Mammoth Energy Services shares fall following report

Jun. 7--Mammoth Energy Services Inc. shares tumbled nearly 36% Thursday after an article in The Wall Street Journal described a federal investigation into contracts to restore electricity in Puerto Rico following Hurricane Maria.

The Oklahoma City company and its subsidiary, Cobra Acquisitions LLC, in 2017 and 2018 secured a series of contracts worth more than $1.8 billion with the Puerto Rico Electric Power Authority and with the support of the Federal Emergency Management Agency to repair storm damage to the island's electrical infrastructure.

The contracts allowed the relatively small Oklahoma City company to expand rapidly. As of January 2018, the company had 880 employees in Puerto Rico.

According to the Wall Street Journal, the Federal Bureau of Investigation and the Department of Homeland Security's Inspector General are looking into the contracts and are studying how Cobra became the dominant company in the restoration effort.

In a separate investigation, the Inspector General's office studied Cobra's rates for linemen, equipment and security in Puerto Rico, the article stated.

A spokesman for Mammoth declined comment to The Oklahoman on Thursday, but he said the company likely will issue a statement Friday.

The Inspector General's contract investigation has focused in part on Ahsha Tribble, a high-ranking FEMA official who last month was placed on leave over allegations that she directed business to Cobra, the Wall Street Journal stated. Before FEMA, Tribble worked with the Department of Energy, the White House National Security Council and the National Oceanic and Atmospheric Administration. She has a Ph.D. in meteorology from the University of Oklahoma.

According to the article, investigators also are looking into Cobra President Keith Ellison and his interactions with Tribble.

Mammoth began as an oil field services company, providing hydraulic fracturing and the sand and other products needed for the well completion process. The company completed a $116 million initial public offering in 2016. Later that year, it expanded into the utility infrastructure business, buying Cobra for about $8 million through two purchases.

Mammoth and Cobra in October 2017 received a 120-day, $200 million contract to begin emergency work in Puerto Rico to help restore power following Hurricane Maria. The contract more than doubled to $445 million in January 2018 and doubled again to $950 million in March 2018.

The company in May 2018 signed an additional, one-year, $900 million contract to complete the emergency restoration and begin broader efforts to strengthen the island's power system.

Mammoth's stock price peaked at $37.76 after the latest contract was signed, but the price has since fallen as work in Puerto Rico has slowed.

The company's infrastructure division generated $109 million in revenue in the first quarter of 2019, down from $326 million in the first quarter of 2018. Mammoth officials last month said the company had 500 employees in Puerto Rico in January, but that nearly all left the island by the end of March as contracts were completed and Congress did not appropriate money for continued improvements to Puerto Rico's system.

Mammoth stock shed $3.42 cents, or 36%, Thursday to close at $6.11.

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