MAMMOTH ENERGY SERVICES, INC. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Control and Procedures Under the direction of our Chief Executive Officer and Chief Financial Officer, we have established disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, 79 summarized and reported within the time periods specified in the SEC’s rules and forms. The disclosure controls and procedures are also intended to ensure that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. As of December 31, 2022, 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, 2022, our disclosure controls and procedures are effective. C hanges in Internal Controls Over Financial Reporting There was no change in our internal control over financial reporting (as defined in Rules 13a-15(d) and 15d-15(d) under the Exchange Act) that occurred during the quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed under the supervision of our Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles. As of December 31, 2022, management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its evaluation, management did not identify any material weaknesses in our internal control over financial reporting and determined that we maintained effective internal control over financial reporting as of December 31, 2022. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. 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. Item 9B. Other Information Not applicable. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 80 PART III. Item 10. Directors, Executive Officers and Corporate Governance Information required by Item 10 of Part III is incorporated herein by reference to the definitive Proxy Statement to be filed by us pursuant to Regulation 14A of the General Rules and Regulations under the Securities Exchange Act of 1934 within 120 days after the close of the year ended December 31, 2022. We have adopted a Code of Business Conduct and Ethics that applies to directors and employees, including the Chief Executive Officer, the Chief Financial Officer, controller and persons performing similar functions. The Code of Business Conduct and Ethics is posted on our website at http://ir.mammothenergy.com/corporate-governance.cfm. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the Code of Business Conduct and Ethics by posting such information on our website at the address specified above. Item 11. Executive Compensation The information required by Item 11 of Part III is incorporated by reference to our definitive Proxy Statement within 120 days after the close of the year ended December 31, 2022. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by Item 12 of Part III is incorporated by reference to our definitive Proxy Statement within 120 days after the close of the year ended December 31, 2022. Item 13. Certain Relationships and Related Transactions and Director Independence The information required by Item 13 of Part III is incorporated by reference to our definitive Proxy Statement within 120 days after the close of the year ended December 31, 2022. Item 14. Principal Accountant Fees and Services The information required by Item 14 of Part III is incorporated by reference to our definitive Proxy Statement within 120 days after the close of the year ended December 31, 2022. 81 PART IV. Item 15. Exhibits, Financial Statement Schedules The following documents are filed as part of this report or incorporated by reference herein: (1) Financial Statements Page Financial Statements Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 1 Consolidated Balance Sheets 3 Consolidated Statement of Comprehensive Loss 4 Consolidated Statement of Changes in Equity 5 Consolidated Statement of Cash Flows 6 Notes to Consolidated Financial Statements 8 (2) Financial Statement Schedules All financial statement schedules have been omitted because they are not applicable or the required disclosure is presented in the financial statements or notes thereto. (3) Exhibits Exhibit Number Exhibit Description 3.1 Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on November 15, 2016). 3.2 Amended and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on November 15, 2016). 4.1 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). 4.2 Specimen Certificate for shares of common stock, par value $0.01 per share, of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Amendment No. 2 to the Registration Statement on Form S-1/A (File No. 333-213504), filed with the SEC on October 3, 2016). 4.3 Registration Rights Agreement, dated October 12, 2016, by and between the Company and Mammoth Energy Holdings, LLC (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on November 15, 2016). 10.1 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). 10.2 Mammoth Energy Securities, Inc. 2016 Equity Incentive Plan (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 November 15, 2016). 10.3 Form of Option Agreement (incorporated by reference to Exhibit 10.12 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A (File No. 333-213504), filed with the SEC on September 23, 2016). 10.4 Form of Restricted Stock Unit Agreement (incorporated by reference to Exhibit 10.13 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A (File No. 333-213504), filed with the SEC on September 23, 2016). 10.5† Form of Director and Officer Indemnification Agreement (incorporated by reference to Exhibit 10.14 to the Company’s Amendment No. 2 to the Registration Statement on Form S-1/A (File No. 333-213504), filed with the SEC on October 3, 2016). 10.6 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. 001-37917), filed with the SEC on November 14, 2017). 10.7 Amendment No. 1 to Emergency Master Service Agreement for PREPA’s Electrical Grid Repairs-Hurricane Maria, executed on November 1, 2017, by the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (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 November 14, 2017). 10.8 Amendment No. 2 to Emergency Master Service Agreement for PREPA’s Electrical Grid Repairs-Hurricane Maria, dated as of December 8, 2017, between the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on January 31, 2018). 10.9 Amendment No. 3 to Emergency Master Service Agreement for PREPA’s Electrical Grid Repairs-Hurricane Maria, dated December 21, 2017, between the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on January 31, 2018). 10.10 Amendment No. 4 to Emergency Master Service Agreement for PREPA’s Electrical Grid Repairs-Hurricane Maria, dated as of January 28, 2018, between the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K (File No. 001-37917), filed with the SEC on January 31, 2018). 10. 1 1 Amendment No. 5 to Emergency Master Service Agreement for PREPA's Electrical Grid Repairs-Hurricane Maria, dated as of February 27, 2018, between the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (incorporated by reference to Exhibit 10.34 to the Company's Annual Report on Form 10-K (File No. 001-37917), filed with the SEC on February 28, 2018). 82 10. 12 Master Service Contract for PREPA's Electrical Grid Repairs Hurricane Maria, executed on May 26, 2018, by the Puerto Rico Electric Power Authority (PREPA) and Cobra Acquisitions LLC (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 May 31, 2018). 10. 13 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). 10. 14 First Amendment to Amended and Restated Revolving Credit and Security Agreement (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 November 12, 2019). 10. 1 5 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). 10. 1 6 N745BW Helicopter Lease Agreement, dated as of January 10, 2020 and effective as of January 1, 2020, by and between Cobra Aviation Services LLC and Cobra Acquisitions LLC and Brim Equipment Leasing 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 11, 2020). 10. 1 7 N745MB Helicopter Lease Agreement, dated as of January 10, 2020 and effective as of January 1, 2020, by and between Cobra Aviation LLC and Brim Equipment Leasing LLC (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37917), filed with the SEC on May 11, 2020). 10. 18 N810LA Helicopter Lease Agreement, dated as of January 10, 2020 and effective as of January 1, 2020, by and between Cobra Aviation LLC and Brim Equipment Leasing LLC (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 May 11, 2020). 10. 19 N902TX Helicopter Lease Agreement, dated as of January 10, 2020 and effective as of January 1, 2020, by and between Air Rescu e Systems Corporation and Brim Equipment Leasing LLC (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 May 11, 2020). 10. 2 0 N904AF Helicopter Lease Agreement, dated as of January 10, 2020 and effective as of January 1, 2020, by and between Cobra Aviation LLC and Brim Equipment Leasing LLC (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q (File No. 001-37917), filed with the SEC on May 11, 2020). 10.2 1 First Amendment to the Mammoth Energy Services, Inc. 2016 Equity Incentive Plan (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, filed with the SEC on June 10, 202 0 ). 10. 2 2 Third Amendment to Amended and Restated Credit Agreement, dated as of November 3, 2021 (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 November 5, 2021). 10. 2 3 Fourth Amendment to Amended and Restated Credit Agreement, dated as of February 28, 2022 (incor porated by reference to Exhibit 10.29 to the Company's Annual Report on Form 10-K (File No. 001-37917), filed with the SEC on March 4, 2022). 21.1* List of Significant Subsidiaries of the Company. 23.1* John T. Boyd Company Consent. 23.2* Consent of Grant Thornton LLP with respect to the financial statements of Mammoth Energy Services Inc. 31.1* Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 31.2* Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(a) promulgated under the Securities Exchange Act of 1934, as amended. 32.1** Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. 32.2** Certification of Chief Financial Officer of the Registrant pursuant to Rule 13a-14(b) promulgated under the Securities Exchange Act of 1934, as amended, and Section 1350 of Chapter 63 of Title 18 of the United States Code. 95.1* Mine Safety Disclosure Exhibit. 96.1 Technical Report Summary for Piranha and Taylor Mines prepared by John T. Boyd Company (incorporated by reference to Exhibit 96.1 to the Company's Annual Report on Form 10-K (File No. 001-37917) filed with the SEC on March 4, 2022) . 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Labels Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. * Filed herewith. ** Furnished herewith, not filed. + Management contract, compensatory plan or arrangement. Item 16. Form 10-K Summary None. 83 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MAMMOTH ENERGY SERVICES, INC. Date: February 24, 2023 By: /s/ Mark Layton Mark Layton Chief Financial Officer Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Arty Straehla Chief Executive Officer (principal executive officer) and Director February 24, 2023 Arty Straehla /s/ Mark Layton Chief Financial Officer (principal financial and accounting officer) February 24, 2023 Mark Layton /s/ Arthur Amron Director (Chairman of the Board) February 24, 2023 Arthur Amron /s/ James D. Palm Director February 24, 2023 James D. Palm /s/ Paul Jacobi Director February 24, 2023 Paul Jacobi /s/ Arthur Smith Director February 24, 2023 Arthur Smith /s/ Corey Booker Director February 24, 2023 Corey Booker 84 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Shareholders Mammoth Energy Services, Inc. Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Mammoth Energy Services, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These financial statements are the responsibility of the Company’s management. 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. 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, 2022, the consolidated financial statements include accounts receivable from PREPA for approximately $227.0 million for services performed as well as receivables of approximately $152.0 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 three individuals, including the former president of Cobra, with conspiracy, wire fraud, false statements and disaster fraud. The indictment was 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, which concluded in December 2022. 