What changed in this filing

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Item 9A. Controls and Procedures

2022-03-04 compared with 2021-03-01 · 503 added, 585 removed, 1291 unchanged (46% of the section changed)

6 unchanged sentences

As of December 31, 2021, an evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) under the Exchange Act.

Based upon our

evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2020, our disclosure controls and procedures are effective.

Based upon our evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2021, our disclosure controls and procedures are effective.

C hanges in Internal Controls Over Financial Reporting

7 unchanged sentences

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Grant Thornton LLP, the independent registered public accounting firm that audited the consolidated financial statements of the Company included in this Annual Report on Form 10-K, has issued their report on the effectiveness of the Company ’ s internal control over financial reporting at December 31, 2021.

The report, which expresses an unqualified opinion on the effectiveness of the Company ’ s internal control over financial reporting at December 31, 2021, is included in this Item under the heading "Report of Independent Registered Public Accounting Firm".

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Mammoth Energy Services, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Mammoth Energy Services, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021, and our report dated March 4, 2022 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ GRANT THORNTON LLP

Oklahoma City, Oklahoma

March 4, 2022

Other Information

On February 28, 2022, we and certain of our direct and indirect subsidiaries, as borrowers, entered into the Fourth Amendment to our amended and restated revolving credit facility, as amended, with the lenders party thereto and PNC Bank, National Association, as a lender and as administrative agent for the lenders.

The Fourth Amendment to our revolving credit facility, among other things, (i) amended our financial covenants as outlined below, (ii) provided for a conditional increase of the applicable interest margin, (iii) permitted certain sale-leaseback transactions, (iv) provided for a reduction in the maximum revolving advance amount in an amount equal to 50% of the PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables, and (v) classified the payments pursuant to our settlement agreement with MasTec Renewables Puerto Rico, LLC as restricted payments and requires $20.0 million of availability both before and after making such payments.

The financial covenants under our revolving credit facility were amended as follows:

• the leverage ratio was eliminated;

• the fixed charge coverage ratio was reduced to 0.85 to 1.0 for the six months ended June 30, 2022 and increases to 1.1 to 1.0 for the periods thereafter;

• a minimum adjusted EBITDA covenant of $4.7 million, excluding interest the accounts receivable from PREPA, for the five months ending May 31, 2022 was added;

• the minimum excess availability covenant was reduced to $7.5 million through the earlier of (i) March 31, 2022 or (ii) the date on which proceeds of permitted sale-leaseback transactions are received, after which the minimum excess availability covenant will increase to $10.0 million.

The Fourth Amendment also permanently waived compliance by the borrowers with the leverage ratio and fixed charge coverage ratio covenants in our revolving credit facility for the fiscal quarters ended September 30, 2021 and December 31, 2021, respectively, ending the limited covenant waiver period contemplated under the third amendment to our revolving credit facility.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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Financial Statements

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 )

Consolidated Balance Sheets

Consolidated Statement of Comprehensive Income (Loss)

Consolidated Statement of Comprehensive Loss

Consolidated Statement of Changes in Equity

8 unchanged sentences

001-37917), filed with the SEC on November 15, 2016).

Description of Securities of the Company (incor porated by reference to Exhibit 4 .1 to the Company's Annua l Report on Form 10-K (File No.

Description of Securities of the Company (incorporated by reference to Exhibit 4.1 to the Company's Annual Report on Form 10-K (File No.

001-37917), filed with the SEC on March 2, 2020).

4 unchanged sentences

001-37917), filed with the SEC on November 15, 2016).

Investor Rights Agreement, dated October 12, 2016, by and between the Company and Gulfport Energy Corporation (incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K (File No.

001-37917), filed with the SEC on November 15, 2016).

Advisory Services Agreement, dated as of October 19, 2016, by and between the Company and Wexford Capital LP (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No.

001-37917), filed with the SEC on November 15, 2016).

Master Service Contract, effective May 16, 2013, by and between Muskie Proppant LLC and Diamondback E&P LLC (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Service Agreement, dated February 22, 2013, by and between Gulfport Energy Corporation and Panther Drilling Systems LLC (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Amendment to Master Service Agreement, dated as of May 23, 2016, by and among Gulfport Energy Corporation, Gulfport Buckeye LLC and Panther Drilling Systems LLC (incorporated by reference to Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Service Contract, effective September 9, 2013, by and between Panther Drilling Systems LLC and Diamondback E&P LLC (incorporated by reference to Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

First Amendment, dated February 21, 2013, to Master Field Services Agreement, effective January 1, 2013, by and between Diamondback E&P LLC and Bison Drilling and Field Services LLC (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Field Services Agreement, effective January 1, 2013, by and between Diamondback E&P LLC and Bison Drilling and Field Services LLC (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Drilling Agreement, effective January 1, 2013, by and between Diamondback E&P LLC and Bison Drilling and Field Services LLC (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Service Agreement, dated June 11, 2012, by and between Gulfport Energy Corporation and Redback Energy Services LLC (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Master Service Contract, effective October 17, 2013, by and between Bison Trucking LLC and Diamondback E&P LLC (incorporated by reference to Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Mammoth Energy Securities, Inc.

10 unchanged sentences

333-213504), filed with the SEC on October 3, 2016).

Amended & Restated Master Services Agreement for Pressure Pumping Services Agreement, effective as of October 1, 2014, by and between Gulfport Energy Corporation and Stingray Pressure Pumping LLC (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Amendment to Amended and Restated Master Services Agreement, dated as of February 18, 2016 to be effective as of January 1, 2016, by and between Gulfport Energy Corporation and Stingray Pressure Pumping LLC (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Amendment to Master Service Agreement, dated as of July 7, 2016, by and among Gulfport Energy Corporation, Gulfport Buckeye LLC and Stingray Pressure Pumping LLC (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Sand Supply Agreement, effective as of October 1, 2014, by and between Muskie Proppant LLC and Gulfport Energy Corporation (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Amendment to Sand Supply Agreement, dated as of November 3, 2015, by and between Muskie Proppant LLC and Gulfport Energy Corporation (incorporated by reference to Exhibit 10.19 to the Company’s Registration Statement on Form S-1 (File No.

333-213504), filed with the SEC on September 2, 2016).

Emergency Master Service Agreement for PREPA’s Electrical Grid Repairs-Hurricane Maria, executed on October 19, 2017, by the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No.

12 unchanged sentences

001-37917), filed with the SEC on January 31, 2018).

Office Lease Agreement, dated as of March 31, 2017, by and between the Company and Caliber Investment Group LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

001-37917), filed with the SEC on May 15, 2017).

Master Subcontract Agreement, dated as of November 2, 2017, by and among Cobra Acquisitions LLC and T&E Flow Services LLC (incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K (File No.

9 unchanged sentences

001-37917), filed with the SEC on May 31, 2018).

Amendment No.

2, dated as of July 10, 2018, between Stingray Pressure Pumping, LLC and Gulfport Energy Corporation to that certain Amended & Restated Master Services Agreement for Pressure Pumping Services, effective as of October 1, 2014, as amended effective January 1, 2016 (incorporated by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q (File No.

001-37917), filed with the SEC on August 8, 2018).

Second Amendment to Sand Supply Agreement, dated as of August 6, 2018, between Muskie Proppant LLC and Gulfport Energy Corporation (incorporated by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q (File No.

001-37917), filed with the SEC on August 8, 2018).

Amended and Restated R evolving Credit and Security Agreement, dated as of October 19, 2018, by and among Mammoth Energy Services, Inc., certain direct and indirect subsidiaries, the lenders party thereto and PNC Bank, National Association, as a lender and administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No.

Amended and Restated Revolving Credit and Security Agreement, dated as of October 19, 2018, by and among Mammoth Energy Services, Inc., certain direct and indirect subsidiaries, the lenders party thereto and PNC Bank, National Association, as a lender and administrative agent for the lenders (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K (File No.

001-37917), filed with the SEC on October 25, 2018).

1 unchanged sentence

001-37917), filed with the SEC on November 12, 2019).

Master Service Agreement, dated January 1, 2019, by and between Gulfport Energy Corporation and Aquahawk Energy LLC (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No.

001-37917), filed with the SEC on May 3, 2019).

Aviation Support Services Agreement, dated December 28, 2018, by and between Brim Equipment Leasing, Inc.

10 unchanged sentences

001-37917), filed with the SEC on May 3, 2019).

Second Amendment to Amended and Restated Revolving Credit and Security Agreement , dated as of February 26, 2020 (incor porated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K (File No.

Second Amendment to Amended and Restated Revolving Credit and Security Agreement, dated as of February 26, 2020 (incorporated by reference to Exhibit 10.40 to the Company's Annual Report on Form 10-K (File No.

001-37917), filed with the SEC on March 2, 2020).

9 unchanged sentences

001-37917), filed with the SEC on May 11, 2020).

Third Amendment to Amended and Restated Credit Agreement, dated as of November 3, 2021, by and among the Company, certain of its subsidiaries, PNC Bank, National Association, as a lender and administrative agent for the lender, and other lenders party thereto.

Fourth Amendment to Amended and Restated Credit Agreement, dated as of February 28 , 2022, by and among the Company, certain of its subsidiaries, PNC Bank, National Association, as a lender and administrative agent for the lender, and other lenders party thereto.

List of Significant Subsidiaries of the Company.

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Mine Safety Disclosure Exhibit.

Technical Report Summary for Piranha and Taylor Mines prepared by John T.

Boyd Company.

101.INS* XBRL Instance Document.

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+ Management contract, compensatory plan or arrangement.

# Confidential treatment with respect to certain portions of this agreement was granted by the SEC which portions have been omitted and filed separately with the SEC.

Form 10-K Summary

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MAMMOTH ENERGY SERVICES, INC.

February 26, 2021 By:

March 4, 2022 By:

/s/ Mark Layton

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Signature Title Date

/s/ Arty Straehla Chief Executive Officer (principal executive officer) and Director February 26, 2021

/s/ Arty Straehla Chief Executive Officer (principal executive officer) and Director March 4, 2022

Arty Straehla

/s/ Mark Layton Chief Financial Officer (principal financial and accounting officer) February 26, 2021

/s/ Arthur Amron Director (Chairman of the Board) February 26, 2021

Palm Director February 26, 2021

/s/ Paul Jacobi Director February 26, 2021

/s/ Arthur Smith Director February 26, 2021

/s/ Corey Booker Director February 26, 2021

/s/ Mark Layton Chief Financial Officer (principal financial and accounting officer) March 4, 2022

/s/ Arthur Amron Director (Chairman of the Board) March 4, 2022

Palm Director March 4, 2022

/s/ Paul Jacobi Director March 4, 2022

/s/ Arthur Smith Director March 4, 2022

/s/ Corey Booker Director March 4, 2022

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Mammoth Energy Services, Inc.

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of comprehensive (loss) income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial statements”).

(a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive loss, changes in equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 4, 2022 expressed an unqualified opinion.

Basis for opinion

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Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

5 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Collectability of the receivable balances from PREPA

As described further in Note 2 and Note 20 to the consolidated financial statements, Cobra Acquisitions LLC (“Cobra”) and the Puerto Rico Electric Power Authority (“PREPA”) entered into an emergency master services agreement in October 2017 and a master service contract in May 2018 for repairs to PREPA’s electrical grid due to damage caused by Hurricane Maria in 2017.

As of December 31, 2020, the consolidated financial statements include accounts receivable from PREPA for approximately $227 million for services performed as well as receivables of approximately $74 million of interest charges on delinquent balances (collectively, “PREPA Receivable”).

PREPA is currently subject to bankruptcy proceedings that are currently pending in the U.S.

Critical audit matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Collectability of receivable balances from the Puerto Rico Electric Power Authority

As described further in Notes 2 and 19 to the consolidated financial statements, Cobra Acquisitions LLC (“Cobra”) and the Puerto Rico Electric Power Authority (“PREPA”) entered into an emergency master services agreement in October 2017 and a second master service contract in May 2018 for repairs to PREPA’s electrical grid due to damage caused by Hurricane Maria in 2017 (collectively, the “PREPA Contracts”).

As of December 31, 2021, the consolidated financial statements include accounts receivable from PREPA for approximately $227.0 million for services performed as well as receivables of approximately $110.8 million of interest charges on delinquent balances in accordance with the terms of the PREPA Contracts (collectively, “PREPA receivable”).

PREPA is subject to bankruptcy proceedings that are currently pending in the U.S.

District Court for the District of Puerto Rico.

Furthermore, on September 10, 2019, the U.S.

District Court for the District of Puerto Rico unsealed an indictment that charged the former president of Cobra with conspiracy, wire fraud, false statements and disaster fraud.

Two other individuals were also charged in the indictment.

District Court for the District of Puerto Rico unsealed an indictment that charged three individuals, including the former president of Cobra, with conspiracy, wire fraud, false statements and disaster fraud.

The indictment is focused on the interactions between a former U.S.

Department of Homeland Security - Federal Emergency Management Agency (“FEMA”) official and the former president of Cobra.

The Company is cooperating with the Department of Justice in the criminal matter and neither the Company nor any of its subsidiaries were charged in the indictment.

The Company is cooperating with the U.S.

Securities and Exchange Commission and the U.S.

Department of Justice in the criminal matter and neither the Company nor any of its subsidiaries were charged in the indictment.

However, adverse developments in the ongoing criminal investigation and/or related litigation may affect PREPA’s willingness or intent to remit payment to Cobra.

We identified the collectability of the receivable balances associated with the PREPA receivable as a critical audit matter.

The principal considerations for our determination that the collectability of the PREPA receivable is a critical audit matter include the high degree of estimation uncertainty resulting from significant management judgment.

Given that FEMA ultimately provides the funds to repay the PREPA receivable, and given the related litigation described in Notes 2 and 20, management’s qualitative evaluation of the PREPA receivable and the determination of PREPA’s ability and intent to remit payment required a high degree of auditor judgment and an increased extent of effort to assess the reasonableness of management’s estimates and assumptions.

We identified the collectability of the receivable balances associated with the PREPA Contracts as a critical audit matter.

The principal consideration for our determination that the collectability of the receivable balances from PREPA is a critical audit matter is the high degree of estimation uncertainty resulting from significant management judgment.

Given that PREPA is subject to bankruptcy proceedings and as a result, its ability to meet its remaining obligations under the PREPA Contracts is largely dependent upon funding from FEMA or other sources, and given the related litigation described in Notes 2 and 19, management’s qualitative evaluation of the collectability of the PREPA receivable and the determination of PREPA’s ability and intent to remit payment required a high degree of auditor judgment and an increased extent of effort to assess the reasonableness of management’s estimates and assumptions.

Our audit procedures related to the collectability of the receivable balances from PREPA included the following, among others.

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• We evaluated the qualitative assessment performed by management by performing the following:

◦ We inquired of management and internal and external legal counsel to confirm our understanding of the facts and circumstances related to collectability of the PREPA receivable and status of the related litigation.

Additionally, we evaluated responses to inquiry letters sent to internal and external legal counsel and obtained written representations from management related to the collectability of the PREPA receivable and related litigation.

◦ We inquired of management and both internal and external legal counsel to confirm our understanding of the facts and circumstances related to collectability of the PREPA receivable and status of the related litigation.

◦ We corroborated the facts and circumstances by obtaining and reviewing the relevant legal documents and correspondence with PREPA officials and others involved in the oversight of PREPA.

◦ We evaluated responses to inquiry letters sent to internal and external legal counsel and obtained written representations from management related to the collectability of the PREPA receivable and related litigation.

◦ Through such procedures, we assessed the reasonableness of management’s conclusions that PREPA has the intent and ability to pay the receivable and whether a loss was probable or reasonably possible.

• We assessed the sufficiency of management’s disclosures related to the PREPA receivable and related litigation.

Fair value measurements used to record impairment of long-lived assets and goodwill

As described further in Note 7 to the consolidated financial statements, oil prices declined significantly in March 2020 as a result of geopolitical events that increased the global supply of oil in the market as well as effects of the COVID-19 pandemic which reduced the global demand for oil.

As a result, the Company determined that impairment indicators existed, and it was more likely than not that the fair value of certain of its oilfield services assets and of its reporting units were less than their carrying value.

Therefore, the Company performed an interim quantitative impairment test that resulted in recording $12.9 million of impairment of other long-lived assets and $55.0 million of impairment of goodwill.

The Company measured the fair values of long-lived assets using direct and indirect observable inputs based on a market approach and measured the fair value of the reporting units using a combination of income and market approaches.

The significant assumptions include the anticipated cash flows, discount rate, terminal growth rate, selection of an appropriate peer group and valuation multiples.

Changes in these inputs could have a significant impact on the estimated fair values of the long-lived assets and reporting units.

We identified the fair value measurements used to measure the impairment of long-lived assets and goodwill as a critical audit matter.

