Mammoth Energy Announces Filing of Rand Corporation Report Findings

OKLAHOMA CITY, June 09, 2020 (GLOBE NEWSWIRE) -- Mammoth Energy Services, Inc. (“Mammoth” or the “Company”) (NASDAQ:TUSK) today announced that it has filed with the Securities and Exchange Commission a detailed independent reasonableness  analysis of the October 19, 2017 emergency Master Services Agreement (the “MSA”) between Cobra Acquisitions LLC (“Cobra”) and the Puerto Rico Electric Power Authority (“PREPA”). The report adds further validation to a December 23, 2017 letter from the Federal Emergency Management Agency (“FEMA”) to the Government of Puerto Rico that the costs under the MSA were reasonable and the MSA was awarded in compliance with applicable procurement provisions.

The Rand Report

After over a year of requests under the Freedom of Information Act, Mammoth received a copy of a detailed independent assessment of the reasonableness of the emergency MSA dated October 19, 2017 between the Company’s subsidiary Cobra and PREPA for repairs to PREPA’s electrical grid as a result of Hurricane Maria. This report, titled “Reasonableness Analysis of Cobra Acquisitions, LLC Emergency Contract – Cost Validation Report” dated March 28, 2019 (the “Rand Report”), was prepared at the request of FEMA by the Homeland Security Operational and Analysis Center (“HSOAC”), a federally funded research and development center operated by the Rand Corporation for the U.S. Department of Homeland Security. FEMA’s request for the Rand Report followed a December 22, 2017 Determination Memorandum produced by FEMA that found the MSA to be reasonable.

The 77-page Rand Report's comprehensive analysis and findings are significant and contain, among others, the following conclusions:

Selection of Cobra was reasonable

“Having examined [the foregoing] aspects regarding the reasonableness of PREPA’s emergency procurement process, HSOAC finds that selecting Cobra for the MSA was reasonable considering FEMA policy on emergency situations and existing regulations regarding contracting.” (page 14)

PREPA adhered to procurement statutes and policies in awarding the contract to Cobra

“PREPA adhered to Puerto Rican legal statutes regarding emergency situations and remained consistent with their own internal policies.” (page 14)

“Thus, according to this evaluation of the procurement process HSOAC concludes that PREPA engaged in a reasonable procurement process given the circumstances following Hurricane Maria.” (page 14)

Cobra’s rates were reasonable

“We conclude that Cobra’s blended rates fall within representative ranges for high voltage emergency repair work. This conclusion is delivered from analytical investigation which combined knowledge of work conditions, assumptions into wage burdens, evaluation of the equipment quantities and workforce structures, different assumptions about fuel costs, and inclusion of the best benchmark data and current adjustment factors available at this time.” (page 48)