AMPY - Earnings call transcript Q3 2019

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Operator

Welcome to the Amplify Energy's Third Quarter 2019 Investor Conference Call. Amplify's operating and financial results were released earlier today, and are available on Amplify's Web site 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 Wednesday, November 20th by dialing 855-859-2056 and then entering conference ID 8498729, or by visiting Amplify's Web site, www.amplifyenergy.com.

to President conference of and Corp. like Willsher, to Amplify now Vice Senior Chief would turn over the Martyn Energy I Financial Officer

Martyn Willsher

morning. I Amplify's of XXXX. call appreciate you begin Energy financial and will Good the today. our for third Chief We to stakeholders with Ken Executive us programs operating quarter on will follow-up effort with Mariani, updating integration results third capital comments quarter discuss by and and conference on third call the operating quarter joining update merger welcome results. follow an And of our our on President our to Amplify Officer financial return results. the and

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

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

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

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

XX-Q, on later to file today. we to For read additional you expect we detailed our which quarterly report disclosure, Form encourage

quarter and in financials. those merger that date were during www.amplifyenergy.com. press in Midstates measures operational earnings note our financial Please at early July may may measures third release due found our be be in of closing excluded of to Also, non-GAAP comparable the our results on site GAAP for GAAP from financial Web measures to August, Reconciliations consolidated call. disclosed the

to of of pro results, in and consolidated include XXXX. results specifically for and quarter shareholders were for this our the be will a the period with quarter operational third full identified, third financial merger Midstates complete the though picture However, will call unless forma order discussed July the for provide more as results the on the assets

this I'll With in turn Ken the mind, over Mariani. call now to Ken?

Ken Mariani

with appreciate the remarks expectations of I and Thank quarter Martyn. our integration call today. an fourth this will our you, recent us Midstates, in merger provide the operational the joining our our of performance XXXX. My update for on guidance in quarter stakeholders third

merger. has closing the the August Since the working the diligently Amplify systems integrate the acquired been and through on X, XXXX, of merger team assets to

was mentioned of extremely happy have that previously, I'm As to goal. track most million we that feel $XX that on at we after to capturing to report the least realize the integral of value of integration synergies are work, And the we confident completing merger.

realized largely progress on later quarter G&A based first expect call. realized the the our in these XXXX this detail will additional by Martin be addition, outlook XXXX. synergies on our fully we should and provide In on to-date, fourth quarter

gas Eagle quarter. interruptions our to EBITDA operations. were Productions to reduction Ford quarter. a despite and guidance our in quarter, slightly NGL approximately volumes the $XX.X was result gas of during testament high million. third of the range Turning of accomplished of range management in pressure. costs, quarter these which offset sales operating day, XX,XXX We lower Oklahoma million to was weather realized $XX above guidance impacted midpoint that for adjusted and per strong a generated to averaged of the million line the These is the also slightly which prices above This from boe our which third $XX midpoint the results area for due operations

The stripping to most NGL during our NGLs significant production Bairoil item for out the the due weak Field our pricing. at modify quarter decision was to process

NGL as CX, always has of has the less NGLs. been the less lighter decided gas While a sell to the valuable remaining to very stream the strip Bairoil and of extraction of the primarily company market. stream Due from liquids has lighter condensate product to instead heavy, the the in resulted product inefficiency, out the liquid this

of a approximately per realizations to oil a by in of XXX barrels result the revenue in than an proportional day. of price overall condensate per barrels approximately corresponds increase increase and day XXX barrels The NGL increase offset XX% will reduction reduced this for were XX volume As volumes net with offsetting more XX% volumes the per adjustment, with day. of

side. completed XXXX, Switching October our project in in which with to Bairoil the expansion development budgeted timeframe. Amplify successfully the line was

plant shut of the previously the have the additional process wells and initiated have back in We started bringing recycling at online. gas

update a We our result the of will the on on call. expansion stakeholders future

call increase XX as focus was productions low were $XX.XX This a reminder, realized boe result approximately third was the of $XX.X XX or on month to below guidance assets. impact project to per to period, completion. fully the initial cost XXX the $XX.XX and company's end increase previous of our over due which million day by $XX.XX oil of But These accomplished in quarter for per a expenses companywide following the guidance on per operating the with efforts Oklahoma our containment boe, boe. range the the

the million $XX Texas, $XX quarter CapEx guidance acquired was expectations Capital reduction million, in The for reduced East CapEx flow. in Earlier and production, workover cash expected and activity and our California in forecast today, newly our the our below XXXX, costs properties. maintenance on spending million. to we including fourth end a of primarily range for free reduction due issued capital to guidance low capital of $XX of for quarter the third approximately was and Oklahoma

