Good day ladies and gentlemen, and welcome to the Mammoth Energy Service Third Quarter 2016 Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference, Mr. Mark Layton, Mammoth Energy Services Chief Financial Officer. Sir, you may begin.

Good morning and welcome to the Mammoth Energy Services third quarter 2016 conference call. Today’s call is being webcast and replay will be available on Mammoth Energy Services website for seven days. Joining me today is Arty Straehla, Chief Executive Officer. Some of our comments today may include forward-looking statements, reflecting Mammoth Energy Services’ views about future events. These matters involve risks and uncertainties that could cause our actual results to materially differ from our forward-looking statements. These risks are discussed in Mammoth Energy Services Form S-1, recent current reports on Form 8-K and other Securities and Exchange Commission filings. We undertake no obligation to revise, or update publicly any forward looking statements for any reason. Our comments today may also include non-GAAP financial measures. Additional details and reconciliations of the most directly comparable GAAP financial measures are included in our third quarter press release which can be found on our website. Now, I’ll turn the call over to Arty.

Thank you, Mark and good morning everyone. Let me start out by saying that I’m very excited and pleased to be conducting the inaugural earnings call for Mammoth Energy Services. This is very exciting time for Mammoth with the completion of our IPO, repayment of our debt and the fortification of our balance sheet to support our Company’s growth, both organically and through acquisitions. The Mammoth team has accomplished a lot in a short period of time and continues to execute at every level of the organization. I am very proud of this team and all that it has accomplished during what has arguably been one of the harshest periods for oilfield services. Our organization is focused on executional excellence and getting the job done safely and in a quality manner at every level of the organization. Let’s take a minute and talk about what has transpired over the third quarter and beyond. The industry has gone through a crimping [ph] and will recover as a healthier business. We’ve seen the recovery start, most recently with the rig count in the U.S. increasing from the lows of 400 rigs at the end of Q2 to close at 570 rigs last week. While the recovery of rigs is one metric of activity, we’re keenly focused on wells completed and completion design in addition to rig efficiency, all of which has continued to increase throughout this downturn. The technological improvements to this industry have been truly remarkable. The recovering activity is notable and TUSK has been a beneficiary of this increasing activity. We were able to have our best quarter this year in all four of our operating segments on an adjusted EBITDA basis. While year-over-year comparisons are less relevant, we’re focused on sequential improvements. Our largest segment completions and productions was…

Thanks, Arty. For the third quarter, revenues were $62.8 million. Revenues decreased compared to $86.2 million in the prior year due to lower industry activity levels, equipment utilization and pricing for our services. Operating loss for the quarter improved to $0.1 million compared to an operating loss of $7.2 million in the prior year. Our loss per share was $0.08 compared to a loss per share of $0.15 in the prior year. Adjusted EBITDA for the third quarter of 2016 increased to $17 million compared to $11.6 million for the same period last year. Cost of revenue decreased from $70.4 million in the third quarter of the prior year to $42.7 million in the current year, primarily due to lower activity coupled with lower labor related costs and lower repairs and maintenance expense. Cost of revenue as a percentage of revenue increased from 68% in the prior year to 82% in the current period due to lower activity levels and continued low pricing for our services. Selling, general and administrative expenses decreased from $4.2 million in the third quarter of the prior year to $3 million this year. The decrease resulted primarily from lower total employment costs due to headcount reductions. SG&A expenses as a percentage of revenues decreased from 4.9% last year to 4.8% this year. Depreciation and amortization was $17.1 million during the third quarter of ‘16 compared to $18 million in the prior year. The decrease resulted from minimal capital expenditures during the past two years. Impairment of assets $0.9 million in the third quarter of the prior year; no assets were impaired in the most recent quarter. As of the end of the third quarter, Mammoth Energy’s pressure pumping fleet totaled approximately 160,000 hydraulic horsepower of which one third is unmanned but available to work. While utilization improved in many markets, we’ve not yet placed any unmanned equipment back in service. As of September 30th, Mammoth Energy’s total headcount was 511 compared to 485 as of June 30, 2016. Capital expenditures during the second quarter were $1.6 million and Mammoth Energy’s full year 2016 capital expenditures are currently projected to be approximately $5.2 million exclusive of the acquisition additional frac equipment currently under negotiation that Arty mentioned earlier. We continue to remain focused on maintaining a strong balance sheet and ensuring our equipment is adequately maintained and ready for work. With that, I’ll turn it back over to Arty for some closing remarks.