The principal considerations for our determination that the fair value measurements used to record impairment of long-lived assets and goodwill as a critical audit matter are the degree of complexity and subjectivity inherent in determining management’s estimates used in developing the fair value measurements of the underlying long-lived assets and reporting units.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s assumptions.

Our audit procedures related to the fair value measurements used to record impairment of long-lived assets and goodwill included the following, among others.

• We evaluated the reasonableness of management’s cash flow projections by comparing such projections to historical Company results and available industry data.

• We utilized our valuation specialists to assist in evaluating the Company’s discounted cash flow model and certain significant assumptions, including those discussed above.

This included the evaluation of peer group and valuation multiples used within the fair value measurement of goodwill.

• We assessed the historical accuracy of management’s estimates and performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value measurements that would result from such changes in the key assumptions, specifically management’s anticipated cash flows and terminal growth rate, as well as the discount rate used to record impairment of goodwill.

• We evaluated the qualifications of, and the methodologies employed by, the third-party specialists utilized by management.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

/s/ GRANT THORNTON LLP

1 unchanged sentence

Oklahoma City, Oklahoma

February 26, 2021

March 4, 2022

MAMMOTH ENERGY SERVICES, INC.

13 unchanged sentences

Operating lease right-of-use assets 12,168 20,179

Intangible assets, net - customer relationships 408 583

Intangible assets, net - trade names 4,366 5,205

Intangible assets, net 2,561 4,774

Goodwill 11,717 12,608

Deferred income tax asset 8,094 —

Other non-current assets 4,342 5,115

3 unchanged sentences

Accounts payable $ 37,560 $ 40,319

Payables to related parties 3 526

Accrued expenses and other current liabilities 62,516 44,408

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Additional paid in capital 538,221 537,039

Retained earnings 28,895 136,502

Retained earnings (deficit) ( 72,535 ) 28,895

Accumulated other comprehensive loss ( 2,931 ) ( 3,065 )

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MAMMOTH ENERGY SERVICES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Years Ended December 31,

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Total cost and expenses 357,150 462,393 753,395

Operating (loss) income ( 149,317 ) ( 128,383 ) 394,451

Operating loss ( 128,188 ) ( 149,317 ) ( 128,383 )

OTHER INCOME (EXPENSE)

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Other, net - related parties ( 515 ) 1,890 —

Total other income (expense) 29,541 37,258 ( 5,223 )

(Loss) income before income taxes ( 119,776 ) ( 91,125 ) 389,228

(Benefit) provision for income taxes ( 12,169 ) ( 12,081 ) 153,263

Net (loss) income $ ( 107,607 ) $ ( 79,044 ) $ 235,965

Total other income 3,895 29,541 37,258

Loss before income taxes ( 124,293 ) ( 119,776 ) ( 91,125 )

Benefit for income taxes ( 22,863 ) ( 12,169 ) ( 12,081 )

Net loss $ ( 101,430 ) $ ( 107,607 ) $ ( 79,044 )

OTHER COMPREHENSIVE INCOME (LOSS)

Foreign currency translation adjustment, net of tax of ($ 36 ), ($ 54 ) and ($ 203 ), respectively, for 2021, 2020 and 2019

241 775 ( 1,420 )

Comprehensive (loss) income $ ( 107,366 ) $ ( 78,269 ) $ 234,545

Net (loss) income per share (basic) (Note 16) $ ( 2.36 ) $ ( 1.76 ) $ 5.27

Net (loss) income per share (diluted) (Note 16) $ ( 2.36 ) $ ( 1.76 ) $ 5.24

Comprehensive loss $ ( 101,296 ) $ ( 107,366 ) $ ( 78,269 )

Net loss per share (basic) (Note 15) $ ( 2.18 ) $ ( 2.36 ) $ ( 1.76 )

Net loss per share (diluted) (Note 15) $ ( 2.18 ) $ ( 2.36 ) $ ( 1.76 )

Weighted average number of shares outstanding (Note 15) 46,428 45,644 45,011

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Common Stock Retained Paid-In Comprehensive

Shares Amount Earnings Capital Loss Total

Shares Amount Earnings (Deficit) Capital Loss Total

(in thousands)

Balance at January 1, 2019 44,877 $ 449 $ 226,765 $ 530,919 $ ( 4,081 ) $ 754,052

Equity based compensation (Note 17) — — — 17,487 — 17,487

Stock based compensation 232 2 — 4,175 — 4,177

Net income — — 235,965 — — 235,965

Net loss — — ( 79,044 ) — — ( 79,044 )

Cash dividends declared ($ 0.25 per share)

— — ( 11,219 ) — — ( 11,219 )

Other comprehensive loss — — — — ( 1,420 ) ( 1,420 )

Other comprehensive income — — — — 775 775

Balance at December 31, 2019 45,109 $ 451 $ 136,502 $ 535,094 $ ( 3,306 ) $ 668,741

1 unchanged sentence

Net loss — — ( 107,607 ) — — ( 107,607 )

Cash dividends declared ($ 0.25 per share)

— — ( 11,219 ) — — ( 11,219 )

Other comprehensive income — — — — 241 241

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Cash flows from operating activities (in thousands)

Net (loss) income $ ( 107,607 ) $ ( 79,044 ) $ 235,965

Adjustments to reconcile net (loss) income to cash provided by (used in) operating activities:

Equity based compensation (Note 17) — — 17,487

Net loss $ ( 101,430 ) $ ( 107,607 ) $ ( 79,044 )

Adjustments to reconcile net loss to cash (used in) provided by operating activities:

Stock based compensation 1,191 1,952 4,177

2 unchanged sentences

Amortization of debt origination costs 665 831 326

Bad debt expense (recoveries) (Note 2) 21,958 1,434 ( 14,578 )

Bad debt expense (Note 2) 41,662 21,958 1,434

(Gain) loss on disposal of property and equipment ( 5,435 ) ( 1,379 ) 55

4 unchanged sentences

Other 280 ( 143 ) ( 986 )

Changes in assets and liabilities, net of acquisitions of businesses:

Changes in assets and liabilities:

Accounts receivable, net ( 55,898 ) ( 32,621 ) ( 27,006 )

3 unchanged sentences

Accounts payable ( 2,982 ) 2,004 ( 25,812 )

Payables to related parties ( 522 ) 156 ( 1,008 )

Accrued expenses and other liabilities 12,380 3,198 ( 18,800 )

Income taxes payable 8,658 648 ( 71,499 )

Net cash provided by (used in) operating activities 6,967 ( 95,318 ) 386,668

Net cash (used in) provided by operating activities ( 18,865 ) 6,967 ( 95,318 )

Cash flows from investing activities:

1 unchanged sentence

Purchases of property and equipment from related parties — ( 76 ) ( 344 )

Business acquisitions, net — — ( 20,824 )

Contributions to equity investee — ( 490 ) ( 680 )

1 unchanged sentence

Purchase of short-term investment — ( 1,750 ) —

Net cash used in investing activities ( 2,295 ) ( 33,224 ) ( 211,955 )

Net cash provided by (used in) investing activities 5,507 ( 2,295 ) ( 33,224 )

Cash flows from financing activities:

6 unchanged sentences

Debt issuance costs — ( 1,051 ) —

Net cash provided by (used in) financing activities 4,266 66,702 ( 112,592 )

Net cash provided by financing activities 8,428 4,266 66,702

Effect of foreign exchange rate on cash 7 12 87

Net increase (decrease) in cash and cash equivalents 8,950 ( 61,753 ) 61,988

Net (decrease) increase in cash and cash equivalents ( 4,923 ) 8,950 ( 61,753 )

Cash and cash equivalents at beginning of period 14,822 5,872 67,625

7 unchanged sentences

Cash paid for interest $ 4,827 $ 4,729 $ 4,741

Cash (recovered) paid for income taxes $ ( 617 ) $ 110,848 $ 32,757

Cash paid (recovered) for income taxes $ 829 $ ( 617 ) $ 110,848

Supplemental disclosure of non-cash transactions:

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Mammoth Energy Services, Inc.

(“Mammoth Inc.” or the “Company”), together with its subsidiaries, is an integrated, growth-oriented company serving both the oil and gas and the electric utility industries in North America and US territories.

Mammoth Inc.'s infrastructure division provides construction, upgrade, maintenance and repair services to various public and private owned utilities.

(“Mammoth Inc.”, “Mammoth” or the “Company”), together with its subsidiaries, is an integrated, growth-oriented company serving both the oil and gas and the electric utility industries in North America and US territories.

Mammoth Inc.’s infrastructure division provides engineering, design, construction, upgrade, maintenance and repair services to various public and private owned utilities.

Its oilfield services division provides a diversified set of services to the exploration and production industry including well completion, natural sand and proppant and drilling services.

Additionally, the Company provides aviation services, coil tubing services, equipment rentals, crude oil hauling, full service transportation, remote accommodation services, equipment manufacturing and infrastructure engineering and design services.

Additionally, the Company provides aviation services, equipment rentals, crude oil hauling, remote accommodation services and equipment manufacturing.

The Company was incorporated in Delaware in June 2016.

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Bison Trucking LLC (“Bison Trucking”), formed August 9, 2013;

White Wing Tubular Services LLC (“White Wing”), formed July 29, 2014;

Anaconda Rentals LLC, formerly known as White Wing Tubular Services LLC, formed July 29, 2014;

Barracuda Logistics LLC (“Barracuda”), formed October 24, 2014;

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Dire Wolf Energy Services LLC (“Dire Wolf”), formed January 8, 2018;

Cobra Logistics Holdings LLC (“Cobra Logistics”), formed February 13, 2018;

Black Mamba Energy LLC (“Black Mamba”), formed March 28, 2018;

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Ivory Freight Solutions LLC (“Ivory Freight”), formed July 26, 2018;

Cobra Caribbean LLC (“Cobra Caribbean”), formed October 3, 2018;

Python Equipment LLC (“Python”), formed December 5, 2018;

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Leopard Aviation LLC (“Leopard”), formed April 29, 2019;

Predator Aviation LLC (“Predator”), formed April 19, 2019;

Predator Aviation LLC (“Predator Aviation”), formed April 19, 2019;

Anaconda Manufacturing LLC (“Anaconda”), formed July 31, 2019;

and Aquawolf LLC (“Aquawolf”), formed September 25, 2019.

At December 31, 2020 and December 31, 2019, Wexford and Gulfport beneficially owned the following shares of outstanding common stock of Mammoth Inc.:

December 31, 2020 December 31, 2019

Share Count % Ownership Share Count % Ownership

Wexford 22,055,766 48.2 % 22,045,273 48.9 %

Gulfport 9,829,548 21.5 % 9,829,548 21.8 %

Outstanding shares owned by related parties 31,885,314 69.7 % 31,874,821 70.7 %

Total outstanding 45,769,283 100.0 % 45,108,545 100.0 %

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company's infrastructure services include construction, upgrade, maintenance and repair services to the electrical infrastructure industry as well as repair and restoration services in response to storms and other disasters.

Aquawolf LLC (“Aquawolf”), formed September 25, 2019;

and Falcon Fiber Solutions LLC (“Falcon”), formed March 3, 2021.

The Company’s infrastructure services include engineering, design, construction, upgrade, maintenance and repair services to the electrical infrastructure industry as well as repair and restoration services in response to storms and other disasters.

The Company’s well completion services include equipment and personnel used in connection with the completion and early production of oil and natural gas wells.

The Company’s natural sand proppant services include the distribution and production of natural sand proppant that is used primarily for hydraulic fracturing in the oil and gas industry.

The Company's drilling services include drilling rigs and directional tools for both vertical and horizontal drilling of oil and natural gas wells.

The Company also provides other services, including aviation, coil tubing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services.

The Company’s drilling services provide drilling rigs and directional tools for both vertical and horizontal drilling of oil and natural gas wells.

The Company also provides other services, including aviation, equipment rentals, remote accommodations and equipment manufacturing.

Substantially all of the Company’s operations are in North America.

During certain of the periods presented in this report, the Company provided its infrastructure services primarily in the northeast, southwest and midwest portions of the United States and in Puerto Rico.

The Company’s infrastructure business depends on infrastructure spending on maintenance, upgrade, expansion and repair and restoration.

During the periods presented in this report, the Company provided its infrastructure services primarily in the northeastern, southwestern, midwestern and western portions of the United States and in Puerto Rico.

The Company’s infrastructure business depends on infrastructure

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

spending on maintenance, upgrade, expansion and repair and restoration.

Any prolonged decrease in spending by electric utility companies, delays or reductions in government appropriations or the failure of customers to pay their receivables could have a material adverse effect on the Company’s results of operations and financial condition.

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Any prolonged increase or decrease in oil and natural gas prices affects the levels of exploration, development and production activity, as well as the entire health of the oil and natural gas industry.

Continuation of or further decreases in the commodity prices for oil and natural gas would have a material effect on the Company’s results of operations and financial condition.

Continuation of or further decreases in the commodity prices for oil and natural gas would have a material adverse effect on the Company’s results of operations and financial condition.

Summary of Significant Accounting Policies

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Actual results could differ from those estimates.

Significant estimates include, but are not limited to, the Company's sand reserves and their impact on calculating depletion expense, allowance for doubtful accounts, asset retirement obligations, reserves for self-insurance, depreciation and amortization of property and equipment, business combination valuations, amortization of intangible assets and future cash flows, fair values used to assess recoverability and impairment of long-lived assets, including goodwill, estimates of income taxes and the estimated effects of litigation and other contingencies.

Significant estimates include, but are not limited to, the Company's sand reserves and their impact on calculating depletion expense, allowance for doubtful accounts, asset retirement obligations, reserves for self-insurance, depreciation and amortization of property and equipment, amortization of intangible assets and future cash flows, fair values used to assess recoverability and impairment of long-lived assets, including goodwill, estimates of income taxes and the estimated effects of litigation and other contingencies.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation.

The Company adopted a new accounting policy related to the classification of certain legal expenses.

For matters related to ongoing operations, the Company continues to present legal expense as selling, general and administrative.

For matters determined to be unrelated to ongoing operations, the Company classifies the legal expenses according to the nature of the underlying matter.

The Company believes that this new accounting policy will more accurately present legal expenses on its consolidated statement of comprehensive loss.

The adoption of this policy resulted in the recognition of approximately $ 5.4 million of legal expenses related to a certain legal settlement, which is included in Other, net on the consolidated statement of comprehensive loss for the year ended December 31, 2021.

See Note 19 for additional information.

Cash and Cash Equivalents and Short-Term Investment

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At December 31, 2021, we had $ 1.5 million, in Canadian dollars, of cash in Canadian accounts.

Cash balances from time to time may exceed the

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

insured amounts;

Cash balances from time to time may exceed the insured amounts;

however, the Company has not experienced any losses in such accounts and does not believe it is exposed to any significant credit risks on such accounts.

The Company’s short-term investment consists of a certificate of deposit with a maturity over 90 days.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts Receivable

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Customer balances are generally considered delinquent if unpaid by the 30th day following the invoice date and credit privileges may be revoked if balances remain unpaid.

Interest on delinquent trade accounts receivable is recognized in other income when chargeable and collectability is reasonably assured.

During certain of the periods presented, the Company provided infrastructure services in Puerto Rico under master services agreements entered into by Cobra, one of the Company's subsidiaries, with the Puerto Rico Electric Power Authority (“PREPA”) to perform repairs to PREPA’s electrical grid as a result of Hurricane Maria.

During the years ended December 31, 2020 and 2019, the Company charged interest on delinquent trade accounts receivable pursuant to the terms of its agreements with PREPA totaling $ 32.2 million and $ 42.0 million, respectively.

These amounts are included in other, net on the consolidated statement of comprehensive (loss) income.

Interest on delinquent trade accounts receivable is recognized in other, net on the consolidated statement of comprehensive loss when chargeable and collectability is reasonably assured.

During the period October 2017 through March 2019, the Company provided infrastructure services in Puerto Rico under master services agreements entered into by Cobra, one of the Company’s subsidiaries, with the Puerto Rico Electric Power Authority (“PREPA”) to perform repairs to PREPA’s electrical grid as a result of Hurricane Maria.

During the years ended December 31, 2021, 2020 and 2019, the Company charged interest on delinquent trade accounts receivable pursuant to the terms of its agreements with PREPA totaling $ 36.6 million, $ 32.2 million and $ 42.0 million, respectively.

These amounts are included in other, net on the consolidated statement of comprehensive loss.

Included in “accounts receivable, net” on the condensed consolidated balance sheets as of December 31, 2021 and 2020 were interest charges of $ 110.8 million and $ 74.3 million, respectively.

The Company's subsidiaries Stingray Pressure Pumping and Muskie are party to a pressure pumping and a sand supply contract with Gulfport.

On November 13, 2020, Gulfport filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code.

During the year ended December 31, 2020, the Company recorded revenue of $ 50.0 million and interest of $ 1.9 million on delinquent trade accounts receivable pursuant to the terms of those contracts.