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 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 Contracts as a critical audit matter. F-1 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. • We obtained an understanding and evaluated the design and implementation of management’s controls over the collectability of the receivable balances from PREPA. • We evaluated the qualitative assessment performed by management by performing the following: ◦ We inquired of management to gain an understanding of the relevant facts and circumstances related to the current status of FEMA’s review of invoices submitted by PREPA for reimbursement, PREPA’s appeals with FEMA on any amounts initially determined to be ineligible for federal assistance, the status of PREPA’s bankruptcy proceedings and the status of the related litigation. ◦ We corroborated the facts and circumstances by obtaining and reviewing the relevant legal documents and correspondence with officials of PREPA, FEMA and the Federal Oversight and Management Board for Puerto Rico, which is 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 regarding the collectability of the accounts receivables from PREPA and whether a loss is probable or reasonably possible. • We assessed the sufficiency of management’s disclosures related to the PREPA receivable and related litigation, including that PREPA’s ability to meet its payment obligations is largely dependent upon funding from FEMA and that the receivable may not be collectible if PREPA (i) does not have or does not obtain the funds necessary to satisfy its obligations 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. /s/ GRANT THORNTON LLP We have served as the Company’s auditor since 2012. Oklahoma City, Oklahoma February 24, 2023 F-2 MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED BALANCE SHEETS ASSETS December 31, 2022 2021 CURRENT ASSETS (in thousands) Cash and cash equivalents $ 17,282 $ 9,899 Short-term investment — 1,762 Accounts receivable, net 456,465 407,550 Receivables from related parties, net 223 88 Inventories 8,883 8,366 Prepaid expenses 13,219 12,381 Other current assets 620 737 Total current assets 496,692 440,783 Property, plant and equipment, net 138,066 176,586 Sand reserves 61,830 64,641 Operating lease right-of-use assets 10,656 12,168 Intangible assets, net 1,782 2,561 Goodwill 11,717 11,717 Deferred income tax asset — 8,094 Other non-current assets 3,935 4,342 Total assets $ 724,678 $ 720,892 LIABILITIES AND EQUITY CURRENT LIABILITIES Accounts payable $ 47,391 $ 37,560 Accrued expenses and other current liabilities 52,297 62,516 Current operating lease liability 5,447 5,942 Current portion of long-term debt 83,520 1,468 Income taxes payable 48,557 42,748 Total current liabilities 237,212 150,234 Long-term debt, net of current portion — 85,240 Deferred income tax liabilities 471 865 Long-term operating lease liability 4,913 5,918 Asset retirement obligations 3,981 3,720 Other long-term liabilities 15,485 11,693 Total liabilities 262,062 257,670 COMMITMENTS AND CONTINGENCIES (Note 19) EQUITY Equity: Common stock, $ 0.01 par value, 200,000,000 shares authorized, 47,312,270 and 46,684,065 issued and outstanding at December 31, 2022 and 2021 473 467 Additional paid in capital 539,138 538,221 Accumulated deficit ( 73,154 ) ( 72,535 ) Accumulated other comprehensive loss ( 3,841 ) ( 2,931 ) Total equity 462,616 463,222 Total liabilities and equity $ 724,678 $ 720,892 The accompanying notes are an integral part of these consolidated financial statements. F-3 MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Years Ended December 31, 2022 2021 2020 REVENUE (in thousands, except per share amounts) Services revenue $ 311,968 $ 182,236 $ 234,081 Services revenue - related parties 1,133 15,782 43,091 Product revenue 48,985 28,799 28,404 Product revenue - related parties — 2,145 7,500 Total revenue 362,086 228,962 313,076 COST AND EXPENSES Services cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $ 55,546 , $ 69,401 and $ 85,481 , respectively, for 2022, 2021, and 2020) 241,323 170,275 205,657 Services cost of revenue - related parties (exclusive of depreciation, depletion, amortization and accretion of $ 0 , $ 0 and $ 0 , respectively, for 2022, 2021, and 2020) 541 531 418 Product cost of revenue (exclusive of depreciation, depletion, amortization and accretion of $ 8,725 , $ 8,993 and $ 9,758 , respectively, for 2022, 2021, and 2020) 36,723 27,520 25,946 Selling, general and administrative (Note 12) 39,554 77,861 66,427 Selling, general and administrative - related parties (Note 12) — 385 758 Depreciation, depletion, amortization and accretion 64,271 78,475 95,317 Gains on disposal of assets, net ( 3,908 ) ( 5,147 ) ( 638 ) Impairment of goodwill — 891 54,973 Impairment of other long-lived assets — 1,212 12,897 Total cost and expenses 378,504 352,003 461,755 Operating loss ( 16,418 ) ( 123,041 ) ( 148,679 ) OTHER INCOME (EXPENSE) Interest expense, net ( 11,506 ) ( 6,406 ) ( 5,397 ) Other income, net 40,912 5,669 32,410 Other (expense) income, net - related parties — ( 515 ) 1,890 Total other income (expense) 29,406 ( 1,252 ) 28,903 Income (loss) before income taxes 12,988 ( 124,293 ) ( 119,776 ) Provision (benefit) for income taxes 13,607 ( 22,863 ) ( 12,169 ) Net loss $ ( 619 ) $ ( 101,430 ) $ ( 107,607 ) OTHER COMPREHENSIVE LOSS Foreign currency translation adjustment, net of tax of $ 0 , ($ 36 ) and ($ 54 ), respectively, for 2022, 2021, and 2020 ( 910 ) 134 241 Comprehensive loss $ ( 1,529 ) $ ( 101,296 ) $ ( 107,366 ) Net loss per share (basic) (Note 15) $ ( 0.01 ) $ ( 2.18 ) $ ( 2.36 ) Net loss per share (diluted) (Note 15) $ ( 0.01 ) $ ( 2.18 ) $ ( 2.36 ) Weighted average number of shares outstanding (Note 15) 47,175 46,428 45,644 Weighted average number of shares outstanding, including dilutive effect (Note 15) 47,175 46,428 45,644 The accompanying notes are an integral part of these consolidated financial statements. F-4 MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Accumulated Additional Other Common Stock Retained Paid-In Comprehensive Shares Amount Earnings (Deficit) Capital Loss Total (in thousands) Balance at January 1, 2020 45,109 $ 451 $ 136,502 $ 535,094 $ ( 3,306 ) $ 668,741 Stock based compensation 660 7 — 1,945 — 1,952 Net loss — — ( 107,607 ) — — ( 107,607 ) Other comprehensive income — — — — 241 241 Balance at December 31, 2020 45,769 $ 458 $ 28,895 $ 537,039 $ ( 3,065 ) $ 563,327 Stock based compensation 915 9 — 1,182 — 1,191 Net loss — — ( 101,430 ) — — ( 101,430 ) Other comprehensive income — — — — 134 134 Balance at December 31, 2021 46,684 $ 467 $ ( 72,535 ) $ 538,221 $ ( 2,931 ) $ 463,222 Stock based compensation 628 6 — 917 — 923 Net loss — — ( 619 ) — — ( 619 ) Other comprehensive loss — — — — ( 910 ) ( 910 ) Balance at December 31, 2022 47,312 $ 473 $ ( 73,154 ) $ 539,138 $ ( 3,841 ) $ 462,616 The accompanying notes are an integral part of these consolidated financial statements. F-5 MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022 2021 2020 Cash flows from operating activities (in thousands) Net loss $ ( 619 ) $ ( 101,430 ) $ ( 107,607 ) Adjustments to reconcile net loss to cash provided by (used in) operating activities: Stock based compensation 923 1,191 1,952 Depreciation, depletion, amortization and accretion 64,271 78,475 95,317 Amortization of coil tubing strings — — 359 Amortization of debt origination costs 777 665 831 Bad debt expense (Note 2) 3,389 41,662 21,958 Gains on disposal of assets, net ( 3,908 ) ( 5,147 ) ( 683 ) Gains from sales of equipment damaged or lost down-hole ( 604 ) ( 288 ) ( 696 ) Impairment of goodwill — 891 54,973 Impairment of other long-lived assets — 1,212 12,897 Deferred income taxes 7,700 ( 32,005 ) ( 12,186 ) Other ( 117 ) 280 ( 143 ) Changes in assets and liabilities: Accounts receivable, net ( 52,392 ) ( 55,898 ) ( 32,621 ) Receivables from related parties ( 135 ) 28,373 ( 40,333 ) Inventories ( 517 ) 3,654 5,103 Prepaid expenses and other assets ( 710 ) 1,444 1,996 Accounts payable 6,680 ( 2,982 ) 2,004 Accrued expenses and other liabilities ( 15,272 ) 12,380 3,198 Income taxes payable 5,800 8,658 648 Net cash provided by (used in) operating activities 15,266 ( 18,865 ) 6,967 Cash flows from investing activities: Purchases of property and equipment ( 12,737 ) ( 5,843 ) ( 6,761 ) Purchases of property and equipment from related parties — — ( 76 ) Contributions to equity investee — — ( 490 ) Proceeds from disposal of property and equipment 10,613 11,350 6,782 Purchase of short-term investment — — ( 1,750 ) Net cash (used in) provided by investing activities ( 2,124 ) 5,507 ( 2,295 ) Cash flows from financing activities: Borrowings on long-term debt 197,975 73,100 35,351 Repayments of long-term debt ( 199,430 ) ( 68,911 ) ( 32,800 ) Proceeds from sale-leaseback transaction 4,589 9,473 5,000 Payments on sale-leaseback transaction ( 4,429 ) ( 2,951 ) ( 268 ) Principal payments on financing leases and equipment financing notes ( 4,306 ) ( 2,283 ) ( 1,966 ) Debt issuance costs — — ( 1,051 ) Net cash (used in) provided by financing activities ( 5,601 ) 8,428 4,266 Effect of foreign exchange rate on cash ( 158 ) 7 12 Net increase (decrease) in cash and cash equivalents 7,383 ( 4,923 ) 8,950 Cash and cash equivalents at beginning of period 9,899 14,822 5,872 Cash and cash equivalents at end of period $ 17,282 $ 9,899 $ 14,822 The accompanying notes are an integral part of these consolidated financial statements. F-6 MAMMOTH ENERGY SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2022 2021 2020 Supplemental disclosure of cash flow information: (in thousands) Cash paid for interest $ 10,164 $ 4,827 $ 4,729 Cash paid (recovered) for income taxes $ 106 $ 829 $ ( 617 ) Supplemental disclosure of non-cash transactions: Purchases of property and equipment included in accounts payable $ 4,736 $ 1,535 $ 1,312 Right-of-use assets obtained for financing lease liabilities $ 3,058 $ 1,750 $ 2,431 The accompanying notes are an integral part of these consolidated financial statements. F-7 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation The accompanying consolidated financial statements were prepared in accordance with the rules and regulations of the Securities and Exchange Commission, and reflect all adjustments, which in the opinion of management are necessary for the fair presentation of the results. Mammoth Energy Services, Inc. (“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, equipment rentals, remote accommodation services and equipment manufacturing. The Company was incorporated in Delaware in June 2016. The following companies (“Operating Entities”) are included in these consolidated financial statements: Bison Drilling and Field Services, LLC (“Bison Drilling”), formed November 15, 2010; Bison Trucking LLC (“Bison Trucking”), formed August 9, 2013; Anaconda Rentals LLC, formerly known as White Wing Tubular Services LLC, formed July 29, 2014; Barracuda Logistics LLC (“Barracuda”), formed October 24, 2014; Mr. Inspections LLC (“MRI”), formed January 25, 2015; Panther Drilling Systems LLC (“Panther”), formed December 11, 2012; Redback Energy Services, LLC (“Redback Energy”), formed October 6, 2011; Redback Coil Tubing, LLC (“Coil Tubing”), formed May 15, 2012; Redback Pump Down Services LLC (“Pump Down”), formed January 16, 2015; Muskie Proppant LLC (“Muskie”), formed September 14, 2011; Stingray Pressure Pumping LLC (“Stingray Pressure Pumping”), acquired November 24, 2014; Silverback Energy LLC (“Silverback”), formerly known as Stingray Logistics LLC, acquired November 24, 2014; Great White Sand Tiger Lodging Ltd. (“Sand Tiger”), formed October 1, 2007; WTL Oil LLC (“WTL”), formerly known as Silverback Energy Services LLC, formed June 8, 2016; Mammoth Equipment Leasing LLC, formed November 14, 2016; Cobra Acquisitions LLC (“Cobra”), formed January 9, 2017; Lion Power Services LLC (“Lion Power”), formerly known as Cobra Energy LLC, formed January 25, 2017; Mako Acquisitions LLC (“Mako”), formed March 28, 2017; Piranha Proppant LLC (“Piranha”), formed March 28, 2017; Higher Power Electrical LLC (“Higher Power”), acquired April 21, 2017; Stingray Energy Services LLC (“SR Energy”), acquired June 5, 2017; Stingray Cementing LLC (“Cementing”), acquired June 5, 2017; Sturgeon Acquisitions LLC (“Sturgeon”), acquired June 5, 2017; Taylor Frac, LLC (“Taylor Frac”), acquired June 5, 2017; Taylor Real Estate Investments, LLC (“Taylor RE”), acquired June 5, 2017; South River Road, LLC (“South River”), acquired June 5, 2017; 5 Star Electric, LLC (“5 Star”), acquired July 1, 2017; Tiger Shark Logistics LLC (“Tiger Shark”), formed October 20, 2017; Cobra Aviation Services LLC (“Cobra Aviation”), formed January 2, 2018; Bison Sand Logistics LLC (“Bison Sand”), formed January 8, 2018; Dire Wolf Energy Services LLC (“Dire Wolf”), formed January 8, 2018; Black Mamba Energy LLC (“Black Mamba”), formed March 28, 2018; Stingray Cementing and Acidizing LLC (“Stingray Cementing and Acidizing”), formerly known as RTS Energy Services LLC (“RTS”), acquired June 15, 2018; Aquahawk Energy LLC (“Aquahawk”), formed June 28, 2018; Ivory Freight Solutions LLC (“Ivory Freight”), formed July 26, 2018; Python Equipment LLC (“Python”), formed December 5, 2018; IFX Transport LLC (“IFX”), formed December 5, 2018; Air Rescue Systems LLC (“ARS”), acquired December 21, 2018; Leopard Aviation LLC (“Leopard”), formed April 29, 2019; Predator Aviation LLC (“Predator Aviation”), formed April 19, 2019; Anaconda Manufacturing LLC (“Anaconda”), formed July 31, 2019; Aquawolf LLC (“Aquawolf”), formed September 25, 2019; and Falcon Fiber Solutions LLC (“Falcon”), formed March 3, 2021. Operations 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 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 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 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. The Company's operations are concentrated in North America. During the periods presented, the Company has operated its oil and natural gas businesses in the Permian Basin, the Utica Shale, the Eagle Ford Shale, the Marcellus Shale, the Granite Wash, the SCOOP, the STACK, the Cana-Woodford Shale, the Cleveland Sand and the oil sands located in F-8 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Northern Alberta, Canada. The Company’s oil and natural gas business depends in large part on the conditions in the oil and natural gas industry and, specifically, on the amount of capital spending by its customers. 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. 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. 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. The Company’s infrastructure business depends on infrastructure 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. 2. Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements are prepared in accordance with GAAP and include the accounts of the Company and its subsidiaries and the variable interest entities (“VIE”) for which the Company is the primary beneficiary. All material intercompany accounts and transactions between the entities within the Company have been eliminated. Variable Interest Entities The Company consolidates a VIE when it is determined to be the primary beneficiary, which is the party that has both (i) the power to direct the activities that most significantly impact the VIE’s economic performance and (ii) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. See Note 11 for more information on the Company’s VIEs. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. 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, 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. Previously, the Company included gains and losses on disposal of assets within other income (expense), net on the consolidated statement of comprehensive loss. The Company now presents gains and losses on disposal of assets as a separate line titled “Gains on disposal of assets, net”. Cash and Cash Equivalents and Short-Term Investment All highly liquid investments with an original maturity of three months or less are considered cash equivalents. The Company maintains its cash accounts in financial institutions that are insured by the Federal Deposit Insurance Corporation, with the exception of cash held by Sand Tiger in a Canadian financial institution. At December 31, 2022, the Company had $ 3.4 million, in Canadian dollars, of cash in Canadian accounts. 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 at December 31, 2021 consisted of a certificate of deposit with a maturity over 90 days. F-9 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Accounts Receivable Accounts receivable include amounts due from customers for services performed or goods sold. The Company grants credit to customers in the ordinary course of business and generally does not require collateral. Prior to granting credit to customers, the Company analyzes the potential customer’s risk profile by utilizing a credit report, analyzing macroeconomic factors and using its knowledge of the industry, among other factors. Most areas in the continental United States in which the Company operates provide for a mechanic’s lien against the property on which the service is performed if the lien is filed within the statutorily specified time frame. 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, 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, 2022, 2021 and 2020, the Company charged interest on delinquent trade accounts receivable pursuant to the terms of its agreements with PREPA totaling $ 41.3 million, $ 36.6 million and $ 32.2 million, respectively. These amounts are included in other income, net on the consolidated statement of comprehensive loss. Included in “accounts receivable, net” on the consolidated balance sheets as of December 31, 2022 and 2021 were interest charges of $ 152.0 million and $ 110.8 million, respectively. 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, 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. In the event the Company expects that a customer may not be able to make required payments, the Company would increase the allowance through a charge to income in the period in which that determination is made. 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 collectability. F-10 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Following is a roll forward of the allowance for doubtful accounts for the years ended December 31, 2022, 2021 and 2020 (in thousands): Balance, January 1, 2020 $ 5,154 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 ) Deductions for uncollectible receivables written off ( 2,350 ) Balance, December 31, 2020 30,139 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 515 Additions charged to other income (expense), net 1,474 Recoveries of receivables previously charged to bad debt expense ( 211 ) Deductions for uncollectible receivables written off ( 83,049 ) Balance, December 31, 2021 18,085 Additions charged to bad debt expense 3,550 Recoveries of receivables previously charged to bad debt expense ( 161 ) Deductions for uncollectible receivables written off ( 17,887 ) Balance, December 31, 2022 $ 3,587 The Company has made specific reserves consistent with Company policy which resulted in additions to allowance for doubtful accounts totaling $ 3.6 million, $ 0.7 million and $ 3.3 million, respectively, for the years ended December 31, 2022, 2021 and 2020. These additions were charged to bad debt expense based on the factors described above. Also, during the year ended December 31, 2021, the Company recorded additions to allowance for doubtful accounts of $ 0.3 million related to insurance claim receivables for its directors and officers liability policy. The Company will continue to pursue collection until such time as final determination is made consistent with Company policy. Gulfport 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. See Notes 3 and 19 for additional information. Following is a roll forward of the allowance for doubtful accounts specifically related to Gulfport (in thousands): Balance, January 1, 2021 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 Recoveries of receivables previously charged to bad debt expense ( 147 ) Deductions for uncollectible receivables written off ( 11,567 ) Balance, December 31, 2022 $ — PREPA As of December 31, 2022 and 2021, PREPA owed the Company $ 379.0 million and $ 337.8 million, respectively, which includes interest charged on delinquent balances. PREPA is currently subject to bankruptcy proceedings, which were filed F-11 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 Federal Emergency Management Agency (“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 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. FEMA approved the appeal in part and denied the appeal in part. FEMA found that staffing costs of $ 24.4 million are eligible for funding. 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. On June 7, 2022, Cobra filed a motion to lift the stay order. On June 29, 2022 the Court denied Cobra’s motion and extended the stay to January 2023. On November 21, 2022, FEMA issued a Determination Memorandum related to the 100 % federal funded portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $ 5.6 million in costs were not authorized costs under the contract. On December 21, 2022, FEMA issued a Determination Memorandum related to the 90 % federal cost share portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $ 68.1 million in costs were not authorized costs under the contract. PREPA filed a first-level administrative appeal of the November 21, 2022 Determination Memorandum and has indicated that they will review the December 21, 2022 Determination Memorandums and, to the extent they feel plausible, file a first-level administrative appeal of the unauthorized amounts. On January 7, 2023, Cobra and PREPA filed a joint status report with the Court, in which PREPA requested that the Court continue the stay through July 31, 2023 and Cobra requested that the stay be lifted. On January 18, 2023, the Court entered an order extending the stay and directing the parties to file a further status report addressing (i) the status of any administrative appeals in connection with the November and December determination memorandums regarding the second contract, (ii) the status of the criminal case against the former Cobra president and the FEMA official that concluded in December 2022, and (iii) a summary of the outstanding and unpaid amounts arising from the first and second contracts and whether PREPA disputes Cobra’s entitlement to these amounts with the Court by July 31, 2023. On January 20, 2023, Cobra submitted a certified claim for approximately $ 379 million to FEMA pursuant to the federal Contract Disputes Act. On February 1, 2023, FEMA notified Cobra that it had reviewed the claim and determined that no contract, expressed or implied, exists between FEMA and Cobra. Therefore, no final decision will be issued in response to Cobra’s claim. Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal. 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, including the determination memorandums mentioned above, 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. 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, 2022 or 2021. 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. F-12 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Inventory 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. Inventory is stated at the lower of cost or market (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. Inventory manufactured at the Company’s sand production facilities includes direct excavation costs, processing costs and overhead allocation. Stockpile tonnages are calculated by measuring the number of tons added and removed from the stockpile. Costs are calculated on a per ton basis and are applied to the stockpiles based on the number of tons in the stockpile. Inventory transported for sale at the Company’s terminal facility includes the cost of purchased or manufactured sand, plus transportation related charges. See Note 4 for additional disclosure related to inventory. Prepaid Expenses Prepaid expenses primarily consist of insurance costs and rail car freight and lease expense. These costs are expensed over the periods that they benefit. Property and Equipment Property and equipment, including renewals and betterments, are capitalized and stated at cost, while maintenance and repairs that do not increase the capacity, improve the efficiency or safety, or improve or extend the useful life are charged to operations as incurred. Disposals are removed at cost, less accumulated depreciation, and any resulting gain or loss is recorded in operations. Depreciation is calculated using the straight-line method over the shorter of the estimated useful life, or the remaining lease term, as applicable. Depreciation does not begin until property and equipment is placed in service. Once placed in service, depreciation on property and equipment continues while being repaired, refurbished, or between periods of deployment. Sand Reserves Sand reserve costs include engineering, mineralogical studies and other related costs to develop the mine, the removal of overburden to initially expose the mineral and building access ways. Exploration costs are expensed as incurred and classified as product cost of revenue. Capitalization of mine development project costs begins once the deposit is classified as proven and probable reserves. Drilling and related costs are capitalized for deposits where proven and probable reserves exist and the activities are directed at obtaining additional information on the deposit or converting non-reserve minerals to proven and probable reserves and the benefit is to be realized over a period greater than one year. Mining property and development costs are amortized using the units-of-production method on estimated measured tons in in-place reserves. The impact of revisions to reserve estimates is recognized on a prospective basis. Impairment of Long-Lived Assets The Company reviews long-lived assets for recoverability in accordance with the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 360, Impairment or Disposal of Long-Lived Assets , which requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. These evaluations for impairment are significantly impacted by estimates of revenues, costs and expenses and other factors. If long-lived assets are considered to be impaired, the impairment to be recognized is measured by the amount in which the carrying amount of the assets exceeds the fair value of the assets. See Note 6 for additional disclosure related to impairment of long-lived assets. Goodwill Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. If it is determined that an impairment exists, an impairment charge is recognized for the excess of carrying value over implied fair value. The fair value is determined using a combination of the income and market approaches. See Notes 6 and 7 for additional disclosures related to goodwill. Other Non-Current Assets Other non-current assets primarily consist of deferred financing costs on our credit facility (see Note 10), sales tax receivables and our equity method investment (see Note 8). 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 F-13 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Investments are evaluated for impairment and a charge to earnings is recognized when any identified impairment is determined to be other than temporary. Asset Retirement Obligations Mine reclamation costs, future remediation costs for inactive mines and other contractual site remediation costs are accrued based on management’s best estimate at the end of each period of the costs expected to be incurred at a site. Such cost estimates include, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates are reflected in earnings in the period an estimate is revised. Following is a roll forward of the Company’s asset retirement obligations for the years ended December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Balance as of beginning of period $ 3,720 $ 4,746 Additions and revisions of prior estimates 176 ( 385 ) Accretion expense 136 146 Liabilities settled — ( 782 ) Foreign currency translation adjustment ( 51 ) ( 5 ) Asset retirement obligation as of end of period $ 3,981 $ 3,720 Amortizable Intangible Assets Intangible assets subject to amortization include customer relationships and trade names. Customer relationships are amortized based on an estimated attrition factor and trade names are amortized over their estimated useful lives. See Notes 6 and 7 for additional disclosures related to intangible assets. Fair Value of Financial Instruments 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 debt. 