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to a decline in equipment rental expense.

Other Services. Other services division cost of revenue, exclusive of depreciation and amortization expense, increased $0.5 million, or 10%, to $5.3 million for the three months ended September 30, 2024 from $4.8 million for the three months ended September 30, 2023 primarily due to increased activity. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $0.7 million and $1.8 million for the three months ended September 30, 2024 and 2023, respectively, was 76% and 80% for the three months ended September 30, 2024 and 2023, respectively. The decrease is primarily due to an increase in utilization for our rental equipment and remote accommodations businesses resulting in a lower ratio of fixed costs to variable costs.

Selling, General and Administrative Expenses. Selling, general and administrative, or SG&A, expenses represent the costs associated with managing and supporting our operations. SG&A expense decreased $1.7 million, or 16%, to $8.7 million for the three months ended September 30, 2024 from $10.4 million for the three months ended September 30, 2023 primarily due to a decrease in professional service fees. The table below presents a breakdown of SG&A expenses for the periods indicated (in thousands):


	Three Months Ended
	September 30, 2024		September 30, 2023
Cash expenses:
Compensation and benefits	$	3,173	$	3,392
Professional services	3,503		4,684
Other(a)	1,775		2,105
Total cash SG&A expense	8,451		10,181
Non-cash expenses:
Change in provision for expected credit losses	32		11

Stock based compensation	219		219
Total non-cash SG&A expense	251		230
Total SG&A expense	$	8,702	$	10,411

a. Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.

Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion decreased $5.0 million, or 45%, to $6.2 million for the three months ended September 30, 2024 from $11.2 million for the three months ended September 30, 2023. The decrease is primarily attributable to a decline in property and equipment depreciation expense as a result of existing assets being fully depreciated.

Gains on Disposal of Assets, Net. Gains on the disposal of assets were $0.3 million and $2.4 million for the three months ended September 30, 2024 and 2023, respectively.

Impairment of Goodwill. As a result of the sale of ARS, we performed an impairment assessment of our goodwill as of September 30, 2023. We determined that the carrying value of goodwill for our Aviation reporting unit exceeded the fair value at September 30, 2023, resulting in impairment expense of $1.8 million for the three months ended September 30, 2023.

Operating Loss. We reported operating loss of $12.6 million for the three months ended September 30, 2024 compared to $8.9 million for the three months ended September 30, 2023. The increase in operating loss is primarily due to a decline in activity for our well completions and natural sand proppant divisions.

Interest Expense and financing charges, Net. Interest expense and financing charges, net increased $6.8 million, or 234%, to $9.7 million for the three months ended September 30, 2024 from $2.9 million for the three months ended September 30, 2023. The increase is primarily due to a $7.1 million charge incurred in relation to our sale leaseback agreements. See “—Liquidity and Capital Resources—Sale Leaseback Transactions” for additional information. The increase was slightly offset by a decline in average borrowings outstanding under our revolving credit facility.

Other (Expense) Income, Net. Other expense was $1.1 million for the three months ended September 30, 2024 compared to other income of $14.1 million for the three months ended September 30, 2023. During the three months ended September 30, 2023, we recognized interest on delinquent accounts receivable totaling $11.4 million in relation to our outstanding receivable with PREPA.

Income Taxes. We recorded income tax expense of $0.6 million on pre-tax loss of $23.4 million for the three months ended September 30, 2024 compared to $3.4 million on pre-tax income of $2.4 million for the three months ended September 30, 2023. Our effective tax rates were 3% and 146% for the three months ended September 30, 2024 and 2023, respectively. The effective tax rates for the three months ended September 30, 2024 and 2023 differed from the statutory rate of 21% primarily due to changes in the valuation allowance as well as the mix of earnings between the United States and Puerto Rico and interest and penalties.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023


	Nine Months Ended
	September 30, 2024		September 30, 2023
	(in thousands)
Revenue:
Well completion services	$	20,549	$	115,210
Infrastructure services	82,514		83,308
Natural sand proppant services	13,935		34,668
Drilling services	2,804		6,501
Other services	20,293		19,191
Eliminations	(5,363)		(2,168)
Total revenue	134,732		256,710

Cost of revenue:
Well completion services (exclusive of depreciation and amortization of $8,501 and $13,281, respectively, for the nine months ended September 30, 2024 and 2023)	26,171		94,187
Infrastructure services (exclusive of depreciation and amortization of $1,970 and $7,359, respectively, for the nine months ended September 30, 2024 and 2023)	68,730		67,839
Natural sand proppant services (exclusive of depreciation, depletion and accretion of $4,105 and $6,395, respectively, for the nine months ended September 30, 2024 and 2023)	13,540		21,905
Drilling services (exclusive of depreciation of $2,074 and $3,497, respectively, for the nine months ended September 30, 2024 and 2023)	3,687		6,061
Other services (exclusive of depreciation and amortization of $2,603 and $6,289, respectively, for the nine months ended September 30, 2024 and 2023)	15,634		14,237
Eliminations	(5,363)		(2,168)
Total cost of revenue	122,399		202,061
Selling, general and administrative expenses	114,961		29,151
Depreciation, depletion, amortization and accretion	19,256		36,839
Gains on disposal of assets, net	(2,496)		(3,284)
Impairment of goodwill	—		1,810

Operating loss	(119,388)		(9,867)
Interest expense and financing charges, net	(20,400)		(9,385)
Other (expense) income, net	(64,658)		31,051
(Loss) income before income taxes	(204,446)		11,799
(Benefit) provision for income taxes	(12,600)		9,006
Net (loss) income	$	(191,846)	$	2,793

Revenue. Revenue for the nine months ended September 30, 2024 decreased $122.0 million, or 48%, to $134.7 million from $256.7 million for the nine months ended September 30, 2023. The decrease in total revenue is primarily attributable to decreases in well completion services and natural sand proppant services revenue. Revenue by operating division was as follows:

Well Completion Services. Well completion services division revenue decreased $94.7 million, or 82%, to $20.5 million for the nine months ended September 30, 2024 from $115.2 million for the nine months ended September 30, 2023. Inter-segment revenues, consisting primarily of revenue derived from our sand segment, was $0.3 million and $0.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The decrease in our well completion services revenue was primarily driven by a decrease in pressure pumping services utilization due to the continued softness in the natural gas basins in which we operate. The number of stages completed decreased 81% to 673 for the nine months ended September 30, 2024 from 3,551 for the nine months ended September 30, 2023. An average of 0.3 of our six fleets were active for the nine months ended September 30, 2024 as compared to an average of 2.1 fleets for the nine months ended September 30, 2023.

