Mammoth Energy Service, Inc. ("Mammoth", the "Company" or “We”)
(NASDAQ:TUSK) announced that it closed the acquisition of
substantially all of the assets of Chieftain Sand and Proppant, LLC
for $36 million in cash, including closing adjustments, on May 26,
2017.
Arty Straehla, Chief Executive Officer, commented, “The
acquisition of the Chieftain assets was strategic for Mammoth as we
now have access to the Union Pacific railway with unit train
capabilities, which provides a low cost solution to move sand into
the Mid-continent, in support of our pressure pumping operations in
the area, and into the Texas markets where there remains
significant demand for high quality sand. We intend to restart the
dry plant in the coming weeks with the restart of the wet plant in
the coming months once selective upgrades are performed. Mammoth
expects to have nearly four million tons per year of processing
capacity and approximately 75 million tons of estimated sand
reserves once it closes the acquisition of Taylor Frac, which is
expected to occur in early June.”
Key Highlights of the Chieftain
Transaction:
The assets acquired from Chieftain included a wet and dry plant
located on approximately 600 acres in New Auburn, Wisconsin. JT
Boyd, a leading mining and geologic consultant, recently completed
an analysis of the reserves in place which found an estimated 38
million tons of useable frac sands present on the parcels acquired
from Chieftain, up from a previously estimated 30 million tons. The
Northern White Wonewoc frac sand meets or exceeds API standards
including turbidity, roundness, sphericity and crush resistance.
Fine grade sands represent approximately 70% of the reserves in
place.
Over the past two months, Mammoth conducted an evaluation of the
Chieftain facility, and now that the transaction has closed, we
intend to work quickly to hire staff, restart the dry plant and
begin selling sand. The evaluation of the wet plant yielded several
ways to modernize and upgrade the facility to more efficiently
process fine grade sands. These enhancements should increase the
profitability of the plant and reduce costs over time. We
estimate that it will take approximately two months to complete
these upgrades to the wet plant and restart the facility with
minimal costs.
Financing
To fund the $36 million purchase price of the acquisition,
Mammoth used cash on hand and borrowings under its revolving credit
facility. At the end of 1Q 2017, we had total liquidity of $156
million including $12 million in cash and availability of $144
million under our credit facility which was undrawn.
About Mammoth Energy Services,
Inc.
Mammoth is an integrated, growth-oriented oilfield service
company serving companies engaged in the exploration and
development of North American onshore unconventional oil and
natural gas reserves. Mammoth’s suite of services includes pressure
pumping services, well services, natural sand proppant services,
contract land and directional drilling services and other energy
services. Other energy services currently consists primarily of
remote accommodation services. For additional information about
Mammoth, please visit our website at www.mammothenergy.com, where
we routinely post announcements, updates, events, investor
information and presentations and recent news releases. Information
on our website is not part of this news release.
Forward-Looking Statements and
Cautionary Statements
This news release contains certain statements and
information that may constitute “forward-looking statements” within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of
1934, as amended. All statements, other than statements of
historical facts that address activities, events or developments
that we expect, believe or anticipate will or may occur in the
future are forward-looking statements. The words “anticipate,”
“believe,” “ensure,” “expect,” “if,” “intend,” “plan,” “estimate,”
“project,” “forecasts,” “predict,” “outlook,” “aim,” “will,”
“could,” “should,” “potential,” “would,” “may,” “probable,”
“likely,” and similar expressions, and the negative thereof, are
intended to identify forward-looking statements. Without limiting
the generality of the foregoing, forward-looking statements
contained in this press release specifically include statements,
estimates and projections regarding our business outlook and plans,
future financial position, liquidity and capital resources,
operations, performance, acquisitions, returns, capital expenditure
budgets, costs and other guidance regarding future developments.
Forward-looking statements are not assurances of future
performance. These forward-looking statements are based on
management’s current expectations and beliefs, forecasts for our
existing operations, experience, and perception of historical
trends, current conditions, anticipated future developments and
their effect on us, and other factors believed to be appropriate.
Although management believes that the expectations and assumptions
reflected in these forward-looking statements are reasonable as and
when made, no assurance can be given that these assumptions are
accurate or that any of these expectations will be achieved (in
full or at all). Moreover, our forward-looking statements are
subject to significant risks and uncertainties, including those
described in our Annual Report filed on Form 10-K filed with the
SEC on February 24, 2017 and our subsequent filings with the
SEC, many of which are beyond our control, which may cause actual
results to differ materially from our historical experience and our
present expectations or projections which are implied or expressed
by the forward-looking statements. Important factors that could
cause actual results to differ materially from those in the
forward-looking statements include, but are not limited to, risks
relating to economic conditions; volatility of crude oil and
natural gas commodity prices; delays in or failure of delivery of
current or future orders of specialized equipment; the loss of or
interruption in operations of one or more key suppliers or
customers; oil and gas market conditions; the effects of government
regulation, permitting and other legal requirements, including new
legislation or regulation of hydraulic fracturing; operating risks;
the adequacy of our capital resources and liquidity; weather;
litigation; competition in the oil and natural gas industry; and
costs and availability of resources.
Readers are cautioned not to place undue reliance
on any forward-looking statement which speaks only as of the date
on which such statement is made. We undertake no obligation to
correct, revise or update any forward-looking statement after the
date such statement is made, whether as a result of new
information, future events or otherwise, except as required by
applicable law.
Contact:
Mammoth Energy Services, Inc., Attention: Don Crist, 14201 Caliber Drive, Suite 300, Oklahoma City, Oklahoma 73134, tel: 405-608-6048
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