Allowance for Doubtful Accounts

The Company regularly reviews receivables and provides for expected losses through an allowance for doubtful accounts.

In evaluating the level of established reserves, the Company makes judgments regarding its customers’ ability to make required payments, payment history, economic events and other factors.

In evaluating the level of established reserves, the Company makes judgments regarding its customers’ ability to make required payments, economic events and other factors.

As the financial condition of customers changes, circumstances develop, or additional information becomes available, adjustments to the allowance for doubtful accounts may be required.

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If it is determined that previously reserved amounts are collectible, the Company would decrease the allowance through a credit to income in the period in which that determination is made.

Uncollectible accounts receivable are periodically charged against the allowance for doubtful accounts once a final determination is made regarding their uncollectability.

Uncollectible accounts receivable are periodically charged against the allowance for doubtful accounts once a final determination is made regarding their collectability.

MAMMOTH ENERGY SERVICES, INC.

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Additions charged to bad debt expense 22,705

Additions charged to other selling, general and administrative expense 3,950

Additions charged to other, net - related parties 1,427

Recoveries of receivables previously charged to bad debt expense ( 747 )

2 unchanged sentences

Additions charged to bad debt expense 41,873

Additions charged to revenue 27,071

Additions charged to other selling, general and administrative expense 273

Additions charged to other, net - related parties 1,427

Additions charged to other income (expense), net - related parties 515

Additions charged to other income (expense), net 1,474

Recoveries of receivables previously charged to bad debt expense ( 211 )

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Balance, December 31, 2021 $ 18,085

During the year ended December 31, 2018, the Company received payment from PREPA of $ 16.0 million for amounts reserved at December 31, 2017.

As a result, the Company reversed the 2017 additions to the allowance for doubtful accounts from PREPA in 2018.

On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

As of November 13, 2020, Gulfport owed the Company approximately $ 46.9 million, which included interest charges of $ 3.3 million and attorneys’ fees of $ 1.8 million.

FASB ASC 326 , Financial Instruments-Credit Losses, requires companies to reflect its current estimate of all expected credit losses.

As a result, the Company recorded reserves on its pre-petition receivables due from Gulfport for products and services, interest and attorneys’ fees of $ 19.4 million, $ 1.4 million and $ 1.8 million, respectively, during the year ended December 31, 2020.

The Company had accounts receivable due from Gulfport totaling $ 28.4 million as of December 31, 2020, which is included in “receivables from related parties, net” on the condensed balance sheets.

This balance includes pre-petition receivables of $ 24.3 million and post-petition receivables of $ 4.1 million.

Additionally, the Company has made specific reserves consistent with Company policy which resulted in additions to allowance for doubtful accounts totaling $ 3.3 million, $ 1.8 million and $ 1.5 million, respectively, for the years ended December 31, 2020, 2019 and 2018.

The Company has made specific reserves consistent with Company policy which resulted in additions to allowance for doubtful accounts totaling $ 0.7 million, $ 3.3 million and $ 1.8 million, respectively, for the years ended December 31, 2021, 2020 and 2019.

These additions were charged to bad debt expense based on the factors described above.

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The Company will continue to pursue collection until such time as final determination is made consistent with Company policy.

As of December 31, 2020, PREPA owed the Company approximately $ 227.0 million for services performed, excluding $ 74.3 million of interest charged on these delinquent balances as of December 31, 2020.

The Company believes these receivables are collectible.

PREPA, however, is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S.

The Company’s subsidiaries Stingray Pressure Pumping and Muskie were party to a pressure pumping contract and a sand supply contract, respectively, with Gulfport Energy Corporation (“Gulfport”).

On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

Following is a roll forward of the allowance for doubtful accounts specifically related to Gulfport (in thousands):

Balance, January 1, 2020 —

Additions charged to bad debt expense 19,395

Additions charged to other selling, general and administrative expense 1,759

Additions charged to other, net - related parties 1,427

Balance, December 31, 2020 22,581

Additions charged to bad debt expense 41,196

Additions charged to revenue 27,070

Additions charged to other income (expense), net - related parties 1,842

Deductions for uncollectible receivables written off ( 80,975 )

Balance, December 31, 2021 $ 11,714

The Company had net accounts receivable due from Gulfport totaling $ 0.1 million as of December 31, 2021, which is included in “accounts receivable, net” on the consolidated balance sheets.

See Notes 3 and 19 for additional information.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021 and 2020, PREPA owed the Company $ 337.8 million and $ 301.2 million, respectively, which includes interest charged on delinquent balances.

PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S.

District Court for the District of Puerto Rico.

As a result, PREPA's ability to meet its payment obligations is largely dependent upon funding from the FEMA or other sources.

As a result, PREPA’s ability to meet its payment obligations is largely dependent upon funding from the Federal Emergency Management Agency (“FEMA”) or other sources.

On September 30, 2019, Cobra filed a motion with the U.S.

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This emergency motion was denied on June 3, 2020 and the Court extended the stay of our motion.

On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status motion by June 7, 2021.

In the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to the Company or (iii) otherwise does not pay amounts owed to the Company for services performed, the receivable may not be collectible.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status report by June 7, 2021.

On April 6, 2021, Cobra filed a motion to lift the stay order.

Following this filing, PREPA initiated discussion with Cobra, which resulted in PREPA and Cobra filing a joint motion to adjourn all deadlines relative to the April 6, 2021 motion until the June 16, 2021 omnibus hearing as a result of PREPA’s understanding that FEMA would be releasing a report in the near future relating to the emergency master service agreement between PREPA and Cobra that was executed on October 19, 2017.

The joint motion was granted by the Court on April 14, 2021.

On May 26, 2021, FEMA issued a Determination Memorandum related to the first contract between Cobra and PREPA in which, among other things, FEMA raised two contract compliance issues and, as a result, concluded that approximately $ 47 million in costs were not authorized costs under the contract.

On June 14, 2021, the Court issued an order adjourning Cobra’s motion to lift the stay order to a hearing on August 4, 2021 and directing Cobra and PREPA to meet and confer in good faith concerning, among other things, (i) the May 26, 2021 Determination Memorandum issued by FEMA and (ii) whether and when a second determination memorandum is expected.

The parties were further directed to file an additional status report, which was filed on July 20, 2021.

On July 23, 2021, with the aid of Mammoth, PREPA filed an appeal of the entire $ 47 million that FEMA de-obligated in the May 26, 2021 Determination Memorandum.

The appeal is currently pending.

On August 4, 2021, the Court denied Cobra ’ s April 6, 2021 motion to lift the stay order, extended the stay of our motion seeking recovery of amounts owed to Cobra and directed the parties to file an additional joint status report, which was filed on January 22, 2022.

On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.

The Company believes all amounts charged to PREPA, including interest charged on delinquent accounts receivable, were in accordance with the terms of the contracts.

Further, there have been multiple reviews prepared by or on behalf of FEMA that have concluded that the amounts Cobra charged PREPA were reasonable, that PREPA adhered to Puerto Rican legal statutes regarding emergency situations, and that PREPA engaged in a reasonable procurement process.

As noted above, in May 2021 FEMA raised two contract compliance issues and concluded that $ 47 million in costs were not eligible under the contract.

PREPA, however, has filed an appeal of the entire $ 47 million, which is currently pending.

The Company believes these receivables are collectible and for the reasons previously described as well as other factors, no allowance was deemed necessary at December 31, 2021 or 2020.

However, in the event PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations to Cobra under the contracts, (ii) obtains the necessary funds but refuses to pay the amounts owed to the Company or (iii) otherwise does not pay amounts owed to the Company for services performed, the receivable may not be collectible.

Inventory consists of raw sand and processed sand available for sale, raw materials, chemicals and other products sold as a bi-product of completion and production operations and supplies used in performing services.

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The strings are used in providing specialized services to customers who are primarily operators of oil or gas wells and are used at various rates based on factors such as well conditions (i.e.

pressure and friction), vertical and horizontal length of the well, running speed of the string in the well and total running feet accumulated to the string.

pressure and friction), vertical and horizontal length of the well, running speed of the

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

string in the well and total running feet accumulated to the string.

The Company obtains usage information from data acquisition software and other established assessment methods and attempts to amortize the strings over their estimated useful life.

In no event will a string be amortized over a period longer than 12 months.

Amortization of coil strings is included in services cost of revenue in the consolidated statements of comprehensive (loss) income and totaled $ 0.4 million, $ 1.6 million and $ 2.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Amortization of coil strings is included in services cost of revenue in the consolidated statements of comprehensive loss and totaled $ 0.4 million and $ 1.6 million for the years ended December 31, 2020 and 2019, respectively.

We did no t recognize any amortization of coil strings for the year ended December 31, 2021.

See Note 4 for additional disclosure related to inventory.

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See Note 6 for additional disclosure related to impairment of long-lived assets.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired.

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Investments are accounted for under the equity method in circumstances where the Company has the ability to exercise significant influence over the operating and investing policies of the investee, but does not have control.

Under the equity method, the Company recognizes its share of the investee's earnings in its consolidated statements of comprehensive (loss) income.

Under the equity method, the Company recognizes its share of the investee’s earnings in its consolidated statements of comprehensive loss.

Investments are evaluated for impairment and a charge to earnings is recognized when any identified impairment is determined to be other than temporary.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset Retirement Obligations

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Balance as of beginning of period $ 4,746 $ 4,241

Additions 372 952

Additions and revisions of prior estimates ( 385 ) 372

Accretion expense 146 115

Liabilities settled ( 782 ) —

Foreign currency translation adjustment ( 5 ) 18

Asset retirement obligation as of end of period $ 3,720 $ 4,746

Business Combinations

The Company accounts for its business acquisitions under the acquisition method of accounting as indicated in FASB ASC 805, Business Combinations , which requires the acquiring entity in a business combination to recognize the fair value of all assets acquired, liabilities assumed and any noncontrolling interest in the acquiree and establishes the acquisition date as the fair value measurement point.

Accordingly, the Company recognizes assets acquired and liabilities assumed in business combinations, including contingent assets and liabilities and noncontrolling interest in the acquiree, based on fair value estimates as of the date of acquisition.

In accordance with FASB ASC 805, the Company recognizes and measures goodwill, if any, as of the acquisition date, as the excess of the fair value of the consideration paid over the fair value of the identified net assets acquired.

When the Company acquires a business from an entity under common control, whereby the companies are ultimately controlled by the same party or parties both before and after the transaction, it is treated for accounting purposes in a manner similar to the pooling of interest method of accounting.

The assets and liabilities are recorded at the transferring entity’s historical cost instead of reflecting the fair market value of assets and liabilities.

Amortizable Intangible Assets

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The Company’s financial instruments consist of cash and cash equivalents, short-term investments, trade receivables, trade payables, amounts receivable or payable to related parties and long-term debt.

The carrying amount of cash and cash

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

equivalents, trade receivables, trade payables and receivables and payables from related parties approximates fair value because of the short-term nature of the instruments.

The carrying amount of cash and cash equivalents, trade receivables, trade payables and receivables and payables from related parties approximates fair value because of the short-term nature of the instruments.

The fair value of long-term debt approximates it s carrying value because the cost of borrowing fluctuates based upon market conditions.

Revenue Recognition

On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 and its related amendments (collectively, “ASC 606”) using the modified retrospective method applied to contracts which were not completed as of January 1, 2018.

See Note 3 for additional discussion of the Company's revenue.

The timing of revenue recognition may differ from contract billing or payment schedules, resulting in revenues that have been earned but not billed (“unbilled revenue”) or amounts that have been billed, but not earned (“deferred revenue”).

The Company had $ 22.0 million and $ 32.3 million, respectively, of unbilled revenue included in accounts receivable, net in the consolidated balance sheets at December 31, 2021 and 2020.

The Company had $ 1.5 million and $ 1.3 million, respectively, of unbilled revenue included in receivables from related parties, net in the consolidated balance sheets at December 31, 2020 and 2019.

The Company had a nominal amount and $ 1.5 million, respectively, of unbilled revenue included in receivables from related parties, net in the consolidated balance sheets at December 31, 2021 and 2020.

The Company had $ 3.2 million and $ 8.3 million, respectively, of deferred revenue included in accrued expenses and other current liabilities in the consolidated balance sheets at December 31, 2021 and 2020.

Earnings (Loss) per Share

Earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of outstanding shares.

Loss per Share

Loss per share is computed by dividing net loss by the weighted average number of outstanding shares.

Equity-based Compensation

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Amounts are recognized in cost of revenue and selling, general and administrative expenses.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company’s operations are included in a consolidated federal income tax return and other state returns.

8 unchanged sentences

The Company evaluates tax positions taken or expected to be taken in preparation of its tax returns and disallows the recognition of tax positions that do not meet a “more likely than not” threshold of being sustained upon examination by the taxing authorities.

During the years ended December 31, 2020 and 2019, no uncertain tax positions existed.

Penalties and interest, if any, are recognized in selling, general and administrative expense and interest expense, respectively.

The Company recorded an unrecognized tax benefit of $ 1.0 million during the year ended December 31, 2021 related to the 2020 tax year returns in Puerto Rico.

No uncertain tax positions existed at December 31, 2020.

It is the Company’s policy to recognize interest and applicable penalties related to uncertain tax positions in income tax expense.

Litigation and Contingencies

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accruals for litigation and contingencies are reflected in the consolidated financial statements based on management’s assessment, including advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings and/or the expected resolution of contingencies.

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For foreign operations, assets and liabilities are translated at the period-end exchange rate and income statement items are translated at the average exchange rate for the period.

Resulting translation adjustments are recorded within accumulated other comprehensive income (loss).

Resulting translation adjustments are recorded within accumulated other comprehensive loss.

Assets and liabilities denominated in foreign currencies, if any, are re-measured at the balance sheet date.

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As of December 31, 2021 and 2020, there were no probable environmental matters.

Other Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) included certain changes in equity that are excluded from net income (loss).

Specifically, cumulative foreign currency translation adjustments are included in accumulated other comprehensive income (loss).

Other Comprehensive Loss

Comprehensive loss consists of net loss and other comprehensive loss.

Other comprehensive loss included certain changes in equity that are excluded from net loss.

Specifically, cumulative foreign currency translation adjustments are included in accumulated other comprehensive loss.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of Credit Risk and Significant Customers

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Accounts receivable for Customer A also includes receivables due for interest charged on delinquent accounts receivable.

Customer B is a related party customer.

Customer B was a related-party customer until June 29, 2021.

Revenues earned from this customer prior to June 29, 2021 are included in services revenue - related parties and product revenue - related parties on the consolidated statements of comprehensive loss.

The related accounts receivable are included in accounts receivable, net on the consolidated balance sheet at December 31, 2021 and receivables due from related parties, net at December 31, 2020.

Revenues and the related accounts receivable balances earned from Customer B were derived from the Company’s well completion services segment, natural sand proppant services segment and other businesses.

Accounts receivable for Customer B also includes receivables due for interest charged on delinquent accounts receivable.

Accounts receivable for Customer B also included receivables due for interest charged on delinquent accounts receivable.

Customer C is a third-party customer.

Revenues and the related accounts receivable balances earned from Customer C were derived from the Company’s infrastructure services segment.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

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It did not have a material impact on the Company’s consolidated financial statements.

The Company's primary revenue streams include infrastructure services, well completion services, natural sand proppant services, drilling services and other services, which includes aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, full service transportations, crude oil hauling, remote accommodations, equipment manufacturing and infrastructure engineering and design services.

The Company’s primary revenue streams include infrastructure services, well completion services, natural sand proppant services, drilling services and other services, which includes coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, full service transportation, crude oil hauling, remote accommodations and equipment manufacturing.

See Note 20 for the Company’s revenue disaggregated by type.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain of the Company’s customer contracts include provisions entitling the Company to a termination penalty when the customer invokes its contractual right to terminate prior to the contract’s nominal end date.

The termination penalties in the customer contracts vary, but are generally considered substantive for accounting purposes and create enforceable rights and obligations throughout the stated duration of the contract.

The Company accounts for a contract cancellation as a contract modification in the period in which the customer invokes the termination provision.

The determination of the contract termination penalty is based on the terms stated in the related customer agreement.

As of the modification date, the Company updates its estimate of the transaction price using the expected value method, subject to constraints, and recognizes the amount over the remaining performance period.

Infrastructure Services

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Generally, revenue is recognized over time upon the completion of each segment of work based upon a completed field ticket, which includes the charges for the services performed, mobilization of the equipment to the location and personnel.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to a contract with Gulfport, Stingray Pressure Pumping has agreed to provide Gulfport with use of up to two pressure pumping fleets for the period covered by the contract.

Under this agreement, performance obligations are satisfied as services are rendered based on the passage of time rather than the completion of each segment of work.

Stingray Pressure Pumping has the right to receive consideration from this customer even if circumstances prevent us from performing work.

