MAMMOTH ENERGY SERVICES INC
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
TUSK$3.11+4.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-02.
0001679268-24-000026
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0001679268-24-000066
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 114 previous paragraphs and 143 current paragraphs.
63 unchanged; 38 reworded; 37 added; 11 removed; 2 previous and 5 current paragraphs rearranged.
Tables are not compared: 11 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (37)
Current report
Settlement Agreement with PREPA
Current report
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”).
Current report
Under the terms of the Settlement Agreement, Cobra will have an allowed administrative expense claim against PREPA of $170.0 million, plus the $18.4 million in the Withheld FEMA Funds that PREPA is currently holding and considers 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 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 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. The Settlement Agreement remains subject to approval by the Title III Court, which is expected to hear the motion relating to the Settlement Agreement at the next omnibus meeting to be held on September 18, 2024. We cannot provide any assurances that the court approval will be obtained on the indicated time frame or at all. 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.
Current report
We plan to use a portion of the $188.4 million in settlement proceeds to pay in full all of the outstanding amounts under our term credit facility, which had a balance of approximately $49.3 million as of June 30, 2024, as well as accrued and unpaid interest thereon, and terminate the term credit 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.
Current report
Second Quarter 2024 Financial Overview
Current report
Infrastructure Services. Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, increased $1.3 million, or 6%, to $24.6 million for the three months ended June 30, 2024 from $23.3 million for the three months ended June 30, 2023, primarily due to an increase in storm restoration activity. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $0.6 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively, was 78% and 82% for the three months ended June 30, 2024 and 2023, respectively. The decline as a percentage of revenue is primarily due to the increase in storm restoration work, which historically has produced higher margins.
Current report
Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $2.5 million to $4.6 million for the three months ended June 30, 2024 from $7.1 million for the three months ended June 30, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $1.3 million and $2.4 million for the three months ended June 30, 2024 and 2023, respectively, was 98% and 61% for the three months ended June 30, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decrease in tons sold and price per ton sold, resulting in a higher ratio of fixed costs to variable costs.
Current report
Other Services. Other services division cost of revenue, exclusive of depreciation and amortization expense, increased $1.4 million, or 33%, to $5.6 million for the three months ended June 30, 2024 from $4.2 million for the three months ended June 30, 2023 primarily due to increased equipment manufacturing activity. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $0.8 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively, was 79% and 74% for the three months ended June 30, 2024 and 2023, respectively. The increase is primarily due to a decrease in utilization for our rental equipment business resulting in a higher ratio of fixed costs to variable costs.
Current report
b. The Company recognized an $89.2 million charge in relation to the Settlement Agreement with PREPA.
Current report
Interest Expense and financing charges, Net. Interest expense and financing charges, net decreased $0.7 million, or 22%, to $2.5 million for the three months ended June 30, 2024 from $3.2 million for the three months ended June 30, 2023. The decrease is primarily due to a decline in average borrowings outstanding under our revolving credit facility.
Current report
Other (Expense) Income, Net. Other expense was $73.7 million for the three months ended June 30, 2024 compared to other income of $8.3 million for the three months ended June 30, 2023. During the three months ended June 30, 2024 and 2023, we recognized interest on delinquent accounts receivable totaling $10.3 million and $11.3 million, respectively, in relation to our outstanding receivable with PREPA. Subsequent to June 30, 2024, Cobra entered into the Settlement Agreement with PREPA. As a result, 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.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenue. Revenue for the six months ended June 30, 2024 decreased $97.1 million, or 51%, to $94.7 million from $191.8 million for the six months ended June 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:
Current report
Well Completion Services. Well completion services division revenue decreased $76.6 million, or 81%, to $18.3 million for the six months ended June 30, 2024 from $94.9 million for the six months ended June 30, 2023. Inter-segment revenues, consisting primarily of revenue derived from our sand segment, was $0.2 million for each of the six months ended June 30, 2024 and 2023, respectively.
Current report
The decrease in our well completion services revenue was primarily driven by a decrease in pressure pumping services utilization. The number of stages completed decreased 77% to 672 for the six months ended June 30, 2024 from 2,974 for the six months ended June 30, 2023. An average of 0.4 of our six fleets were active for the six months ended June 30, 2024 as compared to an average of 2.6 fleets for the six months ended June 30, 2023.
Current report
Infrastructure Services. Infrastructure services division revenue decreased marginally to $56.5 million for the six months ended June 30, 2024 from $56.6 million for the six months ended June 30, 2023. Average crew count was 77 crews for the six months ended June 30, 2024 as compared to 87 crews for the six months ended June 30, 2023. This decrease was offset by an increase in engineering, substation and materials revenue for the six months ended June 30, 2024.
Current report
Natural Sand Proppant Services. Natural sand proppant services division revenue decreased $15.0 million, or 63%, to $9.0 million for the six months ended June 30, 2024, from $24.0 million for the six months ended June 30, 2023. Inter-segment revenue, consisting primarily of revenue derived from our pressure pumping segment, was a nominal amount for each of the six months ended June 30, 2024 and June 30, 2023.
Current report
The decrease in our natural sand proppant services revenue was primarily due to a 63% decrease in tons of sand sold from approximately 775,280 tons for the six months ended June 30, 2023 to approximately 286,277 tons for the six months ended June 30, 2024, and a 23% decrease in the average sales price per ton of sand sold from $30.55 per ton during the six months ended June 30, 2023 to $23.57 per ton during the six months ended June 30, 2024. This was partially offset by $1.1 million of shortfall revenue recognized during the six months ended June 30, 2024.
