Mammoth Energy’s Chief Financial Officer tried to make a case in a recent hearing for Puerto Rico to pay the millions it owes the Oklahoma City-based energy company for electricity restoration following the 2017 Hurricane Maria that struck the island.
Mark Layton spoke at the 34th Public Board Meeting of the Financial Oversight and Management Board for Puerto Rico which took place Friday in San Juan.
“—we’ve not been paid since May of 2019 for the work that we performed restoring power,” he told the board.
Layton stressed the importance of the Puerto Rico Electric Power Authority (“PREPA”) re-paying its financial obligations to Mammoth for work conducted by its wholly owned subsidiary, Cobra Acquisitions LLC (“Cobra”), rebuilding Puerto Rico’s power grid in the aftermath of Hurricane Maria in 2017.
Following Layton’s remarks, Justin Peterson, a member of the FOMB, added, “These guys (Cobra) swung into action after Hurricane Maria and helped to rebuild the grid, to restore emergency power and they have been treated terribly and I think this is a horrible reflection on Puerto Rico, unfortunately – PREPA’s conduct … I think this reflects really poorly, and I don’t know if anybody from PREPA is here, but I hope they’re paying attention.”
Below is a transcript of Layton and Peterson’s remarks, and a link to the entire video exchange is available here: https://youtu.be/WFPI31bg5Y8
MARK LAYTON, MAMMOTH CFO: I’m the Chief Financial officer for Mammoth Energy Services and its wholly-owned subsidiary, Cobra Acquisitions. To Justin’s point, we’ve not been paid since May of 2019 for the work that we performed restoring power. A month ago, our representative Mr. Heimberg addressed the Oversight Board in regards to some purported directions from FEMA not to pay our invoices. Just to update the Board on that: since that time, we’ve not received any update from staff or anyone else in regards to support from that assertion, but most importantly, we’ve not seen any direction from FEMA, inside of any of PREPA’s court filings, any determination memorandums from FEMA or any official document. So we believe there is an excess of $10 million dollars that is available today for PREPA to be able to make disbursements on invoices that we’ve submitted and that have been fully reviewed. We continue to cooperate with that process and push it forward. As you’ve seen recently with the Whitefish settlement, it appears that the ratepayers will bear a significant proportion of these settlements. Time is of the essence as it continues to accrue interest at a rate in excess more than $3.3 million dollars per month. So we would appreciate the Committee’s continued oversight. We have a significant claim. We think that impacts the viability of any plan of adjustment for PREPA and would appreciate the Oversight Board’s attention to that matter.
JUSTIN PETERSON, FOMB MEMBER: Thanks Mark. Just to review, as you said, we covered this last month, but PREPA owes these guys $340 million dollars as of the end of February, including interest, and that interest is accruing, compounding daily, as they refuse to pay. PREPA has ignored Mammoth, doesn’t meet with them and right now is dragging its feet after the Court has ordered PREPA to work with FEMA on a review process – PREPA is dragging its feet on that — and so this is important. These guys swung into action after Hurricane Maria helped to rebuild the grid, to restore emergency power and they have been treated terribly and I think this is a horrible reflection on Puerto Rico, unfortunately – PREPA’s conduct. As somebody who wants Puerto Rico to grow and wants coming out of bankruptcy to mean something and for it to attract more investment and attract more companies to be here, this is not the kind of story that helps with that so I’ve been talking with our staff and I want to publicly thank Alejandro for his attention to this and looking into it, and I’m told there could be some progress soon, we’ll see. But in the meantime, anything I can do to be of assistance I want to do it because a). you did the work, you guys deserve to be paid, and b). I think this reflects really poorly, and I don’t know if anybody from PREPA is here, but I hope they’re paying attention.
Peterson: There was a former executive that has been dealt with, after that was surfaced PREPA continued to run the meter and order up hundreds of millions of service. So, if they thought there was an issue they should have picked another vendor but they didn’t. So they’re still responsible.
Layton: And I think additionally, you can see in Judge Swain’s commentary regarding PREPA’s assertions relative to that matter that those legal arguments are “strained”. And that’s a direct quote from Judge Swain. We continue to cooperate, to Justin’s point, on inquiries from FEMA to PREPA. I believe as of Tuesday there were 49 RFIs that FEMA had sent to PREPA. PREPA had responded to 30 of those 49. But that meter continues to run, so time is of the essence, and there are undisputed amounts that are owed that should be paid in order to stop the interest.
For more information related to the Puerto Rico situation, please go to the attached link: https://puertorico.mammothenergy.com/