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 debt approximates it s carrying value because the cost of borrowing fluctuates based upon market conditions. Revenue Recognition 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 $ 21.1 million and $ 22.0 million, respectively, of unbilled revenue included in accounts receivable, net in the consolidated balance sheets at December 31, 2022 and 2021. The Company had $ 7.5 million and $ 3.2 million, respectively, of deferred revenue included in accrued expenses and other current liabilities in the consolidated balance sheets at December 31, 2022 and 2021. Loss per Share Loss per share is computed by dividing net loss by the weighted average number of outstanding shares. See Note 15. Equity-based Compensation The Company measures equity-based payments at fair value on the date of grant and expenses the value of these equity-based payments in compensation expense over the applicable vesting periods. See Note 16. Stock-based Compensation The Company’s stock-based compensation program consists of restricted stock units granted to employees and restricted stock units granted to non-employee directors under the Mammoth Energy Services, Inc. 2016 Incentive Plan, as amended (the “2016 Plan”). The Company recognizes in its financial statements the cost of employee services received in exchange for restricted stock based on the fair value of the equity instruments as of the grant date. In general, this value is amortized over the vesting period; for grants with a non-substantive service condition, this value is recognized immediately. Amounts are recognized in cost of revenue and selling, general and administrative expenses. See Note 17. F-14 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Income Taxes The Company’s operations are included in a consolidated federal income tax return and other state returns. Accordingly, the Company has recognized deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases for all our subsidiaries as if each entity were a corporation, regardless of its actual characterization for U.S. federal income tax purposes. Under FASB ASC 740, Income Taxes , deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of deferred tax assets and liabilities as a result of a change in tax rate are recognized in the period that includes the statutory enactment date. A valuation allowance for deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized. To assess that likelihood, the Company uses estimates and judgments regarding future taxable income, as well as the jurisdiction in which such taxable income is generated, to determine whether a valuation allowance is required. Certain income from our infrastructure services segment and income from our remote accommodations business is subject to foreign income taxes, and such taxes are provided in the financial statements pursuant to FASB ASC 740 . 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. The Company has recorded interest and penalty payable of $ 2.7 million and $ 1.0 million at December 31, 2022 and 2021, respectively, related to the 2020 and 2021 tax year returns in Puerto Rico. It is the Company’s policy to recognize interest and applicable penalties in income tax expense. Litigation and Contingencies 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. Liabilities for estimated losses are accrued if the potential loss from any claim or legal proceeding is considered probable and the amount can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount is reasonably estimable. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates. See Note 19. Foreign Currency Translation 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 loss. Assets and liabilities denominated in foreign currencies, if any, are re-measured at the balance sheet date. Transaction gains or losses are included as a component of current period earnings. Environmental Matters The Company is subject to various federal, state and local laws and regulations relating to the protection of the environment. Management has established procedures for the ongoing evaluation of the Company’s operations, to identify potential environmental exposures and to comply with regulatory policies and procedures. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation are expensed as incurred. Liabilities are recorded when environmental costs are probable and the costs can be reasonably estimated. The Company maintains insurance which may cover in whole or in part certain environmental expenditures. As of December 31, 2022 and 2021, there were no probable environmental matters. 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. F-15 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Concentrations of Credit Risk and Significant Customers Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents in excess of federally insured limits and trade receivables. Following is a summary of our significant customers based on accounts receivable balances at December 31, 2022 and 2021 and revenues derived for the years ended December 31, 2022, 2021 and 2020: REVENUES ACCOUNTS RECEIVABLE Years Ended December 31, At December 31, 2022 2021 2020 2022 2021 Customer A (a) 10 % 6 % — % — % — % Customer B (b) — % — % — % 83 % 83 % Customer C (c) — % 7 % 16 % — % — % Customer D (d) — % 3 % 15 % — % — % a. Customer A is a third-party customer. Revenues and the related accounts receivable balances earned from Customer A were derived from the Company’s well completion services segment. b. Customer B is a third-party customer. Revenues and the related accounts receivable balances earned from Customer B were derived from the Company’s infrastructure services segment. Accounts receivable for Customer B also includes receivables due for interest charged on delinquent accounts receivable. c. Customer C 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. Revenues and the related accounts receivable balances earned from Customer C were derived from the Company’s well completion services segment, natural sand proppant services segment and other businesses. Accounts receivable for Customer C also included receivables due for interest charged on delinquent accounts receivable. d. Customer D is a third-party customer. Revenues and the related accounts receivable balances earned from Customer D were derived from the Company’s infrastructure services segment. 3. Revenues The Company’s primary revenue streams include well completion services, infrastructure services, natural sand proppant services, drilling services and other services, which includes coil tubing, pressure control, equipment rentals, full service transportation, crude oil hauling, remote accommodations and equipment manufacturing. See Note 20 for the Company’s revenue disaggregated by type. 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. Well Completion Services Well completion services are typically provided based upon a purchase order, contract or on a spot market basis. Services are provided on a day rate, contracted or hourly basis. Generally, the Company accounts for well completion services as a single performance obligation satisfied over time. In certain circumstances, the Company supplies proppant that is utilized for pressure pumping as part of the agreement with the customer. The Company accounts for these pressure pumping agreements as multiple performance obligations satisfied over time. Jobs for these services are typically short-term in nature and range from a few hours to multiple days. 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. 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. 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. On March 22, 2021, Gulfport listed the Stingray Pressure Pumping contract on its master rejection schedule filed with the bankruptcy court. The Company F-16 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. See Notes 12 and 19 below. Additional revenue is generated through labor charges and the sale of consumable supplies that are incidental to the service being performed. Such amounts are recognized ratably over the period during which the corresponding goods and services are consumed. Infrastructure Services Infrastructure services are typically provided pursuant to master service agreements, repair and maintenance contracts or fixed price and non-fixed price installation contracts. Pricing under these contracts may be unit priced, cost-plus/hourly (or time and materials basis) or fixed price (or lump sum basis). Generally, the Company accounts for infrastructure services as a single performance obligation satisfied over time. In certain circumstances, the Company supplies materials that are utilized during the jobs as part of the agreement with the customer. The Company accounts for these infrastructure agreements as multiple performance obligations satisfied over time. Revenue is recognized over time as work progresses based on the days completed or as the contract is completed. Under certain customer contracts in our infrastructure services segment, the Company warranties equipment and labor performed for a specified period following substantial completion of the work. Natural Sand Proppant Services The Company sells natural sand proppant through sand supply agreements with its customers. Under these agreements, sand is typically sold at a flat rate per ton or a flat rate per ton with an index-based adjustment. The Company recognizes revenue at the point in time when the customer obtains legal title to the product, which may occur at the production facility, rail origin or at the destination terminal. Certain of the Company’s sand supply agreements contain a minimum volume commitment related to sand purchases whereby the Company charges a shortfall payment if the customer fails to meet the required minimum volume commitment. These agreements may also contain make-up provisions whereby shortfall payments can be applied in future periods against purchased volumes exceeding the minimum volume commitment. If a make-up right exists, the Company has future performance obligations to deliver excess volumes of product in subsequent periods. In accordance with ASC 606, if the customer fails to meet the minimum volume commitment, the Company will assess whether it expects the customer to fulfill its unmet commitment during the contractually specified make-up period based on discussions with the customer and management’s knowledge of the business. If the Company expects the customer will make-up deficient volumes in future periods, revenue related to shortfall payments will be deferred and recognized on the earlier of the date on which the customer utilizes make-up volumes or the likelihood that the customer will exercise its right to make-up deficient volumes becomes remote. As of December 31, 2021, the Company had deferred revenue totaling $ 3.0 million, respectively, related to shortfall payments. These amounts are included in accrued expenses and other current liabilities on the consolidated balance sheet. The Company did not have any deferred revenue related to shortfall payments at December 31, 2022. If the Company does not expect the customer will make-up deficient volumes in future periods, the breakage model will be applied and revenue related to shortfall payments will be recognized when the model indicates the customer’s inability to take delivery of excess volumes. During the years ended December 31, 2022, 2021 and 2020, the Company recognized revenue totaling $ 3.1 million, $ 12.0 million and $ 24.8 million, respectively, related to shortfall payments. In certain of the Company’s sand supply agreements, the customer obtains control of the product when it is loaded into rail cars and the customer reimburses the Company for all freight charges incurred. The Company has elected to account F-17 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS for shipping and handling as activities to fulfill the promise to transfer the sand. If revenue is recognized for the related product before the shipping and handling activities occur, the Company accrues the related costs of those shipping and handling activities. Pursuant to its contract with Gulfport, Muskie has agreed to sell and deliver specified amounts of sand to Gulfport. In September 2020, Muskie filed a lawsuit against Gulfport to recover delinquent payments due under this agreement. 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. 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. See Notes 12 and 19 below. Drilling Services Contract drilling services were provided under daywork contracts. Directional drilling services, including motor rentals, are provided on a day rate or hourly basis, and revenue is recognized as work progresses. 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. 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, 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 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. Services are provided on a day rate, contracted or hourly basis. Performance obligations for these services are satisfied over time and revenue is recognized as the work progresses based on the measure of output. Jobs for these services are typically short-term in nature and range from a few hours to multiple days. Practical Expedients The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts in which variable consideration is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied distinct good or service that forms part of a single performance obligation. F-18 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Contract Balances Following is a rollforward of the Company’s contract liabilities (in thousands): Balance, January 1, 2020 $ 7,244 Deduction for recognition of revenue ( 25,047 ) Increase for deferral of shortfall payments 25,436 Increase for deferral of customer prepayments 648 Balance, December 31, 2020 8,281 Deduction for recognition of revenue ( 12,329 ) Increase for deferral of shortfall payments 7,023 Increase for deferral of customer prepayments 275 Balance, December 31, 2021 3,250 Deduction for recognition of revenue ( 3,207 ) Deduction for rebate credit recognized ( 140 ) Increase for deferral of customer prepayments 7,647 Balance, December 31, 2022 $ 7,550 The Company did not have any contract assets as of December 31, 2022, December 31, 2021 or December 31, 2020. Performance Obligations Revenue recognized in the current period from performance obligations satisfied in previous periods was a nominal amount for the years ended December 31, 2022, 2021 and 2020. As of December 31, 2022, the Company had unsatisfied performance obligations totaling $ 12.8 million, which will be recognized over the next 21 months. 