Mammoth Energy Services Inc (NASDAQ: TUSK) stock price rallied 31.7% after revealing that its wholly-owned subsidiary Aquawolf LLC (“Aquawolf”) has won a contract from a leading utility company to build electric vehicle (EV) charging stations.
The company noted that the contract would not exceed $5 million and would run up to 2024.
Aquawolf would provide multiple services, including direct engineering and oversight of subcontractors providing civil and structural engineering, designing the electrical distribution, drafting, planning, mapping, permitting and construction support.
Investors cheered the move, as evidenced by the 31% surged in Mammoth Energy’s share price during premarket trading. However, not everyone is optimistic about the company’s long term prospects.
Arty Straehla, Mammoth Energy’s CEO, said: “This contract is a significant development for our Aquawolf team and allows us to compete for further business in the EV charging market,”
Adding:
“Part of the recently passed infrastructure bill contains $7.5 billion for the development of 500,000 EV charging stations and distribution throughout the U.S. This move into EV charging stations allows Aquawolf to expand our business lines and continue the growth of our engineering offerings.”
Some oil industry experts have obtained that Mammoth Energy is likely to run out of financial leeway in 2022 due to its focus on recovering the debt owed to its by the Puerto Rican Electric Power Agency (PREPA) filed for chapter 11 bankruptcy protection in 2017.
There is very little chance that Mammoth Energy will recover the $328.2 million owed to its subsidiary Cobra given the long list of creditors with more senior debt.
Instead, the company should focus on growing its business, given its foray into the oil infrastructure sector that has significant potential, instead of asking shareholders to petition the government to compel PREPA to repay its obligations.
Therefore, Mammoth Energy’s long term prospects are unsettling, and until there is a significant change in the company’s overall strategy, it is likely to fall into financial distress in future.
*This is not investment advice. Always do your due diligence before making investment decisions.
Mammoth Energy stock price.
Mammoth Energy stock price rallied 31.67% to trade at 42.91, rising from Thursday’s closing price of $2.21.
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