Infrastructure Services. Infrastructure services division revenue decreased marginally to $82.5 million for the nine months ended September 30, 2024 from $83.3 million for the nine months ended September 30, 2023. Average crew count was 77 crews for the nine months ended September 30, 2024 as compared to 85 crews for the nine months ended September 30, 2023. The decrease was offset by an increase in transmission, engineering, and materials revenue for the nine months ended September 30, 2024.

Natural Sand Proppant Services. Natural sand proppant services division revenue decreased $20.8 million, or 60%, to $13.9 million for the nine months ended September 30, 2024, from $34.7 million for the nine months ended September 30, 2023. The decrease in our natural sand proppant services revenue was primarily due to a 60% decrease in tons of sand sold from approximately 1,127,556 tons for the nine months ended September 30, 2023 to approximately 449,574 tons for the nine months ended September 30, 2024, coupled with a 23% decrease in the average sales price per ton of sand sold from $30.44 per ton during the nine months ended September 30, 2023 to $23.32 per ton during the nine months ended September 30, 2024. The decrease was partially offset by $2.3 million of shortfall revenue recognized during the nine months ended September 30, 2024.

Drilling Services. Drilling services division revenue decreased $3.7 million, or 57%, to $2.8 million for the nine months ended September 30, 2024 from $6.5 million for the nine months ended September 30, 2023. The decrease in our drilling services revenue was primarily attributable to a decrease in utilization for our directional drilling business from 42% during the nine months ended September 30, 2023 to 19% during the nine months ended September 30, 2024, which was coupled with a decrease in pricing.

Other Services. Other services revenue, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing businesses, increased marginally to $20.3 million for the nine months ended September 30, 2024 from $19.2 million for the nine months ended September 30, 2023. Inter-segment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $5.0 million and $1.7 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase in our other services revenue was primarily due to an increase in utilization for our remote accommodations business, which was offset by a decline in utilization for our equipment rental business. On average, 222 rooms were utilized during the nine months ended September 30, 2024 as compared to 181 for the nine months ended September 30, 2023. We rented an average of 228 pieces of equipment to customers during the nine months ended September 30, 2024, a decrease of 9% from an average of 250 pieces of equipment rented to customers during the nine months ended September 30, 2023.

Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $79.7 million from $202.1 million, or 79% of total revenue, for the nine months ended September 30, 2023 to $122.4 million, or 91% of total revenue, for the nine months ended September 30, 2024. Cost of revenue by operating division was as follows:

Well Completion Services. Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $68.0 million, or 72%, to $26.2 million for the nine months ended September 30, 2024 from $94.2 million for the nine months ended September 30, 2023. As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $8.5 million and $13.3 million for the nine months ended September 30, 2024 and 2023, respectively, was 128% and 82% for the nine months ended September 30, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decline in utilization of our pressure pumping services, resulting in a higher ratio of fixed costs to variable costs.

Infrastructure Services. Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, increased $0.9 million, or 1%, to $68.7 million for the nine months ended September 30, 2024 from $67.8 million for the nine months ended September 30, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $2.0 million and $7.4 million, respectively, for the nine months ended September 30, 2024 and 2023 was 83% and 81% for the nine months ended September 30, 2024 and 2023, respectively.

Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $8.4 million, or 38%, from $21.9 million for the nine months ended September 30, 2023 to $13.5 million for the nine months ended September 30, 2024. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $4.1 million and $6.4 million for the nine months ended September 30, 2024 and 2023, respectively, was 97% and 63% for the nine months ended September 30, 2024 and 2023, respectively. The increase in cost as a percentage of revenue is primarily due to a 60% decrease in tons sold and a 23% decrease in average sales price per ton.

Drilling Services. Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $2.4 million, or 39%, from $6.1 million for the nine months ended September 30, 2023 to $3.7 million for the nine months ended September 30, 2024. As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $2.1 million and $3.5 million, for the nine months ended September 30, 2024 and 2023, respectively, was 132% and 94% for the nine months ended September 30, 2024 and 2023. The increase is primarily due to a decline in utilization of our directional drilling services, resulting in a higher ratio of fixed costs to variable costs.

Other Services. Other services division cost of revenue, exclusive of depreciation and amortization expense, increased $1.4 million, or 10%, from $14.2 million for the nine months ended September 30, 2023 to $15.6 million for the nine months ended September 30, 2024. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $2.6 million and $6.3 million for the nine months ended September 30, 2024 and 2023, respectively, was 77% and 74% for the nine months ended September 30, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decrease in utilization for our equipment rental business, resulting in a higher ratio of fixed costs to variable costs.

Selling, General and Administrative Expenses. Selling, general and administrative expenses represent the costs associated with managing and supporting our operations. SG&A expense increased $85.8 million, or 294%, to $115.0 million for the nine months ended September 30, 2024 from $29.2 million for the nine months ended September 30, 2023 primarily due to an increase in the provision for expected credit losses in connection with the Settlement Agreement with PREPA. The table below presents a breakdown of SG&A expenses for the periods indicated (in thousands):


	Nine Months Ended
	September 30, 2024		September 30, 2023
Cash expenses:
Compensation and benefits	$	10,394	$	11,665
Professional services	9,016		10,889
Other(a)	5,249		5,884
Total cash SG&A expenses	24,659		28,438
Non-cash expenses:
Change in provision for expected credit losses(b)	89,645		(414)

Stock based compensation	657		1,127
Total non-cash SG&A expenses	90,302		713
Total SG&A expenses	$	114,961	$	29,151

a. Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.

b. The Company recognized an $89.2 million charge in relation to the Settlement Agreement with PREPA during the nine months ended September 30, 2024.

Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion decreased $17.5 million to $19.3 million for the nine months ended September 30, 2024 from $36.8 million for the nine months ended September 30, 2023. The decrease is primarily attributable to a decline in property and equipment depreciation expense as a result of lower capital expenditures and existing assets being fully depreciated.

Gains on Disposal of Assets, Net. Gains on the disposal of assets were $2.5 million and $3.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Operating Loss. We reported an operating loss of $119.4 million for the nine months ended September 30, 2024 compared to $9.9 million for the nine months ended September 30, 2023. The increased operating loss was primarily due to an $89.2 million charge to selling, general and administrative expenses recognized during the nine months ended September 30, 2024 in relation to the Settlement Agreement with PREPA. The increased loss was coupled with reduced utilization across our well completions and natural sand proppant divisions, and partially offset by a decline in depreciation, depletion, amortization and accretion expense.

Interest Expense and financing charges, Net. Interest expense and financing charged, net increased $11.0 million, or 117%, to $20.4 million for the nine months ended September 30, 2024 from $9.4 million for the nine months ended September 30, 2023. The increase is primarily due to a $7.1 million charge incurred in relation to our sale leaseback agreements coupled with a $5.5 million financing charge incurred in relation to the Assignment Agreement with SPCP Group. See “—Liquidity and Capital Resources—Sale Leaseback Transactions” and “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.

Other (Expense) Income, Net. We recognized other expense, net of $64.7 million during the nine months ended September 30, 2024 compared to other income of $31.1 million for the nine months ended September 30, 2023. During the nine months ended September 30, 2024 and 2023, we recognized interest on delinquent accounts receivable totaling $20.8 million and $33.9 million, respectively, in relation to our outstanding receivable with PREPA. In July 2024, Cobra entered into the Settlement Agreement with PREPA resulting in a charge to interest on delinquent accounts receivable totaling $81.5 million during the nine months ended September 30, 2024 to reduce its accounts receivable balance to the amount expected to be collected in relation to interest charged to PREPA.

Income Taxes. We recorded income tax benefit of $12.6 million on pre-tax loss of $204.4 million for the nine months ended September 30, 2024 compared to an income tax expense of $9.0 million on pre-tax income of $11.8 million for the nine months ended September 30, 2023. Our effective tax rate was 6% for the nine months ended September 30, 2024 compared to 76% for the nine months ended September 30, 2023. The effective tax rates for the nine months ended September 30, 2024 and 2023 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico, changes in the valuation allowance and interest and penalties. Additionally, as a result of the Settlement Agreement with PREPA, during the nine months ended September 30, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.

Non-GAAP Financial Measures

Adjusted EBITDA

Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We define Adjusted EBITDA as net (loss) income before depreciation, depletion, amortization and accretion, gains (losses) on disposal of assets, impairment of goodwill, stock based compensation, interest expense and financing charges, net, other income (expense), net (which is comprised of interest on trade accounts receivable and certain legal expenses) and provision for income taxes, further adjusted to add back interest on trade accounts receivable. We exclude the items listed above from net (loss) income in arriving at Adjusted EBITDA because these amounts can vary substantially from company to company within our industries depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDA should not be considered as an alternative to, or more meaningful than, net loss or cash flows from operating activities as determined in accordance with GAAP or as an indicator of our operating performance or liquidity. Certain items excluded from Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of Adjusted EBITDA. Our computations of Adjusted EBITDA may not be comparable to other similarly titled measures of other companies. We believe that Adjusted EBITDA is a widely followed measure of operating performance and may also be used by investors to measure our ability to meet debt service requirements.

The following tables provide a reconciliation of Adjusted EBITDA to the GAAP financial measure of net income or (loss) for each of our operating segments for the specified periods (in thousands).

Consolidated


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net (loss) income to Adjusted EBITDA:	2024		2023			2024		2023
Net (loss) income	$	(24,042)	$	(1,088)		$	(191,846)	$	2,793
Depreciation, depletion, amortization and accretion expense	6,184		11,233			19,256		36,839
Gains on disposal of assets, net	(293)		(2,450)			(2,496)		(3,284)
Impairment of goodwill	—		1,810			—		1,810





Stock based compensation	219		219			657		1,127
Interest expense and financing charges, net	9,730		2,876			20,400		9,385
Other expense (income), net	1,122		(14,088)			64,658		(31,051)
Provision (benefit) for income taxes	640		3,438			(12,600)		9,006
Interest on trade accounts receivable	—		11,443			(60,686)		33,897
Adjusted EBITDA	$	(6,440)	$	13,393		$	(162,657)	$	60,522

Well Completion Services


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net (loss) income to Adjusted EBITDA:	2024		2023			2024		2023
Net (loss) income	$	(8,959)	$	(1,834)		$	(18,990)	$	1,376
Depreciation and amortization expense	2,546		3,971			8,501		13,288
(Gains) losses on disposal of assets, net	(60)		(2,016)			85		(2,016)





Stock based compensation	33		64			122		451
Interest expense and financing charges, net	533		774			1,624		2,527
Other expense, net	1		—			2		1


Adjusted EBITDA	$	(5,906)	$	959		$	(8,656)	$	15,627

Infrastructure Services


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net (loss) income to Adjusted EBITDA:	2024		2023			2024		2023
Net (loss) income	$	(13,500)	$	3,239		$	(158,767)	$	6,392
Depreciation and amortization expense	626		1,557			1,972		7,366
Gains on disposal of assets, net	(41)		(311)			(984)		(439)



Stock based compensation	124		99			364		436
Interest expense and financing charges, net	8,742		1,647			17,417		5,361
Other expense (income), net	1,491		(11,348)			63,919		(28,713)
Provision (benefit) for income taxes	629		3,381			(15,398)		8,411
Interest on trade accounts receivable	—		11,443			(60,686)		33,897
Adjusted EBITDA	$	(1,929)	$	9,707		$	(152,163)	$	32,711

Natural Sand Proppant Services


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net (loss) income to Adjusted EBITDA:	2024		2023			2024		2023
Net (loss) income	$	(1,238)	$	(515)		$	(7,195)	$	3,290
Depreciation, depletion, amortization and accretion expense	1,688		2,836			4,105		6,397
Gains on disposal of assets, net	—		—			(110)		(16)



