Ladies and gentlemen, please stand by your conference will begin momentarily. Once again thank you for your patience and please stand by. Good day, ladies and gentlemen, and welcome to the Mammoth Energy Services' Third Quarter 2017 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 and will be available for replay on Mammoth Energy Services' website. I would now like to introduce your host for today's conference, Mr. Don Crist, Mammoth Energy Service's Director of Investor Relation. Sir, you may begin

Thank you. Good morning and welcome to Mammoth Energy Services' third quarter 2017 earnings conference call. Joining me on today's call are Arty Straehla, Chief Executive Officer; Mark Layton, Chief Financial Officer. Before I turn the call over to them, I would like to read our Safe Harbor statement. 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 10-K, Forms 10-Q, 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 to the most directly comparable GAAP financial measures are included in our third quarter press release, which can be found on our website along with our third quarter earnings presentation. Now, I will turn the call over to Arty.

Thank you, Don, and good morning, everyone. The third quarter of 2017 was a very active one for the entire Mammoth team and a pivotal point in our portfolios development. We executed on the substantial expansion of our frac and sand businesses into the Mid-Continent and grew our energy infrastructure services business known as Cobra while realizing company wide margin improvement. Starting with our frac business, the expansion into the Mid-Continent occurred in line with previously announced plans and we are very pleased with our team’s performance. We rolled out two new fleets to the area with our fifth and sixth fleets starting in August and October respectively and find ourselves fully utilized today operating in that SCOOP/STACKS to your customers. We had approximately 4.6 spreads active during the period with closer to full utilization expected to contribute to our Q4 2017 results. Our team executed well broadly in our customer base getting stages in the ground in limiting margin compressions associated with the start-up. As we look forward, we are examining near-term options which may include shifting some assets between Ohio and Oklahoma to supplement further work as well as building out a seventh fleet from some of our existing fleets with minimal investment. Leading edge pricing continues to march higher, but not quite to the level needed to support new build economics. As you may recall, our prior expansion of new capacity was done with lower equipment prices giving some unique opportunities. Looking ahead, we expect our frac assets to be fully utilized into 2018 and inbound calls have been increasing versus just three months ago when we last met. It is important to point out, all three crews that work in the Mid-Continent are being supplied from Mammoth sand mines and last mile logistics we have in…

Thank you, Arty. I hope that all of you have had a chance to read our press release, so I will keep my financial comments brief and focus on certain highlights. Mammoth had a strong third quarter of 2017 with revenue coming in at $149 million, up more than 50% from the second quarter of 2017. The start up of our fifth and sixth lease the incorporation of two new sand lines, improved equipment utilization and improved pricing for our services all contributed to the higher revenue compared to the prior periods. Net loss for the third quarter of 2017 came in at $800,000 million, which is an improvement of approximately 32% when compared to the second quarter of 2017, which came in at a loss of $1.2 million. On a per share basis, net loss came in at $0.02 per share during the third quarter of 2017 as compared to a loss per share of $0.03 during the second quarter of 2017. Adjusted EBITDA for the third quarter of 2017 came in at $28 million, up approximately 84% from the second quarter of 2017. Our adjusted corporate EBITDA margin remained strong in the third quarter, coming in at 19% up more of the 19% from the second quarter of 2017. We remained confident that our corporate EBITDA margins will remain in a similar range in the coming quarters. Selling, general, and administrative expenses came in at $8 million in the third quarter of 2017 generally in line with the second quarter of 2017. SG&A expenses as a percentage of total revenue came in at 5% in the third quarter of 2017 compared to 8% during the second quarter of 2017. Going forward, we expect SG&A to trend slightly higher on a nominal basis as we grow but remain in…

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

Good morning guys. Just as the first conference call of the season where nobody mentioned the word Permian Basin. So as you all didn’t mentioned I will bring it up, you are obviously taking a huge piece of market share and booming business in Oklahoma in the SCOOP/STACK. You have got some exposure to the Permian that hasn’t been your primary area of growth which is different from everybody else. Can you talk about Arty, what you do plan to do, what’s TUSK going to do in the Permian over the next year or so? And what are the expansion plans?