4. Inventories 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): December 31, 2022 2021 Supplies $ 5,167 $ 4,557 Raw materials 974 701 Work in process 2,221 2,435 Finished goods 521 673 Total inventory $ 8,883 $ 8,366 F-19 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. Property, Plant and Equipment Property, plant and equipment include the following (in thousands): December 31, Useful Life 2022 2021 Pressure pumping equipment 3 - 5 years $ 230,760 $ 220,414 Drilling rigs and related equipment 3 - 15 years 110,724 111,478 Machinery and equipment 7 - 20 years 162,634 166,873 Buildings (a) 15 - 39 years 40,316 46,006 Vehicles, trucks and trailers 5 - 10 years 101,580 103,982 Coil tubing equipment 4 - 10 years 6,908 7,592 Land N/A 12,393 13,417 Land improvements 15 years or life of lease 10,053 10,133 Rail improvements 10 - 20 years 13,793 13,793 Other property and equipment (b) 3 - 12 years 18,296 18,235 707,457 711,923 Deposits on equipment and equipment in process of assembly (c) 13,885 3,300 721,342 715,223 Less: accumulated depreciation (d) 583,276 538,637 Total property, plant and equipment, net $ 138,066 $ 176,586 a. Included in Buildings at each of December 31, 2022 and 2021 are costs of $ 7.6 million related to assets under operating leases. b. Included in Other property and equipment at each of December 31, 2022 and 2021 are costs of $ 6.0 million related to assets under operating leases. c. 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. d. Includes accumulated depreciation of $ 8.0 million and $ 6.6 million at December 31, 2022 and 2021, 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, 2022, 2021 and 2020, proceeds from the sale of equipment damaged or lost down-hole were $ 0.8 million, $ 0.3 million, and $ 0.7 million, respectively, and gains on sales of equipment damaged or lost down-hole were $ 0.6 million, $ 0.3 million, and $ 0.7 million, respectively. Proceeds from assets sold or disposed of as well as the carrying value of the related equipment are reflected in other income, net on the consolidated statement of comprehensive loss. For the years ended December 31, 2022, 2021 and 2020, proceeds from the sale of equipment were $ 10.0 million, $ 11.2 million and $ 6.1 million, respectively, and gains from the sale or disposal of equipment were $ 3.9 million, $ 5.1 million and $ 0.7 million, respectively. A summary of depreciation, depletion, amortization and accretion expense is shown below (in thousands): Years Ended December 31, 2022 2021 2020 Depreciation expense $ 60,545 $ 76,093 $ 93,332 Accretion and depletion expense 2,947 1,381 970 Amortization expense 779 1,001 1,015 Depreciation, depletion, amortization and accretion $ 64,271 $ 78,475 $ 95,317 F-20 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6. Impairments 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 2022. Based on this assessment, the Company concluded that it was more likely than not that the fair value of each of the Company's reporting units was greater than their carrying value. Accordingly, no further testing was required and no impairment was recognized during the year ended December 31, 2022. 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. As a result, the Company determined that it was more likely than not that the fair value of certain of its reporting units were less than their carrying value. Therefore, the Company performed an interim goodwill impairment test. The Company impaired goodwill associated with Stingray Pressure Pumping, Silverback and WTL, resulting in a $ 55.0 million impairment charge during the first quarter of 2020. The Company performed an assessment of goodwill during the fourth quarter of 2020 and determined that the fair value of its goodwill was greater than its carrying value. Therefore, no additional impairment was necessary at December 31, 2020. To determine fair value, the Company used a combination of the income and market approaches. The income approach estimates the fair value based on anticipated cash flows that are discounted using a weighted average cost of capital. The market approach estimates the fair value using comparative multiples, which involves significant judgment in the selection of the appropriate peer group companies and valuation multiples. Impairment of Other Long-Lived Assets 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. As a result, the Company determined that it was more likely than not that the fair value of certain of its oilfield services assets were less than their carrying value. Therefore, the Company performed an interim impairment test. As a result of the test, the Company recorded impairments totaling $ 12.9 million to its fixed assets during the first quarter of 2020. The Company measured the fair values of these assets using direct and indirect observable inputs (Level 2) based on a market approach. The assumptions used in the impairment evaluation for long-lived assets are inherently uncertain and require management’s judgment. A continued period of low oil and natural gas prices or continued reductions in capital expenditures by our customers would likely have an adverse impact on our utilization and the prices that we receive for our services. This could result in the recognition of future material impairment charges on the same, or additional, property and F-21 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS equipment if future cash flow estimates, based upon information then available to management, indicate that their carrying values are not recoverable. 7. Goodwill and Intangible Assets Goodwill Changes in the net carrying amount of goodwill by reporting segment (see Note 20) for the years ended December 31, 2022 and 2021 are presented below (in thousands): Infrastructure Well Completion Sand Other Total Balance as of January 1, 2021 Goodwill $ 891 $ 86,043 $ 2,684 $ 14,830 $ 104,448 Accumulated impairment losses — ( 76,829 ) ( 2,684 ) ( 12,327 ) ( 91,840 ) 891 9,214 — 2,503 12,608 Acquisitions — — — — — Impairment losses (a) ( 891 ) — — — ( 891 ) Balance as of December 31, 2021 Goodwill 891 86,043 2,684 14,830 104,448 Accumulated impairment losses ( 891 ) ( 76,829 ) ( 2,684 ) ( 12,327 ) ( 92,731 ) — 9,214 — 2,503 11,717 Acquisitions — — — — — Impairment losses — — — — — Balance as of December 31, 2022 Goodwill 891 86,043 2,684 14,830 104,448 Accumulated impairment losses ( 891 ) ( 76,829 ) ( 2,684 ) ( 12,327 ) ( 92,731 ) $ — $ 9,214 $ — $ 2,503 $ 11,717 a. See Note 6 for a description of impairment losses recognized. Intangible Assets The Company had the following definite lived intangible assets recorded as of the dates presented below (in thousands): December 31, 2022 2021 Trade names 7,850 7,850 Less: accumulated amortization - trade names ( 6,068 ) ( 5,289 ) Intangible assets, net $ 1,782 $ 2,561 Amortization expense for intangible assets was $ 0.8 million, $ 1.0 million and $ 1.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company recognized impairment of intangible assets totaling $ 1.2 million for the year ended December 31, 2021. See Note 6 for a description of these impairment losses. The original lives of trade names range from 10 to 20 years and as of December 31, 2022 the remaining average useful life was 3.22 years. F-22 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Aggregated expected amortization expense for the future periods is expected to be as follows (in thousands): Year ended December 31: Amount 2023 $ 779 2024 710 2025 91 2026 91 2027 45 Thereafter 66 $ 1,782 8. Equity Method Investment 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. 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. Brim Acquisitions, through Brim Equipment, owns four commercial helicopters and leases five commercial helicopters for operations, which it uses to provide a variety of services, including short haul, aerial ignition, hoist operations, aerial photography, fire suppression, construction services, animal/capture/survey, search and rescue, airborne law enforcement, power line construction, precision long line operations, pipeline construction and survey, mineral and seismic exploration, and aerial seeding and fertilization. The Company uses the equity method of accounting to account for its investment in Brim Acquisitions, which had a carrying value of approximately $ 3.5 million and $ 3.4 million, respectively, at December 31, 2022 and 2021. 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 $ 0.1 million, ($ 0.3 ) million, and $ 0.6 million respectively, for the years ended December 31, 2022, 2021 and 2020, respectively, which is included in “other income, net” on the consolidated statements of comprehensive loss. The Company made additional investments totaling $ 0.5 million during the year ended December 31, 2020. No additional investments were made during the years ended December 31, 2022 and 2021. F-23 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 9. Accrued Expenses and Other Current Liabilities and Other Long-Term Liabilities Accrued expense and other current liabilities and Other long-term liabilities included the following (in thousands): December 31, 2022 2021 Accrued Expenses and Other Current Liabilities State and local taxes payable $ 13,336 $ 13,772 Financed insurance premiums (a) 10,136 9,852 Deferred revenue 7,550 3,250 Accrued compensation and benefits 6,743 5,133 Sale-leaseback liability (b) 4,501 3,340 Financing leases 4,003 1,834 Equipment financing note (c) 2,329 — Insurance reserves 1,509 1,413 Payroll tax liability 95 2,810 Accrued legal settlement (d) — 18,966 Other 2,095 2,146 Total accrued expenses and other current liabilities $ 52,297 $ 62,516 Other Long-Term Liabilities Sale-leaseback liability (b) $ 6,836 $ 7,318 Equipment financing note (c) 6,047 — Financing leases 2,602 4,375 Total other long-term liabilities $ 15,485 $ 11,693 a. 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, 2022, the applicable interest rates associated with financed insurance premiums ranged from 1.95 % to 5.13 %. As of December 31, 2021, the applicable interest rates associated with financed insurance premiums ranged from 1.95 % to 2.45 %. b. 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. On June 1, 2022, the Company entered into another agreement with FNC whereby the Company sold additional assets from its infrastructure segment to FNC for aggregate proceeds of $ 4.6 million and entered into a 42 -month lease agreement whereby the Company agreed to lease back the assets at a monthly rental rate of $ 0.1 million . Under the agreements, the Company has the option to purchase the assets at the end of the lease terms. The Company recorded liabilities for the proceeds received and will continue to depreciate the assets. The Company has imputed an interest rate so that the carrying amount of the financial liability will be the expected repurchase price at the end of the initial lease terms. c. In December 2022, the Company entered into a 42 month financing arrangement with FNC for the purchase of seven new pressure pumping units for an aggregate value of $ 9.7 million. Under this arrangement, the Company has agreed to make monthly principal and interest payments totaling $ 0.3 million over the term of the agreement. This note is secured by the seven pressure pumping units and bears interest at an imputed rate of approximately 14.3 %. d. On August 2, 2021, the Company reached an agreement to settle a certain legal matter, which was paid during 2022. See Note 19 for additional detail. F-24 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. Debt Debt included the following (in thousands): December 31, 2022 2021 Revolving credit facility 83,520 83,370 Aviation note — 3,371 Unamortized debt issuance costs — ( 33 ) Total debt 83,520 86,708 Less: current portion 83,520 1,468 Total long-term debt $ — $ 85,240 Mammoth Credit Facility On October 19, 2018, Mammoth Inc. and certain of its direct and indirect subsidiaries, as borrowers, entered into an amended and restated revolving credit and security agreement with the lenders party thereto and PNC Bank, National Association, as a lender and as administrative agent for the lenders, as amended and restated (the “revolving credit facility”). The revolving credit facility matures on October 19, 2023. 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. 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. At December 31, 2022, there were outstanding borrowings under the revolving credit facility of $ 83.5 million and $ 19.7 million of available borrowing capacity, after giving effect to $ 6.5 million of outstanding letters of credit and the requirement to maintain a $ 10 million reserve out of the available borrowing capacity. At December 31, 2021, there were outstanding borrowings under the revolving credit facility of $ 83.4 million and $ 16.5 million of borrowing capacity under the facility, after giving effect to $ 9.0 million of outstanding letters of credit. As of December 31, 2022, the Company was in compliance with its financial covenants under the revolving credit facility. 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 ended on February 28, 2022, as discussed below. 