XX,XXX boe of offset of midpoint of XX,XXX for XXXX fourth third declines the quarter other pro forecasting our currently by start production increasing EBITDA on across containment are company. We $XX.X day. and forecast EBITDA million. is than production anticipated anticipate realized Despite cost We the quarter stronger the fourth forma the production production million, expectations. adjusted in project is expansion Amplify's Bairoil at areas for XXXX the by plant pricing fourth of of per quarter quarter-over-quarter our driven decline, of quarter higher the of guidance adjusted to the the This $XX.X focus and XXXX,

$XX $X spending Our program our revised capital forecast our plant to million million, approximately $X.X million expansion and conversion to range Oklahoma. fourth quarter Bairoil a is capital in rod-lift with the allocated for as

The capital spending which type Texas. to this We also on budget across a fourth a allocated believe will of drilling anticipate facility a in including will allow projects, opportunity maintenance our our East and evaluate quarter be small our risk low capital capital with us area. in remainder be delineate economics, to projects. to opportunity further portfolio We attractive portion budget and workovers of participate

return implies to cash Lastly our to EBITDA approximately the free in adjusted fourth The quarter using XXXX XXXX. our of of used quarter quarter free capital cash This expense $XX fourth and cash flow, second of the down of of half updated the flow which range fourth be we outstanding generation and be million $XX guidance. cash midpoint million interest to in to $XX will pay million free define less expected in flow strong XXXX shareholders debt. is as the generated CapEx

and integration the and what merger we year, value have increased excited and am creation As what operating the A quarter that Amplify. the stage acquisitions for mergers. demonstrates our about of final accomplished potential we successful the our enter future platform during XXXX, of future holds for I significantly optionality mid

strategy. overall headwind, commodity our continues we us executing industry gas to that on and continue oil prices believe also a and creates sentiment to opportunities current While it consolidation for be

enhance SOP the ability goal meaningfully index timeframe. deliver over which free compares In and to addition, with nearly This flow strategy same decline generation appears the to further the increasing starting favorable in differentiated on by our that strong our it price X% since market support, merger share market on Amplify of capital XX% closing will our up is very value. favorably the shareholder combined of Xth, execution, be of continuing August operational our with to on appreciated return cash the

discuss With to results. that to in mind, I call our would like Martyn financial turn over to the

Martyn Willsher

Amplify Xth. Thank you, on followed an program, Ken. to I closing shareholders dividend the paid first September This on of an of approximately or by upcoming third on positions. $X.XX per shareholders update XX% close price of share quarter business provide on a of million like of on November our Xth. December of XXth The return liquidity $X.XX our would $X.X record yield will December quarterly dividend Xst. dividend of per share at its on based record to hedging of on and capital September on financial to XXth implies be results, update $X.XX our paid quarterly

an to outstanding to Since company's initiated stock. million total cost open-market November of an company for common repurchase repurchased of of our Xst. a approval repurchase of shares with open million approximately up at at million also the common X.X stock of $XX.X share average the market repurchase has merger shares program, board closing price share of of the Amplify the $X.XX the as program XX of inception approximately

million continues repurchase of available Amplify our $XX.X As a result, capacity to program. have under

a third our $X.X Net further results. that severance operating Midstate capital. quarter results negative was one-time transaction million. and cash to from along and with for excludes was is in Moving This by July on beginning working a activities costs, change significant reduced

EBITDA than region driven $XX.X gas result the offsetting our lower realizations the the lease operating guidance of slightly some Tim East $XX in of NGLs, region. by lesser for adjusted was mentioned to which $XX third extent was This above price for million. to expenses, As Texas midpoint Oklahoma and the and was earlier, lower range forecasted primarily a quarter million,

