Mammoth Energy Discusses Recent Federal Emergency Management Agency's Release of Determination Memorandums
OKLAHOMA CITY, Jan. 19, 2023 -- Mammoth Energy Services, Inc. (NASDAQ: TUSK) ("Mammoth" or the "Company") today announced that the Federal Emergency Management Agency ("FEMA") released Determination Memorandums dated November 21, 2022, and December 21, 2022, related to the May 26, 2018 contract between the Puerto Rico Electric Power Authority ("PREPA") and Mammoth's wholly owned subsidiary Cobra Acquisitions LLC ("Cobra").
The Determination Memorandum dated November 21, 2022, covered the 100% federal cost share of the May 2018 contract ("PW 466" or "Project 49848") and the Determination Memorandum dated December 21, 2022, covered the 90% federal share ("Project 49831") of the May 2018 contract. For PW 466, FEMA determined approximately $49.3 million in costs to be eligible and approximately $5.6 million to be ineligible for federal assistance. In a January 7, 2022, Joint Status Report filed in PREPA's bankruptcy case, PREPA indicated that they would review the Determination Memorandum and, to the extent they felt plausible, file a first-level administrative appeal by January 20, 2023. Further, PREPA indicated that they did not believe that FEMA's decision in the November Determination Memorandum would result in additional funding to PREPA for costs incurred under PW 466.
For Project 49831, FEMA determined approximately $233.7 million in costs to be eligible and approximately $68.1 million to be ineligible for federal assistance. In a January 7, 2022, Joint Status Report filed in PREPA's bankruptcy case, PREPA indicated that subject to approximately $21.5 million in offsets asserted by PREPA, approximately $99.2 million in FEMA funding would be available to PREPA for Cobra's outstanding invoices. Additionally, PREPA indicated that they would review the Determination Memorandum and, to the extent they felt plausible, file a first-level administrative appeal of FEMA's decision by February 19, 2023. Both the November 2022 and December 2022 Determination Memorandums can be found on Mammoth's website www.mammothenergy.com.
Separately, Mammoth has sought and obtained bipartisan help from Senate and Congressional members in pursuit of collecting the over $375 million outstanding receivable from PREPA. The assistance of these Senators and Congressional members has been beneficial to the efforts to collect the receivable from PREPA and the Company continues to pursue multiple avenues to collect the money owed from PREPA.
Arty Straehla, Chief Executive Officer, commented, "While the financial and operational issues of PREPA have been well documented, the ongoing refusal by the Financial Oversight and Management Board for Puerto Rico ("Oversight Board") and the Central Office for Recovery, Reconstruction, and Resilience ("COR3") to hold PREPA accountable to pay contractors for work performed more than three years ago is absurd. Cobra's work has been affirmed by both FEMA and independent reviewers such as the Rand Corporation, and the lack of commitment by the Oversight Board and COR3 to hold PREPA accountable serves as a dangerous precedent related to the oversight of federal funds and a stark warning to private sector partners considering assisting Puerto Rico. Further, the strategy of the Oversight Board to delay resolution and turn a blind eye towards PREPA's refusal to pay contractors for work that has been affirmed, and for which federal funds are available to reimburse PREPA for the payments, should serve as an indication of the lack of oversight that is pervasive at both the Oversight Board and COR3 relative to the management of federal funding and give pause to Senators and Congressional members before appropriating additional funding to PREPA. To that end, I've written a letter to David Skeel, the Chairman of the Oversight Board, and all of the members of the Oversight Board, requesting attention to this matter." A copy of this letter can be found on Mammoth's website www.mammothenergy.com.