AMPY - Earnings call transcript Q1 2019

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Operator

Welcome to the Amplify Energy First Quarter 2019 Investor Conference Call. Amplify’s operating and financial results were released earlier today and are available on Amplify’s website at www.amplifyenergy.com.

During this presentation, all participants will be in a listen-only mode. Today’s call is being recorded. A replay of the call will be accessible until Thursday, May 23rd by dialing 855-859-2056 and then entering conference ID 7860565 or by visiting Amplify’s website, www.amplifyenergy.com. to President conference of and Corporation. like Willsher, to Amplify now Vice Senior Chief would turn over the Martyn Energy I Financial Officer

Martyn Willsher

morning Mariani, quarter of conference We appreciate Amplify and Good us results and XXXX. to today. Chief joining discuss Ken financial first to President operating Energy the for you welcome and Amplify’s call the update updating first Executive Officer, follow on announcement the and quarter company’s results. results. on first with will begin our an our the financial quarter recent stakeholders call will operating by I merger

future remind First, like based various to that would expectations remarks with These we and events our uncertainties assumptions management’s risks, to may certain forward-looking to of and are you and are reflect some team. management views remarks statements subject of assumptions. Amplify’s and contain current on regard

believes are statements to intend such correct or Although occurring does obligation such expectations assurance reasonable, circumstances reflect will and it the and prove call. management this in that forward-looking give after statements to update be these no no expectations reflected forward-looking earnings events that undertakes to can not

guidance. for include, forward-looking refer release that limited made but are XXXX statements our statements the results from our and to may of, a during to filings list statements actual second of and and in cause full-year to, SEC discussion press quarter this materially those Forward-looking about not Please factors call. differ

highlighted that be and information unaudited here derived addition, In books, financial internal will records, from is the reports. our financial

financial during Reconciliations or file call GAAP later Form you website our press measures For to non-GAAP to on the Ken www.amplifyenergy.com. additional to I Ken? turn this will which measures our XX-Q, disclosure, in we With over to found Quarterly read Also, disclosed of expect may be comparable this mind, in our be Mariani. may measures now on at encourage those we release call. detailed today. Report

Ken Mariani

has on quarter, the our In year, this an stakeholders recently guidance My with opportunities merger in commitment the XXXX. joining updated on for at our call our today began our expand merger with all processing process and Martyn. value us remarks announced focus first completing provide update Bairoil in announced explore been and of to This today. as stockholders. a Midstates. last to organizational and Amplify’s the performance plant I Thank with are to our appreciate the we early stages any you, previously for will continues operational Midstates, create

stockholders has million The each diversified value our initial base announcement and we for combined uplift the advantages on an the both per of synergies mentioned assets, will substantial strategic year approximately was $XX merger of combination call, companies. shallow-decline of long-life, merger provide to with As that company. cost improves platform immediate a believe this identified asset company’s

diverse, some a and combined addition, have returns to our The investors that additional In profile. flow on asset merger PDP-focused flow the review the remarks, low-risk, of encourage will to deal our his for the cash comments materials in capacity of top of us consolidation base posted will generation will have positive accelerate cash position potential we and market financial potential all Martyn were stockholders presentation the on further opportunities. benefits but website. low we leverage with free and additional will capital a more provide entity tier free

management and look this a remain on to shareholder creating executing opportunity. committed value to we forward As team, tremendous

Texas. our to volumes Ford in areas, performed operations, the non-operated slightly our Turning as delays well quarter first producing Eagle production adjustment in and in California to as an production to expectations our East we below unfavorable due non-operated

approximately Production the guidance the of XX,XXX for Adjusted Boe to our below guidance quarter day, slightly $XX for we $XX.X first As generated quarter, million. range was our averaged quarter. of below of was the end million low a per EBITDA $XX range result, in the which which first