$X.X $XX.X G&A quarter million was and included for transaction non-cash expenses. compensation of $XX.X $X.X of forma the million, which severance costs million third Pro of million costs,

the merger-related million guidance. was $X.XX was cash G&A expenses, $X.X of Excluding our BOE, or which the per below midpoint

trend that transaction-related quarter beginning $X expect now the of in and be XXXX the million approximately are $X.X million first and We that the costs behind G&A to down our XXXX. cash will us, quarter of fourth recurring of in majority

may we look XXXX. acquired costs G&A with that as and merger be will cost certain opportunities and off able for continue to anticipate other roll subscriptions reduce We the further to reduction in additional

expense. be will quarter. completed and redetermination Amplify's strong expense, flow, slightly with of less interest CapEx for Free adjusted which quarter, define high-end was million EBITDA and we guidance was the our which cash range. This cash was forecasted approximately at Due by fall than to $X as coupled the the third cash the interest expenditures than lower later operating fourth driven capital merger closing, usual results,

in wide At decrease time, due reduction to bank price redetermination. and we forecast this a anticipate spring a market borrowing our the base since

will moving decrease, despite will position. than increase we free sufficient in meeting However, flow this forward, liquidity be liquidity future periods cash significant that generating will Amplify our more further and

million with of a which As facility was of of consisting debt total our current November Amplify's in million, lines on of $XXX the borrowing X, and Amplify credit million capacity million. $XXX cash of $X.XX under liquidity million XXXX, of borrowing credit. outstanding includes of $XXX impact had of million, revolving $XX hand $XXX available base

to production our Moving Amplify the our to mix a change restructured to Bairoil call, has hedge NGLs added last in our position on hedge our hedges earnings opportunistically and from reflect Since latest of to number also condensate. position. has

addition, Amplify the the Midstates all in through In positions at merger. assumed place has of

are but to a percentage certain flows, a way primarily we're swaps, collars. combination us limiting positions and collars future costless lock our able three maintain to positions of head cash of allow additional while new upside our also in Our These downside.

per approximately remainder midpoint year XX% production fourth hedged boe of day. of XX,XXX our were the for based on the guidance We quarter

hedge mark-to-market Web presentation on section. of under million. Investor our net value today third gain our position site Relations quarter current As a additional our Amplify's and XXXX was posted contains hedge on a the was earlier November details Xst, $XX position,

strong of this quarter We our environment. capabilities third demonstrate with positive strength results organization's price despite believe results a challenging financial the that

our enthusiastic believe and forward. are containment moving about cost additional costs very operating opportunities to there reduce We that will initiatives overhead be and expenses,

this for line management the they any for we remarks prepared open like now please invite have ask Operator, our concludes analysts questions. and any to And would call. to investors the for questions morning's team. This

Operator

go Please [Operator from We a do ahead. Grampp Capital. Instructions] question Jeff have Northland with

Jeff Grampp

can the I you, and talk if for -- or bigger was the the Any of side Ken, versus things of thoughts for mid thing, type spread seeing there? just into just smaller deals. seeing traction asset about curious ask -- acquisition your what then you're overall if of you're on state you you the maybe packages talk we could maybe on or what side about bifurcated guys, level you what bid

Ken Mariani

in already a kind obviously flow of regards expertise effort we and call assets markets. we the of obviously, aligned our focused a bit what doing we question cards. And The to but nature looking internal what assets deal looking We're to the can good deal maybe at continually ongoing call similar that’s from. And at have monitor we general. on, have. on type to assets we're free doing with score are And operating what we I'd that quite A&D our cash a that in incremental are are mature use market, producing extract just the we market, the not And assets. seeing

we're a bit just fall that acquire companies season, to are going what market borrowing it's cash assets assets will again, to on seeing accretive production, or the selective, -- these Obviously, again to capabilities. because pressure there very mature So of with we strategic very we model this self base opportunistic them be is to in make on our purposes free type our to of basins. and divest are And generation quite decisions assets. continual flow whole and not think producing increase be

there line bases share. market. more target insight And in have as I do going is So out well I market. if rich additional see think is you're the it to again, bottom don't may even think this a fall he'd opportunities to Martyn like with borrowing some season, I