Current report
Drilling Services. Drilling services division revenue decreased $3.0 million, or 71%, to $1.2 million for the six months ended June 30, 2024 from $4.2 million for the six months ended June 30, 2023. The decrease in our drilling services revenue was primarily attributable to a decrease in utilization for our directional drilling business from 44% during the six months ended June 30, 2023 to 15% during the six months ended June 30, 2024, which was coupled with a decrease in pricing.
Current report
Other Services. Other services revenue, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing businesses, increased marginally to $13.3 million for the six months ended June 30, 2024 from $13.2 million for the six months ended June 30, 2023. Inter-segment revenue, consisting primarily of revenue derived from our infrastructure and well completion segments, totaled $3.4 million and $0.8 million for the six months ended June 30, 2024 and 2023, respectively.
Current report
The increase in our other services revenue was primarily due to an increase in equipment manufacturing and utilization for our remote accommodations business, which was offset by a decline in utilization for our equipment rental business. We rented an average of 217 pieces of equipment to customers during the six months ended June 30, 2024, a decrease of 20% from an average of 270 pieces of equipment rented to customers during the six months ended June 30, 2023.
Current report
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $64.8 million from $149.2 million, or 78% of total revenue, for the six months ended June 30, 2023 to $84.4 million, or 89% of total revenue, for the six months ended June 30, 2024. Cost of revenue by operating division was as follows:
Current report
Well Completion Services. Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $57.4 million, or 75%, to $18.9 million for the six months ended June 30, 2024 from $76.3 million for the six months ended June 30, 2023. As a percentage of revenue, our well completion services division cost of revenue, exclusive of depreciation and amortization expense of $6.0 million and $9.3 million for the six months ended June 30, 2024 and 2023, respectively, was 103% and 80% for the six months ended June 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.
Current report
Infrastructure Services. Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, increased $0.4 million, or 1%, to $46.2 million for the six months ended June 30, 2024 from $45.8 million for the six months ended June 30, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $1.3 million and $5.8 million, respectively, for the six months ended June 30, 2024 and 2023 was 82% and 81% for the six months ended June 30, 2024 and 2023, respectively.
Current report
Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $4.5 million, or 30%, from $14.9 million for the six months ended June 30, 2023 to $10.4 million for the six months ended June 30, 2024. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $2.4 million and $3.6 million for the six months ended June 30, 2024 and 2023, respectively, was 116% and 62% for the six months ended June 30, 2024 and 2023, respectively. The increase in cost as a percentage of revenue is primarily due to a 63% decrease in tons sold and a 23% decrease in average sales price.
Current report
Drilling Services. Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $1.7 million, or 44%, from $3.9 million for the six months ended June 30, 2023 to $2.2 million for the six months ended June 30, 2024. As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $1.5 million and $2.4 million, for the six months ended June 30, 2024 and 2023, respectively, was 183% and 93% for the six months ended June 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.
Current report
Other Services. Other services division cost of revenue, exclusive of depreciation and amortization expense, increased $0.9 million, or 10%, from $9.4 million for the six months ended June 30, 2023 to $10.3 million for the six months ended June 30, 2024. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $1.9 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively, was 77% and 71% for the six months ended June 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.
Current report
b. The Company recognized an $89.2 million charge in relation to the Settlement Agreement with PREPA.
Current report
Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion decreased $12.5 million to $13.1 million for the six months ended June 30, 2024 from $25.6 million for the six months ended June 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.
Current report
Operating Loss. We reported an operating loss of $106.8 million for the six months ended June 30, 2024 compared to $1.0 million for the six months ended June 30, 2023. The increased operating loss was primarily due to an $89.2 million charge to selling, general and administrative expenses recognized during the six months ended June 30, 2024 in relation to the Settlement Agreement with PREPA. This 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.
Current report
Other (Expense) Income, Net. We recognized other expense, net of $63.5 million during the six months ended June 30, 2024 compared to other income of $17.0 million for the six months ended June 30, 2023. During the six months ended June 30, 2024 and 2023, we recognized interest on delinquent accounts receivable totaling $20.8 million and $22.5 million, respectively, in relation to our outstanding receivable with PREPA. Subsequent to June 30, 2024, Cobra entered into the Settlement Agreement with PREPA. As a result, Cobra recognized a charge to interest on delinquent accounts receivable totaling $81.5 million during the six 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.
Current report
Income Taxes. We recorded income tax benefit of $13.2 million on pre-tax loss of $181.0 million for the six months ended June 30, 2024 compared to an income tax expense of $5.6 million on pre-tax income of $9.4 million for the six months ended June 30, 2023. Our effective tax rate was 7% for the six months ended June 30, 2024 compared to 59% for the six months ended June 30, 2023. The effective tax rates for the six months ended June 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 six months ended June 30, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.
Current report
Net cash used in operating activities was $6.8 million for the three months ended June 30, 2024, compared to net cash provided by operating activities of $29.4 million for the three months ended June 30, 2023. The decline in operating cash flows for the three months ended June 30, 2024 was primarily attributable to a decline in utilization for our well completion and natural sand proppant services.
Current report
c. Capital expenditures primarily for maintenance for our directional drilling assets for the three and six months ended June 30, 2024.