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 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; F-25 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS • 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; and • the minimum excess availability covenant was reduced to $ 7.5 million through March 31, 2022, after which the minimum excess availability covenant increased 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 February 22, 2023, the Company had $ 79.7 million in borrowings outstanding under its revolving credit facility, leaving an aggregate of $ 22.3 million of available borrowing capacity under this facility, after giving effect to $ 6.4 million of outstanding letters of credit and the requirement to maintain a $ 10.0 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. The Company’s revolving credit facility is currently scheduled to mature on October 19, 2023. The Company continues to explore various strategic alternatives to extend, refinance or repay its revolving credit facility at or before the scheduled maturity date. There is no guarantee that such extension, refinancing or repayment will be secured. Additionally, any such extended or new credit facility could have terms that are less favorable to the Company than the terms of its existing revolving credit facility, which may significantly increase the Company’s cost of capital and may have a material adverse effect on the Company’s liquidity and financial condition. Aviation Note On November 6, 2020, Leopard and Cobra Aviation entered into a 39 month promissory note agreement with Bank7 (the “Aviation Note”) in an aggregate principal amount of $ 4.6 million and received net proceeds of $ 4.5 million. The Aviation Note bore interest at a rate based on the Wall Street Journal Prime Rate plus a margin of 1 %. The Aviation Note was paid off on September 30, 2022. 11. Variable Interest Entities Dire Wolf and Predator Aviation, wholly owned subsidiaries of the Company, are party to Voting Trust Agreements with TVPX Aircraft Solutions Inc. (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 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. Prior to the transfer of the membership interest to the Voting Trustee, Cobra Aviation was a wholly owned subsidiary of Dire Wolf and Leopard was a wholly owned subsidiary of Predator Aviation. Cobra Aviation owns two helicopters and support equipment, 100 % of the equity interest in ARS and 49 % of the equity interest in Brim Acquisitions. Leopard owns one helicopter. 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, 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 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, 2022. F-26 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. Selling, General and Administrative Expense Selling, general and administrative (“SG&A”) expense includes of the following (in thousands): Years Ended December 31, 2022 2021 2020 Cash expenses: Compensation and benefits $ 13,729 $ 15,064 $ 14,876 Professional services 13,501 11,400 19,905 Other (a) 8,012 9,052 8,828 Total cash SG&A expense 35,242 35,516 43,609 Non-cash expenses: Bad debt provision (b) 3,389 41,662 21,958 Stock based compensation 923 1,068 1,618 Total non-cash SG&A expense 4,312 42,730 23,576 Total SG&A expense $ 39,554 $ 78,246 $ 67,185 a. Includes travel-related costs, information technology expenses, rent, utilities and other general and administrative-related costs. b. 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. 13. Income Taxes The components of income tax provision (benefit) attributable to the Company for the year ended December 31, 2022, 2021 and 2020, respectively, are as follows (in thousands): Year Ended December 31, 2022 2021 2020 U.S. current income tax expense (benefit) $ 61 $ 290 $ ( 6,931 ) U.S. deferred income tax benefit ( 207 ) ( 23,740 ) ( 12,330 ) Foreign current income tax expense 5,846 8,852 6,948 Foreign deferred income tax expense (benefit) 7,907 ( 8,265 ) 144 Total $ 13,607 $ ( 22,863 ) $ ( 12,169 ) F-27 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS A reconciliation of the statutory federal income tax amount to the recorded expense is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Income (loss) before income taxes $ 12,988 $ ( 124,293 ) $ ( 119,776 ) Statutory income tax rate 21 % 21 % 21 % Expected income tax expense (benefit) 2,727 ( 26,102 ) ( 25,153 ) Change in tax rate — — ( 161 ) Interest and penalties 1,677 1,043 — Foreign income tax rate differential 4,311 ( 282 ) 2,556 Foreign earnings (loss) not in reported income 1,565 ( 336 ) 3,252 Foreign tax credits ( 3,646 ) ( 7,749 ) ( 7,133 ) Withholding taxes 1,677 ( 49 ) 1,019 Goodwill impairment — 52 11,544 Other permanent differences 322 426 1,290 State tax benefit ( 1,129 ) ( 2,449 ) ( 1,664 ) CARES act — — ( 2,378 ) Return to provision ( 116 ) 390 894 Change in valuation allowance 6,219 12,193 3,765 Total $ 13,607 $ ( 22,863 ) $ ( 12,169 ) The Company’s effective tax rate was 104.8 % for the year ended December 31, 2022 compared to 18.4 % for the year ended December 31, 2021 and 10.2 % for the year ended December 31, 2020. The effective tax rate for the years ended December 31, 2022 and 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 interest and penalties expense of $ 1.7 million and $ 1.0 million during the years ended December 31, 2022 and 2021, respectively, related to the 2020 and 2021 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. law in response to the COVID-19 pandemic, and among other things, permits the carryback of certain net operating losses. 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 years ended December 31, 2020. F-28 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred tax liabilities attributable to the Company consisted of the following (in thousands): Year Ended December 31, 2022 2021 Deferred tax assets: Allowance for doubtful accounts $ 598 $ 1,241 Lease asset 4,287 4,432 Intangible assets 952 1,070 Accrued liabilities 926 12,833 Net operating loss carryover 9,674 13,447 Foreign tax credits 86,311 83,780 Other 1,396 1,652 Valuation allowance ( 78,298 ) ( 71,612 ) Deferred tax assets 25,846 46,843 Deferred tax liabilities: Property and equipment $ ( 18,989 ) $ ( 28,126 ) Lease liability ( 4,057 ) ( 4,392 ) Other ( 3,271 ) ( 7,096 ) Deferred tax liabilities ( 26,317 ) ( 39,614 ) Net deferred tax (liability) asset $ ( 471 ) $ 7,229 Reflected in accompanying balance sheet as: Deferred income tax asset $ — $ 8,094 Deferred income tax liability ( 471 ) ( 865 ) Total $ ( 471 ) $ 7,229 During the years ended December 31, 2022 and 2021, the Company recorded changes in its valuation allowance of $ 6.2 million and $ 12.2 million, respectively, related to excess foreign tax credits that are not expected to be utilized. The Company has foreign tax credits carryforwards of $ 86.3 million as of December 31, 2022. These credits have a 10 year carryforward period and begin to expire in 2028. The Company maintains a partial valuation allowance related to U.S. foreign tax credit carryforwards, as it cannot objectively assert that these deferred tax assets are more likely than not to be realized. All available positive and negative evidence was weighed to determine whether a valuation allowance was necessary. The more significant evidential matter is the higher foreign tax rate applied to foreign source income in comparison to the U.S. Federal tax rate of 21%. As a result, the Company’s has foreign tax credits in excess of the corresponding U.S. income tax liability for which the foreign tax credits are allowed as an offset and, therefore, are not likely to be realized. At December 31, 2022, the Company had undistributed earnings in its Puerto Rico foreign branch. 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. The Company has recorded interest and penalties payable of $ 2.7 million and $ 1.0 million at December 31, 2022 and 2021, respectively, related to the 2021 and 2020 tax year returns in Puerto Rico. It is the Company’s policy to recognize interest and applicable penalties in income tax expense. The Company did not have any uncertain tax positions for the years ended December 31, 2022 and 2021. The Company’s U.S. federal tax returns for tax years 2017 through 2022 remain subject to examination by the tax authorities. The Company’s state and local income tax returns for tax years 2016 through 2022 remain subject to examination, with few exceptions, by the respective tax authorities. Puerto Rico tax returns for tax years 2017 through F-29 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2022 and Canada tax returns for the tax years 2015 through 2022 remain open to examination by the respective tax authorities. 14. Leases Lessee Accounting The Company recognizes 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 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 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. The rate implicit in the Company’s leases is not readily determinable. Therefore, the Company uses its incremental borrowing rate based on information available at the commencement date of its leases in determining the present value of lease payments. The Company’s incremental borrowing rate reflects the estimated rate of interest that it would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Lease expense consisted of the following for the years ended December 31, 2022 and 2021 (in thousands): Year Ended December 31, 2022 2021 Operating lease expense $ 6,804 $ 9,156 Short-term lease expense 75 335 Finance lease expense: Amortization of right-of-use assets 1,820 1,582 Interest on lease liabilities 215 202 Total lease expense $ 8,914 $ 11,275 Supplemental balance sheet information related to leases as of December 31, 2022 and 2021 is as follows (in thousands): Year Ended December 31, 2022 2021 Operating leases: Operating lease right-of-use assets $ 10,656 $ 12,168 Current operating lease liability 5,447 5,942 Long-term operating lease liability 4,913 5,918 Finance leases: Property and equipment, net $ 7,267 $ 6,065 Accrued expenses and other current liabilities 4,003 1,834 Other liabilities 2,602 4,375 F-30 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Other supplemental information related to leases for the years ended December 31, 2022 and 2021 is as follows (in thousands): Year Ended December 31, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 6,790 $ 9,284 Operating cash flows from finance leases 215 202 Financing cash flows from finance leases 2,655 1,677 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 5,190 $ 594 Finance leases 3,058 1,750 ` Year Ended December 31, 2022 2021 Weighted-average remaining lease term: Operating leases 2.9 years 3.1 years Finance leases 2.0 years 3.3 years Weighted-average discount rate: Operating leases 4.1 % 3.3 % Finance leases 4.3 % 3.3 % Maturities of lease liabilities as of December 31, 2022 are as follows (in thousands): Operating Leases Finance Leases 2023 $ 5,731 $ 4,148 2024 3,708 1,203 2025 1,034 696 2026 147 795 2027 12 — Thereafter 399 — Total lease payments 11,031 6,842 Less: Present value discount 671 237 Present value of lease payments $ 10,360 $ 6,605 Lessor Accounting 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 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, 2022, 2021 and 2020, the Company recognized lease revenue, which is included in “ services F-31 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS revenue” and “services revenue - related parties” on the consolidated statements of comprehensive loss of $ 3.3 million, $ 2.4 million, and $ 1.4 million, respectively. 15. Loss Per Share Year Ended December 31, 2022 2021 2020 (in thousands, except per share data) Basic loss per share: Allocation of earnings: Net loss $ ( 619 ) $ ( 101,430 ) $ ( 107,607 ) Weighted average common shares outstanding 47,175 46,428 45,644 Basic loss per share $ ( 0.01 ) $ ( 2.18 ) $ ( 2.36 ) Diluted loss per share: Allocation of earnings: Net loss $ ( 619 ) $ ( 101,430 ) $ ( 107,607 ) Weighted average common shares, including dilutive effect (a) 47,175 46,428 45,644 Diluted loss per share $ ( 0.01 ) $ ( 2.18 ) $ ( 2.36 ) a. No incremental shares of potentially dilutive restricted stock awards were included for the years ended December 31, 2022, 2021, or 2020 as their effect was antidilutive under the treasury stock method. 16. Equity Based Compensation Upon formation of certain operating entities by Wexford and Gulfport, specified members of management (the “Specified Members”) and certain non-employee members (the “Non-Employee Members”) were granted the right to receive distributions from the operating entities after the contribution member’s unreturned capital balance was recovered (referred to as “Payout” provision). On November 24, 2014, the awards were modified in conjunction with the contribution of the operating entities to Mammoth. These awards were not granted in limited or general partner units. The awards are for interests in the distributable earnings of the members of MEH Sub, Mammoth’s majority equity holder. 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. 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. 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. 17. 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 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. Restricted Stock Units F-32 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The fair value of restricted stock unit awards was determined based on the fair market value of the Company’s common stock on the date of the grant. This value is amortized over the vesting period. 