Pursuant to a contract with Gulfport, Stingray Pressure Pumping agreed to provide Gulfport with use of up to two pressure pumping fleets for the period covered by the contract.

Under this agreement, performance obligations were satisfied as services were rendered based on the passage of time rather than the completion of each segment of work.

Stingray Pressure Pumping had the right to receive consideration from this customer even if circumstances prevent us from performing work.

All consideration owed to Stingray Pressure Pumping for services performed during the contractual period is fixed and the right to receive it is unconditional.

Gulfport has filed a legal action in Delaware state court seeking the termination of this contract and monetary damages.

On December 28, 2019, Gulfport filed a legal action in Delaware state court seeking the termination of this contract and monetary damages.

Further, on November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

Gulfport may take action in its chapter 11 proceeding to terminate its agreement with us and/or seek to reduce our claims for services and damages to which we may be entitled.

During the year ended December 31, 2020, Stingray Pressure Pumping generated $ 38.5 million in pre-petition revenues and $ 3.9 million in post-petition revenues under this contract with Gulfport.

As of November 13, 2020, Gulfport owed Stingray Pressure Pumping approximately $ 43.4 million, which included interest charges of $ 3.2 million and attorneys’ fees of $ 1.7 million.

FASB ASC 326 , Financial Instruments-Credit Losses, requires companies to reflect its current estimate of all expected credit losses.

As a result, Stingray Pressure Pumping recorded reserves on its pre-petition receivables due from Gulfport for services, interest and attorneys’ fees of $ 16.2 million, $ 1.4 million and $ 1.7 million, respectively, during the year ended December 31, 2020.

On March 22, 2021, Gulfport listed the Stingray Pressure Pumping contract on its master rejection schedule filed with the bankruptcy court.

The Company determined that these factors changed the scope of the contract, accelerated the duration of, and otherwise changed the rights and obligations of each party to the contract.

As a result, the Company accounted for this as a contract modification during the three months ended March 31, 2021.

Stingray Pressure Pumping used the expected value method to estimate unliquidated damages totaling $ 37.9 million, which resulted in the recognition of net revenue totaling $ 14.8 million and bad debt expense of $ 2.9 million on previously recognized revenue during the three months ended March 31, 2021.

On September 21, 2021, the Company and Gulfport reached a settlement under which all litigation relating to the Stingray Pressure Pumping contract will be terminated.

Stingray Pressure Pumping released all claims against Gulfport and its subsidiaries with respect to Gulfport’s bankruptcy proceedings and each of the parties released all claims they had against the others with respect to the litigation matters discussed in Note 19.

As a result of this settlement agreement, during the three months ended September 30, 2021, the Company wrote off its remaining receivable related to the Stingray Pressure Pumping claim resulting in bad debt expense and other expense of $ 31.0 million and $ 1.3 million, respectively.

Gulfport was a related party until June 29, 2021.

On June 29, 2021, pursuant to the terms of its plan of reorganization, all of the Company’s shares that Gulfport owned were transferred to a trust for the benefit of certain of Gulfport’s creditors.

The revenue recognized related to this agreement is included in “services revenue - related parties” in the accompanying consolidated statement of comprehensive loss and the related accounts receivable is included in “receivables due from related parties” as of December 31, 2020.

See Notes 12 and 19 below.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additional revenue is generated through labor charges and the sale of consumable supplies that are incidental to the service being performed.

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In September 2020, Muskie filed a lawsuit against Gulfport to recover delinquent payments due under this agreement.

Further, on November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

Gulfport may take action in its chapter 11 proceeding to terminate its agreement with us and/or seek to reduce our claims

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

for services and damages that we may be entitled to.

During the year ended December 31, 2020, Muskie generated $ 6.5 million in pre-petition revenues and $ 1.0 million in post-petition revenues under this contract with Gulfport.

As of November 13, 2020, Gulfport owed Muskie approximately $ 3.4 million, which included interest charges of $ 0.04 million and attorneys’ fees of $ 0.02 million.

FASB ASC 326 , Financial Instruments-Credit Losses, requires companies to reflect its current estimate of all expected credit losses.

As a result, Muskie recorded reserves on its pre-petition receivables due from Gulfport for services, interest and attorneys’ fees of $ 3.1 million, $ 0.04 million and $ 0.02 million, respectively, during the year ended December 31, 2020.

On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

On March 22, 2021, Gulfport listed the Muskie contract on its master rejection schedule filed with the bankruptcy court.

The Company determined that these factors changed the scope of the contract, accelerated the duration of, and otherwise changed the rights and obligations of each party to the contract.

As a result, the Company accounted for this as a contract modification during the three months ended March 31, 2021.

Muskie used the expected value method to estimate unliquidated damages totaling $ 8.5 million, which resulted in the recognition of net revenue totaling $ 2.1 million and bad debt expense of $ 1.0 million on previously recognized revenue during the three months ended March 31, 2021.

On September 21, 2021, the Company and Gulfport reached a settlement under which all litigation relating to the Muskie contract was terminated, each of the parties released all claims they had against the others with respect to the litigation matters discussed in Note 19 and Muskie’s contract claim against Gulfport was allowed under Gulfport’s plan of reorganization in the amount of $ 3.1 million.

As a result of this settlement agreement, Muskie recognized bad debt expense of $ 0.2 million during the third quarter of 2021.

As of December 31, 2021, Muskie had net accounts receivable due from Gulfport totaling $ 0.1 million, which includes a nominal amount of interest on delinquent accounts receivable.

Gulfport was a related party until June 29, 2021.

The revenue recognized related to this agreement is included in “product revenue - related parties” in the accompanying consolidated statement of comprehensive loss and the related accounts receivable is included in “accounts receivable, net” in the consolidated balance sheets as of December 31, 2021 and “receivables due from related parties” as of December 31, 2020.

See Notes 12 and 19 below.

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Performance obligations are satisfied over time as the work progresses based on the measure of output.

Mobilization revenue and costs were recognized over the days of actual drilling.

Mobilization revenue and costs were

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recognized over the days of actual drilling.

As a result of market conditions, the Company temporarily shut down its contract land drilling operations beginning in December 2019 and its rig moving operations beginning in April 2020.

Other Services

During the periods presented, the Company also provided aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations, equipment manufacturing and infrastructure engineering and design services, which are reported under other services.

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019 and its coil tubing and full service transportation operations beginning in July 2020.

During the periods presented, the Company also provided aviation, coil tubing, pressure control, flowback, cementing, acidizing, equipment rentals, crude oil hauling, full service transportation, remote accommodations and equipment manufacturing, which are reported under other services.

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in July 2019, its coil tubing, pressure control and full service transportation operations beginning in July 2020 and its crude oil hauling operations beginning in July 2021.

The Company’s other services are typically provided based upon a purchase order, contract or on a spot market basis.

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Increase for deferral of customer prepayments 675

Deduction of shortfall payments due to contract renegotiations ( 1,350 )

Balance, December 31, 2019 7,244

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Increase for deferral of customer prepayments 648

Deduction of shortfall payments due to contract renegotiations ( 1,350 )

Balance, December 31, 2020 8,281

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The Company did no t have any contract assets as of December 31, 2021, December 31, 2020 or December 31, 2019.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Performance Obligations

Revenue recognized in the current period from performance obligations satisfied in previous periods was a nominal amount for the year ended December 31, 2020.

Revenue recognized in the current period from performance obligations satisfied in previous periods was a nominal amount for the years ended December 31, 2021, 2020 and 2019.

As of December 31, 2021, the Company had unsatisfied performance obligations totaling $ 1.7 million, which will be recognized over the next 6 months.

Acquisition of Air Rescue Systems and Brim Equipment Assets

On December 21, 2018, Cobra Aviation, a variable interest entity of the Company, completed a series of transactions that provided for an expansion of its aviation service business.

These transactions included (i) the acquisition of all outstanding equity interests in ARS, (ii) the purchase of two commercial helicopters, spare parts, support equipment and aircraft documents from Brim Equipment Leasing, Inc.

(“Brim Equipment”) (the “Brim Equipment Assets”) and (iii) the formation of a joint venture between Cobra Aviation and Wexford Partners Investment Co.

LLC (“Wexford Investment”), a related party, under the name of Brim Acquisitions LLC (“Brim Acquisitions”), which acquired all outstanding equity interest in Brim Equipment.

Cobra Aviation owns a 49 % economic interest and Wexford Investment owns a 51 % economic interest in Brim Acquisitions, and each member contributed its pro rata portion of Brim Acquisitions initial capital of $ 2.0 million.

The acquisition of ARS qualifies under FASB ASC 805, Business Combinations , as a business combination.

The purchase of the Brim Equipment Assets was negotiated and funded as part of the acquisition.

Therefore, the purchase of the Brim Equipment Assets also qualifies as a business combination under ASC 805.

Cobra Aviation is able to exercise significant influence over Brim Acquisitions, but is a minority owner and does not have controlling financial interest.

As a result, Cobra Aviation's investment in Brim Acquisitions is accounted for as an equity method investment under FASB ASC 323, Investments-Equity Method and Joint Ventures .

See Note 9 for additional information on our investment in Brim Acquisitions.

Total consideration paid for ARS and the Brim Equipment Assets was $ 2.7 million and $ 4.2 million, respectively.

The Company used cash on hand to fund the acquisitions.

The following table summarizes the fair value of ARS and the Brim Equipment Assets as of December 21, 2018 (in thousands):

ARS Brim Equipment Assets

Accounts receivable $ 146 $ —

Property, plant and equipment 1,702 1,990

Identifiable intangible assets - trade name (a)

Other non-current assets 5 —

Total assets acquired $ 2,667 $ 4,233

Trade name was valued using a “Relief-from-Royalty” method and will be amortized over 20 years.

Goodwill was the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Goodwill recorded in connection with the acquisition is attributable to assembled workforces and future profitability expected to arise from the acquired entity.

From the acquisition date through December 31, 2020, ARS and the Brim Equipment Assets provided the following activity (in thousands):

2020 2019 2018 2020 2019 2018

ARS Brim Equipment Assets

Revenues $ 1,054 $ 2,153 $ — $ 155 $ 2,616 $ —

( 359 ) ( 546 ) ( 25 ) ( 86 ) ( 1,056 ) —

Includes depreciation expense of $ 0.3 million, $ 0.3 million and $ 0.02 million, respectively, for ARS for 2020, 2019 and 2018 and $ 0.4 million and $ 0.4 million for the Brim Equipment Assets for 2020 and 2019.

The Company recognized $ 0.3 million of transaction related costs during the year ended December 31, 2018 related to

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

these acquisitions.

Acquisition of WTL Oil

On May 31, 2018, the Company completed its acquisition of WTL for total consideration of $ 6.1 million.

The Company used cash on hand and borrowings under its credit facility to fund the acquisition.

The acquisition of WTL expanded the Company's service offerings into the crude oil hauling business.

The following table summarizes the fair value of WTL as of May 31, 2018 (in thousands):

Property, plant and equipment $ 2,960

Identifiable intangible assets - customer relationships (a)

Identifiable intangible assets - trade name (a)

Total assets acquired $ 6,107

Identifiable intangible assets were measured using a combination of income approaches.

Trade names were valued using a “Relief-from-Royalty” method.

Non-contractual customer relationships were valued using a “Multi-period excess earnings” method.

Identifiable intangible assets will be amortized over 10 - 20 years.

Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.

From the acquisition date through December 31, 2020, WTL provided the following activity (in thousands):

2020 2019 2018

Revenues $ 1,897 $ 8,413 $ 7,511

( 5,486 ) ( 2,719 ) ( 149 )

Includes depreciation and amortization expense of $ 1.4 million, $ 2.2 million and $ 1.0 million, respectively, for 2020, 2019 and 2018, and impairment expense totaling $ 4.8 million for 2020.

The Company recognized $ 0.1 million of transaction related costs during the year ended December 31, 2018 related to this acquisition.

Acquisition of RTS Energy Services

On June 15, 2018, the Company completed its acquisition of RTS for total consideration of $ 8.1 million.

The Company used cash on hand and borrowings under its credit facility to fund the acquisition.

The acquisition of RTS expanded Mammoth Inc.'s cementing services into the Permian Basin and added acidizing to the Company's service offerings.

The following table summarizes the fair value of RTS as of June 15, 2018 (in thousands):

Inventory $ 180

Property, plant and equipment 7,787

Total assets acquired $ 8,100

Goodwill recorded in connection with the acquisition is attributable to the assembled workforce and future profitability expected to arise from the acquired entity.

From the acquisition date through December 31, 2020, RTS provided the following activity (in thousands):

2020 2019 2018

Revenues $ — $ 2,456 $ 6,682

( 2,018 ) ( 6,458 ) ( 3,210 )

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations beginning in July 2019.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Includes depreciation expense of $ 1.7 million, $ 2.3 million and $ 0.9 million, respectively, for 2020, 2019 and 2018.

The Company recognized $ 0.1 million of transaction related costs during the year ended December 31, 2018 related to this acquisition.

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations beginning in July 2019.

As a result, the Company impaired the balance of RTS's goodwill totaling $ 0.1 million.

In addition, the Company wrote-off obsolete inventory totaling $ 0.2 million.

Inventories consist of raw sand and processed sand available for sale, chemicals and other products sold as a bi-product of completion and production operations and supplies used in performing services.

Inventory is stated at the lower of cost or net realizable value on an average cost basis.

The Company assesses the valuation of its inventories based upon specific usage, future utility, obsolescence and other factors.

A summary of the Company’s inventories is shown below (in thousands):

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Total inventory $ 8,366 $ 12,020

As a result of market conditions, the Company temporarily shut down its cementing and acidizing operations as well as its flowback operations beginning in 2019.

As a result of this, the Company wrote-off obsolete inventory totaling $ 1.3 million during the year ended December 31, 2019.

Property, Plant and Equipment

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Total property, plant and equipment, net $ 176,586 $ 251,262

Included in Buildings at December 31, 2020 and 2019 are costs of $ 7.6 million and $ 6.7 million, respectively, related to assets under operating leases.

Included in Other property and equipment at December 31, 2020 and 2019 are costs of $ 6.0 million and $ 6.5 million, respectively, related to assets under operating leases.

Included in Buildings at each of December 31, 2021 and 2020 are costs of $ 7.6 million related to assets under operating leases.

Included in Other property and equipment at each of December 31, 2021 and 2020 are costs of $ 6.0 million related to assets under operating leases.

Deposits on equipment and equipment in process of assembly represents deposits placed with vendors for equipment that is in the process of assembly and purchased equipment that is being outfitted for its intended use.

The equipment is not yet placed in service.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Includes accumulated depreciation of $ 6.6 million and $ 5.0 million at December 31, 2021 and 2020, respectively, related to assets under operating leases.

Proceeds from customers for horizontal and directional drilling services equipment, damaged or lost down-hole are reflected in revenue with the carrying value of the related equipment charged to cost of service revenues and are reported as cash inflows from investing activities in the statement of cash flows.

For the years ended December 31, 2020, 2019 and 2018, proceeds from the sale of equipment damaged or lost down-hole were $ 0.7 million, a nominal amount and $ 1.0 million, respectively, and gain on sales of equipment damaged or lost down-hole were $ 0.7 million, a nominal amount and $ 0.9 million, respectively.

Proceeds from assets sold or disposed of as well as the carrying value of the related equipment are reflected in other, net on the consolidated statement of comprehensive (loss) income.

For the years ended December 31, 2020, 2019 and 2018, proceeds from the sale of equipment were $ 6.1 million, $ 3.2 million and $ 0.8 million, respectively, and gains (losses) from the sale or disposal of equipment were $ 0.7 million, ($ 0.1 ) million and ($ 1.8 ) million, respectively.

For the years ended December 31, 2021, 2020 and 2019, proceeds from the sale of equipment damaged or lost down-hole were $ 0.3 million, $ 0.7 million, and a nominal amount, respectively, and gain on sales of equipment damaged or lost down-hole were $ 0.3 million, $ 0.7 million, and a nominal amount, respectively.

Proceeds from assets sold or disposed of as well as the carrying value of the related equipment are reflected in other, net on the consolidated statement of comprehensive loss.

For the years ended December 31, 2021, 2020 and 2019, proceeds

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

from the sale of equipment were $ 11.2 million, $ 6.1 million and $ 3.2 million, respectively, and gains (losses) from the sale or disposal of equipment were $ 5.1 million, $ 0.7 million and ($ 0.1 ) million, respectively.

A summary of depreciation, depletion, amortization and accretion expense is shown below (in thousands):

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Impairment of Goodwill

Under GAAP, the Company has the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of one or more of its reporting units is greater than its carrying amount.

If, after assessing the totality of events or circumstances, the Company determines it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, there is no need to perform any further testing.

However, if the Company concludes otherwise, then it is required to perform a quantitative impairment test by calculating the fair value of the reporting unit and comparing the fair value with the carrying amount of the reporting unit.

If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded based on that difference.

The Company performed the qualitative assessment described above during the fourth quarter of 2021.