Current report
e. Eliminations primarily relate to upgrades to our pressure pumping fleet completed by our equipment manufacturing business.
Current report
under its term credit facility, together with accrued and unpaid interest, and terminate the term credit facility.
Current report
However, our liquidity and future cash flows are subject to a number of variables, including receipt of payments from our customers, and the payments of the $188.4 million in aggregate settlement proceeds payable to us under the Settlement Agreement with PREPA relating to the PREPA receivable, which Settlement Agreement remains subject to approval by the Title III Court. 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 plan to use a portion of the $188.4 million in settlement proceeds to pay in full all of the outstanding amounts under our term credit facility, which had a balance of approximately $49.3 million as of June 30, 2024, as well as accrued and unpaid interest thereon, and terminate the term credit 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.
Removed paragraphs (11)
Previous report
As of March 31, 2024, PREPA owed us approximately $140.8 million for services performed excluding approximately $208.0 million of interest charged on these delinquent balances. See Note 2. Basis of Presentation and Significant Accounting Policies—Accounts Receivable of our unaudited condensed consolidated financial statements. PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S. District Court for the District of Puerto Rico. As a result, PREPA’s ability to meet its payment obligations under the contracts is largely dependent upon funding from the Federal Emergency Management Agency, or FEMA, or other sources. Since September 30, 2019, we have been pursuing litigation in the U.S. District Court for the District of Puerto Rico 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 Note 19—“Commitments and Contingencies—Litigation” included elsewhere in this report. In connection with these efforts, in 2023, an aggregate of $99 million was approved by FEMA for reimbursement to Cobra for services performed by Cobra, of which amount approximately $22.2 million was paid by PREPA to Cobra in 2023. 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”), pursuant to which Cobra transferred to SPCP Group all of its rights, title and interest in $54.4 million of outstanding accounts receivable with PREPA and received net proceeds of $46.1 million. See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information. On February 26, 2024, PREPA paid $50.6 million, of which $9.6 million was paid to Cobra and $41.0 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. On March 27, 2024, the parties in the PREPA proceedings filed a joint status report in which, among other things, PREPA informed the Court that it was withholding the release of FEMA approved funds for reimbursement to Cobra totaling approximately $18.2 million due to municipal and construction excise tax claims against Cobra. Cobra believes it is exempt from the construction excise taxes and strongly disagrees with PREPA’s decision to withhold funds. On March 29, 2024, the Court extended the previously ordered stay in the proceedings through May 24, 2024, and directed the parties to file a joint status report by May 8, 2024. Cobra remains in mediation with PREPA on all open disputes. See Note 19—“Commitments and Contingencies—Litigation” included elsewhere in this report for additional information.
Previous report
We believe all amounts charged to PREPA were in accordance with the terms of the contracts. Further, we believe these receivables are collectible. However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to us or (iii) otherwise does not pay amounts owed to us for services performed, the receivable may not be collected and our financial condition, results of operations and cash flows would be materially and adversely affected. In addition, government contracts are subject to various uncertainties, restrictions and regulations, including oversight audits and compliance reviews by government agencies and representatives. In this regard, 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 with conspiracy, wire fraud, false statements and disaster fraud. Two other individuals were also charged in the indictment. The indictment was focused on the interactions between a former FEMA official and the former President of Cobra. Neither we nor any of our 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 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. We do not expect any additional activity in the criminal proceeding. Given the uncertainty inherent in the criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencings could have on us. PREPA has stated in Court filings that it may contend the alleged criminal activity affects Cobra’s entitlement to payment under its contracts with PREPA. It is unclear what PREPA’s position will be going forward. See Note 19. Commitments and Contingencies to our consolidated financial statements included elsewhere in this report for additional information regarding these investigations and proceedings. Further, as noted above, our contracts with PREPA have concluded and we have not obtained, and there can be no assurance that we will be able to obtain, one or more contracts with other customers to replace the level of services that we provided to PREPA.
Previous report
First Quarter 2024 Financial Overview
Previous report
•Net cash flow provided by operating activities increased to $47.3 million for the first quarter of 2024 as compared to $3.2 million for the first quarter of 2023.
Previous report
2024 as well as a $20.5 million decrease in sand and chemical materials revenue. An average of 0.6 of our fleets were active for the three months ended March 31, 2024 as compared to an average of 3.6 fleets for the three months ended March 31, 2023.
Previous report
Infrastructure Services. Infrastructure services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.9 million, or 4%, to $21.6 million for the three months ended March 31, 2024 from $22.5 million for the three months ended March 31, 2023, primarily due to a decline in crew count combined with a reduction in storm restoration activity. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $0.7 million and $3.4 million for the three months ended March 31, 2024 and 2023, respectively, was 86% and 80% for the three months ended March 31, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to an increase in labor and rental costs as a percentage of revenue.
Previous report
Natural Sand Proppant Services. Natural sand proppant services division cost of revenue, exclusive of depreciation, depletion and accretion expense, decreased $2.1 million to $5.8 million for the three months ended March 31, 2024 from $7.9 million for the three months ended March 31, 2023. As a percentage of revenue, cost of revenue, exclusive of depreciation, depletion and accretion expense of $1.1 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively, was 135% and 63% for the three months ended March 31, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decrease in tons sold, resulting in a higher ratio of fixed costs to variable costs.
