Mammoth Energy Services Shifts Focus with Aviation Portfolio Investment Increase

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Mammoth Energy Services has shifted its focus by selling off infrastructure subsidiaries and pressure pumping equipment for a combined $500 million. The company is now increasing investments in its aviation portfolio, which is expected to drive growth in the future. This move comes as Mammoth Energy Services aims to diversify its business and capitalize on the growing demand for aviation services.

Mammoth Energy Services (NASDAQ:TUSK) has made significant strategic changes to its business model by selling off infrastructure subsidiaries and pressure pumping equipment for a combined total of $123.7 million. The company is now focusing its efforts on its aviation portfolio, with an aim to drive future growth and capitalize on the growing demand for aviation services.

The divestment of infrastructure subsidiaries and pressure pumping equipment, which accounted for around 85% to 90% of its infrastructure business, has allowed Mammoth to reduce its operational costs and streamline its operations. The sale of its pressure pumping equipment, in particular, was underwhelming, fetching $15 million, which appears to be below book value. However, the sale also removed the need for further spending on upgrades, reducing the company's cash burn and debt obligations.

Mammoth has been investing heavily in its aviation portfolio, spending $25 million year-to-date. This includes the purchase of eight small passenger aircraft for around $11.5 million in April. The company aims for a 2x to 3x return on invested capital from its aviation investments over a three to five-year time frame.

Mammoth's continuing operations are expected to generate negative $3 million to negative $4 million in adjusted EBITDA in the second half of 2025, primarily due to legal fees related to the Puerto Rico litigation. However, the company expects declining legal fees and aviation growth to help it reach neutral free cash flow in the near term.

As of the end of Q2 2025, Mammoth had $157 million in cash, including $30 million in restricted cash. The company is also owed $20 million from PREPA, payable within seven days of the effective date of PREPA's plan of adjustment with its bankruptcy proceedings. Mammoth projects around $15 million in capex from continuing operations in the second half of 2025, and a $3 to $4 million EBITDA loss from continuing operations.

Mammoth's current valuation is estimated at approximately $3.20 per share, based on its projected cash position and remaining businesses. This valuation is around $1 less than the previous estimate, which was largely dependent on a partial recovery in the well completion services business. The company is expected to end 2025 with $89 million in cash net of income taxes payable, and an additional $20 million from PREPA, bringing the total to $104 million.

While the exit from the well completion services business reduces the variability of Mammoth's results, it also significantly reduces its upside in a recovery scenario. The company's focus on the aviation portfolio and its strategic divestments position it well for future growth and diversification.

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