Following the Incident, the Company deployed contractors so that at the height of the Incident response there were over 1,800 personnel working under the guidance and at the direction of the Unified Command to aid in cleanup operations. As of October 14, 2021, all beaches that had been closed following the Incident have reopened. On October 15, 2021, the Unified Command announced that reports from trained oil observers and beach cleanup contractors working for the Unified Command showed significant progress in cleanup operations. On October 18, 2021, the Unified Command stated that segments of beach are recommended for no further clean-up activities. While the Unified Command has significantly reduced the number of personnel conducting remediation activities from the height of the effort, remediation efforts remain ongoing at November 15, 2021.
The Company carries customary industry insurance policies, including loss of production income insurance, which it expects will cover a material portion of the total aggregate costs associated with the Incident, including loss of revenue resulting from suspended operations. However, the Company can provide no assurance that its coverage will adequately protect it against liability from all potential consequences, damages and losses related to the Incident.
In response to the Incident, all operations have been suspended and the pipeline has been shut-in until the Company receives the required regulatory approvals to begin operations. At present, given that the pipeline to shore is not operational, no operations are underway in the Beta field.
Key Financial Results
During the third quarter of 2021, Amplify generated $27.1 million of Adjusted EBITDA, an increase of approximately $3.3 million from $23.8 million in the prior quarter. Third quarter Adjusted EBITDA exceeded internal projections as a result of production outperformance and strong price realizations.
Free cash flow, defined as Adjusted EBITDA less cash interest and capital spending, was $13.1 million in the third quarter of 2021, a quarter-over-quarter increase of approximately $3.6 million.
The positive change was primarily associated with production outperformance and higher net pricing realizations overall.
| | | | | | |
| | Third Quarter | | Second Quarter |
$in millions | | 2021 | | 2021 |
Net income (loss) | | $ | (13.5) | | $ | (35.0) |
Net cash provided by operating activities | | $ | 18.9 | | $ | 20.8 |
Average daily production (MBoe/d) | | | 25.1 | | | 25.3 |
Total revenues | | $ | 97.0 | | $ | 80.4 |
Adjusted EBITDA (a non-GAAP financial measure) | | $ | 27.1 | | $ | 23.8 |
Total capital | | $ | 10.5 | | $ | 10.9 |
Free Cash Flow (a non-GAAP financial measure) | | $ | 13.1 | | $ | 9.5 |
Revolving Credit Facility
On November 10, 2021, the Company completed the regularly scheduled semi-annual redetermination of its revolving credit facility borrowing base and entered into an amendment to its credit agreement. The redetermination reaffirmed the borrowing base at $245 million. Beginning in February 2022, the borrowing base will be reduced by $5 million per month until the spring borrowing base redetermination, which is expected to be completed by April 2022.
As of September 30, 2021, Amplify had net debt of $204 million, consisting of $230 million outstanding under its revolving credit facility and $26 million of cash on hand. Net Debt to LTM EBITDA was 2.1x (net debt as of September 30, 2021 and 3Q21 LTM EBITDA).
Corporate Production and Pricing Update
During the third quarter of 2021, average daily production was approximately 25.1 MBoepd, a decrease of 1% from 25.3 MBoepd in the second quarter. Production exceeded internal expectations during the quarter, driven primarily by the low-decline profile of the Company’s East Texas assets and the successful workover program in Oklahoma.
The Company’s commodity product mix for the quarter consisted of 41% crude oil, 16% NGLs, and 43% natural gas. On a quarter-over-quarter basis, Amplify’s oil composition increased by approximately 3%.