Previous report
Other Services. Other services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.5 million, or 10%, to $4.7 million for the three months ended March 31, 2024 from $5.2 million for the three months ended March 31, 2023 primarily due to decreased activity. As a percentage of revenue, cost of revenue, exclusive of depreciation and amortization expense of $1.0 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively, was 76% and 69% for the three months ended March 31, 2024 and 2023, respectively. The increase is primarily due to a decrease in utilization, resulting in a higher ratio of fixed costs to variable costs.
Previous report
Other Income, Net. Other income increased $1.5 million to $10.1 million for the three months ended March 31, 2024 compared to $8.6 million for the three months ended March 31, 2023. During the three months ended March 31, 2023 we recognized Puerto Rico related legal charges totaling approximately $2.0 million.
Previous report
However, our liquidity and future cash flows are subject to a number of variables, including receipt of payments from our customers, including the remaining amounts outstanding under the PREPA receivable. During the three months ended March 31, 2024, PREPA paid our subsidiary Cobra approximately $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. As of March 31, 2024, PREPA owed Cobra approximately $348.8 million for services performed, including $208.0 million of interest charges.
Previous report
Throughout 2021 and 2022, we released significant data that we obtained through Freedom of Information Act requests along with reviews of both our work and our contracts by the Federal Emergency Management Agency that, we believe, affirm the work performed by Cobra in Puerto Rico. We believe these documents in conjunction with the current Administration’s focus on the recovery of Puerto Rico and our enhanced lobbying efforts will aid in collecting the outstanding amounts owed to us by PREPA. However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to Cobra or (iii) otherwise does not pay amounts owed to Cobra, the remaining PREPA receivable may not be collectible, which may adversely impact our liquidity.
Reworded paragraphs (38)
Previous wording
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. In the first quarter 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. We expect that this trend will continue into the second quarter of 2024. We are seeing indications, however, of increased activity levels in the back half of 2024 in anticipation of increased natural gas demand, and we intend to be strategically positioned to capitalize on this anticipated demand, if and when it ramps up.
Current wording
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. In the first half 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. Current indications are that activity levels are expected to remain relatively flat in the second half of 2024, with potential for a ramp up in 2025. We will be strategically positioned to capitalize on this anticipated demand if and when it ramps up.
Previous wording
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 quarter of 2024 relative to the fourth quarter of 2023, activity remained suppressed. We expect that this trend will continue into the second quarter of 2024.
Current wording
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 half of 2024 relative to the fourth quarter of 2023, activity remained suppressed. We expect that this trend will continue into the second half of 2024.
Previous wording
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.
Current wording
Our average crew count declined slightly from approximately 78 crews throughout the fourth quarter of 2023 to approximately 77 crews throughout the first half of 2024. An uptick in storm restoration activity drove enhanced results during the second quarter of 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.
Previous wording
•Revenue for the first quarter of 2024 decreased by $73.1 million, or 63%, to $43.2 million from $116.3 million for the first quarter of 2023. The decrease in total revenue is primarily attributable to a decline in well completions services revenues.
Current wording
•Revenue for the second quarter of 2024 decreased by $23.9 million, or 32%, to $51.5 million from $75.4 million for the second quarter of 2023. The decrease in total revenue is primarily attributable to a decline in well completions services and natural sand proppant services revenue, partially offset by an increase in infrastructure services revenue.
Previous wording
•Net loss for the first quarter of 2024 was $11.8 million, or $0.25 loss per diluted share, as compared to net income of $8.4 million, or $0.17 earnings per diluted share, for the first quarter of 2023. The decrease in net income is primarily attributable to a decline in utilization for our well completion services as well as a $5.5 million financing charge incurred in relation to the Assignment Agreement with SPCP Group.
Current wording
•Net loss for the second quarter of 2024 was $156.0 million, or $3.25 loss per diluted share, as compared to net loss of $4.5 million, or $0.09 loss per diluted share, for the second quarter of 2023. The increase in net loss is primarily attributable to charges totaling $170.7 million recognized during the three months ended June 30, 2024 in relation to the Settlement Agreement with PREPA.
Previous wording
•Adjusted EBITDA (as defined and reconciled below) for the first quarter of 2024 decreased to $4.5 million from $30.7 million for the first quarter of 2023. See “Non-GAAP Financial Measures” below for a reconciliation of net income to Adjusted EBITDA.
Current wording
•Adjusted EBITDA (as defined and reconciled below) for the second quarter of 2024 was ($160.7) million as compared to $16.4 million for the second quarter of 2023. See “Non-GAAP Financial Measures” below for a reconciliation of net income to Adjusted EBITDA.
Previous wording
Revenue. Revenue for the three months ended March 31, 2024 decreased $73.1 million, or 63%, to $43.2 million from $116.3 million for the three months ended March 31, 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 March 31, 2024. Revenue by operating division was as follows:
Current wording
Revenue. Revenue for the three months ended June 30, 2024 decreased $23.9 million, or 32%, to $51.5 million from $75.4 million for the three months ended June 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 June 30, 2024, partially offset by an increase in our infrastructure services revenue. Revenue by operating division was as follows:
Previous wording
Well Completion Services. Well completion services division revenue decreased $59.0 million, or 88%, to $8.3 million for the three months ended March 31, 2024 from $67.3 million for the three months ended March 31, 2023. The decrease in our well completion services revenue was primarily driven by an 81% decrease in the number of stages completed from 2,018 for the three months ended March 31, 2023 to 380 for the three months ended March 31,
Current wording
Well Completion Services. Well completion services division revenue decreased $17.6 million, or 64%, to $10.0 million for the three months ended June 30, 2024 from $27.6 million for the three months ended June 30, 2023. The decrease in our well completion services revenue was primarily driven by an 69% decrease in the number of stages completed from 956 for the three months ended June 30, 2023 to 292 for the three months ended June 30, 2024. An average of 0.3 of our fleets were active for the three months ended June 30, 2024 as compared to an average of 1.6 fleets for the three months ended June 30, 2023.
