Mammoth Energy still not paid for Puerto Rican recovery

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Four years after the category 5 Hurricane Maria hit Puerto Rico leaving it without electrical power, Oklahoma City’s Mammoth Energy Services remains to be paid hundreds of millions of dollars for the power restoration work it performed in the aftermath. The country refuses to pay.

In a recent filing with the Securities and Exchange Commission, the company released more information from FEMA and PREPA, the Puerto Rico Electric Power Authority. The information stated again that Mammoth’s subsidiary, Cobra Acquisitions LLC had fulfilled its contractual requirements to rebuild and restore power in the country, but PREPA continues to withhold payments of more than $325 million owed to the company.

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“The men and women of our company are proud of the work we performed and the services we provided to the citizens of Puerto Rico. Now, four years after Maria made landfall, we are still awaiting payment while PREPA continues to breach their contract,” stated Mammoth’s Chief Executive Officer, Arty Straehla in making a case for his company to be paid.

“Experts have verified the work Cobra performed time and time again, so it is far past time for Cobra to receive payment. We appreciate the comments of former FEMA and PREPA officials, who oversaw the recovery efforts after Hurricane Maria destroyed Puerto Rico, further validating the work our team performed in the harshest conditions.”

Mammoth’s SEC filing included comments from former Puerto Rican officials attesting to the work performed by the firm following the deadly hurricane.

“Thanks Arty, I hope this is resolved fairly to a company that helped the most in the recovery. Take care,” wrote Jose Ortiz, the former CEO of PREPA.

“My impression was that Cobra generally performed good restoration work. I do not recall reports of any significant deficiencies in Cobra’s work during my time in Puerto Rico. I also found that Cobra demonstrated a strong commitment to safety,” added Carlos Torres, Governor-appointed Power Restoration Coordinator for the emergency restoration of electrical power in Puerto Rico.

Mark Merritt, the former FEMA consultant to Puerto Rico offered the most supportive comments that were also critical of the country’s delays in payments.

“Restoring the power grid in Puerto Rico was uniquely challenging, as the terrain on the Island includes steep mountains and triple-canopy jungles, among other obstacles. Transmission restoration work, including potentially the installation of new transmission towers, required helicopters. Cobra, which brought its own helicopters and pilots, was very effective at performing its work under difficult circumstances.”

“PREPA would often find reasons not to pay Cobra – by, for instance, delaying their own inspections of completed work – even though Cobra’s PW was obligated, and funds were awaiting draw-down by PREPA.”

“Nonetheless, I never observed Cobra slowing or ceasing its work based on lack of payment. On the contrary, I witnessed Cobra working at considerable financial risk not knowing if and when they were going to get paid by their client, PREPA, even though the funding had been made available by FEMA.”

“The entire Unified Command Group (“UCG”) favored allocation of work to Cobra because Cobra was the most effective, and often the only available, resource.”

Mammoth Energy – The Journal Record

As Mammoth’s filing stated, the company was awarded an initial $200 million reconstruction contract in 2017 and through five separate amendments, the total amount eventually increased to $945 million.  PREPA awarded a second contract of $900 million to Cobra in response to a Request for Proposals (RFP) process.

As of August 31, 2021, Mammoth, through Cobra, is owed $325 million including $98 million in interest charges, as specified in the contract, on remaining invoices for work it has already completed.

Source: SEC