Martyn Willsher

on Jeff, well. as target think merger also I will there on side, I just add potential that is the but the acquisition

in sellers kind So more a that on would it's the the wanting at are willing variety we're price about I merger of as side that. think side. the realization a ones at there that pay And we're your question come cases we're it bit coming shrinking in certainly we more. and looking bid acquisition on some regards is are and Obviously, of at spread, most high in and say the actionable. are so as I But be more and certain both that is people a and to options the still are assets a think looking still to of real. But would market ask we've -- the that we to little to looking well, graded

Jeff Grampp

guys also was let's guys about you I months real trading and you couple your your and your should cons relative that can through the how the front. go in of on Wondering you that And maybe curious see expanding maybe buybacks, and active we how then on pros you that guys guys evaluating the that? And to term medium weigh were like last to are volumes the buyback say stock? in

Ken Mariani

year, adding you the debt, said versus budget buyback acquisition uses free the pros weigh of cons to we'll it and obviously start to our exactly flow down paying I the on look to the next for or side. or think adding if at So of we dividend, the cash what

it's kind something balancing we to I earnings think So the update what have call will it's next a do. that. for an will act, of decide we like on But

Jeff Grampp

for one last me. And

like the recovery. Can with you With you it NGL to improvement I that relatively really, make quickly, to there, the us you up is see guys kind that revert any if the And shutting what the intensive if to you ballpark a quo back. you type tweaks on guys guess of tweaks operationally of to market perspective, you that in NGL maybe guys guys status down time made for to Rockies the make is from change you you an that just back that can then or make will. from do, need switch talk thing about to need

Martyn Willsher

we're doing tweak. you recoveries, chiller. the what of temperature the is obviously, either increase Jeff, Basically adjusting relatively on easy a by essentially it's decrease operational we're the what temperature to going doing. adjusting the that's And or side, chiller, our

have make to want never decisions short-term implications. we So that long-term

So this market adjust, something back obviously is go other the can if to was the way. we

think better variety and right had we it's probably -- reduction different and calls of significantly the revenue, type basins. heard XX% barrel probably for NGLs is the with than are even the decrease. specific of the value you've mean, even I now, And opportunities basically was across $X of where it's XX% Jeff. adjusting XX% XX% small weak condensate, of production which impact, relatively the or just to this at on I $X a just

I more to consistently relative be can kind condensate was worth of relatively in have to So and and of this switch obviously we value range felt we like that up than that then the easy NGLs moved in range it'd And back it. said, the be a process.

Ken Mariani

When been thing, higher they even it mix, times COX plays, I'll one of think the attractive. more some of higher of again to percentage these I it's ends rich heavies. add meaning very lighter is resources producing again stripped have much This when other overly And A make already get we about its flood about all the component here, not a a mix talk much lighter talk technical. of we have that the end mature out, the a where so mix. lot of

Martyn Willsher

it's XX et propanes -- out Yes, XX% condensate just CX more so and worth stripping cetera. as to the now I the butanes, previously, as to mean opposed

Operator

there Instructions] at this questions. time, are [Operator And no further

Ken Mariani

to on to demonstration cost built lead of is the all and to and merger and team a Midstates commitment safety, containment. platform Amplify this accomplish, locations team. talented the great is very fortunate across to integration such hard-working their I'm what for The business the seamless effort to like thank I'd entire closing, of of our and In production a relentless like

As our of remarks. And and to combining cash any appreciate long-term support. return on always, generation us as continue for Thank flow our joining support believe plans. to hesitate investors. with concludes to prepared value of like we I'd free And always, investors will We out reach sustainable to again capital don’t we today This strategy today. again execute your please as their create thank significant our for our our questions. you for us of

Operator

call. and in thank participating today's gentlemen, Ladies for you conference

You may disconnect. now

Amplify Energy (AMPY) 8 Nov 192019 Q3 Earnings call transcript