Previous wording
Infrastructure Services. Infrastructure services division revenue decreased $3.3 million, or 12%, to $25.0 million for the three months ended March 31, 2024 from $28.3 million for the three months ended March 31, 2023. The decrease in revenue was primarily due to a decline in average crew count from 88 crews for the three months ended March 31, 2023 to 75 crews for the three months ended March 31, 2024 coupled with a decrease in storm restoration activity.
Current wording
Infrastructure Services. Infrastructure services division revenue increased $3.1 million, or 11%, to $31.4 million for the three months ended June 30, 2024 from $28.3 million for the three months ended June 30, 2023. The increase in revenue was primarily due to a $4.1 million increase in storm restoration activity, which was partially offset by a decline in average crew count from 86 crews for the three months ended June 30, 2023 to 79 crews for the three months ended June 30, 2024.
Previous wording
Natural Sand Proppant Services. Natural sand proppant services division revenue decreased $8.2 million, or 66%, to $4.3 million for the three months ended March 31, 2024 from $12.5 million for the three months ended March 31, 2023 primarily due to a 63% decrease in tons of sand sold from 391,439 tons for the three months ended March 31, 2023 to 145,662 tons for the three months ended March 31, 2024, coupled with a 21% decline in the average price per ton of sand sold from $31.02 per ton during the three months ended March 31, 2023 to $24.38 per ton during the three months ended March 31, 2024.
Current wording
Natural Sand Proppant Services. Natural sand proppant services division revenue decreased $6.9 million, or 59%, to $4.7 million for the three months ended June 30, 2024 from $11.6 million for the three months ended June 30, 2023 primarily due to a 63% decrease in tons of sand sold from 383,841 tons for the three months ended June 30, 2023 to 140,615 tons for the three months ended June 30, 2024, coupled with a 24% decline in the average price per ton of sand sold from $30.08 per ton during the three months ended June 30, 2023 to $22.73 per ton during the three months ended June 30, 2024. This was partially offset by $1.1 million of shortfall revenue recognized during the three months ended June 30, 2024.
Previous wording
Drilling Services. Drilling services division revenue decreased $0.9 million, or $64%, to $0.5 million for the three months ended March 31, 2024 as compared to $1.4 million for the three months ended March 31, 2023. The decrease is primarily due to decreased utilization for our directional drilling business from 30% for the three months ended March 31, 2023 to 13% for the three months ended March 31, 2024.
Current wording
Drilling Services. Drilling services division revenue decreased $2.1 million, or 75%, to $0.7 million for the three months ended June 30, 2024 as compared to $2.8 million for the three months ended June 30, 2023. The decrease is primarily due to decreased utilization for our directional drilling business from 58% for the three months ended June 30, 2023 to 16% for the three months ended June 30, 2024.
Previous wording
Other Services. Other services revenue, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing businesses, decreased approximately $1.3 million, or 17%, to $6.2 million for the three months ended March 31, 2024, from $7.5 million for the three months ended March 31, 2023. Inter-segment revenue, consisting primarily of equipment manufacturing revenue derived from our well completion segment, was $1.0 million and $0.5 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Other Services. Other services revenue, consisting of revenue derived from our aviation, equipment rental, remote accommodation and equipment manufacturing businesses, increased approximately $1.4 million, or 25%, to $7.1 million for the three months ended June 30, 2024, from $5.7 million for the three months ended June 30, 2023. Inter-segment revenue, consisting primarily of equipment manufacturing revenue derived from our well completion segment, was $2.4 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
An average of 211 pieces of equipment were rented to customers during the three months ended March 31, 2024, a decrease from an average of 287 pieces of equipment rented to customers during the three months ended March 31, 2023. Additionally, utilization for remote accommodations business declined. On average, 235 rooms were utilized during the three months ended March 31, 2024 as compared to 272 for the three months ended March 31, 2023.
Current wording
On average, 212 rooms were utilized during the three months ended June 30, 2024 as compared to 146 for the three months ended June 30, 2023, resulting in an increase in remote accommodations revenue. An average of 223 pieces of equipment were rented to customers during the three months ended June 30, 2024, a decrease of 12% from an average of 253 pieces of equipment rented to customers during the three months ended June 30, 2023.
Previous wording
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $48.4 million from $89.0 million, or 77% of total revenue, for the three months ended March 31, 2023 to $40.6 million, or 94% of total revenue, for the three months ended March 31, 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:
Current wording
Cost of Revenue (exclusive of depreciation, depletion, amortization and accretion expense). Cost of revenue, exclusive of depreciation, depletion, amortization and accretion expense, decreased $16.5 million from $60.3 million, or 80% of total revenue, for the three months ended June 30, 2023 to $43.8 million, or 85% of total revenue, for the three months ended June 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:
Previous wording
Well Completion Services. Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $43.9 million, or 84%, to $8.6 million for the three months ended March 31, 2024 from $52.5 million for the three months ended March 31, 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 $3.3 million and $4.8 million for the three months ended March 31, 2024 and 2023, respectively, was 104% and 78% for the three months ended March 31, 2024 and 2023, respectively. The increase as a percentage of revenue is primarily due to a decrease in utilization of our pressure pumping services, resulting in a higher ratio of fixed costs to variable costs.