Based on this assessment, the Company concluded that it was more likely than not that the fair value of the Stingray Pressure Pumping, Silverback and Aviation reporting units was greater than their carrying value.

Accordingly, no further testing was required on these units.

Additionally, the Company concluded that the carrying value for its infrastructure reporting unit was greater than its fair value.

To determine fair value of the infrastructure reporting unit at December 31, 2021, the Company used the income approach.

The income approach estimates the fair value based on anticipated cash flows that are discounted using a weighted average cost of capital.

As a result, the Company impaired goodwill associated with 5 Star and Higher Power, resulting in a $ 0.9 million impairment charge for 2021.

Oil prices declined significantly in March 2020 as a result of geopolitical events that increased the supply of oil in the market as well as effects of the COVID-19 pandemic.

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The fair value was measured using an income approach.

During the year ended December 31, 2018, the Company moved Cementing's equipment from the Utica Shale to the Permian Basin.

As a result, the Company recognized impairment on Cementing's goodwill totaling $ 3.2 million.

The fair value was measured using an income approach.

MAMMOTH ENERGY SERVICES, INC.

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$ 1,212 $ 12,897 $ 7,358

Due to market conditions, the Company has temporarily shut down its crude oil hauling operations beginning in July 2021.

As a result, the Company recognized impairment of trade names totaling $ 0.5 million, which is included in impairment of other long-lived assets on the consolidated statements of comprehensive loss.

The Company performed a review of its intangible asset balances as of December 31, 2021 and determined the fair value of Higher Power’s trade names and customer relationships was less than their carrying value, resulting in an additional impairment expense of $ 0.7 million at year-end.

Oil prices declined significantly in March 2020 as a result of geopolitical events that increased the supply of oil in the market as well as effects of the COVID-19 pandemic.

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Additionally, during the third quarter of 2019, the Company temporarily shut down its flowback operations, resulting in impairment of non-contractual customer relationships of $ 0.1 million.

For the year ended December 31, 2018, the Company recognized impairments related to drilling rig assets and other property, plant and equipment of $ 4.0 million and $ 0.3 million, respectively.

These assets were deemed impaired based on future expected cash flows of the equipment.

The Company measured the fair values of its drilling rigs and other property, plant and equipment at December 31, 2018 using direct and indirect observable inputs (Level 2) based on a market approach.

During the year ended December 31, 2018, the Company moved Cementing's equipment from the Utica shale to the Permian basin.

As a result, the Company recognized impairment on Cementing's intangible assets, including non-contractual customer relationships and trade name of $ 1.0 million and $ 0.2 million, respectively.

Additionally, the Company recognized impairment of trade name totaling $ 0.2 million related to the name change of Stingray Logistics to Silverback Energy, which is included in the Company's well completion segment.

The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment.

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See Note 6 for a description of these impairment losses.

The original lives of customer relationships is 6 years and as of December 31, 2020 the remaining average useful life was 2.33 years.

The original lives of trade names range from 10 to 20 years and as of December 31, 2021 the remaining average useful life was 3.95 years.

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Equity Method Investment

On December 21, 2018, Cobra Aviation and Wexford Investment, a related party, formed a joint venture under the name of Brim Acquisitions to acquire all outstanding equity interest in Brim Equipment for a total purchase price of approximately $ 2.0 million.

On December 21, 2018, Cobra Aviation and Wexford Partners Investment Co.

LLC (“Wexford Investment”), a related party, formed a joint venture under the name of Brim Acquisitions LLC (“Brim Acquisitions”) to acquire all outstanding equity interest in Brim Equipment for a total purchase price of approximately $ 2.0 million.

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The investment is included in other non-current assets on the consolidated balance sheets.

The Company recorded equity method adjustments to its investment for its share of Brim Acquisitions' income (loss) of $ 0.6 million and $ 1.0 million, respectively, for the years ended December 31, 2020 and 2019 and ($ 0.02 ) million for the period between the acquisition date and December 31, 2018, which is included in other, net on the consolidated statements of comprehensive (loss) income.

The Company made additional investments totaling $ 0.5 million and $ 0.7 million during the years ended December 31, 2020 and 2019.

The Company recorded equity method adjustments to its investment for its share of Brim Acquisitions’ (loss) income of ($ 0.3 ) million, $ 0.6 million, and $ 1.0 million respectively, for the years ended December 31, 2021, 2020 and 2019, respectively, which is included in other, net on the consolidated statements of comprehensive loss.

The Company made additional investments totaling $ 0.5 million and $ 0.7 million during the years ended December 31, 2020 and 2019, respectively.

No additional investments were made during the year ended December 31, 2021.

MAMMOTH ENERGY SERVICES, INC.

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Accrued Expenses and Other Current Liabilities

Accrued legal settlement (a)

State and local taxes payable 13,772 13,838

Financed insurance premiums (a)

Financed insurance premiums (b)

Deferred revenue 3,250 8,281

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Financing leases 1,834 1,499

Sale leaseback liability (b)

Sale-leaseback liability (c)

Other 2,146 1,639

2 unchanged sentences

Financing leases $ 4,375 4,618

Sale leaseback liability (b)

Sale-leaseback liability (c)

Payroll tax liability — 1,977

Other 492 1,175

Total other long-term liabilities $ 11,693 $ 10,435

In June 2021, the Company reached an agreement to settle a certain legal matter.

See Note 19 for additional detail.

Financed insurance premiums are due in monthly installments, are unsecured and mature within the twelve-month period following the close of the year.

As of December 31, 2020, the applicable interest rate associated with financed insurance premiums was 2.45 %.

As of December 31, 2021, the applicable interest rates associated with financed insurance premiums ranged from 1.95 % to 2.45 %.

As of December 31, 2020, the applicable interest rates associated with financed insurance premiums ranged from 3.45 % to 3.75 %.

On December 30, 2020, the Company entered into an agreement with First National Capital, LLC (“FNC”) whereby the Company agreed to sell certain assets from its infrastructure segment to FNC for aggregate proceeds of $ 5.0 million.

Concurrent with the sale of assets, the Company entered into a 36 month lease agreement whereby the Company will lease back the assets at a monthly rental rate of $ 0.1 million.

On June 1, 2021, the Company entered into another agreement with FNC whereby the Company sold additional assets from its infrastructure segment to FNC for aggregate proceeds of $ 9.5 million and entered into a 42 month lease agreement whereby the Company agreed to lease back the assets at a monthly rental rate of $ 0.2 million.

Under the agreement, the Company has the option to purchase the assets at the end of the lease term.

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Borrowings under the revolving credit facility are secured by the assets of Mammoth Inc., inclusive of the subsidiary companies, and are subject to a borrowing base calculation prepared monthly.

On November 5, 2019, the Company entered into a first amendment to the revolving credit facility to amend the interest coverage ratio definition to give accrual treatment to certain cash taxes included in the ratio calculation.

As a result, certain cash tax payments that were made in 2019 were now treated as if they were made in 2018, the year in which the income related to such tax payments was actually received.

As of December 31, 2019, the revolving credit facility contained various customary affirmative and restrictive covenants.

Among the covenants are two financial covenants, including a minimum interest coverage ratio ( 3.0 to 1.0), and a maximum leverage ratio ( 4.0 to 1.0).

The Company was in compliance with its financial covenants under the revolving credit facility as of December 31, 2019.

On February 26, 2020, the Company entered into a second amendment to the revolving credit facility to, among other things, (i) amend its financial covenants, as outlined below, (ii) decrease the maximum revolving advance amount from $ 185 million to $ 130 million, (iii) decrease the amount that the maximum revolving advance can be increased to (the accordion) from $ 350 million to $ 180 million, (iv) increase the applicable margin ranges from 2.00 % to 2.50 % per annum in the case of the alternate base rate and from 3.00 % to 3.50 % per annum in the case of LIBOR, (v) increase the aggregate amount of permitted asset dispositions, and (vi) permit certain sale-leaseback transactions.

The financial covenants under the revolving credit facility were amended as follows:

• the minimum interest coverage ratio of 3.0 to 1.0 was eliminated;

• the maximum leverage coverage ratio of 4.0 to 1.0 was eliminated for the first two fiscal quarters of 2020 and, beginning with the fiscal quarter ended September 30, 2020, changed to 2.5 to 1.0;

• beginning with the fiscal quarter ended September 30, 2020, a minimum fixed charge coverage ratio of at least 1.1 to 1.0 was added;

• from the effective date of February 26, 2020 through September 30, 2020, a minimum excess availability covenant of 10% of the maximum revolving advance amount was added.

As of December 31, 2020, the Company was in compliance with its financial covenants under the revolving credit facility.

At December 31, 2020, there were outstanding borrowings under the revolving credit facility of $ 78.0 million and $ 38.7 million of available borrowing capacity, after giving effect to $ 13.0 million of outstanding letters of credit.

The revolving credit facility also contains various customary affirmative and restrictive covenants.

Among the covenants is a financial covenant, including a minimum fixed charges coverage ratio of at least 1.1 to 1.0.

As a result of the lack of payment from PREPA, the Company projected that it would likely breach the leverage ratio covenant contained in its revolving credit facility for the fiscal quarter ended September 30, 2021.

On November 3, 2021, the Company entered into a third amendment to its revolving credit facility (the “Third Amendment”) to, among other things, (i) suspend the leverage ratio and fixed charges coverage ratio covenants for the quarters ending September 30, 2021 and December 31, 2021, (ii) permanently reduce the maximum revolving advance amount from $ 130 million to $ 120 million, (iii) add a minimum adjusted EBITDA financial covenant of $ 6.0 million for the quarter ending December 31, 2021, (iv) set the applicable margin on all loans at 3.50 % during the limited covenant waiver period, (v) add a requirement to maintain revolver availability of not less than $ 10.0 million at all times during the limited covenant waiver period, (vi) permanently reduce the maximum revolving advance amount in an amount equal to fifty percent ( 50 %) of any mandatory prepayments made with non-recurring proceeds that are received during the limited covenant waiver period, and (vii) eliminate the declaration of unrestricted subsidiaries during the limited covenant waiver period.

The limited covenant waiver period commenced on the effective date of the Third Amendment and was scheduled to end on the earlier to occur of (i) May 15, 2022, (ii) the Company reporting compliance with both the leverage ratio and the fixed charge coverage ratio covenants for either its fiscal quarter ending September 30, 2021 or December 31, 2021, and (iii) the occurrence of any event of default after the effective date of the Third Amendment.

Under the Third Amendment, the Company also agreed to engage an advisor during the limited covenant waiver period to advise the Company and its subsidiaries with regard to, among other things, efforts to achieve certain operation efficiencies, improvement in results of operations, and general business strategy, and provide assistance to the Company and its subsidiaries in the preparation of the supplemental reporting and information required by the Third Amendment.

At December 31, 2021, there were outstanding borrowings under the revolving credit facility of $ 83.4 million and $ 16.5 million of available borrowing capacity, after giving effect to $ 9.0 million of outstanding letters of credit and the requirement to maintain a $ 10 million reserve out of the available borrowing capacity during the limited waiver period.

At December 31, 2020, there were outstanding borrowings under the revolving credit facility of $ 78.0 million and $ 38.7 million of borrowing capacity under the facility, after giving effect to $ 13.0 million of outstanding letters of credit.

As of February 24, 2021, the Company had $ 75.0 million in borrowings outstanding under its revolving credit facility, leaving an aggregate of $ 41.7 million of available borrowing capacity under this facility, after giving effect to $ 13.0 million of outstanding letters of credit.

If an event of default occurs under the revolving credit facility and remains uncured, it could have a material adverse effect on the Company's business, financial condition, results of operations and

As of December 31, 2021, the Company was in compliance with its financial covenants under the revolving credit facility, as amended and waived by the Third Amendment.

On February 28, 2022, the Company entered into a fourth amendment to the revolving credit facility (the “Fourth Amendment”) to, among other things, (i) amend the financial covenants as outlined below, (ii) provide for a conditional increase of the applicable interest margin, (iii) permit certain sale-leaseback transactions, (iv) provide for a reduction in

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the maximum revolving advance amount in an amount equal to 50 % of the PREPA claims proceeds, subject to a floor equal to the sum of eligible billed and unbilled accounts receivables, and (v) classifies the payments pursuant to the Company ’ s settlement agreement with MasTec Renewables Puerto Rico, LLC (“MasTec”) as restricted payments and requires $ 20.0 million of availability both before and after making such payments.

The financial covenants under our revolving credit facility were amended as follows:

• the leverage ratio was eliminated;

• the fixed charge coverage ratio was reduced to .85 to 1.0 for the six months ended June 30, 2022 and increases to 1.1 to 1.0 for the periods thereafter;

• a minimum adjusted EBITDA covenant of $ 4.7 million, excluding interest on accounts receivable from PREPA, for the five months ending May 31, 2022 was added;

• the minimum excess availability covenant was reduced to $ 7.5 million through the earlier of (i) March 31, 2022 or (ii) the date on which proceeds of permitted sale-leaseback transactions are received, after which the minimum excess availability covenant will increase to $ 10.0 million.

The Fourth Amendment also permanently waived compliance by the borrowers with the leverage ratio and fixed charge coverage ratio covenants in the revolving credit facility for the fiscal quarters ended September 30, 2021 and December 31, 2021, respectively, ending the limited covenant waiver period under the Third Amendment.

As of March 2, 2022, the Company had $ 83.7 million in borrowings outstanding under its revolving credit facility, leaving an aggregate of $ 10.6 million of available borrowing capacity under this facility, after giving effect to $ 8.5 million of outstanding letters of credit and the requirement to maintain a $ 7.5 million reserve out of the available borrowing capacity.

If an event of default occurs under the revolving credit facility and remains uncured, it could have a material adverse effect on the Company ’ s business, financial condition, results of operations and cash flows.

The lenders (i) would not be required to lend any additional amounts to the Company, (ii) could elect to increase the interest rate by 200 basis points, (iii) could elect to declare all outstanding borrowings, together with accrued and unpaid interest and fees, to be due and payable, (iv) may have the ability to require the Company to apply all of its available cash to repay outstanding borrowings, and (v) may foreclose on substantially all of the Company’s assets.

As of March 2, 2022, the Company was in compliance with the covenants under its revolving credit facility, as amended and waived by the Third Amendment and Fourth Amendment.

Aviation Note

1 unchanged sentence

The Aviation Note bears interest at a rate based on the Wall Street Journal Prime Rate plus a margin of 1 %.

Principal and interest payments of $ 0.1 million are due monthly beginning on March 1, 2021, with a final payment of $ 0.2 million due on February 1, 2024.

Principal and interest payments of $ 0.1 million are due monthly, with a final payment of $ 0.2 million due on February 1, 2024.

The Aviation Note is collateralized by Leopard and Cobra Aviation’s assets, including a $ 1.8 million certificate of deposit.

The Aviation Note contains various customary affirmative and restrictive covenants, all of which the Company was in compliance with as of December 31, 2021.

As of December 31, 2021, the Company did not meet the minimum debt coverage ratio of 1.25 to 1.0 set forth in the Aviation Note.

On March 2, 2022, Bank7 granted the Company a waiver of this event of default.

The waiver extended the minimum cash requirement until June 30, 2022.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Variable Interest Entities

1 unchanged sentence

(the “Voting Trustee”).

Under the Voting Trust Agreements, Dire Wolf transferred 100 % of its membership interest in Cobra Aviation and Predator Aviation transferred 100 % of its membership in Leopard Aviation LLC (“Leopard') to the respective Voting Trustees in exchange for Voting Trust Certificates.

Under the Voting Trust Agreements, Dire Wolf transferred 100 % of its membership interest in Cobra Aviation and Predator Aviation transferred 100 % of its membership interest in Leopard to the respective Voting Trustees in exchange for Voting Trust Certificates.

Dire Wolf and Predator Aviation retained the obligation to absorb all expected returns or losses of Cobra Aviation and Leopard.

3 unchanged sentences

Dire Wolf and Predator Aviation entered into the Voting Trust Agreements in order to meet certain registration requirements.

Dire Wolf's and Predator Aviation's voting rights are not proportional to their respective obligations to absorb expected returns or losses of Cobra Aviation and Leopard and all of Cobra Aviation's and Leopard's activities are conducted on behalf of Dire Wolf and Predator Aviation, which have disproportionately fewer voting rights;

Dire Wolf’s and Predator Aviation’s voting rights are not proportional to their respective obligations to absorb expected returns or losses of Cobra Aviation and Leopard, respectively, and all of Cobra Aviation’s and Leopard’s activities are conducted on behalf of Dire Wolf and Predator Aviation, which have disproportionately fewer voting rights;

therefore, Cobra Aviation and Leopard meet the criteria of a VIE.

Cobra Aviation's and Leopard's operational activities are directed by Dire Wolf's and Predator Aviation's officers and Dire Wolf and Predator Aviation have the option to terminate the Voting Trust Agreements at any time.