Thanks Mark. Let me summarize the call. As we’ve discussed several times, Mammoth continues to execute well. We’re pleased to have brought the Company public, paid off our debt and continue to generate positive cash flow in a very challenging environment. We’ve produced steady positive results in the third quarter and provided some underpinning to growth as we seek to add brand new equipment for deployment next year. We think that Mammon is poised operationally and financially to grow at a very rapid pace. We’re heavily engaged in identifying the wining strategies for the next market upturn, which with particular focus in the area of frac sands, transload facilities, cementing [ph] and logistics. Thank you very much for your time and let’s open it up for question.

Thank you. [Operator Instructions] Our first question comes from the line of Jim Wicklund with Credit Suisse. Your line is open.

Hey guys, this is actually Charles [ph] calling on for Jim, congrats on a great quarter. I just wanted to dig a little bit on the C&P business. Margins came in at about 33% of the EBITDA line. I’m wondering sustainable that is moving forward. Does that have to do with some of the Gulfport deferrals from Q1 and any more color on that would be appreciated?

We certainly did benefit from a lift related to the deferrals outside of Q1. We also benefited from some lower than normal repairs and maintenance, largely due to timing related to the overhauls of engines and transmissions and primary components of our equipment. We think the margins are sustainable in the high-20s. We obviously received a bit of a lift in the Q3 results related to that deferral.

Let me go little bit deeper and talk a little about the RNM [ph] because RNM [ph] one of the single biggest cost aspects that we do that we have within our frac operations. We have focused very, very intensely on our flow, [ph] we focused on our operations aspects of it, of how we prime pumps, how we bring them online and we focus with our vendors. Mark and I visited several of our vendors during second and third quarter as we seek to get the right fluid and matches with the pumping intensity that we have in the Utica shale. So, we’re working extremely hard on that and some of that result is starting to bear out. We’re seeing average hours go up on our fluid ins [ph] and we saw a cost reduction in our RNM [ph] in Q3 compared to earlier quarters that we have.

Okay, great. That’s very helpful. And then the third spread that’s not active right now, have you guys started to think about, when that could go back to work and where it could go back to work?

That spread is currently in the Northeast, it’s available in the Utica and Marcellus. We’ve seen an increase related to the availability of that spread. We’ve not staffed that spread at this time, and the reason we’ve not staffed that spread is we’re waiting for the calendar to fill in a bit more, prior to bringing on the staffing, the equipment is 100% ready condition. But we’re looking for little more visibility for a longer period of time on the prior calendar before we staff that spread. Depending how commodities move over the near term, we think that spread could go back to work as soon as Q1 of 2017.

In addition to that, we talked about the 75,000 horsepower that we’re going to bring on. We are going to take those fleets to somewhere in the south, where Texas or Oklahoma, we’re going to go and seek a home for it, where we think it will bring the best return on investment. And part of that equipment quite honestly we’ll be moving from there to the basins that we are going to go to in this south. So, we will fulfill our contractual obligations with Gulfport with the two spreads that we have under contract and we are going to -- we’re going try to optimize the utilization of that equipment and also optimize the pricing where we can get the best operational aspects of everything.

Okay, thanks a lot. And then just one more on that 75,000 horsepower. Is that coming -- are you buying that from another service company, is that coming out of the inventory from one of the suppliers? And then -- sorry, go ahead.

It’s brand new equipment coming from the supplier. We think this is the opportune time. As we said on the road show repeatedly that we think we saw and have looked at equipment that we can get for about 67% of what it would have cost new two years ago. We think it’s an opportune time to buy new. We’ve looked at the lot of the used equipment in the marketplace either through auctions or though refer of opportunities and/or acquisition opportunities, and we think quite honestly that there has been awful lot of cannibalization and awful lot of where equipment is in very, very bad shape. We wanted to go new, we thought it was the opportune time to do it and we are continuing to negotiate and move forward on that.

Okay, great. And then just final one, would you expect those -- I’m assuming that’s 75,000 two spreads, will those go to work you think before the third spread that’s ideal right now? Any chance of that or is that more -- it’s 2h 2017 event?