Current wording
Well Completion Services. Well completion services division cost of revenue, exclusive of depreciation and amortization expense, decreased $13.5 million, or 57%, to $10.3 million for the three months ended June 30, 2024 from $23.8 million for the three months ended June 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 $2.7 million and $4.5 million for the three months ended June 30, 2024 and 2023, respectively, was 103% and 86% for the three months ended June 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.
Previous wording
Drilling Services. Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $0.4 million, or 27%, to $1.1 million for the three months ended March 31, 2024 from $1.5 million for the three months ended March 31, 2023. As a percentage of revenue, our drilling services division cost of revenue, exclusive of depreciation and amortization expense of $0.9 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively, was 220% and 107% for the three months ended March 31, 2024 and 2023, respectively. 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.
Current wording
Drilling Services. Drilling services division cost of revenue, exclusive of depreciation and amortization expense, decreased $1.2 million, or 50%, to $1.2 million for the three months ended June 30, 2024 from $2.4 million for the three months ended June 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 $1.2 million for the three months ended June 30, 2024 and 2023, respectively, was 171% and 86% for the three months ended June 30, 2024 and 2023, respectively. 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.
Previous wording
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 increased $0.4 million, or 5%, to $8.8 million for the three months ended March 31, 2024 from $8.4 million for the three months ended March 31, 2023 primarily due to an increase in professional fees. The table below presents a breakdown of SG&A expenses for the periods indicated (in thousands):
Current wording
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 increased $87.1 million, or 838%, to $97.5 million for the three months ended June 30, 2024 from $10.4 million for the three months ended June 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):
Previous wording
Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion decreased $6.0 million, or 46%, to $7.0 million for the three months ended March 31, 2024 from $13.0 million for the three months ended March 31, 2023. The decrease is primarily attributable to a decline in property and equipment depreciation expense as a result of existing assets being fully depreciated.
Current wording
Depreciation, Depletion, Amortization and Accretion. Depreciation, depletion, amortization and accretion decreased $6.5 million, or 52%, to $6.1 million for the three months ended June 30, 2024 from $12.6 million for the three months ended June 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.
Previous wording
Gains on Disposal of Assets, Net. Gains on the disposal of assets were $1.2 million and $0.4 million for the three months ended March 31, 2024 and 2023, respectively.
Current wording
Gains on Disposal of Assets, Net. Gains on the disposal of assets were $1.0 million and $0.5 million for the three months ended June 30, 2024 and 2023, respectively.
Previous wording
Operating (Loss) Income. We reported operating loss of $12.0 million for the three months ended March 31, 2024 compared to operating income of $6.3 million for the three months ended March 31, 2023. The increase in operating loss is primarily due to a decline in utilization in our well completions division.
Current wording
Operating Loss. We reported operating loss of $94.8 million for the three months ended June 30, 2024 compared to $7.4 million for the three months ended June 30, 2023. The increase in operating loss is primarily due to an $89.2 million charge to selling, general and administrative expenses recognized during the three months ended June 30, 2024 in relation to the Settlement Agreement with PREPA.
Previous wording
Income Taxes. We recorded income tax expense of $1.8 million on pre-tax loss of $10.0 million for the three months ended March 31, 2024 compared to $3.3 million on pre-tax income of $11.7 million for the three months ended March 31, 2023. Our effective tax rates were 18% and 29% for the three months ended March 31, 2024 and 2023, respectively. The effective tax rates for the three months ended March 31, 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 goodwill impairment.
Current wording
Income Taxes. We recorded income tax benefit of $15.0 million on pre-tax loss of $171.0 million for the three months ended June 30, 2024 compared to an income tax expense of $2.2 million on pre-tax loss of $2.2 million for the three months ended June 30, 2023. Our effective tax rates were 9% and (100)% for the three months ended June 30, 2024 and 2023, respectively. The effective tax rates for the three months ended June 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 as well as changes in the valuation allowance. Additionally, as a result of the Settlement Agreement with PREPA, during the three months ended June 30, 2024, the Company reversed $19.9 million in withholding tax accruals related to undistributed earnings from Puerto Rico.
Previous wording
Interest Expense and financing charges, Net. Interest expense and financing charges, net increased $4.8 million, or 145%, to $8.1 million for the three months ended March 31, 2024 from $3.3 million for the three months ended March 31, 2023. The increase is primarily due to a $5.5 million financing charge incurred in relation to the Assignment Agreement with SPCP Group. See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.
Current wording
Interest Expense and financing charges, Net. Interest expense, net increased $4.2 million, or 65%, to $10.7 million for the six months ended June 30, 2024 from $6.5 million for the six months ended June 30, 2023. The increase is primarily due to a $5.5 million financing charge incurred in relation to the Assignment Agreement with SPCP Group. See “—Liquidity and Capital Resources—Cobra Assignment Agreement” for additional information.