Cobra Aviation and Leopard’s operational activities are directed by Dire Wolf’s and Predator Aviation’s officers and Dire Wolf and Predator Aviation have the option to terminate the Voting Trust Agreements at any time.

Therefore, the Company, through Dire Wolf and Predator Aviation, is considered the primary beneficiary of the VIEs and consolidates Cobra Aviation and Leopard at December 31, 2021.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Selling, General and Administrative Expense

10 unchanged sentences

41,662 21,958 1,434

Equity based compensation (c)

Stock based compensation 1,068 1,618 3,326

1 unchanged sentence

Total SG&A expense $ 78,246 $ 67,185 $ 51,552

Includes travel-related costs, IT expenses, rent, utilities and other general and administrative-related costs.

The bad debt provision for the year ended December 31, 2020, includes $ 19.4 million related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport and certain of its subsidiaries.

Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs.

The bad debt provision for the year ended December 31, 2021 includes $ 41.2 million related to the Stingray Pressure Pumping and Muskie contracts with Gulfport.

The bad debt provision for the year ended December 31, 2020, included $ 19.4 million related to the voluntary petitions for relief filed on November 13, 2020, by Gulfport and certain of its subsidiaries.

See Notes 2 and 19.

During the year ended December 31, 2018, the Company received payment for amounts previously reserved in 2017.

As a result, during the year ended December 31, 2018, the Company reversed bad debt expense of $ 16.0 million recognized in 2017.

Represents compensation expense for non-employee awards, which were issued and are payable by certain affiliates of Wexford (the sponsor level).

See Note 17 for additional detail.

The components of income tax expense (benefit) attributable to the Company for the year ended December 31, 2020, 2019 and 2018, respectively, are as follows (in thousands):

The components of income tax benefit attributable to the Company for the year ended December 31, 2021, 2020 and 2019, respectively, are as follows (in thousands):

Year Ended December 31,

2021 2020 2019

current income tax expense $ ( 6,931 ) $ 386 $ 25,656

deferred income tax (benefit) expense ( 12,330 ) ( 21,761 ) 25,372

current income tax expense (benefit) $ 290 $ ( 6,931 ) $ 386

deferred income tax benefit ( 23,740 ) ( 12,330 ) ( 21,761 )

Foreign current income tax expense 8,852 6,948 30,172

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2021 2020 2019

(Loss) income before income taxes $ ( 119,776 ) $ ( 91,125 ) $ 389,228

Loss before income taxes $ ( 124,293 ) $ ( 119,776 ) $ ( 91,125 )

Statutory income tax rate 21 % 21 % 21 %

1 unchanged sentence

Change in tax rate — ( 161 ) —

Change in uncertain tax positions 1,043 — —

Foreign income tax rate differential ( 282 ) 2,556 9,387

Foreign earnings not in reported income 3,252 12,581 46,834

Foreign (loss) earnings not in reported income ( 336 ) 3,252 12,581

Foreign tax credits ( 7,749 ) ( 7,133 ) ( 26,141 )

5 unchanged sentences

Return to provision 390 894 ( 15,156 )

Other — — 680

Change in valuation allowance 12,193 3,765 12,006

1 unchanged sentence

The Company’s effective tax rate was 18.4 % for the year ended December 31, 2021 compared to 10.2 % for the year ended December 31, 2020 and 13.3 % for the year ended December 31, 2019.

The effective tax rate for the year ended December 31, 2021 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico as well as changes in the valuation allowance.

Additionally, the Company recorded an unrecognized tax benefit of $ 1.0 million during the year ended December 31, 2021 related to the 2020 tax year returns in Puerto Rico.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted and signed into U.S.

1 unchanged sentence

As a result of the enacted legislation, the Company recognized a $ 2.4 million net tax benefit during the year ended December 31, 2020, which consisted of a $ 7.0 million current tax benefit and a $ 4.6 million deferred tax expense.

This impact, along with the rate impact from non-deductible goodwill impairment and the change in valuation allowance, was the primary driver for the difference between the statutory rate of 21% and the effective tax rate for the year ended December 31, 2020.

The effective tax rate for the year ended December 31, 2019 differed from the statutory rate of 21% primarily due to the mix of earnings between the United States and Puerto Rico.

1 unchanged sentence

Additionally, during the year ended December 31, 2019, the Company recorded a benefit related to return to provision adjustments, which was partially offset by changes in the valuation allowance.

The decrease in effective tax rate from 2019 to 2020 is primarily the result of a decline in earnings for the Company's Puerto Rico operations as well as return to provision adjustment recorded in 2019.

The decrease in effective tax rate from 2018 to 2019 is primarily the result of a decline in earnings for the Company's Puerto Rico operations as well as return to provision adjustments and goodwill impairment.

MAMMOTH ENERGY SERVICES, INC.

5 unchanged sentences

Lease asset 4,432 6,060

Intangible assets 1,070 —

Accrued liabilities 12,833 740

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Deferred tax liabilities ( 39,614 ) ( 48,341 )

Net deferred tax liability $ ( 24,741 ) $ ( 36,873 )

Net deferred tax asset (liability) $ 7,229 $ ( 24,741 )

Reflected in accompanying balance sheet as:

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The distribution of these undistributed earnings is subject to a withholding tax in Puerto Rico and since the Company intends to make these distributions in the future, the withholding tax has been accrued.

As of December 31, 2020, the Company had no uncertain tax positions or interest and penalties that qualify for either recognition or disclosure in the financial statements.

A reconciliation of the beginning and ending amounts of liabilities associated with uncertain tax positions for the year ended December 31, 2021 is as follows ($ in thousands):

Balance, January 1, 2021 $ —

Additions for tax positions of prior years 1,043

Balance, December 31, 2021 $ 1,043

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company recorded an unrecognized tax benefit of $ 1.0 million during the year ended December 31, 2021 related to the 2020 tax year returns in Puerto Rico.

It is the Company’s policy to recognize interest and applicable penalties related to uncertain tax positions in income tax expense.

The Company did not have any uncertain tax positions for the years ended December 31, 2020 and 2019.

The Company’s U.S.

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Puerto Rico tax returns for tax years 2017 through 2021 and Canada tax returns for the tax years 2015 through 2021 remain open to examination by the respective tax authorities.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) which supersedes the requirements set forth in ASC 840, Leases .

The Company adopted this standard effective January 1, 2019 utilizing the transition method which permits an entity to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption with no adjustment made to the comparative periods presented in the consolidated financial statements.

Accordingly, the comparative information for the year ended December 31, 2018 has not been adjusted and continues to be reported under the previous lease standard.

The new guidance requires lessees to report a right of use asset and lease liability on the balance sheet for all leases with a term longer than one year, while maintaining substantially similar classifications for financing and operating leases.

Lessor accounting remains substantially unchanged with the exception that no leases entered into after the effective date will be classified as leveraged leases.

The Company elected the transition practical expedient package whereby an entity was not required to reassess (i) whether any expired or existing contracts are or contained leases, (ii) the lease classification for any expired or existing leases and (iii) initial direct costs for any existing leases.

The adoption of ASC 842 resulted in the recognition of approximately $ 60.0 million of operating lease right-of-use assets and operating lease liabilities on our consolidated balance sheet as of January 1, 2019 and did not materially impact our consolidated statement of comprehensive (loss) income for the year ended December 31, 2019.

Lessee Accounting

Beginning January 1, 2019, for all leases with a term in excess of 12 months, the Company recognized a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term.

The Company recognized a lease liability equal to the present value of the lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term for all leases with a term in excess of 12 months.

For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term, while finance leases include both an operating expense and an interest expense component.

For all leases with a term of 12 months or less, the Company elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company's operating leases are primarily for rail cars, real estate, equipment and vehicles and its finance leases are primarily for machinery and equipment.

For all leases with a term of 12 months or less, the Company has elected the practical expedient to not recognize lease assets and liabilities and recognizes lease expense for these short-term leases on a straight-line basis over the lease term.

The Company’s operating leases are primarily for rail cars, real estate, and equipment and its finance leases are primarily for machinery and equipment.

Generally, the Company does not include renewal or termination options in its assessment of the leases unless extension or termination for certain assets is deemed to be reasonably certain.

The accounting for some of the Company's leases requires significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options.

The accounting for some of the Company’s leases may require significant judgment, which includes determining whether a contract contains a lease, determining the incremental borrowing rates to utilize in the net present value calculation of lease payments for lease agreements which do not provide an implicit rate and assessing the likelihood of renewal or termination options.

Lease agreements that contain a lease and non-lease component are generally accounted for as a single lease component.

43 unchanged sentences

2024 1,641 965

2024 1,799 774

Thereafter 407 —

5 unchanged sentences

Lessor Accounting

Certain of the Company's agreements with its customers for contract land drilling services, aviation services and remote accommodation services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use.

Certain of the Company’s agreements with its customers for drilling services, aviation services and remote accommodation services contain an operating lease component under ASC 842 because (i) there are identified assets, (ii) the customer obtains substantially all of the economic benefits of the identified assets throughout the period of use and (iii) the customer directs the use of the identified assets throughout the period of use.

The Company has elected to apply the practical expedient provided to lessors to combine the lease and non-lease components of a contract where the revenue recognition pattern is the same and where the lease component, when accounted for separately, would be considered an operating lease.

The practical expedient also allows a lessor to account for the combined lease and non-lease components under ASC 606, Revenue from Contracts with Customers , when the non-lease component is the predominant element of the combined component.

The Company's agreements for its contract land drilling services contain a service component in addition to a lease component.

The Company has determined the service component is greater than the lease component and therefore, reports revenue for its contract land drilling services under ASC 606.

The Company’s lease agreements are generally short-term in nature and lease revenue is recognized over time based on a monthly, daily or hourly rate basis.

The Company does not provide an option for the lessee to purchase the rented assets at the end of the lease and the lessees do not provide residual value guarantees on the rented assets.

During the years ended December 31, 2020 and 2019, the Company recognized lease revenue, which is included in services revenue - related parties and services revenue on the consolidated statements of comprehensive (loss) income, of $ 1.4 million and $ 2.3 million, respectively.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized lease revenue, which is included in “services revenue” and “services revenue - related parties” on the consolidated statements of comprehensive loss of $ 2.4 million, $ 1.4 million, and $ 2.3 million, respectively.

Dividends and Earnings (Loss) Per Share

7 unchanged sentences

Total cash dividends $ 0.25 $ 11,219

Paid on August 14, 2018 $ 0.125 $ 5,595

Paid on November 15, 2018 0.125 5,606

Total cash dividends $ 0.25 $ 11,201

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings (Loss) Per Share

2 unchanged sentences

(in thousands, except per share data)

Basic (loss) earnings per share:

Basic loss per share:

Allocation of earnings:

Net (loss) income $ ( 107,607 ) $ ( 79,044 ) $ 235,965

Net loss $ ( 101,430 ) $ ( 107,607 ) $ ( 79,044 )

Weighted average common shares outstanding 46,428 45,644 45,011

Basic (loss) earnings per share $ ( 2.36 ) $ ( 1.76 ) $ 5.27

Diluted (loss) earnings per share:

Basic loss per share $ ( 2.18 ) $ ( 2.36 ) $ ( 1.76 )

Diluted loss per share:

Allocation of earnings:

Net (loss) income $ ( 107,607 ) $ ( 79,044 ) $ 235,965

Net loss $ ( 101,430 ) $ ( 107,607 ) $ ( 79,044 )

Weighted average common shares, including dilutive effect (a)

46,428 45,644 45,011

Diluted (loss) earnings per share $ ( 2.36 ) $ ( 1.76 ) $ 5.24

No incremental shares of potentially dilutive restricted stock awards were included for the years ended December 31, 2020 and 2019 as their effect was antidilutive under the treasury stock method.

Diluted loss per share $ ( 2.18 ) $ ( 2.36 ) $ ( 1.76 )

No incremental shares of potentially dilutive restricted stock awards were included for the years ended December 31, 2021, 2020, or 2019 as their effect was antidilutive under the treasury stock method.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity Based Compensation

3 unchanged sentences

The awards are for interests in the distributable earnings of the members of MEH Sub, Mammoth Inc.’s majority equity holder.

On the IPO closing date, the unreturned capital balance of Mammoth Inc.'s majority equity holder was not fully recovered from its sale of common stock in the IPO.

On the closing date of Mammoth Inc.’s initial public offering (“IPO”), the unreturned capital balance of Mammoth’s majority equity holder was not fully recovered from its sale of common stock in the IPO.

As a result, Payout did not occur and no compensation cost was recorded.

On June 29, 2018, as part of an underwritten secondary public offering, MEH Sub sold 2,764,400 shares of the Company’s common stock at a purchase price to MEH Sub of $ 38.01 per share.

Additionally, the selling stockholders granted the underwriters an option to purchase additional shares of the Company's common stock at the same purchase price.

On July 30, 2018, in connection with the partial exercise of this option, MEH Sub sold an additional 266,026 shares of common stock to the underwriters.

MEH Sub received the proceeds from this offering.

As a result of the June 29, 2018 offering, a portion of the Non-Employee Member awards reached Payout.

During the year ended December 31, 2018, the Company recognized equity compensation expense totaling $ 17.5 million related to these non-employee awards.

These awards are at the sponsor level and this transaction had no dilutive impact or cash impact to the Company.

Payout for the remaining awards is expected to occur as the contribution member’s unreturned capital balance is recovered from additional sales by MEH Sub of its shares of the Company’s common stock or from dividend distributions, which is not considered probable until the event occurs.

For the Specified Member awards, the unrecognized amount, which represents the fair value of the award as of the modification dates or grant date, was $ 5.6 million.

The Company adopted ASU 2018-07 as of January 1, 2019.

This ASU aligns the accounting for non-employee share-based compensation with the requirements for employee share-based compensation.

The standard required non-employee awards to be measured at fair value as of the date of adoption.

For the Company’s Non-Employee Member awards, the unrecognized amount, which represents the fair value of the awards as of the date of adoption of ASU 2018-07 was $ 18.9 million.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-Based Compensation

The 2016 Plan authorizes the Company's Board of Directors or the compensation committee of the Company's Board of Directors to grant incentive restricted stock, restricted stock unit, stock appreciation rights, stock options and performance awards.

The 2016 Plan authorizes the Company’s Board of Directors or the compensation committee of the Company’s Board of Directors to grant restricted stock, restricted stock units, stock appreciation rights, stock options and performance awards.

There are 4.5 million shares of common stock reserved for issuance under the 2016 Plan.

2 unchanged sentences

This value is amortized over the vesting period.

Forfeitures are recognized as they occur.

A summary of the status and changes of the unvested shares of restricted stock units under the 2016 Plan is presented below.

Forfeitures are recognized as incurred.

A summary of the status and changes of the unvested shares of restricted stock under the 2016 Plan is presented below.

Number of Unvested Restricted Stock Units Weighted Average Grant-Date Fair Value

13 unchanged sentences

As of December 31, 2021, there was $ 0.8 million of total unrecognized compensation cost related to the unvested restricted stock.

The cost is expected to be recognized over a weighted average period of approximately 1.7 years.

The cost is expected to be recognized over a weighted average period of approximately 1.0 year.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Included in cost of revenue and selling, general and administrative expenses is stock-based compensation expense of $ 1.2 million, $ 2.0 million and $ 4.2 million, respectively, for the years ended December 31, 2021, 2020 and 2019.

8 unchanged sentences

Caliber Investment Group LLC (“Caliber”);

Dunvegan North Oilfield Services ULC (“Dunvegan”);

Predator Drilling LLC (“Predator”);

T&E Flow Services LLC (“T&E”);

and Brim Equipment.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Following is a summary of related party transactions (in thousands):

6 unchanged sentences

Aquahawk and Gulfport (d) — — 828 — —

Cementing and Gulfport (e) — — 5,853 — —

Cobra Aviation/ARS/Leopard and Brim Equipment (f) 446 2,093 — 44 235

Panther and El Toro (g) 38 573 918 — —

Cobra Aviation/ARS/Leopard and Brim Equipment (e) 371 446 2,093 85 44

Panther and El Toro (f) 599 38 573 — —

Other Relationships 12 34 1 3 9

5 unchanged sentences

$ 88 $ 28,461

Stingray Pressure Pumping has agreed to provide pressure pumping, stimulation and related completion services to Gulfport.

Stingray Pressure Pumping provided pressure pumping, stimulation and related completion services to Gulfport.

Other amount represents interest charged on delinquent accounts receivable related to these services.

Muskie has agreed to sell and deliver, and Gulfport has agreed to purchase, specified annual and monthly amounts of natural sand proppant, subject to certain exceptions specified in the agreement, and pay certain costs and expenses.

On June 29, 2021, Gulfport ceased to be a related party.

Muskie agreed to sell and deliver, and Gulfport has agreed to purchase, specified annual and monthly amounts of natural sand proppant, subject to certain exceptions specified in the agreement, and pay certain costs and expenses.