from brought Ford results, numbers. full primarily its an quarter back impacted until online, continues Eagle of and to quarter XXXX over in wells non-operated wells first than An our and completion is the higher brought a to average production impact X,XXX production Amplify East The on When our but Ford Eagle non-operated in first anticipated. line mentioned, IPXX Boe as begin be in such, were they delays EBITDA, program. previously for by Ford volume in As slower March. quarter. we wells, producing be Texas anticipated brought with to first XXXX timing maintaining In which as Texas volumes, by the adjustments resulting a approximately quarter Amplify for non-operated February, recorded were wells impacted activity of year with was certain the not Adjusted with anticipate larger were day. in excluding response online the ten was wells primarily the adjustments additional May ten also made a will these in impacted will production California anticipated now production California, end ultimately volumes, were in of the quarter delay over our These work originally expectations to East first adjustment guidance online Eagle work along merger. production but per Ten third

million, expenses the expense will a Lease LOE production low compared plant million, expectations but the of quarter. approximately increase end to $XX to also second and our the work to $XX.X $XX deferral total equipment projects a Bairoil on to was was reduced we in key including the quarter in in the The $XX.X approximately million. scheduled of due advance be in was the a plant project guidance primarily Boe, $XX.X of million was was in missed dollar the at previously in for over of days for per the quarter described. install in for at guidance range production, for executing During the expansion Earlier $XX.X our later cash first fourth XXXX, which conversion were in Bairoil due a Beta, million and projections the fourth expectations were basis, reduced work a fourth completed planned shutdown annual from overs, the to or turnaround today CapEx that and updated quarter volumes be which to below well Bairoil and year. flow. we deferred line in capital for quarter. spending XX to short-term XXXX, quarter, forecasts caused operating of issued CapEx free that Capital with guidance first $XX.XX lower the

We projects currently of Boe our production day, the are additional XX,XXX XX,XXX year prior XX,XXX of XXXX full Boe forecasting our Boe are production XX,XXX of opportunities. of We completion per of Bairoil with fourth per evaluating expansion and portfolio day. forecast to to increasing quarter project from plant the down anticipate Boe our in from

Our capital forecast capital allocated revised expansion. million, million Bairoil spending to range $XX approximately for plant of $XX is the to our with XX% XXXX

portfolio. allocated of We spending properties. also of anticipate remainder and budget facilities across our non-operated our will development projects budget capital over The our approximately on capital work to be our XX% Ford Eagle of the

flow, may capital budget returning or Free to CapEx as which to Texas does at expected for to opportunities million later free which this our are stockholders. Management cash XXXX. East we flow, continuing less we Adjusted capital the the include properties, supplement development XXXX budget further cash for contemplate reducing Beta these in not range and While EBITDA, to be allocation XXXX. cash the debt capital $XX of and include define our uses is and/or Board evaluate drilling a million additional opportunities, in may expense, our in our $XX will and best funding interest

levered XXXX, with look base, future Midstates. stronger diverse for excited following growth pending asset am more opportunities. I production forward The provides and combination to us capital structure our and enhanced with I and As merger minimally a the

Additionally, turn have to significant our this we are combination investors, platform. create stockholders I to our increased in capability and to results. that will to Martyn our to the all would call of apprised We continue accretive targets progress. will for we and discuss like our external value over keep believe to pursue mind, that of will growth financial optionality With our

Martyn Willsher

benefits flow, reserve tier $XXX generate the value XX% like disconnect in XXXX and start cash expect opportunities of by to of combined million value details XX,XXX resulting substantial top regards of profile. million company’s pro forma scale day enterprise The cash and the indicates to discussing significant guidance pro combined to liquidity, a our levered XXXX, approximately on believe merger, also hedge per will consolidation million. and million some million to of review of asset’s XQ of reserve flow EBITDA annualized Adjusted combination quality flow. of value the generating of company free in production, lead enhancement EBITDA, to combined companies We assets, discount achieves developed through $XXX cash In of proved Boe free On cash our yield our revised $XXX Ken. free and and of synergy flow In combined for value free results, of enterprise by financial forma benefits realization, the the followed value. of to basis, flow updated free production, a generated cash close I’d reinvestment two help of and a improvements our $XXX the between the a Midstates you, position our additional transaction Thank $XX at we XX%. quarterly year. merger, the financial least

approximately to XQ balance our differentiate of would results, Boe, annualized combination the than times annual cash half to expected result cash leverage X.X the less of G&A XX% leverage company the a sheet generate with average while of Based transaction Furthermore, free combined than addition, approximately will significantly $X.XX companies the for The maintaining X a decrease combined on In year itself will the in to is with fiscal million savings by flow expense G&A $XX per company our is greater a combined stronger which group. than significant of basis. XXXX cost in of ability realization times. savings. ratio its two result peer less XXXX on