Previous wording
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 under the assignment agreement with SPCP Group 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.
Current wording
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.
Previous wording
a. Net working capital (less cash) is a non-GAAP measure and, as of March 31, 2024, is calculated by subtracting total current liabilities of $123.3 million and cash and cash equivalents of $22.0 million from total current assets of $433.9 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 $348.8 million at March 31, 2024 and $402.3 million at December 31, 2023 and corresponding liabilities of $61.2 million at March 31, 2024 and $60.6 million at December 31, 2023. See “Capital Requirements and Sources of Liquidity” section below.
Current wording
a. Net working capital (less cash) is a non-GAAP measure and, as of June 30, 2024, is calculated by subtracting total current liabilities of $103.3 million and cash and cash equivalents of $10.3 million from total current assets of $265.5 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 June 30, 2024 and $402.3 million at December 31, 2023 and corresponding liabilities of $42.7 million at June 30, 2024 and $60.6 million at December 31, 2023. See “Capital Requirements and Sources of Liquidity” section below.
Previous wording
As of April 30, 2024, we had cash on hand of $15.5 million and no outstanding borrowings under our new revolving credit facility and a borrowing base of $19.9 million, leaving an aggregate of $13.6 million of available borrowing capacity under this facility, after giving effect to $6.3 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.
Current wording
As of August 7, 2024, we had cash on hand of $9.1 million and no outstanding borrowings under our new revolving credit facility and a borrowing base of $25.7 million, leaving an aggregate of $19.0 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.
Previous wording
Net cash provided by operating activities was $47.3 million for the three months ended March 31, 2024, compared to $3.2 million for the three months ended March 31, 2023. The increase in operating cash flows was primarily attributable to increased receipts on accounts receivable, including the receipt of $64.0 million from PREPA. This was partially offset by an increase in payments on accounts payable and other liabilities.
Current wording
Net cash provided by operating activities was $40.5 million for the six months ended June 30, 2024, compared to $32.6 million for the six months ended June 30, 2023. The increase in operating cash flows for the six months ended June 30, 2024 was primarily attributable to increased receipts on accounts receivable, including the receipt of $64.0 million from PREPA for the six months ended June 30, 2024, compared to $10.8 million from PREPA for the six months ended June 30, 2023, which was offset by a decline in utilization for our well completion and natural sand proppant services during the six months ended June 30, 2024.
Previous wording
Net cash used in investing activities was $1.1 million for the three months ended March 31, 2024, compared to $5.7 million for the three months ended March 31, 2023. Cash used in investing activities is primarily comprised of purchases of property and equipment and proceeds from the disposal of property and equipment.
Current wording
Net cash used in investing activities was $3.4 million for the three months ended June 30, 2024, compared to $4.0 million for the three months ended June 30, 2023. Net cash used in investing activities was $4.5 million for the six months ended June 30, 2024, compared to $9.7 million for the six months ended June 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.
Previous wording
a. Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and maintenance for the three months ended March 31, 2024 and 2023.
Current wording
a. Capital expenditures primarily for upgrades to our pressure pumping fleet to reduce greenhouse gas emissions and maintenance for the three and six months ended June 30, 2024 and 2023.
Previous wording
b. Capital expenditures primarily for tooling and other equipment for the three months ended March 31, 2024 and 2023.
Current wording
b. Capital expenditures primarily for tooling and other equipment for the three and six months ended June 30, 2024 and 2023.
Previous wording
c. Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the three months ended March 31, 2024.
Current wording
d. Capital expenditures primarily for equipment for our remote accommodations and equipment rental businesses for the three and six months ended June 30, 2024.
Previous wording
Net cash used in financing activities was $48.5 million for the three months ended March 31, 2024, compared to $3.1 million for the three months ended March 31, 2023. Net cash used in financing activities for the three months ended March 31, 2024 was primarily attributable to payments on financing transactions of $46.8 million, payments on sale leaseback transactions of $1.1 million and principal payments on financing leases and equipment financing notes totaling $0.5 million. Net cash used in financing activities for the three months ended March 31, 2023 was primarily attributable to principal payment on financing leases and equipment financing notes of $2.0 million, principal payments on sale leaseback arrangements of $1.2 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. These were partially offset by net borrowings under our revolving credit facility of $1.1 million during the three months ended March 31, 2023.
Current wording
Net cash used in financing activities was $50.0 million for the six months ended June 30, 2024, compared to $31.3 million for the six months ended June 30, 2023. Net cash used in financing activities for the six months ended June 30, 2024 was primarily attributable to payments on financing transactions of $46.8 million, payments on sale leaseback transactions of $2.1 million and principal payments on financing leases and equipment financing notes totaling $1.0 million. Net cash used in financing activities for the six months ended June 30, 2023 was primarily attributable to net payments on our revolving credit facility of $24.2 million, principal payment on financing leases and equipment financing notes of $3.8 million, principal payments on sale leaseback arrangements of $2.5 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.
Previous wording
The effect of foreign exchange rate on cash was a nominal amount for each of the three months ended March 31, 2024 and 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.
Current wording
The effect of foreign exchange rate on cash was a nominal amount and $(0.1) million for the three and six months ended June 30, 2024 and a nominal amount for the three and six months ended June 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.