Stock based compensation	39		37			109		149
Interest expense and financing charges, net	135		117			408		422
Other expense (income), net	3		(6)			2		(12)


Adjusted EBITDA	$	627	$	2,469		$	(2,681)	$	10,230

Drilling Services


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net loss to Adjusted EBITDA:	2024		2023			2024		2023
Net loss	$	(866)	$	(1,303)		$	(3,953)	$	(3,987)
Depreciation expense	587		1,114			2,075		3,497





Stock based compensation	5		5			15		18
Interest expense and financing charges, net	127		117			377		376


Adjusted EBITDA	$	(147)	$	(67)		$	(1,486)	$	(96)

Other Services(a)


	Three Months Ended				Nine Months Ended
	September 30,					September 30,
Reconciliation of net income (loss) to Adjusted EBITDA:	2024		2023			2024		2023
Net income (loss)	$	519	$	(675)		$	(2,941)	$	(4,278)
Depreciation, amortization and accretion expense	737		1,755			2,603		6,291
Gains on disposal of assets, net	(192)		(123)			(1,487)		(813)
Impairment of goodwill	—		1,810			—		1,810




Stock based compensation	18		14			47		73
Interest expense and financing charges, net	193		221			574		699
Other (income) expense, net	(373)		(2,734)			735		(2,327)
Provision for income taxes	11		57			2,798		595

Adjusted EBITDA	$	913	$	325		$	2,329	$	2,050

a. Includes results for our aviation, equipment rentals, remote accommodations and equipment manufacturing and corporate related activities. Our corporate related activities do not generate revenue.

Liquidity and Capital Resources

We require capital to fund ongoing operations including maintenance expenditures on our existing fleet of equipment, organic growth initiatives, investments and acquisitions, and the litigation settlement obligations described in Note 19. Commitments and Contingencies of the Notes to the Unaudited Condensed Consolidated Financial Statements and under “Capital Requirements and Sources of Liquidity” below. Our primary sources of liquidity have been cash on hand, borrowings under our revolving credit facility and term credit facility and cash flows from operations, as well as the net proceeds received by Cobra relating to the PREPA receivable. Our primary uses of capital have been for investing in property and equipment used to provide our services and to acquire complementary businesses.

Liquidity

The following table summarizes our liquidity as of the dates indicated (in thousands):


	September 30,		December 31,
	2024		2023
Cash and cash equivalents	$	4,165	$	16,556
Revolving credit facility borrowing base	20,444		27,016

Less current and long-term debt - related parties	(50,888)		(45,000)

Less letter of credit facilities (environmental remediation)	(4,228)		(3,782)
Less letter of credit facilities (insurance programs)	(2,500)		(2,500)
Net working capital (less cash and current portion of long-term debt)(a)	137,585		297,816
Total	$	104,578	$	290,106

a.Net working capital (less cash) is a non-GAAP measure and, as of September 30, 2024, is calculated by subtracting total current liabilities of $113.4 million and cash and cash equivalents of $4.2 million from total current assets of $255.2 million. As of December 31, 2023, net working capital (less cash and current portion of long-term debt) is calculated by subtracting total current liabilities of $182.6 million and cash and cash equivalents of $16.6 million from total current assets of $496.9 million. Amounts include receivables due from PREPA of $188.4 million at September 30, 2024 and $402.3 million at December 31, 2023 and corresponding liabilities of $43.3 million at September 30, 2024 and $60.6 million at December 31, 2023. See “Capital Requirements and Sources of Liquidity” section below.

As of October 30, 2024, we had unrestricted cash on hand of $86.2 million and no outstanding borrowings under our new revolving credit facility and a borrowing base of $18.2 million, leaving an aggregate of $11.5 million of available borrowing capacity under this facility, after giving effect to $6.7 million of outstanding letters of credit and the requirement to maintain the reserves specified in the new revolving credit facility out of the available borrowing capacity.

Cash Flows

The following table sets forth our cash flows at the dates indicated (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Net cash (used in) provided by operating activities	$	(1,229)	$	(7,657)	$	39,301	$	24,951
Net cash (used in) provided by investing activities	(1,398)		2,048		(5,920)		(7,685)
Net cash (used in) provided by financing activities	(1,495)		7,330		(51,483)		(23,993)
Effect of foreign exchange rate on cash	21		(44)		(31)		(28)
Net change in cash	$	(4,101)	$	1,677	$	(18,133)	$	(6,755)

Operating Activities

Net cash used in operating activities was $1.2 million for the three months ended September 30, 2024, compared to net cash used in operating activities of $7.7 million for the three months ended September 30, 2023. The increase in operating cash flows for the three months ended September 30, 2024 was primarily attributable to increased receipts on accounts receivable.

Net cash provided by operating activities was $39.3 million for the nine months ended September 30, 2024, compared to $25.0 million for the nine months ended September 30, 2023. The increase in operating cash flows for the nine months ended September 30, 2024 was primarily attributable to increased receipts on accounts receivable, including the receipt of $64.0 million from PREPA for the nine months ended September 30, 2024, compared to $13.6 million from PREPA for the nine months ended September 30, 2023, which was offset by a decline in utilization for our well completion and natural sand proppant services during the nine months ended September 30, 2024.

Investing Activities

Net cash used in investing activities was $1.4 million for the three months ended September 30, 2024, compared to net cash provided by investing activities of $2.0 million for the three months ended September 30, 2023. Net cash used in investing activities was $5.9 million for the nine months ended September 30, 2024, compared to $7.7 million for the nine months ended September 30, 2023. Cash used in investing activities is primarily comprised of purchases of property and equipment and proceeds from the disposal of property and equipment.

The following table summarizes our capital expenditures by operating division for the periods indicated (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Well completion services(a)	$	3,812	$	4,651	$	8,549	$	14,762
Infrastructure services(b)	88		69		1,051		344

Drilling services(c)	15		98		102		97
Other(d)	323		72		665		82
Eliminations(e)	(2,341)		(165)		600		(20)
Total capital expenditures	$	1,897	$	4,725	$	10,967	$	15,265

a. Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and maintenance for the three and nine months ended September 30, 2024 and 2023.

b. Capital expenditures primarily for tooling and other equipment for the three and nine months ended September 30, 2024 and 2023.

c. Capital expenditures primarily for maintenance for our directional drilling assets for the three and nine months ended September 30, 2024.

d. Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the three and nine months ended September 30, 2024.

e. Eliminations primarily relate to upgrades to our pressure pumping fleet completed by our equipment manufacturing business.

Financing Activities

Net cash used in financing activities was $1.5 million for the three months ended September 30, 2024, compared to net cash provided by financing activities of $7.3 million for the three months ended September 30, 2023. Net cash used in financing activities for the three months ended September 30, 2024 was primarily attributable to payments on sale leaseback transactions of $1.1 million and principal payments on financing leases and equipment financing notes totaling $0.4 million. Net cash provided by financing activities for the three months ended September 30, 2023 was primarily attributable to net borrowings on our revolving credit facility of $9.7 million, partially offset by payments on sale leaseback transactions of $1.3 million and principal payments on financing leases and equipment financing notes totaling $1.1 million.

Net cash used in financing activities was $51.5 million for the nine months ended September 30, 2024, compared to $24.0 million for the nine months ended September 30, 2023. Net cash used in financing activities for the nine months ended September 30, 2024 was primarily attributable to payments on financing transactions of $46.8 million, payments on sale leaseback transactions of $3.2 million and principal payments on financing leases and equipment financing notes totaling $1.4 million. Net cash used in financing activities for the nine months ended September 30, 2023 was primarily attributable to net payments on our revolving credit facility of $14.5 million, principal payment on financing leases and equipment financing notes of $4.9 million, principal payments on sale leaseback arrangements of $3.7 million and share repurchases used to satisfy tax withholding obligations of $0.9 million in connection with the vesting and settlement of certain executive restricted stock unit awards.

Effect of Foreign Exchange Rate on Cash

The effect of foreign exchange rate on cash was a nominal amount for the three and nine months ended September 30, 2024 and a nominal amount for the three and nine months ended September 30, 2023. The change was driven primarily by a favorable (unfavorable) shift in the weakness (strength) of the Canadian dollar relative to the U.S. dollar for the cash held in Canadian accounts.

Working Capital

Our working capital totaled $141.8 million and $314.4 million at September 30, 2024 and December 31, 2023, respectively, including receivables due from PREPA of $188.4 million at September 30, 2024 and $402.3 million at

December 31, 2023 and corresponding liabilities of $43.3 million at September 30, 2024 and $60.6 million at December 31, 2023. Our unrestricted cash balances were $4.2 million and $16.6 million at September 30, 2024 and December 31, 2023, respectively.

New Revolving Credit Facility and New Term Credit Facility

On October 16, 2023, we entered into the new revolving credit facility and the new term credit facility (each as defined below), which refinanced in full our indebtedness outstanding under, and terminated, the amended and restated revolving credit facility, dated as of October 19, 2018, as amended (the “existing revolving credit facility”), with us and certain of our direct and indirect subsidiaries, as borrowers, the lenders party thereto from time to time, and PNC Bank, National Association, as a lender and as administrative agent for the lenders.

On October 16, 2023, we, as borrower, and certain of our direct and indirect subsidiaries, as guarantors, entered into a revolving credit agreement with the lenders party thereto and Fifth Third Bank, National Association, as a lender and as administrative agent for the lenders (“Fifth Third Bank”), as may be subsequently amended (the “new revolving credit facility”). The new revolving credit facility provides for revolving commitments in an aggregate amount of up to $75 million. Borrowings under the new revolving credit facility are secured by our assets, inclusive of the subsidiary companies, and are subject to a borrowing base calculation prepared monthly which includes a requirement to maintain certain reserves as specified in the new revolving credit facility. The new revolving credit facility also contains various affirmative and restrictive covenants. Interest under the new revolving credit facility equals the Tranche Rate (as defined in the new revolving credit facility) plus (i) 1.75%, if the Average Excess Availability Percentage (as defined in the new revolving credit facility) is greater than 66 2/3%, (ii) 2.00% if the Average Excess Availability Percentage is greater than 33 1/3% and less than or equal to 66 2/3%, and (iii) 2.25% if the Average Excess Availability Percentage is less than or equal to 33 1/3%.

As of September 30, 2024 and December 31, 2023, the financial covenant under the new revolving credit facility was the fixed charge coverage ratio of 1.0 to 1.0 which applies only during the period from the date that excess availability under the new revolving credit facility is less than the greater of (i) 10% of total availability under the new revolving credit facility and (ii) $5 million until the date in which the excess availability is equal to the greater of (i) 10% of excess availability and (ii) $5 million for 30 consecutive days (such period, a “Financial Covenant Period”). A Financial Covenant Period was not in effect as of each of September 30, 2024 and the filing date of this report.

On October 16, 2024, the Company entered into (i) an amendment to the new revolving credit agreement (the “Credit Agreement Amendment”) and (ii) a letter of credit reimbursement agreement (the “Reimbursement Agreement”), each with Fifth Third Bank. The Credit Agreement Amendment, among other things, permits the transactions contemplated by the Reimbursement Agreement, including the issuance of one or more letters of credit to satisfy Cobra’s obligations under the Settlement Agreement relating to one or more indemnity letters of credit. The aggregate amount of all such letters of credit shall not exceed $18.4 million. Under the terms of the Reimbursement Agreement, the Company agreed to hold cash funds totaling at least 105% of the stated amount of all letters of credit in an account maintained by Fifth Third Bank and to which Fifth Third Bank has a first priority security interest.

On October 18, 2024, Cobra received a payment from PREPA totaling $18.4 million under the terms of the Settlement Agreement. In connection with the receipt of the $18.4 million from PREPA, Cobra instructed Fifth Third Bank to issue a letter of credit to PREPA under the Reimbursement Agreement in the amount of $18.4 million and transferred a total of $19.3 million to a restricted cash account maintained by Fifth Third Bank as collateral for the letter of credit.

On October 16, 2023, we, as borrower, and certain of our direct and indirect subsidiaries, as guarantors, also entered into a loan and security agreement with the lenders party thereto and Wexford Capital LP, an affiliate of the Company (the “new term credit facility”). The new term credit facility was approved by the audit committee of our board of directors, consisting entirely of independent directors, as a transaction with a related party.

The new term credit facility provided for term commitments in an aggregate amount equal to $45 million. Borrowings under the new term credit facility were secured by our assets, inclusive of the subsidiary companies. The new term credit facility also contained various affirmative and restrictive covenants. Interest under the new term credit facility equaled the SOFR Interest Rate (as defined in the new term credit facility) plus 7.50%; provided that we may elect to pay all or a portion of the accrued interest due with respect to any Interest Period (as defined in the new term credit facility) ending on or before April 16, 2025, in kind by adding such accrued interest to the principal amount of the outstanding loans thereunder.

In particular, under the new term credit facility, we were required, among other things, to mandatorily remit to Wexford up to 50% of all amounts that constitute PREPA Claim Proceeds, as such term is defined in the new term credit

facility, which were used to reduce outstanding borrowings under the new term credit facility, as required under the terms thereof. Wexford waived this requirement in connection with the Assignment Agreement and the $9.6 million received by Cobra from PREPA in February 2024.

There were no financial covenants applicable under the new revolving credit facility as of September 30, 2024 and December 31, 2023.

As of October 30, 2024, our borrowing base was $18.2 million and we had no outstanding borrowings under our new revolving credit facility, leaving an aggregate of $11.5 million of available borrowing capacity, after giving effect to $6.7 million of outstanding letters of credit and the requirement to maintain the reserves specified in the new revolving credit facility out of the available borrowing capacity.

Cobra Assignment Agreement

On December 1, 2023, Cobra, as seller, and Mammoth, as guarantor, entered into an assignment agreement (the “Assignment Agreement”) with SPCP Group, LLC (“SPCP Group”), as purchaser. Under the terms and conditions of the Assignment Agreement, Cobra transferred to SPCP Group, at the purchase rate of 88.0% and free and clear of any liens and claims, all of its rights, title and interest in the first $63.0 million (the “Transferred Amount”) of the total outstanding accounts receivable that remained unpaid by PREPA as of October 6, 2023 (the “PREPA Claim”), received or to be received by Cobra on or after October 6, 2023. Between October 6, 2023 and December 1, 2023, Cobra received payments from PREPA with respect to the PREPA Claim totaling $8.6 million (the “Interim Payment Amount”), resulting in the net Transferred Amount of $54.4 million.

The net proceeds received by Cobra in connection with the Assignment Agreement were $46.1 million. During the three months ended March 31, 2024, PREPA paid $64.0 million with respect to the outstanding PREPA receivable. Of the $64.0 million, $54.4 million was paid to SPCP Group, as Cobra’s assignee under the Assignment Agreement, which fully extinguished Cobra’s and Mammoth’s obligations to SPCP Group, and the Assignment Agreement was terminated. The remaining $9.6 million was paid to Cobra. Wexford waived the requirement to mandatorily remit to Wexford up to 50% of all PREPA Claim proceeds in relation to the $9.6 million.

Repurchase Program Authorization

On August 10, 2023, our board of directors approved a stock repurchase program pursuant to which we would be

authorized to repurchase up to the lesser of $55 million or 10 million shares of its common stock, subject to the factors discussed below. Following the completion of the refinancing transactions discussed in this report, any stock repurchases under this program may be made opportunistically from time to time in open market or privately negotiated transactions in compliance with Rule 10b-18 under the Securities Act of 1934, as amended, including any 10b5-1 plan, and will be subject to market conditions, applicable legal and contractual restrictions, liquidity requirements and other factors. The repurchase

program has no time limit, does not require us to repurchase any specific number of shares and may be suspended from time to time, modified or discontinued by our board of directors at any time. Any common stock repurchased as part of such stock repurchase program will be cancelled and retired. We have not repurchased any shares of our common stock under the stock repurchase program as of September 30, 2024 or to date.

Sale Leaseback Transactions

On December 30, 2020, we entered into an agreement with First National Capital, LLC, or FNC, whereby we agreed to sell certain assets from our infrastructure segment to FNC for aggregate proceeds of $5.0 million. Concurrent with the sale of assets, we entered into a 36-month lease agreement whereby we lease back the assets at a monthly rental rate of $0.1 million. On December 30, 2023, this lease was extended 12 months. On June 1, 2021, we entered into another agreement with FNC whereby we sold additional assets from our infrastructure segment to FNC for aggregate proceeds of $9.5 million and entered into a 42-month lease agreement whereby we lease back the assets at a monthly rental rate of $0.2 million. On June 1, 2022, we entered into another agreement with FNC whereby we sold additional assets from our infrastructure segment to FNC for aggregate proceeds of $4.6 million and entered into a 42-month lease agreement whereby we lease back the assets at a monthly rental rate of $0.1 million. Under the agreements, we have the option to purchase the assets at the end of the lease term. We recorded a liability for the proceeds received and will continue to depreciate the assets. We imputed an interest rate so that the carrying amount of the financial liabilities will be the expected repurchase price at the end of the lease terms. During the three months ended September 30, 2024, the Company changed its estimate of the purchase price at the end of a portion of the leases, resulting in a charge to interest expense and financing charges, net of $7.1 million.

Equipment Financing Note

In December 2022, we entered into a 42-month financing arrangement with FNC for the purchase of seven new pressure pumping units for an aggregate value of $9.7 million. Under this arrangement, we agreed to make monthly principal and interest payments totaling $0.3 million over the term of the agreement. This note was secured by the seven pressure pumping units and bore interest at an imputed rate of approximately 15.0%. This equipment note was paid off on December 22, 2023.

Capital Requirements and Sources of Liquidity

As we pursue our business and financial strategy, we regularly consider which capital resources are available to meet our future financial obligations and liquidity requirement. We believe that our cash on hand, including the cash payments received to date under the Settlement Agreement with PREPA, operating cash flow and available borrowings under our currently undrawn credit facility will be sufficient to meet our short-term and long-term funding requirements, including funding our current operations, planned capital expenditures, debt service obligations and known contingencies.

We have increased our 2024 capital expenditure estimate to approximately $23.0 million from the previously planned 2024 capital budget of $12.0 million as a result of the receipt of the first installment payment from PREPA in the amount of

$150.0 million. Capital expenditures will ultimately be dependent upon industry conditions, demand for our services and our financial and operating results. Our total increased 2024 capital expenditures contemplate $10.0 million for our well completions segment, $12.0 million for our infrastructure segment and $1.0 million for our other businesses. During the nine months ended September 30, 2024, our capital expenditures totaled $11.0 million.

Also, as noted above in this report, in response to market conditions and reduced demand, we have (i) temporarily shut down certain of our oilfield service offerings, including coil tubing, pressure control, flowback, crude oil hauling, cementing, acidizing and land drilling services, (ii) idled certain facilities, including our sand processing plant in Pierce County, Wisconsin and (iii) reduced our workforce across all of our operations. We continue to monitor market conditions to determine if and when we will recommence these services and operations and increase our workforce. Any such recommencement and expansion will further increase our liquidity requirements in advance of revenue generation.

In addition, while we regularly evaluate acquisition opportunities, we do not have a specific acquisition budget for 2024 since the timing and size of acquisitions cannot be accurately forecasted. We intend to continue to evaluate acquisition opportunities, including those in the renewable energy sector as well as transactions involving entities controlled by Wexford. Our acquisitions may be undertaken with cash, our common stock or a combination of cash, common stock and/or other consideration. In the event we make one or more acquisitions and the amount of capital required is greater than the amount we have available for acquisitions at that time, we could be required to reduce the expected level of capital expenditures and/or seek additional capital.

If we seek additional capital for any of the above or other reasons, we may do so through borrowings under a revolving credit facility, joint venture partnerships, sale-leaseback transactions, asset sales, including potential sales of accounts receivable or other financing transactions, offerings of debt or equity securities or other means. Although we expect that our sources of capital will be adequate to fund our short-term and long-term liquidity requirements, we cannot assure you that this additional capital will be available on acceptable terms or at all. If we are unable to obtain funds we need, our ability to conduct operations, make capital expenditures, satisfy debt services obligations, pay litigation settlement obligations, fund contingencies and/or complete acquisitions that may be favorable to us will be impaired, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The demand, pricing and terms for our products and services are largely dependent upon the level of activity for the U.S. oil and natural gas industry, energy infrastructure industry and natural sand proppant industry. Industry conditions are influenced by numerous factors over which we have no control, including, but not limited to: the supply of and demand for oil and natural gas services, energy infrastructure services and natural sand proppant; demand for repair and construction of transmission lines, substations and distribution networks in the energy infrastructure industry and the level of expenditures of utility companies; the level of prices of, and expectations about future prices for, oil and natural gas and natural sand proppant, as well as energy infrastructure services; the cost of exploring for, developing, producing and delivering oil and natural gas; the expected rates of declining current production; the discovery rates of new oil and natural gas reserves and frac sand reserves meeting industry specifications and consisting of the mesh size in demand; access to pipeline, transloading and other transportation facilities and their capacity; weather conditions; domestic and worldwide economic conditions; political instability in oil-producing countries; environmental regulations; technical advances affecting energy consumption; the price and availability of alternative fuels; the ability of oil and natural gas producers and other users of our services to raise equity capital and debt financing; and merger and divestiture activity in industries in which we operate.

Throughout 2023, pricing for crude oil and natural gas declined from levels seen in 2022, which slowed down completion activities for our customers, in particular, in the Utica and Marcellus Shale natural gas plays, and, as a result, reduced demand for our well completion services. Throughout the first three quarters of 2024, we continued to experience persistent challenges in our well completion business and other oilfield services associated with lower U.S. onshore activity and sustained weakness in the natural gas basins in which we operate. Activity levels have begun to ramp up in the fourth quarter of 2024, with potential for increased activity currently anticipated in the second half of 2025. Additionally, the ongoing war in Ukraine and the recent Israel-Hamas war could continue to have an adverse impact on the global energy markets and volatility of commodity prices, which could further adversely impact demand for our well completion and natural sand proppant services.

The levels of activity in the U.S. oil and natural gas exploration and production, energy infrastructure and natural sand proppant industries continue to be volatile. We are unable to predict the ultimate impact of the volatility in commodity prices, any changes in the near-term or long-term outlook for our industries or overall macroeconomic conditions on our business, financial condition, results of operations, cash flows and stock price.

Interest Rate Risk

We had a cash and cash equivalents balance of $4.2 million at September 30, 2024. We do not enter into investments for trading or speculative purposes.

Interest under the new revolving credit facility equals the Tranche Rate (as defined in the new revolving credit facility) plus an applicable margin, which can fluctuate based on multiple facts, including rates set by the U.S. Federal Reserve the supply and demand for credit and general economic conditions, plus an applicable margin. Interest under our new term credit facility equals the SOFR Interest Rate (as defined in the new term credit facility) plus 7.50%. At September 30, 2024, we had no outstanding borrowings under the new credit facility and $50.9 million outstanding under our term loan with an interest rate of 12.9%. Based on the outstanding borrowings under our term loan as of September 30, 2024, a 1% increase or decrease in the interest rate would have increased or decreased our interest expense by approximately $0.5 million per year. We do not currently hedge our interest rate exposure.

Foreign Currency Risk

Our remote accommodation business, which is included in our other services division, generates revenue and incurs expenses that are denominated in the Canadian dollar. These transactions could be materially affected by currency fluctuations. Changes in currency exchange rates could adversely affect our consolidated results of operations or financial position. We also maintain cash balances denominated in the Canadian dollar. At September 30, 2024, we had $2.7 million of cash, in Canadian dollars, in Canadian accounts. A 10% increase in the strength of the Canadian dollar versus the U.S. dollar would have resulted in an increase in pre-tax income of approximately $0.3 million as of September 30, 2024. Conversely, a corresponding decrease in the strength of the Canadian dollar would have resulted in a comparable decrease in pre-tax income. We have not hedged our exposure to changes in foreign currency exchange rates and, as a result, could incur unanticipated translation gains and losses.

Customer Credit Risk

We are also subject to credit risk due to concentration of our receivables from several significant customers. We generally do not require our customers to post collateral. The inability, delay or failure of our customers to meet their obligations to us due to customer liquidity issues or their insolvency or liquidation may adversely affect our business, financial condition, results of operations and cash flows. This risk may be further enhanced by the volatility in commodity prices, the reduction in demand for our services and challenging macroeconomic conditions.

Specifically, with respect to our PREPA receivables outstanding as of September 30, 2024, we have since received two installment payments from PREPA in the aggregate amount of $168.4 million under the Settlement Agreement, with an additional $20.0 million payable following the effective date of PREPA’s plan of adjustment in its bankruptcy proceedings. See Note 2. Basis of Presentation and Significant Accounting Policies—Accounts Receivable and —Concentrations of Credit Risk and Significant Customers and Note 19. Commitments and Contingencies—Litigation of our unaudited condensed consolidated financial statements.

Seasonality

We provide infrastructure services in the northeastern, southwestern, midwestern and western portions of the United States. We provide well completion and drilling services primarily in the Utica, Permian Basin, Eagle Ford, Marcellus, Granite Wash, Cana Woodford and Cleveland sand resource plays located in the continental U.S. We provide remote accommodation services in the oil sands in Alberta, Canada. We serve these markets through our facilities and service centers that are strategically located to serve our customers in Ohio, Texas, Oklahoma, Wisconsin, Kentucky, Colorado, California, Indiana and Alberta, Canada. A portion of our revenues are generated in Ohio, Wisconsin, Minnesota, Pennsylvania, West Virginia and Canada where weather conditions may be severe. As a result, our operations may be limited or disrupted, particularly during winter and spring months, in these geographic regions, which would have a material adverse effect on our financial condition and results of operations. Our operations in Oklahoma and Texas are generally not affected by seasonal weather conditions.

Inflation

During the last two years, inflation in the U.S. reached some of the highest levels in over 40 years, creating inflationary pressure on the cost of services, equipment and other goods in our industries and other sectors and contributing to labor and materials shortages across the supply-chain. Although inflation has recently moderated and the Federal Reserve has begun lowering interest rates, there can be no assurance regarding the timing of any such interest rate cuts or their impact on inflation or any future price changes. If the inflationary pressures on our operating costs and capital expenditures persist, our business, results of operations and financial condition may be adversely affected.

Item 4. Controls and Procedures

Evaluation of Disclosure Control and Procedures

Under the direction of our Chief Executive Officer and Chief Financial Officer, we have established disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

As of September 30, 2024, an evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act. Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of September 30, 2024, our disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the quarter ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Due to the nature of our business, we are, from time to time, involved in litigation or subject to disputes or claims related to our business activities, including breaches of contractual obligations, workers’ compensation claims, employment related disputes, arbitrations, class actions and other litigation. We are also involved, from time to time, in reviews, investigations, subpoenas and other proceedings (both formal and informal) by governmental agencies regarding our business (collectively, “regulatory matters”), which regulatory matters, if determined adversely to us, could subject us to significant fines, penalties, obligations to change our business practices or other requirements resulting in increased expenses, diminished income and damage to our reputation. In the opinion of our management, none of the pending litigation, disputes or claims against us is expected to have a material adverse effect on our financial condition, cash flows or results of operations, except as disclosed in Note 19 “Commitments and Contingencies,” of the Notes to Unaudited Condensed Consolidated Financial Statements.

Item 1A. Risk Factors

As of the date of this filing, our Company and operations continue to be subject to the risk factors previously disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K filed with the SEC on March 1, 2024. For a discussion of the recent trends and uncertainties impacting our business and risks associated with the recent Settlement Agreement with PREPA, see also “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Developments—Overview of Our Services and Industry Conditions.”

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 4. Mine Safety Disclosures

Our operations are subject to the Federal Mine Safety and Health Act of 1977, as amended by the Mine Improvement and New Emergency Response Act of 2006, which imposes stringent health and safety standards on numerous aspects of mineral extraction and processing operations, including the training of personnel, operating procedures, operating equipment and other matters. Our failure to comply with such standards, or changes in such standards or the interpretation or enforcement thereof, could have a material adverse effect on our business and financial condition or otherwise impose significant restrictions on our ability to conduct mineral extraction and processing operations. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has also increased in recent years. Information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K (17 CFR 229.104) is included in Exhibit 95.1 to this Report.

Item 5. Other Information

None of our directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the third quarter ended September 30, 2024.

MAMMOTH ENERGY SERVICES, INC.

Item 6. Exhibits

The following exhibits are filed as a part of this report:

Incorporated By Reference

Exhibit Number

Exhibit Description

Form

Commission File No.

Filing Date

Exhibit No.

Filed Herewith

Furnished Herewith

3.1

Amended and Restated Certificate of Incorporation of the Company

8-K

001-37917

11/15/2016

3.1

3.2

Amended and Restated Bylaws of the Company

8-K

001-37917

11/15/2016

3.2

3.3

First Amendment to Amended and Restated Bylaws of the Company

8-K

001-37917

6/9/2020

3.1

4.1

Specimen Certificate for shares of common stock, par value $0.01 per share, of the Company

S-1/A

333-213504

10/3/2016

4.1

4.2

Registration Rights Agreement, dated October 12, 2016, by and between the Company and Mammoth Energy Holdings, LLC

8-K

001-37917

11/15/2016

4.1

10.1

Credit Agreement Amendment, dated as of October 16, 2024, by and between the Company and Fifth Third Bank, National Association.

31.1

Certification of Chief Executive Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.

31.2

Certification of Chief Financial Officer pursuant to Rule 13(a)-14 and 15(d)-14 under the Securities Exchange Act of 1934.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

95.1

Mine Safety Disclosure Exhibit

101.INS

XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

MAMMOTH ENERGY SERVICES, INC.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

MAMMOTH ENERGY SERVICES, INC.

Date:

November 1, 2024

By:

/s/ Arty Straehla

Arty Straehla

Chief Executive Officer

Date:

November 1, 2024

By:

/s/ Mark Layton

Mark Layton

Chief Financial Officer