Our with the capital allocation free cash decisions make sheet us flexibility will flow stockholders. liquidity our balance are and to strong of provide position favorable best interests that generation, in

Operating was which capital lower guidance from lower quarter was quarter Moving EBITDA $XX $XX G&A costs $X.X the additional Activities for Cash to Adjusted of million, advisor expected was than compensation our the $X.X quarter of of $XX.X severance by quarter fees. Net and was to was on related non-cash This and was primarily in merger. below million the due driven along results, first EBITDA and first production expenses one-time slightly some included which due million, million. the results with working This of increased decline than which earlier, was Adjusted our million, lower fourth the million. $XX to $XXX,XXX million range result adjustments. $XX.X quarter for G&A to discussed first payments to the expenses

first was the these expectations. below Excluding expenses, per $X.XX one-time quarter or for G&A which $X.X was cash Boe, million, our

We weighted annual to and Midstates’ EBITDA be less XXXX. Amplify for change which as of was Free be $X.XX borrowing G&A its program of facility. terminated remainder the first million. G&A over which facility. redetermination pending Flow, of credit $X.X the the combined remainder expenditures, spring base and be moved to repurchased share of at May it expect with per quarter, consideration consolidated to $XX will that platform cash XXXX from least that revised at total continued anticipate in guidance cash the merger and and a cost related remaining in was Adjusted will market Midstates’ Prior our at merger, announcement, had the $X per merger of XXXX the million XXXX. we Company’s closing, Due expense credit anticipates repurchase define costs early for expects credit a finalizing merger Company facility credit generate of phased had program. into shares integrate approximately market the XXXX for we June Cash reductions open transaction. existing at The range. merger, down into was will subject open XXXX assets Company’s excluding quarter the to repurchase approximately at approximately has any order end the XXX,XXX terminated assets This from closing but of Amplify interest borrowings Midstates’ low incorporate base savings million the be to in we we $X.X to equity price average facility as million will paid with the be capital to the effective the

on million, borrowing million was $XXX revolving $XXX was credit Xrd, $X.XX $XXX facility base consisting the cash $XXX million million, impact on includes outstanding. May which $XX its of Liquidity capacity of letters of with of million hand of available of in credit. As outstanding borrowing and Amplify’s million,

last Moving its accumulating on Since position. to earnings of portfolio our call, hedges. Amplify our been latest further hedge has

positions costless limiting allow new combination to downside. Our hedge our while of us a and are upside collars, additional will which swaps maintain

proved our additional positions our Amplify’s details website contains pricing May current on XXXX. was investor today hedges As was hedge the producing of developed that note presentation position a our It XX% first earlier under through of reserves on XXXX posted section. quarter current over relations lock Xrd, and value $X.X of on mark-to-market is our to in net million. hedge downside liability our important

today quarter of and Full the midpoint. events for $X the been the our timing first has and approximately full-year second reflects million earlier year year. at issued slightly quarter increased by Our remainder guidance outlook CapEx revised

small We Adjusted the $XX our cash guidance million. $XX in turn $X are $XXX to CapEx XXXX interest for Ken decreased cash call due for adjustment, will in Despite of free million of cash remarks. increase EBITDA I year, the increase expense. and to maintaining but closing midpoint now free midpoint remains the a by the range the with strong a XXXX flow million our over Amplify’s back estimate full to flow million of

Ken Mariani

Martyn. you, Thank

support remarks. to and forward transaction during with concludes to questions. their advance today of continued the all the like our Thank in Midstates our This as to please pleased don’t very for the out process. months. thank in coming merger, look us Moreover, are integration moving to I’d with and prepared hesitate for you closing always, forward the We any reach to joining stakeholders us be

Operator

call. conference today’s concludes This

disconnect may You now

Amplify Energy (AMPY) 11 May 192019 Q1 Earnings call transcript