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 Unvested restricted stock units as of January 1, 2020 221,241 $ 22.43 Granted 2,401,446 0.98 Vested ( 660,738 ) 5.32 Forfeited ( 47,167 ) 3.28 Unvested restricted stock units as of December 31, 2020 1,914,782 1.21 Granted 128,205 3.90 Vested ( 914,782 ) 1.52 Forfeited — — Unvested restricted stock units as of December 31, 2021 1,128,205 1.27 Granted 228,310 2.19 Vested ( 628,205 ) 1.54 Forfeited — — Unvested restricted stock units as of December 31, 2022 728,310 1.32 As of December 31, 2022, there was $ 0.4 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 5 months. Included in cost of revenue and selling, general and administrative expenses is stock-based compensation expense of $ 0.9 million, $ 1.2 million and $ 2.0 million, respectively, for the years ended December 31, 2022, 2021 and 2020. 18. Related Party Transactions Transactions between the subsidiaries of the Company and the following companies are included in Related Party Transactions: Wexford, Gulfport; Grizzly Oil Sands ULC (“Grizzly”); El Toro Resources LLC (“El Toro”); Everest Operations Management LLC (“Everest”); Elk City Yard LLC (“Elk City Yard”); Double Barrel Downhole Technologies LLC (“DBDHT”); Caliber Investment Group LLC (“Caliber”); Predator Drilling LLC (“Predator”); and Brim Equipment. Following is a summary of related party transactions (in thousands): Years Ended December 31, At December 31, 2022 2021 2020 2022 2021 REVENUES ACCOUNTS RECEIVABLE Stingray Pressure Pumping and Gulfport (a) $ — $ 14,812 $ 42,460 $ — $ — Muskie and Gulfport (b) — 2,145 7,500 — — SR Energy and Gulfport (c) — — 113 — — Cobra Aviation/ARS/Leopard and Brim Equipment (d) 316 371 446 217 85 Panther and El Toro (e) 814 599 38 — — Other Relationships 3 12 34 6 3 $ 1,133 $ 17,939 $ 50,591 $ 223 $ 88 OTHER ACCOUNTS RECEIVABLE Stingray Pressure Pumping and Gulfport (a) $ — $ 514 $ 1,887 $ — $ — Muskie and Gulfport (b) — 1 3 — — $ — $ 515 $ 1,890 $ — $ — $ 223 $ 88 F-33 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS a. 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. On June 29, 2021, Gulfport ceased to be a related party. See Note 3. b. 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. On June 29, 2021, Gulfport ceased to be a related party. See Note 3. c. SR Energy provided rental services for Gulfport. On June 29, 2021, Gulfport ceased to be a related party. d. Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements. e. Panther provides directional drilling services for El Toro, an entity controlled by Wexford, pursuant to a master service agreement. COST OF REVENUE ACCOUNTS PAYABLE Years Ended December 31, At December 31, 2022 2021 2020 2022 2021 Cobra Aviation/ARS/Leopard and Brim Equipment (a) 77 73 72 3 5 The Company and Caliber (b) 357 351 248 — — Other Relationships 107 107 98 — — $ 541 $ 531 $ 418 $ 3 $ 5 SELLING, GENERAL AND ADMINISTRATIVE COSTS The Company and Wexford (c) — 5 3 — — The Company and Caliber (b) — 374 774 — — Other Relationships — 8 ( 19 ) — — $ — $ 387 $ 758 $ — $ — $ 3 $ 5 a. Cobra Aviation, ARS and Leopard lease helicopters to Brim Equipment pursuant to aircraft lease and management agreements. b. Caliber, an entity controlled by Wexford, leases office space to the Company. c. 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 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. Following these transactions, and also on December 21, 2018, Cobra Aviation formed a joint venture with Wexford Investments named Brim Acquisitions to acquire all outstanding equity interests 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. Cobra Aviation made additional investments in Brim Acquisitions totaling $ 0.5 million during the year ended December 31, 2020. Wexford Investments is an entity controlled by Wexford, which owns approximately 48 % of the Company’s outstanding common stock. 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. 19. Commitments and Contingencies Commitments From time to time, the Company may enter into agreements with suppliers that contain minimum purchase obligations and agreements to purchase capital equipment. The Company did not have any unconditional purchase obligations as of December 31, 2022. F-34 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Letters of Credit The Company has various letters of credit that were issued under the Company’s revolving credit facility which is collateralized by substantially all of the assets of the Company. The letters of credit are categorized below (in thousands): December 31, 2022 2021 Environmental remediation $ 3,694 $ 3,694 Insurance programs 2,800 3,890 Bonding program — 1,000 Rail car commitments — 455 Total letters of credit $ 6,494 $ 9,039 Insurance The Company has insurance coverage for physical partial loss to its assets, employer’s liability, automobile liability, commercial general liability, workers’ compensation and insurance for other specific risks. The Company has also elected in some cases to accept a greater amount of risk through increased deductibles on certain insurance policies. As of December 31, 2022 and 2021, the workers’ compensation and automobile liability policies required a deductible per occurrence of up to $ 0.3 million and $ 0.1 million, respectively. The Company establishes liabilities for the unpaid deductible portion of claims incurred based on estimates. As of December 31, 2022 and 2021, the workers’ compensation and auto liability policies contained an aggregate stop loss of $ 5.4 million. The Company establishes liabilities for the unpaid deductible portion of claims incurred relating to workers’ compensation and auto liability based on estimates. As of December 31, 2022 and 2021, accrued claims were $ 1.5 million and $ 1.4 million, respectively. The Company also has insurance coverage for directors and officers liability. As of December 31, 2022 and 2021, the directors and officers liability policy had a deductible per occurrence of $ 1.0 million and an aggregate deductible of $ 10.0 million. As of December 31, 2022 and 2021, the Company did not have any accrued claims for directors and officers liability. The Company also self-insures its employee health insurance. The Company has coverage on its self-insurance program in the form of a stop loss of $ 0.2 million per participant and an aggregate stop-loss of $ 5.8 million for the calendar year ending December 31, 2022. As of December 31, 2022 and 2021, accrued claims were $ 1.5 million and $ 1.6 million, respectively. These estimates may change in the near term as actual claims continue to develop. Warranty Guarantees Pursuant to certain customer contracts in our infrastructure services segment, the Company warrants equipment and labor performed under the contracts for a specified period following substantial completion of the work. Generally, the warranty is for one year or less. No liabilities were accrued as of December 31, 2022 or 2021 and no expense was recognized during the years ended December 31, 2022, 2021 or 2020 related to warranty claims. However, if warranty claims occur, the Company could be required to repair or replace warrantied items, which in most cases are covered by warranties extended from the manufacturer of the equipment. In the event the manufacturer of equipment failed to perform on a warranty obligation or denied a warranty claim made by the Company, the Company could be required to pay for the cost of the repair or replacement. Bonds In the ordinary course of business, the Company is required to provide bid bonds to certain customers in the infrastructure services segment as part of the bidding process. These bonds provide a guarantee to the customer that the Company, if awarded the project, will perform under the terms of the contract. Bid bonds are typically provided for a percentage of the total contract value. Additionally, the Company may be required to provide performance and payment bonds for contractual commitments related to projects in process. These bonds provide a guarantee to the customer that the Company will perform under the terms of a contract and that the Company will pay subcontractors and vendors. If the Company fails to perform under a contract or to pay subcontractors and vendors, the customer may demand that the surety make payments or provide services under the bond. The Company must reimburse the surety for expenses or outlays it incurs. As of December 31, 2022 and 2021, outstanding performance and payment bonds totaled $ 8.6 million and $ 20.3 million, respectively. The estimated cost to complete projects secured by the performance and payment bonds totaled $ 1.4 million as of December 31, 2022. The Company did not have any outstanding bid bonds as of December 31, 2022. Outstanding bid bonds totaled $ 0.6 million as of December 31, 2021. F-35 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Litigation As of December 31, 2022, PREPA owed the Company approximately $ 227.0 million for services performed, excluding $ 152.0 million of interest charged on these delinquent balances as of December 31, 2022. 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. 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. FEMA approved the appeal in part and denied the appeal in part. FEMA found that staffing costs of $ 24.4 million are eligible for funding. 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 June 7, 2022, Cobra filed a motion to lift the stay order. On June 29, 2022 the Court denied Cobra’s motion and extended the stay to January 2023. On November 21, 2022, FEMA issued a Determination Memorandum related to the 100 % federal funded portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $ 5.6 million in costs were not authorized costs under the contract. On December 21, 2022, FEMA issued a Determination Memorandum related to the 90 % federal cost share portion of the second contract between Cobra and PREPA in which FEMA concluded that approximately $ 68.1 million in costs were not authorized costs under the contract. PREPA filed a first-level administrative appeal of the November 21, 2022 Determination Memorandum and has indicated that they will review the December 21, 2022 Determination Memorandums and, to the extent they feel plausible, file a first-level administrative appeal of the unauthorized amounts. On January 7, 2023, Cobra and PREPA filed a joint status report with the Court, in which PREPA requested that the Court continue the stay through July 31, 2023 and Cobra requested that the stay be lifted. On January 18, 2023, the Court entered an order extending the stay and directing the parties to file a further status report addressing (i) the status of any administrative appeals in connection with the November and December determination memorandums regarding the second contract, (ii) the status of the criminal case against the former Cobra president and the FEMA official that concluded in December 2022, and (iii) a summary of the outstanding and unpaid amounts arising from the first and second contracts and whether PREPA disputes Cobra’s entitlement to these amounts with the Court by July 31, 2023. On January 20, 2023, Cobra submitted a certified claim for approximately $ 379 million to FEMA pursuant to the federal Contract Disputes Act. On February 1, 2023, FEMA notified Cobra that it had reviewed the claim and determined that no contract, expressed or implied, exists between FEMA and Cobra. Therefore, no final decision will be issued in response to Cobra’s claim. Cobra has 90 days from the February 1, 2023 decision to file a notice of appeal. 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. 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 F-36 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. 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. 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 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. 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 specified interest rates between 6 % and 12 %. 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. Cobra made the second installment payment, including accrued interest, to MasTec on August 23, 2022, the final installment principal payment to MasTec on October 24, 2022 and the final installment interest payment to MasTec on December 1, 2022. 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 alleged wrongful interference by means of 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 County 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 was granted on May 5, 2022. The case will now proceed according to a schedule that will be set by the Oklahoma County District Court. 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 alleging essentially the same facts as Foreman’s action and asserting violations of federal RICO statutes and certain non-federal claims. MLI alleges it sustained injuries to its business and property in an unspecified amount because the Company’s and Cobra’s wrongful F-37 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS interference by means of 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. During 2015, the State of Ohio assessed taxes on the purchase of equipment the Company believes is exempt under state law. 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, which the Company appealed. On February 25, 2022, the Company received an unfavorable decision on the appeal. The Company appealed 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. Cobra has been served with ten lawsuits from municipalities in Puerto Rico alleging failure to pay construction excise and volume of business taxes. These matters are in various stages in the Court. On November 14, 2022, the Court entered judgment against Cobra in connection with one of the lawsuits ordering payment of approximately $ 9.0 million. On January 9, 2023, Cobra appealed the judgment and is currently awaiting a decision from the Court. To the extent Cobra receives an unfavorable judgment, the Company believes that any such taxes in the judgement that relate to the Emergency Master Service Agreement with PREPA executed on October 19, 2017, would be reimbursable to Cobra. 