Other amount represents interest charged on delinquent accounts receivable related to this agreement.

SR Energy provides rental services for Gulfport.

Aquahawk provides water transfer services for Gulfport pursuant to a master services agreement.

Cementing performs well cementing services for Gulfport.

On June 29, 2021, Gulfport ceased to be a related party.

SR Energy provided rental services for Gulfport.

On June 29, 2021, Gulfport ceased to be a related party.

Aquahawk provided water transfer services for Gulfport pursuant to a master services agreement.

Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements.

Panther provides directional drilling services for El Toro, an affiliate of Wexford, pursuant to a master service agreement.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

COST OF REVENUE ACCOUNTS PAYABLE

2 unchanged sentences

Cobra Aviation/ARS/Leopard and Brim Equipment (a) 73 72 4,720 5 1

Anaconda and Caliber (b) 248 — — — —

Cobra and T&E (c) — — 4,042 — —

Higher Power and T&E (c) — — 1,603 — —

The Company and Caliber (b) 351 248 — — —

Other Relationships 107 98 50 — —

1 unchanged sentence

SELLING, GENERAL AND ADMINISTRATIVE COSTS

The Company and Wexford (d) 3 650 992 2 1

The Company and Wexford (c) 5 3 650 — 2

The Company and Caliber (b) 374 774 785 — —

4 unchanged sentences

Leopard and Brim Equipment (a) — — 420 — —

Cobra and T&E (c) — — 1,247 — —

Higher Power and T&E (c) — — 2,960 — —

$ — $ — $ 420 $ — $ —

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements.

Caliber, an entity controlled by Wexford, leases office space to Anaconda and Mammoth.

Cobra and Higher Power purchased materials and services from T&E, an entity in which a member of management's family owned a minority interest.

T&E ceased to be a related party as of September 30, 2018.

Caliber, an entity controlled by Wexford, leases office space to the Company.

Wexford provides certain administrative and analytical services to the Company and, from time to time, the Company pays for goods and services on behalf of Wexford.

On June 29, 2018, Gulfport and certain entities controlled by Wexford (the “Selling Stockholders”) completed an underwritten secondary public offering of 4,000,000 shares of the Company’s common stock at a purchase price to the Selling Stockholders of $ 38.01 per share.

The Selling Stockholders granted the underwriters an option to purchase up to an aggregate of 600,000 additional shares of the Company's common stock at the same purchase price.

This option was exercised, in part, and on July 30, 2018, the underwriters purchased an additional 385,000 shares of common stock from the Selling Stockholders at the same price per share.

The Selling Stockholders received all proceeds from this offering.

The Company incurred costs of approximately $ 1.0 million related to the secondary public offering during the year ended December 31, 2018.

On December 21, 2018, Cobra Aviation acquired all outstanding equity interest in ARS and purchased two commercial helicopters, spare parts, support equipment and aircraft documents from Brim Equipment.

4 unchanged sentences

ARS leases a helicopter to Brim Equipment and Cobra Aviation leases the two helicopters purchased as part of these transactions to Brim Equipment under the terms of aircraft lease and management agreements.

See Note 8 for further discussion.

Commitments and Contingencies

Minimum Purchase Commitments

The Company has entered into agreements with suppliers that contain minimum purchase obligations.

Capital Spend Commitments

The Company has entered into agreements with suppliers to acquire capital equipment.

Aggregate future minimum payments under these agreements at December 31, 2020 are as follows (in thousands):

Year ended December 31:

Capital Spend Commitments Minimum Purchase Commitments

2021 $ 1,275 $ 698

Thereafter — —

$ 1,275 $ 800

Subsequent to December 31, 2020, the Company entered into an agreement with a supplier to provide infrastructure engineering subcontracting services totaling $ 0.5 million and ordered additional capital equipment with aggregate commitments of $ 0.1 million.

The Company has entered into agreements with suppliers that contain minimum purchase obligations and agreements to purchase capital equipment.

Aggregate future minimum payments under these obligations in effect at December 31, 2021 were approximately $ 1.4 million.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Letters of Credit

1 unchanged sentence

The letters of credit are categorized below (in thousands):

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Bonding program $ 1,000 $ 5,000

32 unchanged sentences

The estimated cost to complete projects secured by the performance and payment bonds totaled $ 4.7 million as of December 31, 2021.

As of December 31, 2020, outstanding bid bonds totaled $ 1.0 million.

The Company did not have any bid bonds outstanding as of December 31, 2019.

As of December 31, 2021 and 2020, outstanding bid bonds totaled $ 0.6 million and $ 1.0 million, respectively.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2021, PREPA owed the Company approximately $ 227.0 million for services performed, excluding $ 110.8 million of interest charged on these delinquent balances as of December 31, 2021.

The Company believes these receivables are collectible.

PREPA, however, is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S.

District Court for the District of Puerto Rico.

As a result, PREPA’s ability to meet its payment obligations is largely dependent upon funding from FEMA or other sources.

On September 30, 2019, Cobra filed a motion with the U.S.

District Court for the District of Puerto Rico seeking recovery of the amounts owed to Cobra by PREPA, which motion was stayed by the Court.

On March 25, 2020, Cobra filed an urgent motion to modify the stay order and allow the recovery of approximately $ 61.7 million in claims related to a tax gross-up provision contained in the emergency master service agreement, as amended, that was entered into with PREPA on October 19, 2017.

This emergency motion was denied on June 3, 2020 and the Court extended the stay of our motion.

On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status motion by June 7, 2021.

On April 6, 2021, Cobra filed a motion to lift the stay order.

Following this filing, PREPA initiated discussion, which resulted in PREPA and Cobra filing a joint motion to adjourn all deadlines relative to the April 6, 2021 motion until the June 16, 2021 omnibus hearing as a result of PREPA’s understanding that FEMA would release a report in the near future relating to the emergency master service agreement between PREPA and Cobra that was executed on October 19, 2017.

The joint motion was granted by the Court on April 14, 2021.

The parties were further directed to file an additional status report, which was filed on July 20, 2021.

On July 23, 2021, with the aid of Mammoth, PREPA filed an appeal of the entire $ 47 million that FEMA de-obligated in the May 26, 2021 Determination Memorandum.

On August 4, 2021, the Court extended the stay and directed that an additional status report be filed, which was done on January 22, 2022.

On January 26, 2022, the Court extended the stay and directed the parties to file a further status report by July 25, 2022.

On December 28, 2019, Gulfport filed a lawsuit against Stingray Pressure Pumping in the Superior Court of the State of Delaware.

Pursuant to the complaint, Gulfport sought to terminate the October 1, 2014, Amended and Restated Master Services Agreement for Pressure Pumping Services between Gulfport and Stingray Pressure Pumping (“MSA”).

In addition, Gulfport alleged breach of contract and sought damages for alleged overpayments and audit costs under the MSA and other fees and expenses associated with this lawsuit.

On March 26, 2020, Stingray Pressure Pumping filed a counterclaim against Gulfport seeking to recover unpaid fees and expenses due to Stingray Pressure Pumping under the MSA.

In September 2020, Muskie filed a lawsuit against Gulfport to recover delinquent payments due under a natural sand proppant supply contract.

These matters were automatically stayed as a result of Gulfport’s bankruptcy filing on November 13, 2020, seeking voluntary relief under chapter 11 of the Bankruptcy Code.

Gulfport emerged from bankruptcy on May 17, 2021.

As of November 13, 2020, Gulfport owed the Company approximately $ 46.9 million, which included interest charges of $ 3.3 million and $ 1.8 million in attorneys’ fees.

FASB ASC 326 , Financial Instruments-Credit Losses, requires companies to reflect its current estimate of all expected credit losses.

On March 22, 2021, Gulfport listed the Stingray Pressure Pumping and Muskie contracts on its master rejection schedule filed with the bankruptcy court.

During the first quarter of 2021, the Company recognized unliquidated damages of approximately $ 46.4 million and recorded reserves on these unliquidated damages as a reduction to revenue of $ 27.1 million and to bad debt expense of $ 3.8 million.

Also during the first quarter of 2021, the Company recorded additional reserves on its pre-petition products and services and interest receivables of $ 6.1 million and $ 0.5 million, respectively.

On September 21, 2021, the Company and Gulfport reached a settlement under which all litigation relating to the Stingray Pressure Pumping contract and the Muskie contract was terminated, Stingray Pressure Pumping released all claims against Gulfport and its subsidiaries with respect to Gulfport’s bankruptcy proceedings, each of the parties released all claims they had against the others with respect to the litigation matters discussed above and Muskie retained an allowed general unsecured claim against Gulfport of $ 3.1 million.

As a result, during the three months ended September 30, 2021, the Company wrote off its remaining receivable related to the Stingray Pressure Pumping claim resulting in bad debt expense and other expense of $ 31.0 million and $ 1.3 million, respectively, and recorded additional bad debt expense related to the Muskie claim totaling $ 0.2 million.

The Company had net accounts receivable due from Gulfport totaling $ 0.1 million as

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of December 31, 2021, which is included in “accounts receivable, net” on the balance sheets.

On January 21, 2020, MasTec Renewables Puerto Rico, LLC (“MasTec”) filed a lawsuit against Mammoth Inc.

and Cobra in the U.S.

District Court for the Southern District of Florida.

MasTec’s complaint asserted claims against the Company and Cobra Acquisitions for violations of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), tortious interference and violations of Puerto Rico law.

MasTec alleged that it sustained injuries to its business and property in an unspecified amount because it lost the opportunity to perform work in connection with rebuilding the energy infrastructure in Puerto Rico after Hurricane Maria under a services contract with a maximum value of $ 500 million due to the Company’s and Cobra’s wrongful interference, payment of bribes, and other inducement to a FEMA official.

On April 1, 2020, the defendants filed a motion to dismiss the complaint.

On October 14, 2020, the Court dismissed the RICO claims, and on November 18, 2020, dismissed the claims arising under the Puerto Rico statute and the cause of action for tortious interference with MasTec’s contract (but not its business relations), and dismissed Mammoth Inc.

from the litigation.

On August 2, 2021, in order to avoid the risks of further litigation, and with no admission of wrongdoing whatsoever, the Company reached an agreement to settle this matter.

Under the terms of the agreement, Cobra paid $ 6.5 million to MasTec on August 2, 2021 and the Company guaranteed payment, by Cobra, of $ 9.25 million on both August 1, 2022 and December 1, 2022.

The agreement bears interest at rates between 6 % and 12 % and includes an acceleration clause that requires Cobra to pay within ten days all unpaid amounts if Cobra collects $ 100 million or more of specified receivables.

The settlement amount and legal expenses related to the matter of $ 25.0 million and $ 5.4 million, respectively, are reflected in “other, net” on the accompanying consolidated statement of comprehensive loss for the year ended December 31, 2021.

As of December 31, 2021, $ 19.0 million was included in “accrued expenses and other current liabilities” in the accompanying consolidated balance sheets, which includes accrued interest of $ 0.5 million.

On May 13, 2021, Foreman Electric Services, Inc.

(“Foreman”) filed a petition against Mammoth Inc.

and Cobra in the Oklahoma County District Court (Oklahoma State Court).

The petition asserted claims against the Company and Cobra under federal RICO statutes and certain state-law causes of action.

Foreman alleged that it sustained injuries to its business and property in the amount of $ 250 million due to the Company’s and Cobra’s wrongful interference, payment of bribes and other inducements to a FEMA official.

On May 18, 2021, the Company removed this action to the United States District Court for the Western District of Oklahoma and filed a motion to dismiss on July 8, 2021.

On July 29, 2021, Foreman voluntarily dismissed the action without prejudice.

On December 14, 2021, Foreman re-filed its petition against Mammoth Inc.

and Cobra in the Oklahoma Count District Court (Oklahoma State Court).

On December 16, 2021, the Company again removed this action to the United States District Court for the Western District of Oklahoma.

Foreman filed a motion to remand this action back to Oklahoma County District Court, which motion is under consideration by the federal court.

The Company and Cobra filed a motion to dismiss on January 31, 2022, which is expected to be fully briefed by March 7, 2022.

In a related matter, on January 12, 2022, a Derivative Complaint on behalf of nominal defendant Machine Learning Integration, LLC (“MLI”), which alleges it would have served as a sub-contractor to Foreman in Puerto Rico, was filed against the Company and Cobra in the U.S.

District Court for the District of Puerto Rico arising from essentially the same facts as Foreman's action and asserting violations of federal RICO statutes and certain state law claims.

MLI alleges it sustained injuries to its business and property in an unspecified amount because the Company’s and Cobra’s wrongful interference, payment of bribes and other inducements to a FEMA official prevented Foreman from obtaining work, and thereby prevented MLI, as Foreman's subcontractor, from obtaining work.

These matters are still in the early stages and at this time, the Company is not able to predict the outcome of these claims or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

The Company is routinely involved in state and local tax audits.

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The Company appealed the assessment and a hearing was held in 2017.

As a result of the hearing, the Company received a decision from the State of Ohio.

The Company is appealing the decision and while it is not able to predict the outcome of the appeal, this matter is not expected to have a material adverse effect on the Company's business, financial condition, results of operations or cash flows.

As a result of the hearing, the Company received a decision from the State of Ohio, which the Company appealed.

On February 25, 2022, the Company received an unfavorable decision on the appeal.

The Company intends to appeal the decision and while it is not able to predict the outcome of the appeal, this matter is not expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

On June 19, 2018, Wendco of Puerto Rico Inc.

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Grimm Puerto Rico, LLC, et al.

The plaintiffs allege that the defendants caused power outages in Puerto Rico while performing restoration work on Puerto Rico’s electrical network following Hurricanes Irma and Maria in 2017, thereby interrupting commercial activities and causing economic loss.

The Company believes these claims are without merit and will vigorously defend the action.

However, at this time, the Company is not able to predict the outcome of this lawsuit or whether it will have a material impact on the Company's business, financial condition, results of operations or cash flows.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The parties have agreed to a settlement in principle and are in the process of documenting the settlement.

Until the settlement agreement is executed, however, the Company is not able to predict the outcome of this lawsuit or whether it will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

Cobra has been served with ten lawsuits from municipalities in Puerto Rico alleging failure to pay construction excise and volume of business taxes.

The Government of Puerto Rico's Central Recovery and Reconstruction Office (“COR3”) has noted the unique nature of work executed by entities such as Cobra in Puerto Rico and that taxes, such as those in these matters, may be eligible for reimbursement by the government.

Further, COR3 indicated that it is working to develop a solution that will result in payment of taxes owed to the municipalities without placing an undue burden on entities such as Cobra.

The Company continues to work with COR3 to resolve these matters.

However, at this time, the Company is not able to predict the outcome of these matters or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

These matters are in various stages in the Court.

At this time, the Company is not able to predict the outcome of these matters or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

On March 20, 2019, EJ LeJeune, a former employee of ESPADA Logistics and Security Group, LLC and ESPADA Caribbean LLC (together, “ESPADA”) filed a putative collective and class action complaint in LeJeune v.

16 unchanged sentences

Notice was sent to putative class members on September 15, 2020, and the opt-in period closed on November 14, 2020.

The parties are in discovery.

The Company believes these claims are without merit and will vigorously defend the action.

However, at this time, the Company is not able to predict the outcome of this lawsuit or whether it will have a material impact on the Company’s business, financial condition, results of operations or cash flows.

The parties informed the Court that that the plaintiff and the ESPADA defendants reached a settlement on November 5, 2021, and subsequently, that a settlement was reached between the plaintiffs and Cobra on December 6, 2021.

The stipulation of dismissal as to all parties was filed with the Court and the case was dismissed on January 19, 2022.

On April 16, 2019, Christopher Williams, a former employee of Higher Power Electrical, LLC, filed a putative class and collective action complaint titled Christopher Williams, individually and on behalf of all others similarly situated v.

7 unchanged sentences

The arbitrations remain pending.

Other claimants have subsequently initiated additional individual arbitration

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

proceedings asserting similar claims.

Other claimants have subsequently initiated additional individual arbitration proceedings asserting similar claims.

All complainants and the respondents have paid the filing fees necessary to initiate the arbitrations.

In May 2020, six arbitrations were held in the related matters.

The parties are currently engaged in discovery.

The Company believes these claims are without merit and will vigorously defend the arbitrations.

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On January 26, 2021, the Court granted the motion to dismiss in part and denied the motion to dismiss in part.

The Company believes the plaintiffs’ claims are without merit and will vigorously defend the action.

In April 2021 a settlement was reached and motion for preliminary approval

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

was filed, which the Court granted on May 4, 2021.

On September 21, 2021, the Court issued a final judgment approving the settlement, which released the defendants from all claims asserted in the litigation, or that could have been asserted arising from the subject matter of the litigation and the purchase or acquisition of Mammoth common stock during the class period in return for a cash payment in the amount of $ 11.0 million for the benefit of the settlement class.