Jim in fact we did expand in the Permian with our logistics operations. We bought 20 trucks that we are placing down there. We think logistics and trucking becomes a critical element of everything down there. So we have been spending some money down there in the Permian and I will tell you. We see a lot of opportunities especially with E&Ps that are looking for contractual opportunities for us to move in. So we have moved our logistics in there and you always got to have an answer on how you move stand and from trans loads to the wellbore, and we have that answer. And we are looking very hard to things in the Permian. As you well know, we get an off a lot of deal flow. We look at 142 deals so far this year. We continue to working some of them are located. We have done some things, we look at some of the regional sands and we are also as you well know a group has focused on internal capital and we are not going to say a lot of blue sky for the investments that we make out there.

And for that we very, very much appreciate it, I think it’s an interesting thing all service industries focused on return on capital before the E&P industry knows how to spell it.

Again, the best part of our story all the way from when we talked about last year. The first 75,000 of horsepower that we got at $0.37, the additional 60,000 that we going to [sooner after (Ph) the mine that we bought out of bankruptcy for 36 million. We are absolutely focused on return on capital for our investors.

And I’m glad you are going to keep that up. So keep that is a focus or I appreciate it. Cobra has made news lately because of Puerto Rico, but not just Puerto Rico, but because of another company that’s operating there. And I know you both called to Washington, I don’t expect you to make any comments about the Montana-based company, but I don’t think you guys have hire the secretary of interior, so is an intern and I know you have more than two full time employee. So we all talk about the Montana company. But can you talk about how you guys expect to address the hearings in Washington on Puerto Rico?

Yes. We haven’t, there is not been anything. And I will tell you, we did everything absolutely right. Let me give just a little bit of the backdrop of how we get this. We get this the old-fashioned way. On the 13th of October and we have this competency within our group. We have performed extremely well, where the hurricanes unfortunately hit South Texas when Harvey and Irma went through. So we had disability built on our logistics group that we have, built on our lodging group that we have an experience. So myself and my President glued down to Puerto Rico on the 13th of October. We met with people start meeting at Saturday at the convention center where everybody was there that’s the Commanding Control Center. We went from meeting-to-meeting talking with FEMA of officials, talking with the governors officials, talking with officials from PREPA that resulted in a meeting that evening, Saturday evening at around 7 o'clock with PREPA. We had a fully self contained plan that nobody else has had put together for them. That includes having building barge that includes housing our folks. We have in fact begin the logistic aspect of that with the first barge that departed on the 29th loaded with 75 pieces of equipment mostly buckets and diggers. Yesterday, another barge departed from to Fourchon, Louisiana with 28 pieces of equipment, we will have more barges departing. We have actually sent large cargo planes with full of equipment as well. So our mobilization the way that we have done this it's been right from the very beginning and our goal and operational is to give the lights turn back on in Puerto Rico with our team. We have got a...

A very legitimate effort, very legitimate effort. And finally if I could on sand we have had a couple of sand companies who report. Can you talk about what pricing momentum is that you guys see in the industry for Sam and I know frac intensity has been a issue [indiscernible] said that sand per well is going and replaced but in the Permian nobody else seems to have seen that. Can you talk about frac intensity in terms of sand used and sand price just brief one.

Jim we are continuing to see our customers pump a high level of sand in both the Utica and in our operations in the Mid-Continent so we continue to see the frac intensity. In regards the pricing we are seeing spot market trades on 40/70 right now in the low 50s. So the sand pricing has moderated a little bit, but we are still seeing some increased pricing on the sand side and demand for all grades.

Okay guys. Thank you. Very good quarter. I appreciate it.

Thanks Jim.

And our next question comes from the line of Jason Wangler with Imperial Capital. Your line is open.

Good morning guys. You mentioned in the prepared remarks Arty about of the potential of maybe move from frac equipment down to the Oklahoma from Utica, would that be the one crew not contracted or could you just may be some color on the thought processes as you look at the markets and how they are shaping up for next year?

Sure. Most of our work has been up in the high-pressure that requires a lot of additional equipment. We are now seeing some of the lower pressure work that gives us ability to put less pumps on and we think for a minimal investment we would be able to come to the Mid-Continent area and probably we would have to buy a blender, we would have to buy hydration unit. It's very, very small amount that we would have to spend in order to do that. As you make the transition from pads that use 20 pounds versus pads that use 12 or 14 in some cases. So that is something that we have already considered and you know us very well Jason we try to get the most out of what we got before we go. And we just don’t think the prices are there quite yet for new build economics.

