Flotek Industries (NYSE: FTK) said work tied to its participation in Puerto Rico’s Emergency Temporary Power Generation project has been placed on hold after the Financial Oversight and Management Board for Puerto Rico voted to direct the Puerto Rico Electric Power Authority, or PREPA, to terminate the underlying contract.
Flotek said PREPA issued a directive on August 17 instructing all consortium participants, including the company, to immediately suspend project-related work while PREPA evaluates the situation.
As of the latest update, however, Flotek said it has not received a formal notice terminating the PREPA contract.
Flotek’s Role Centered on 400-Megawatt Aguirre Project
Flotek had entered into a 10-year agreement to provide power-generation equipment and its proprietary PWRtek gas-conditioning, distribution and real-time monitoring systems in support of the proposed 400-megawatt project at the Aguirre Power Plant.
The project was intended to support temporary power generation in Puerto Rico and represented a potentially significant opportunity for Flotek.
The company’s participation, however, now depends on how the PREPA contract dispute is ultimately resolved.
PREPA Orders Immediate Halt to Project Work
Following the Oversight Board’s vote, PREPA directed project participants to stop work immediately.
Flotek emphasized that the directive is currently a hold on development activity rather than a formal termination notice delivered directly to the company.
That distinction leaves the ultimate status of the project unresolved for now.
Flotek Says Participation Remains Subject to Multiple Conditions
Flotek said the timing and scope of any future participation remain dependent on several factors.
These include resolution of the PREPA contract matter, satisfaction of contractual conditions, financing and bonding requirements, regulatory and governmental approvals, and the project ultimately moving forward to deployment.
The update adds clarity around the current status of the project while stopping short of confirming that Flotek’s agreement has been formally canceled.
Investors are likely to focus on whether PREPA proceeds with an official termination and what financial impact that could have on Flotek’s backlog and future revenue expectations.