The settlement amount is covered in full under Mammoth’s directors’ and officers’ insurance policy.

In September 2019, four derivative lawsuits were filed, two in the Western District of Oklahoma and two in the District of Delaware, purportedly on behalf of the Company and against its officers and directors.

In October 2019, the plaintiffs in the two Oklahoma actions voluntarily dismissed their respective cases, with one plaintiff refiling his action in the District of Delaware.

On September 13, 2019, the Delaware court consolidated the three actions under the case caption In re Mammoth Energy Services, Inc.

On September 13, 2019, the Court consolidated the three actions under the case caption In re Mammoth Energy Services, Inc.

Consolidated Shareholder Litigation.

1 unchanged sentence

Heerwagen IV, Marc McCarthy, Jim Palm, Matthew Ross, Arthur Smith, Gulfport Energy Corporation, and Wexford Capital LP.

On February 18, 2020, the defendants filed a motion to stay this action.

On August 3, 2020, the Court stayed the litigation pending the outcome of other matters.

The Company believes the plaintiffs’ claims are without merit and will vigorously defend the action.

On October 5, 2021, the plaintiffs and Nominal Defendant Mammoth entered into the Stipulation and Agreement of Settlement (the “Stipulation”) in the derivative action, which was preliminarily approved by the Court on October 28, 2021.

The terms of the Stipulation required that, in exchange for the full release, discharge and dismissal with prejudice of the claims asserted against the defendants in the derivative action, (1) the individual defendants will cause the insurers under Mammoth’s Directors’ and Officers’ (“D&O”) insurance policy (the “D&O insurers”) to pay $ 1.5 million to Mammoth, which Mammoth will use for general corporate purposes;

and (2) Mammoth will adopt certain corporate governance reforms, which will further enhance Mammoth’s current corporate governance policies.

Additionally, the Stipulation provides that the individual defendants will cause the D&O insurers to pay, subject to Court approval, a separate payment of $ 0.5 million to plaintiffs’ counsel for their attorneys’ fees and expenses.

The approval hearing was held on January 25, 2022 and the final order was entered.

The settlement was covered in full under Mammoth’s D&O insurance policy.

On September 10, 2019, the U.S.

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ESPADA Logistics & Security Group, LLC, ESPADA Caribbean LLC, Arty Straehla, Ken Kinsey, Jennifer Jorrie, and Mammoth Energy Services, Inc., in the 57th Judicial District in Bexar County, Texas.

The petition alleges that the Company should be held vicariously liable under alter ego, agency and respondeat superior theories for Alpha Lobo’s alleged claims against Cobra and Arty Straehla for aiding and abetting, knowing participation in and conspiracy to breach fiduciary duty in connection with Cobra’s execution of an agreement with ESPADA

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Caribbean, LLC for security services related to Cobra’s work in Puerto Rico.

The case is currently subject to a statutory stay pending a ruling on the appeal of anti-SLAPP motions to dismiss filed by certain defendants.

2 unchanged sentences

Additionally, there is a parallel arbitration proceeding that has been initiated in which certain Defendants are seeking a declaratory judgment regarding Cobra’s rights to terminate the Alpha Lobo contract and enter into a new contract with a third-party.

On September 16, 2019, Cobra filed a lawsuit against Robert Malcom (“Malcom”) and later added claims against BHI Energy I Power Services LLC (“BHI”) in a case styled Cobra Acquisitions v.

Malcom and BHI Energy I Power Services LLC in the 242nd Judicial District, District Court of Hale County, Texas.

Cobra alleges Malcom breached his non-compete and non-solicit obligations contained in the purchase and sale agreement in which Cobra purchased Higher Power from Malcom.

On September 16, 2019, the court entered a Temporary Restraining Order enjoining Malcom from competing against Higher Power or soliciting its customers and employees.

Subsequently, on October 25, 2019, the court entered a Temporary Injunction enjoining Malcom from competing against Higher Power in three states or soliciting its customers and employees until the time of trial.

Cobra is seeking to permanently enjoin Malcom from competing against Higher Power or soliciting its customers and employees, and further seeks damages it incurred as a result of Malcom’s breach of his non-compete agreement.

Cobra’s claims against BHI, Malcom’s employer after he left Higher Power, are for tortious interference and misappropriation of trade secrets.

On November 3, 2019, Malcom filed his original counter-petition and third-party petition against Cobra, Higher Power, Keith Ellison and Arty Straehla alleging claims for breach of contract, conversion, unjust enrichment, tortious interference, retaliation, violations of the federal Racketeer Influenced and Corrupt Organizations Act, and conspiracy.

Cobra and Higher Power moved to dismiss these claims and, on January 24, 2020, after the hearing on the motion to dismiss, Malcom dismissed his claims without prejudice.

On December 23, 2019, Malcom filed an appeal of the Temporary Injunction Order enjoining him from competing against Higher Power.

On April 20, 2020, the Court of Appeals Seventh District of Texas denied Malcom’s appeal.

On February 11, 2021, Cobra and Higher Power entered into a confidential settlement agreement with Malcom and BHI resolving the lawsuit.

The Company believes these receivables are collectible.

However, PREPA is currently subject to bankruptcy proceedings, which were filed in July 2017 and are currently pending in the U.S.

District Court for the District of Puerto Rico.

As a result, PREPA's ability to meet its payment obligations is largely dependent upon funding from the FEMA or other sources.

On September 30, 2019, Cobra filed a motion with the U.S.

District Court for the District of Puerto Rico seeking recovery of the amounts owed to Cobra by PREPA, which motion was stayed by the court.

This emergency motion was denied on June 3, 2020 and the court extended the stay of our motion.

On December 9, 2020, the Court again extended the stay of our motion and directed PREPA to file a status motion by June 7, 2021.

On December 28, 2019, Gulfport filed a lawsuit against Stingray Pressure Pumping in the Superior Court of the State of Delaware.

Pursuant to the complaint, Gulfport seeks to terminate the October 1, 2014, Amended and Restated Master Services Agreement for Pressure Pumping Services between Gulfport and Stingray Pressure Pumping (“MSA”).

In addition, Gulfport alleges breach of contract and seeks damages for alleged overpayments and audit costs under the MSA and other fees and expenses associated with this lawsuit.

The Company believes Gulfport’s claims are without merit and will vigorously defend the action.

On March 26, 2020, Stingray Pressure Pumping filed a counterclaim against Gulfport seeking to recover unpaid fees and expenses due to Stingray Pressure Pumping under the MSA.

In September 2020, Muskie filed a lawsuit against Gulfport to recover delinquent payments due under a natural sand proppant supply contract.

On November 13, 2020, Gulfport filed petitions for voluntary relief under chapter 11 of the Bankruptcy Code.

Gulfport may take action in its chapter 11 proceeding to terminate its agreement with us and/or seek to reduce our claims for services and damages that we may be entitled to.

We cannot assure you of the outcomes of our claims in Gulfport’s chapter 11 proceeding, what our recovery on those claims might be, or that we will be able to preserve, extend or renew our contract with Gulfport on favorable terms and conditions or at all.

As of November 13, 2020, Gulfport owed the Company approximately $ 46.9 million, which included interest charges of $ 3.3 million and $ 1.8 million in attorneys’ fees.

FASB ASC 326 , Financial

On June 24, 2021, the arbitration panel ruled in favor of Cobra.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Instruments-Credit Losses, requires companies to reflect its current estimate of all expected credit losses.

This balance includes pre-petition receivables of $ 24.3 million and post-petition receivables of $ 4.1 million.

On January 21, 2020, MasTec Renewables Puerto Rico, LLC (“MasTec”) filed a lawsuit against Mammoth Inc., and Cobra, in the U.S.

District Court in the Southern District of Florida.

MasTec’s complaint asserts claims against the Company and Cobra Acquisitions for violations of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”), tortious interference and violations of Puerto Rico state law.

MasTec alleges that it sustained injuries to its business and property in an unspecified amount because it lost the opportunity to perform work under a services contract with a maximum value of $ 500 million due to the Company’s and Cobra’s wrongful interference, payment of bribes, and other inducement to a FEMA official in order to secure two infrastructure contracts to aid in the rebuilding of the energy infrastructure in Puerto Rico after Hurricane Maria.

On April 1, 2020, the defendants filed a motion to dismiss the complaint.

On October 14, 2020, the court dismissed the RICO claims.

The Company believes these claims are without merit and will vigorously defend the action.

Subsequently, the trial Court in this action granted Cobra, the Company and Straehla’s motion to compel arbitration.

Alpha Lobo has not brought their claims in arbitration at this time.

The Company is involved in various other legal proceedings in the ordinary course of business.

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Reporting Segments

As of December 31, 2020, our revenues, loss before income taxes and identifiable assets are primarily attributable to four reportable segments.

As of December 31, 2021, the Company’s revenues, income before income taxes and identifiable assets are primarily attributable to four reportable segments.

The Company principally provides electric infrastructure services to private utilities, public investor-owned utilities and co-operative utilities and services in connection with on-shore drilling of oil and natural gas wells for small to large domestic independent oil and natural gas producers.

1 unchanged sentence

Segment information is prepared on the same basis that the CODM manages the segments, evaluates the segment financial statements and makes key operating and resource utilization decisions.

Segment evaluation is determined on a quantitative basis based on a function of operating income (loss) less impairment expense, as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

Segment evaluation is determined on a quantitative basis based on a function of operating loss less impairment expense, as well as a qualitative basis, such as nature of the product and service offerings and types of customers.

As of December 31, 2021, the Company’s four reportable segments include infrastructure services (“Infrastructure”), well completion services (“Well Completion”), natural sand proppant services (“Sand”) and drilling services (“Drilling”).

In 2019, the Company included Barracuda in its Well Completion segment, Cobra Aviation, ARS and Leopard in its Infrastructure segment and Mako in its Drilling segment.

Based on its assessment of FASB ASC 280, Segment Reporting , guidance at December 31, 2020, the Company changed its presentation in 2020 to move Barracuda to the Sand segment and Cobra Aviation, ARS, Leopard and Mako to the reconciling column titled “All Other”.

Additionally, the Company changed the name of its pressure pumping segment to the well services segment in 2020.

The results for the years ended December 31, 2019 and 2018 have been retroactively adjusted to reflect these changes.

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During the periods presented, the infrastructure services segment provided electric utility infrastructure services to government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities in Puerto Rico and the northeast, southwest and midwest portions of the United States.

The well completion services segment provides hydraulic fracturing, sand hauling and water transfer services primarily in the Utica Shale of Eastern Ohio, Marcellus Shale in Pennsylvania, Eagle Ford and Permian Basins in Texas and the mid-continent region.

Prior to the year ended December 31, 2021, the Company included Aquawolf in its “All Other” reconciling column.

Based on its assessment of FASB ASC 280, Segment Reporting , guidance at December 31, 2021, the Company changed its presentation in 2021 to move Aquawolf to the Infrastructure segment.

The results for the years ended December 31, 2020 and 2019 have been retroactively adjusted to reflect this change.

The Infrastructure segment provides electric utility infrastructure services to government-funded utilities, private utilities, public investor-owned utilities and co-operative utilities in the northeastern, southwestern, midwestern and western portions of the United States.

The Well Completion segment provides hydraulic fracturing and water transfer services primarily in the Utica Shale of Eastern Ohio, Marcellus Shale in Pennsylvania and the mid-continent region.

The Sand segment mines, processes and sells sand for use in hydraulic fracturing.

The Sand segment primarily services the Utica Shale, Permian Basin, SCOOP, STACK and Montney Shale in British Columbia and Alberta, Canada.

The drilling services segment currently provides rental equipment, such as mud motors and operational tools, for both vertical and horizontal drilling.

During the periods presented, the Company also provided aviation services, coil tubing services, flowback services, cementing services, acidizing services, equipment rental services, crude oil hauling services, full service transportation, remote accommodation, equipment manufacturing and infrastructure engineering and design services.

During certain of the periods presented, the Drilling segment provided contract land and directional drilling services primarily in the Permian Basin and mid-continent region.

During certain of the periods presented, the Company also provided aviation services, coil tubing services, equipment rental services, full service transportation, crude oil hauling services, remote accommodation and equipment manufacturing.

The businesses that provide these services are distinct operating segments, which the CODM reviews independently when making key operating and resource utilization decisions.

None of these operating segments met the quantitative thresholds of a reporting segment and did not meet the aggregation criteria set forth in ASC 280 Segment Reporting for the year ended December 31, 2020.

Therefore, results for these operating segments are included in the column labeled “All Other” in the tables below.

None of these operating segments meet the quantitative thresholds of a reporting segment and do not meet the aggregation criteria set forth in ASC 280 Segment Reporting.

Therefore, results for these operating segments are included in the column titled “All Other” in the tables below.

Additionally, assets for corporate activities, which primarily include cash and cash equivalents, inter-segment accounts receivable, prepaid insurance and certain property and equipment, are included in the All Other column.

Although Mammoth LLC, which holds these corporate assets, meets one of the quantitative thresholds of a reporting segment, it does not engage in business activities from which it may earn revenues and its results are not regularly reviewed by the Company's CODM when making key operating and resource utilization decisions.

Although Mammoth Energy Partners LLC, which holds these corporate assets, meets one of the quantitative thresholds of a reporting segment, it does not engage in business activities from which it may earn revenues and its results are not

MAMMOTH ENERGY SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

regularly reviewed by the Company’s CODM when making key operating and resource utilization decisions.

Therefore, the Company does not include it as a reportable segment.

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Other (income) expense, net ( 6,785 ) 1,073 ( 874 ) ( 177 ) ( 3,538 ) — ( 10,301 )

Income (loss) before income taxes $ 7,103 $ ( 69,073 ) $ ( 11,324 ) $ ( 16,865 ) $ ( 29,617 ) $ — $ ( 119,776 )

Loss before income taxes $ ( 35,999 ) $ ( 58,050 ) $ ( 6,328 ) $ ( 11,307 ) $ ( 12,609 ) $ — $ ( 124,293 )

Total expenditures for property, plant and equipment $ 627 $ 4,327 $ 484 $ 44 $ 361 $ — $ 5,843

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Total cost of revenue 173,551 206,543 87,652 36,953 88,837 ( 49,748 ) 543,788

Selling, general and administrative (a)

25,235 29,457 6,522 5,267 6,616 — 73,097

Selling, general and administrative 23,616 10,889 5,006 4,177 7,864 — 51,552

Depreciation, depletion, amortization and accretion 30,349 40,159 14,050 13,143 19,332 — 117,033

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Total assets $ 420,755 $ 172,608 $ 189,415 $ 55,273 $ 166,406 $ ( 52,072 ) $ 952,385

Included i n well completion se lling, general and administrative expense is non-cash equity based compensation of $ 17.5 million.

MAMMOTH ENERGY SERVICES, INC.

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United States $ 258,666 $ 342,838 $ 526,584

Puerto Rico — — 32,604

Canada 13,349 16,976 18,821

Total $ 272,015 $ 359,814 $ 545,405

Quarterly Financial Data (unaudited)

Three Months Ended

March 31, June 30, September 30, December 31, Total

2020 2020 2020 2020

(in thousands, except per share data)

Revenue $ 97,383 $ 60,109 $ 70,534 $ 85,050 $ 313,076

Gross profit 15,477 11,356 24,605 29,617 81,055

Net (loss) income ( 83,971 ) ( 15,205 ) 3,430 ( 11,861 ) ( 107,607 )

Net (loss) income per share (basic) $ ( 1.85 ) $ ( 0.33 ) $ 0.07 $ ( 0.26 ) $ ( 2.36 )

Net (loss) income per share (diluted) $ ( 1.85 ) $ ( 0.33 ) $ 0.07 $ ( 0.26 ) $ ( 2.36 )

Three Months Ended

March 31, June 30, September 30, December 31, Total

2019 2019 2019 2019

(in thousands, except per share data)

Revenue $ 262,138 $ 181,820 $ 113,417 $ 67,637 $ 625,012

Gross profit (loss) 73,068 13,805 2,283 ( 7,932 ) 81,224

Net income (loss) 28,333 ( 10,889 ) ( 35,709 ) ( 60,779 ) ( 79,044 )

Net income (loss) per share (basic) $ 0.63 $ ( 0.24 ) $ ( 0.79 ) $ ( 1.35 ) $ ( 1.76 )

Net income (loss) per share (diluted) $ 0.63 $ ( 0.24 ) $ ( 0.79 ) $ ( 1.35 ) $ ( 1.76 )

Subsequent Events

As discussed above, on February 28, 2022, the Company entered into a fourth amendment to its revolving credit facility.

See Note 10 above for details.

Subsequent to December 31, 2021, the Company ordered additional capital equipment with aggregate commitments of $ 2.7 million.

Subsequent to December 31, 2021, the Company entered into two three-year real estate operating lease agreements with aggregate commitments of $ 0.6 million.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures