New York, July 23, 2024 - PRISM MarketView - The PRISM Oil and Gas Index is currently led by Mammoth Energy Services (TUSK) on an announcement related to its wholly owned subsidiary, Cobra Acquisitions LLC regarding a settlement agreement it has entered into with the Puerto Rico Electric Power Authority (“PREPA”) and the Financial Oversight and Management Board for Puerto Rico (“FOMB”), acting as PREPA’s Title III representative, to resolve all outstanding issues between Cobra and PREPA (the “Settlement Agreement”).
“We are pleased to have reached this resolution with PREPA and look forward to receiving the payment for the work completed over five years ago. We plan to use a portion of the $188.4 million in settlement proceeds to pay off our term credit facility, which had a balance of approximately $49.3 million as of June 30, 2024. The remaining amount of approximately $139.1 million will be added to our cash balance to be used for business investments and general corporate purposes.”
Arty Straehla, Chief Executive Officer
Previously, Cobra and PREPA had entered into two agreements to assist in restoring and reconstructing Puerto Rico’s power grid following Hurricane Maria in 2017. PREPA is currently undergoing bankruptcy proceedings, initiated in July 2017 and pending in the United States District Court for the District of Puerto Rico (the “Title III Court”). PREPA’s ability to fulfill its payment obligations under these agreements largely depends on funding from the Federal Emergency Management Agency (“FEMA”) or other sources. Since September 30, 2019, Mammoth has been involved in litigation in the Title III Court and other dispute resolution efforts to recover the amounts owed by PREPA for restoration services, as detailed in Mammoth’s filings with the Securities and Exchange Commission (the “SEC”).
As a result of the Settlement Agreement, the Company will record a non-cash, pre-tax charge of approximately $170.7 million in the second quarter of 2024 to adjust its accounts receivable balance from PREPA to the expected amount to be received from the Settlement Agreement.
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