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 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. Higher Power Electrical, LLC, Cobra Acquisitions LLC, and Cobra Energy LLC in the U.S. District Court for the District of Puerto Rico. On June 24, 2019, the complaint was amended to replace Mr. Williams with Matthew Zeisset as the named plaintiff. The plaintiff alleges the defendant failed to pay overtime wages to a class of workers in compliance with the Fair Labor Standards Act and Puerto Rico law. On August 21, 2019, upon request of the parties, the Court stayed proceedings in the lawsuit and administratively closed the case pending completion of individual arbitration proceedings initiated by Mr. Zeisset and opt-in plaintiffs. The arbitrations remain pending. 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. The parties are currently engaged in discovery. The Company believes these claims are without merit and is vigorously defending the arbitrations. However, at this time, the Company is not able to predict the outcomes of these proceedings or whether they will have a material impact on the Company’s business, financial condition, results of operations or cash flows. 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 Acquisitions LLC with conspiracy, wire fraud, false statements and disaster fraud. Two other individuals were also charged in the indictment. The indictment is focused on the interactions between a former FEMA official and the former president of Cobra. Neither the Company nor any of its subsidiaries were charged in the indictment. On May 18, 2022, the former FEMA official and the former president of Cobra each pled guilty to one-count information charging gratuities related to a project that Cobra never bid upon and was never awarded or received any monies for. On December 13, 2022, the Court sentenced the former Cobra president to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and one day and a fine of $ 25,000 . The Court sentenced the FEMA official to custody of the Bureau of Prisons for six months and one day, a term of supervised release of six months and a fine of $15,000. The Court also dismissed the indictment against the two defendants. The Company does not expect any additional activity in the criminal proceeding. Given the uncertainty inherent in criminal litigation, however, it is not possible at this time to determine the potential impacts that the sentencings could have on the Company. PREPA has stated in Court filings that it may contend the alleged criminal activity affects Cobra’s entitlement to payment under its contracts with PREPA. It is unclear what PREPA’s position will be going forward. Subsequent to the indictment, Cobra received a civil investigative demand (“CID”) from the United States Department of Justice (“DOJ”), which requests certain documents and answers to specific interrogatories relevant to an ongoing investigation it is conducting. The aforementioned DOJ investigation is in connection with the issues raised in the criminal matter. Cobra is cooperating with the DOJ and is not able to predict the outcome of this investigation or if it will have a material impact on Cobra’s or the Company’s business, financial condition, results of operations or cash flows. With regard to the previously disclosed SEC investigation, on July 6, 2022, the SEC sent a letter saying that it had concluded its investigation as to the Company and that based on information the SEC has as of this date, it does not intend to recommend an enforcement action against the Company. F-38 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS On September 12, 2019, AL Global Services, LLC (“Alpha Lobo”) filed a second amended third-party petition against the Company in an action styled Jim Jorrie v. Craig Charles, Julian Calderas, Jr., and AL Global Services, LLC v. Jim Jorrie v. Cobra Acquisitions LLC v. 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 Caribbean, LLC for security services related to Cobra’s work in Puerto Rico. The trial court granted Cobra, Mammoth and Straehla’s motion to compel Alpha Lobo’s claims against them to arbitration. However, Alpha Lobo has not yet brought its claims in arbitration. Instead, on March 22, 2022, Alpha Lobo filed a Petition for Writ of Mandamus in the Fourth Court of Appeals, San Antonio, Texas, seeking to overturn the order compelling arbitration. The appellate court denied the Mandamus on May 4, 2022, without requesting a response. On June 28, 2022, Alpha Lobo filed a Petition for Writ of Mandamus in the Texas Supreme Court, seeking to overturn the order compelling arbitration. The Texas Supreme Court denied the Mandamus on August 5, 2022, without requesting a response. Alpha Lobo has not yet brought its claims in arbitration. 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. Additionally, there was a parallel arbitration proceeding in which certain Defendants were 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 June 24, 2021, the arbitration panel ruled in favor of Cobra. The Company is involved in various other legal proceedings in the ordinary course of business. Although the Company cannot predict the outcome of these proceedings, legal matters are subject to inherent uncertainties and there exists the possibility that the ultimate resolution of these matters could have a material impact on the Company’s business, financial condition, results of operations or cash flows. Defined contribution plan The Company sponsors a 401(k) defined contribution plan for the benefit of substantially all employees at their date of hire. The plan allows eligible employees to contribute up to 92 % of their annual compensation, not to exceed annual limits established by the federal government. The Company makes discretionary matching contributions of up to 3 % of an employee’s compensation and may make additional discretionary contributions for eligible employees. For the years ended December 31, 2022, 2021 and 2020, the Company paid $ 1.9 million, $ 1.8 million and $ 2.0 million, respectively, in contributions to the plan. 20. Reporting Segments and Geographic Areas Reporting Segments As of December 31, 2022, the Company’s revenues, income before income taxes and identifiable assets are primarily attributable to four reportable segments. The Company principally provides services in connection with on-shore drilling of oil and natural gas wells for small to large domestic independent oil and natural gas producers as well as electric infrastructure services to private utilities, public investor-owned utilities and co-operative utilities. The Company’s Chief Executive Officer and Chief Financial Officer comprise the Company’s Chief Operating Decision Maker function (“CODM”). 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. As of December 31, 2022, the Company’s four reportable segments include , well completion services (“Well Completion”), infrastructure services (“Infrastructure”), natural sand proppant services (“Sand”) and drilling services (“Drilling”). 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 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 Sand segment primarily services F-39 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS the Utica Shale, Permian Basin, SCOOP, STACK and Montney Shale in British Columbia and Alberta, Canada. 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 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 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 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. Sales from one segment to another are generally priced at estimated equivalent commercial selling prices. Total revenue and total cost of revenue amounts included in the Eliminations column in the following tables include inter-segment transactions conducted between segments. Receivables due for sales from one segment to another and for corporate allocations to each segment are included in the Eliminations column for total assets in the following tables. All transactions conducted between segments are eliminated in consolidation. Transactions conducted by companies within the same reporting segment are eliminated within each reporting segment. The following tables set forth certain financial information with respect to the Company’s reportable segments (in thousands): Year Ended December 31, 2022 Well Completion Infrastructure Sand Drilling All Other Eliminations Total Revenue from external customers $ 169,872 $ 111,452 $ 48,916 $ 10,346 $ 21,500 $ — $ 362,086 Intersegment revenues 791 — 2,475 22 1,614 ( 4,902 ) — Total revenue 170,663 111,452 51,391 10,368 23,114 ( 4,902 ) 362,086 Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 124,848 91,577 36,783 9,259 16,120 — 278,587 Intersegment cost of revenues 3,894 72 — 538 398 ( 4,902 ) — Total cost of revenue 128,742 91,649 36,783 9,797 16,518 ( 4,902 ) 278,587 Selling, general and administrative 8,642 19,147 7,171 1,241 3,353 — 39,554 Depreciation, depletion, amortization and accretion 22,103 16,171 8,732 6,467 10,798 — 64,271 Gains on disposal of assets, net ( 615 ) ( 795 ) ( 89 ) ( 172 ) ( 2,237 ) — ( 3,908 ) Operating (loss) income 11,791 ( 14,720 ) ( 1,206 ) ( 6,965 ) ( 5,318 ) — ( 16,418 ) Interest expense 1,940 7,390 753 545 878 — 11,506 Other income, net ( 343 ) ( 40,470 ) ( 14 ) — ( 85 ) — ( 40,912 ) Income (loss) before income taxes $ 10,194 $ 18,360 $ ( 1,945 ) $ ( 7,510 ) $ ( 6,111 ) $ — $ 12,988 Total expenditures for property, plant and equipment $ 11,421 $ 885 $ 88 $ 101 $ 395 $ ( 153 ) $ 12,737 As of December 31, 2022: Intangible assets, net $ 1,307 $ 135 $ — $ — $ 340 $ — $ 1,782 Total assets $ 82,897 $ 450,841 $ 129,467 $ 21,755 $ 120,164 $ ( 80,446 ) $ 724,678 F-40 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Year Ended December 31, 2021 Well Completion Infrastructure Sand Drilling All Other Eliminations Total Revenue from external customers $ 84,190 $ 93,403 $ 30,880 $ 4,197 $ 16,292 $ — $ 228,962 Intersegment revenue 144 — 3,980 124 2,218 ( 6,466 ) — Total revenue 84,334 93,403 34,860 4,321 18,510 ( 6,466 ) 228,962 Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 58,782 90,363 27,232 6,102 15,847 — 198,326 Intersegment cost of revenues 5,770 196 — — 500 ( 6,466 ) — Total cost of revenue 64,552 90,559 27,232 6,102 16,347 ( 6,466 ) 198,326 Selling, general and administrative 49,275 18,267 5,351 1,414 3,939 — 78,246 Depreciation, depletion, amortization and accretion 26,377 21,880 9,005 7,996 13,217 — 78,475 Gains on disposal of assets, net ( 770 ) ( 286 ) ( 30 ) ( 202 ) ( 3,859 ) — ( 5,147 ) Impairment of goodwill — 891 — — — — 891 Impairment of other long-lived assets — 665 — — 547 — 1,212 Operating loss ( 55,100 ) ( 38,573 ) ( 6,698 ) ( 10,989 ) ( 11,681 ) — ( 123,041 ) Interest expense 1,107 3,925 474 293 607 — 6,406 Other (income) expense, net 1,843 ( 6,499 ) ( 844 ) 25 321 — ( 5,154 ) Loss before income taxes $ ( 58,050 ) $ ( 35,999 ) $ ( 6,328 ) $ ( 11,307 ) $ ( 12,609 ) $ — $ ( 124,293 ) Total expenditures for property, plant and equipment $ 4,327 $ 627 $ 484 $ 44 $ 361 $ — $ 5,843 As of December 31, 2021: Intangible assets, net $ 1,995 $ 165 $ — $ — $ 401 $ — $ 2,561 Total assets $ 56,036 $ 427,626 $ 156,519 $ 27,457 $ 129,202 $ ( 75,948 ) $ 720,892 Year Ended December 31, 2020 Well Completion Infrastructure Sand Drilling All Other Eliminations Total Revenue from external customers $ 87,201 $ 157,751 $ 34,265 $ 7,746 $ 26,113 $ — $ 313,076 Intersegment revenues 1,124 — 95 39 2,716 ( 3,974 ) — Total revenue 88,325 157,751 34,360 7,785 28,829 ( 3,974 ) 313,076 Cost of revenue, exclusive of depreciation, depletion, amortization and accretion 45,647 124,232 25,955 10,757 25,430 — 232,021 Intersegment cost of revenues 1,836 323 — 152 1,663 ( 3,974 ) — Total cost of revenue 47,483 124,555 25,955 10,909 27,093 ( 3,974 ) 232,021 Selling, general and administrative 23,039 27,261 7,807 3,149 5,929 — 67,185 Depreciation, depletion, amortization and accretion 30,411 29,373 9,771 10,039 15,723 — 95,317 (Gains) losses on disposal of assets, net ( 388 ) ( 444 ) 1,829 ( 352 ) ( 1,283 ) — ( 638 ) Impairment of goodwill 53,406 — — — 1,567 — 54,973 Impairment of other long-lived assets 4,203 — — 326 8,368 — 12,897 Operating loss ( 69,829 ) ( 22,994 ) ( 11,002 ) ( 16,286 ) ( 28,568 ) — ( 148,679 ) Interest expense 1,130 2,794 312 454 707 — 5,397 Other expense, net ( 1,886 ) ( 31,993 ) 10 125 ( 556 ) — ( 34,300 ) Income (loss) before income taxes $ ( 69,073 ) $ 6,205 $ ( 11,324 ) $ ( 16,865 ) $ ( 28,719 ) $ — $ ( 119,776 ) Total expenditures for property, plant and equipment $ 4,358 $ 258 $ 1,073 $ 432 $ 716 $ — 6,837 As of December 31, 2020: Intangible assets, net $ 2,683 $ 1,063 $ — $ — $ 1,028 $ — $ 4,774 Total assets $ 99,247 $ 437,296 $ 172,927 $ 36,252 $ 136,422 $ ( 57,582 ) $ 824,562 F-41 MAMMOTH ENERGY SERVICES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Geographic Areas The following table presents consolidated revenues by country based on sales destination of the products or services (in thousands): Year Ended December 31, 2022 2021 2020 United States $ 343,307 $ 217,958 $ 302,205 Puerto Rico — — 53 Canada 18,603 10,685 10,723 Other 176 319 95 Total $ 362,086 $ 228,962 $ 313,076 The following table presents long-lived assets, excluding deferred income tax assets, by country (in thousands): Year Ended December 31, 2022 2021 2020 United States $ 217,101 $ 258,666 $ 342,838 Canada 10,885 13,349 16,976 Total $ 227,986 $ 272,015 $ 359,814 21. Subsequent Events Subsequent to December 31, 2022, the Company granted an aggregate of 250,000 restricted stock units (“RSUs”) to certain non-executive employees of the Company under the 2016 Plan. Of the RSUs granted, an aggregate of 50,000 RSUs will vest in three substantially equal annual installments, and an aggregate of 200,000 RSUs will vest in four equal annual installments, in each case beginning on the grant date, subject to such plan participants’ continued service. F-42