Previous wording
Our working capital totaled $310.6 million and $314.4 million at March 31, 2024 and December 31, 2023, respectively, including receivables due from PREPA of $348.8 million at March 31, 2024 and $402.3 million at December 31, 2023 and corresponding liabilities of $61.2 million at March 31, 2024 and $60.6 million at December 31, 2023. Our unrestricted cash balances were $22.0 million and $16.6 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
Our working capital totaled $162.2 million and $314.4 million at June 30, 2024 and December 31, 2023, respectively, including receivables due from PREPA of $188.4 million at June 30, 2024 and $402.3 million at December 31, 2023 and corresponding liabilities of $42.7 million at June 30, 2024 and $60.6 million at December 31, 2023. Our unrestricted cash balances were $10.3 million and $16.6 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
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”), 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)
Current wording
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”), 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%.
Previous wording
If an event of default occurs under the new revolving credit facility or the new term credit facility, as applicable, and remains uncured, it could have a material adverse effect on our business, financial condition, liquidity and results of operations. The lenders, as applicable, (i) would not be required to lend any additional amounts to us under the new revolving credit facility, (ii) could elect to increase the interest rate by (x) 200 basis points in connection with an event of default under the new revolving credit facility or (y) 300 basis points with respect to an event of default under the new term credit facility, (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 us to apply all of our available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of our assets. The exercise of remedies under the new revolving credit facility and the new term credit facility are subject to the terms of an intercreditor agreement (the “intercreditor agreement”) between Fifth Third and Wexford and acknowledged by us and certain of our subsidiaries. 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. The new term credit facility is currently scheduled to mature on October 16, 2028.
Current wording
If an event of default occurs under the new revolving credit facility or the new term credit facility, as applicable, and remains uncured, it could have a material adverse effect on our business, financial condition, liquidity and results of operations. The lenders, as applicable, (i) would not be required to lend any additional amounts to us under the new revolving credit facility, (ii) could elect to increase the interest rate by (x) 200 basis points in connection with an event of default under the new revolving credit facility or (y) 300 basis points with respect to an event of default under the new term credit facility, (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 us to apply all of our available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of our assets. The exercise of remedies under the new revolving credit facility and the new term credit facility are subject to the terms of an intercreditor agreement (the “intercreditor agreement”) between Fifth Third and Wexford and acknowledged by us and certain of our subsidiaries. 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. The new term credit facility is currently scheduled to mature on October 16, 2028. We intend to use a portion of the proceeds from the Settlement Agreement to pay off all of the outstanding amounts
Previous wording
As of April 30, 2024, our borrowing base was $19.9 million and we had no outstanding borrowings under our new revolving credit facility, leaving an aggregate of $13.6 million of available borrowing capacity, after giving effect to $6.3 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.
Current wording
As of August 7, 2024, our borrowing base was $25.7 million and we had no outstanding borrowings under our new revolving credit facility, leaving an aggregate of $19.0 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.
Previous wording
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, operating cash flow and available borrowings under our credit facility and term loan 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.
Current wording
Settlement Agreement, operating cash flow and available borrowings under our credit facility and term loan 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.
Previous wording
We have revised our 2024 capital expenditure estimate down to approximately $9.0 million from the previously planned 2024 capital budget of $15 million primarily due to lower commodity prices and softer demand for oilfield services. During the first quarter of 2024, pricing for natural gas has remained suppressed, which has 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. Capital expenditures will ultimately be dependent upon industry conditions and our financial results. These capital expenditures include $7.0 million for our well completions segment, $1.0 million for our infrastructure segment and $1.0 million for our other businesses. During the three months ended March 31, 2024, our capital expenditures totaled $4.2 million.
Current wording
We have increased our 2024 capital expenditure estimate to approximately $12.0 million from the previously planned 2024 capital budget of $9.0 million in relation to upgrades to our pressure pumping fleet. Capital expenditures will ultimately be dependent upon industry conditions and our financial results. These capital expenditures include $10.0 million for our well completions segment, $1.0 million for our infrastructure segment and $1.0 million for our other businesses. During the six months ended June 30, 2024, our capital expenditures totaled $9.1 million.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Selling, General and Administrative Expenses. Selling, general and administrative expenses represent the costs associated with managing and supporting our operations. SG&A expense increased $87.6 million, or 468%, to $106.3 million for the six months ended June 30, 2024 from $18.7 million for the six months ended June 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):
Current report — wording carried from elsewhere
a. Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.
Current report — wording carried from elsewhere
Gains on Disposal of Assets, Net. Gains on the disposal of assets were $2.2 million and $0.8 million for the six months ended June 30, 2024 and 2023, respectively.
Current report — wording carried from elsewhere
Net cash used in financing activities was $1.5 million for the three months ended June 30, 2024, compared to $28.2 million for the three months ended June 30, 2023. Net cash used in financing activities for the three months ended June 30, 2024 was primarily attributable to payments on sale leaseback transactions of $1.0 million and principal payments on financing leases and equipment financing notes totaling $0.5 million. Net cash used in financing activities for the three months ended June 30, 2023 was primarily attributable to net payments on our revolving credit facility of $25.3 million.
Current report — wording carried from elsewhere
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, the settlement proceeds under the
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Our average crew count declined slightly from approximately 78 crews throughout the fourth quarter of 2023 to approximately 75 crews throughout the first quarter of 2024. A reduction in storm restoration activity in the first quarter of 2024 compared to the fourth quarter of 2023 reduced operating results. 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
Previous report — wording carried elsewhere
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%.