And so then the idea would be there to move I guess not necessarily an entire crew so to speak, but just to maybe shift the horsepower allocation between the two and try to maximize that is that a fair way to look at it?

That’s right, it's been moving pieces and parts to maximize that effort.

Okay. Great, I appreciate it. I will turn it back.

Jason, thank you.

Thank you.

And our next call comes from the line of John Watson with Simmons.

Hey guys thanks for talking my call. Arty, one of the things that we have seen out there and I'm sure you guys know there are few sand mines in Oklahoma and just given your exposure to SCOOP/STACKS can you speak to opportunities to potentially develop a mine in a state?

John we are very, very seriously at it, we have hired actually a geologist to help us out to look at different areas and different things and we think regional sands with the 100 metro going to be a player in the future. So it's very logical that we are doing and I can't comment on anything specifically, there is nothing to comment on, but we are absolutely looking at regional sands on a very strong basis.

Okay thank you. Just two more from me. One is the expected cost improvement in terms of the production cost. Can you just give us a few examples of some of the maybe specific examples and our initiatives that you got going on that to bring it down?

So John as we have gotten in primarily into the Piranha plant, we have identified a few efficiencies as we have done across our other plants you have seen the improvement at Taylor since we have operated that mine. The team has gone through Piranha and done an excellent job of identifying some processes to reduce some of the cost involved with transporting the sand from the washed to dry plant and then some efficiencies within the drive plant that we expect to reduce our cost.

We also have identified some things from a very small capital expenditure that would get us some additional 400,000 tons a year that we would anticipate to put in place next year.

Okay, got it. And then the final one from me is just as I look at the slide a thing that jumped out was the need to get 500 people more to tackle the project in Puerto Rico. I’m just curious, where you find these folks and I think the same labor pool that you target for traditional oilfield work and could that be a potential limitation?

John this is very highly specialized with our Cobra operations. These are professional linemen that are really situated all over the U.S. and these guys are highly qualified experts of doing everything from changing out transmission distribution polls, all the way to bare hand to a lot of the other type of work that you have to do with it as far as pulling cable and everything like that. So these are very highly qualified professionals that we have been able to recruit and bring on.

Got it, okay, that’s all I have got. Thank you.

Thank you.

Thank you.

Thank you. [Operator Instructions]. Our next question comes from the line of Henry Shortess with Johnson Rice. Your line is open.

Hey guys good morning. So a quick question, kind of a two part question on the sand side. The large take or pay contract that started in October. Are the volumes there under that contract currently running at 720,000 tons per year or are they still ramping. And then a little more broadly if you can just address how you are fulfilling that contract and supplying all six suites moving to the fourth quarter?

That contract actually went into place in October 1st and we are supplying that on a full time basis. Now there isn’t other 300,000 sand contract that goes along with [indiscernible] so we do have million tons per year that are contracted out and we are fulfilling that as well as we speak. But we are able to with the ramp up of our additional mines able to satisfy the sand elements here in the Mid-Continent for ourselves and for those customers. So we are very effectively moving that sand.

Thanks that helpful. And then maybe if we can just discuss a little bit, the strong performance EBITDA wise, there is a non-contractual committed go [indiscernible] fleet. So if you could just talk about the performance as there is fleets and maybe the ability to drive further pricing and efficiency gains going forward?

So we are very proud of the execution of the team and the rollout of the Mid-Continent fleets. On a go forward basis, we would expect efficiencies in mid-cont to pick up as we move from more of a single well pack completion type environment to hold acreage to more of a full scale field development type scenario.

Great. That’s helpful color guys. Thanks, I’m going to turn it back.

This concludes today’s Q&A session. I would now like to turn the call back over to Arty Straehla for closing remarks.

Thank you. We want to thank everyone for dialing in today during this very busy time. I want to personally thank all of our employees without each of you, we would not be where we are today. 2017 has been a very busy year so far as we have been in dramatic growth mode. As we look to 2018, we anticipated that the first of our labor will be realized. As we have stated previously, the maintenance capital required to maintain our asset bases relatively low, which is expected to allow for increased cash flow which will be use initially for debt repayment. We look forward to speaking with you again on our year-end call in early 2018. Good day.

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may now disconnect. Everyone have a great day.