No. We think it’s all together with the strategy. We will have three additional spreads that depending on what basin we go. If you go to the Eagle Ford, the pressures are much lighter, the number of pumps required on job are less. If you go to the Stack/Scoop, you have to use -- the intensity of equipment is higher in some over-pressured areas; it’s lower in some another areas. So, we’re looking at the opportunities to do that. But anywhere we go, we will be vertically integrated all the way back to the sand mine. We think that becomes an important part of the 2017 story, the logistical aspect, the sand, the load-outs, the transloads, the rail and mining aspects of it. We think all that becomes big part in future and we’re going to have all that vertically integrated. So, not only are we looking at just adding equipment, we’re actually looking at adding a whole business line anywhere we go.

And our next question is from the line of Jason Wangler with Wunderlich Securities. Your line is open.

Maybe kind of dovetailing on the previous couple of questions. I think you mentioned with the new equipment getting that mid 2017. Can you just talk about that timing? It seems like it’s a little bit more than maybe I would have thought, but just maybe some color on that?

We think that equipment maybe is available as soon as 16 weeks out. The equipment is completely manufactured and available at the manufacture, they need to add a few things to it for us to take delivery. We’re somewhat conservative in that mid-2017 estimate, as I mentioned maybe available as soon as 16 weeks out.

It will obviously come to us in pieces, what, they will get five done at a time and another five and that type of thing as it comes forward typically -- as it typically it does. And then there’s a lot of other equipment that we’ll coordinate. When we talk about the -- we look to the contribution to our numbers in back half of 2017 and put it into play.

And then, as you look at the staffing both for the third crew and then that one as well and obviously you spoke about moving it south, how do you see as far as the timing of that, once you’re able to move it and get into at least the basin from a staffing perspective, whether it’s cost or timing, how long do you think and how much that would be to both mobilize and get that up and running for whenever that’s going to be able to go back to work?

We’re not seeing current staffing constraints and part of the reason for that is due to the contracted nature of two of the spreads in the Northeast. We’re fortunate to back stop our utilization with those contracts. And that’s helped maintain the staffing. As we look to add staffing for the third fleet in Northeast and for incremental fleets, we certainly see labor as a constraint going forward. But we’ve got industry relationships both through our existing companies that we’ve got in each one of the basins, as well as those contracts that I’ve mentioned earlier, that certainly help us recruit and maintain highly qualified staff.

Thank you. [Operator Instructions] Our next question is from the line of David Anderson with Barclays. Your line is open.

Hey, good morning. It’s Will Thompson [ph] sitting in for Dave. Maybe to follow-up on that line of question, did you mention the budget for that 75,000 horsepower?

We did not. We’re currently in negotiations for the final price related to that 75,000 horsepower. We believe it’s an opportunistic purchase, as Arty mentioned earlier. It’s about $0.67 on a $1 compared to what a spread would have cost two years ago. But we don’t have a final amount on that as the negotiations are ongoing.

And then, how do -- you mentioned moving that capacity to the south, how do we think about -- I mean you touched on the labor aspect, maybe just the cost friction of going into a new market. I know you have other equipment capacities outside of pressure pumping in the Permian, but how do you think about -- when your peers talk about scale being a competitive advantage and you’re moving kind of maybe one or two fleets down there, what does that mean from sort of the margin profile and the onset of that work?

Well, we think it creates opportunity, because we’re one of the few frac companies that is completely backwardly integrated all the way through sand. And we talked a lot about sand being tightened. You see some of the reflection of that going forward with what’s going on in the overall sand markets. We also think logistics get tight. So we’re taking every bit of that aspect of it into consideration as we go forward. As you well know we’ve operations in the Eagle Ford, we have the Stack/Scoop is our backyard, the Permian is -- we’ve our rig operations there. So, we’re currently doing the whole business outlook at it, not only look just at the frac operations but look at having sand, rail capacity, having logistics, having trucking, having making sure that we have plenty of water in order to do the fracs. So, we’re looking at it overall from every aspect. And we’re just not ready to disclose quite yet exactly where it is going but we’re doing our diligence, we want to go where we can make money, and that’s the driving force behind it.

And just to add real quickly to that, I think we look at scale, particularly as it relates to frac fleets more in the lines of two to three fleets for a district as opposed to one to two.

One of those things that we did -- that as went through and we did road show discussions and all that, we talked an awful lot about our customers. And we talked about the cross-selling opportunities. And that will be determinant factor for this next fleet as well. We’re in constant discussions with several customers where we think these type of operations will get tight and we will have a customer -- we will try to have customer pull in as we go through.

It’s a good segue just on the sand business, you mentioned opportunities on the integration side where you think some of the bottlenecks. Can you maybe clarify on that, help us -- I think the confusion is still on kind of what your sand business model is today and may be your vision at what it will be may be in the next 12 to 24 months?

Right now, we’re brokering sand through Muskie and handling the logistics aspect of it. Muskie if you remember has 307 railcars. An affiliated company by the name of Taylor is a sand mining Taylor, Wisconsin that has 700,000 ton per year capability and it’s an affiliated company that sale the sand. We think that is -- you go back to the intensity of the fracs that are going on, they are going from 1500 to 1800 pounds per lateral foot, we’ve heard them as much as 3000 pounds per lateral foot, because the EURs for the E&P companies are greatly improved with additional sand concentricity. We heard that Chesapeake well and Haynesville being tested out with 50 million pounds, 5,000 pounds pre lateral foot on 10,000 foot lateral. So people -- there is no doubt people are going to more sand, longer laterals, we think that puts a strain on the entire ecosystem of those supply logistics of how you get sand there. All the way to -- we can talk about the Delaware. You got one railroad track going down to the Delaware, you got a little bit of the transload facility, but how are you going to transport that much sand to the Delaware basin. So that’s what we’re trying to go our head on. We’re trying -- we’re negotiating, we had Greenbrier in our offices yesterday talking about as leases runoff and additional leases and saving money and that type of things and how can we do more economically. So, we’re looking at the whole process as whole supply chain. Frac is a big part of that of course but so is sand logistics, so is transloads, so is trucking. If you look at the amount of sand that we would have to be trucked out of Midland Odessa because there is not enough transload facilities, it’s just -- it’s incredible. On a two lane road going from -- going down from Midland Odessa to [indiscernible] it’s just incredible amount of logistic nightmare. And we think we can get ahead of that curve, and we think we can be ready for it and we’re a frac company that will not run out of sand.

That’s helpful and just a follow-up on that point. You mentioned an increase in sand prices. How does that impact the profitability of your brokering business today under kind of -- part of that’s under a supply contract with Gulfport?

It is. We see it as opportunity. When pricing gets back up to the $30 per ton, we’ll open the Muskie facility back up. Meanwhile we’re running -- the Taylor facility is supplying the sand during this time period and Taylor has the capacity to be expanded beyond the 700,000 tons without a great deal of investment. So, we seen the upcoming sand as a great opportunity. And when be perfectly -- Taylor is just an affiliated company; it’s not one that we have any agreements to acquire or anything like that.

And last one from me if I can sneak one, you guys during the road show were taking about the pipeline of M&A opportunities. Can you just help us how is that vision and what that opportunity set has evolved over time or how should we think about -- I know you are adding the frac capacity but maybe what’s kind of the next opportunity that you think is available?

We talked on the road show about having our 25 or 30 in the pipeline. That pipeline for us has doubled when we gotten back. I think there were a lot of people from what we heard and the feedback we get, there was a lot of people that were impressed that we were able to get the company out, get pipeline and execute. We want to -- obviously it’s got to be accretive for us as we go forward. And it’s got to be something that’s going to make us great deal of amount. And we don’t always think traditionally with -- or acquisitions. So, I will tell you we have a number in the pipeline that we will execute as we go forward and we are working very diligently on that. We want to focus on completion in the production area with sand and frac because again as the upfront starts to come back, we think that’s the area that tightens the most. So, we are very focused on M&A, we are very active going forward and we will continue to be active. We think we have a window of period where we will be able to eventually use our stock after lockup period as a currency and then we’ve got the balance sheet to follow on or it’s cash positive and a whole revolver out there.

It’s great color. Thank you very much and congratulations on the public offering on an eventful day here. So, thank you.

What else is going on besides our call? Thanks for the call.

Thank you. And I’m not showing any further questions. So, I’ll now turn the call back over to Arty Straehla for closing remarks.

Well, thanks everybody. Again, we appreciate everybody being a part of the inaugural call on our earnings. And we thank everybody for your time and good luck.

Ladies and gentlemen, this does conclude the program and you may now disconnect. Everyone have a great day.