AMPY - Earnings call transcript Q4 2019

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Operator

Welcome to the Amplify Energy's Fourth 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 placed on a listen-only mode. Today’s call is being recorded. A replay of the call will be accessible until Thursday, March 19th by dialing 855-859-2056 and then entering conference ID 6466309, or by visiting Amplify's website, 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. Mariani, quarter of Conference We appreciate Amplify on and Good us results full follow and XXXX. to comments today. Chief the joining discuss Officer our fourth Ken financial update financial and fourth to President operating call Energy the for with you welcome results And Amplify's will Call I the with quarter on return programs year begin capital guidance. will operating XXXX fourth of and Executive our an quarter our results.

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

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

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

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

we Report encourage our we later today. disclosure, read detailed Annual additional file on which Form XX-K, to to expect For you

our comparable be during measures measures website may at Reconciliations measures on press be found may non-GAAP GAAP call. release those this or our financial www.amplifyenergy.com. Also disclosed of in to

Ken? in mind, Ken over now I turn will call Mariani. the to This

Ken Mariani

for the appreciate and for this an proved XXXX of fourth on performance reserves I year call us quarter, today. guidance you, update Thank XXXX. our everyone provide will operational year-end Martyn. joining expectations My remarks full

averaged unrelated at BOE quarter This fourth operations for Bairoil, Oklahoma. Wyoming quarter end and the related driven was a the production approximately largely field to production. materially compressor for of day, impacted total start-up incremental expenses outages power operating which with was primarily expansion Bairoil complications were per submersible and line which million, outages. impacted events was in our was in low $XX.X on in failures challenging the XX,XXX dollar In by result Production expectations. third At Lease following weather in the and by at pump our guidance quarter. range the Oklahoma, planned basis

expected lease than high basis, the However, a lower Amplify's end as was per a production. BOE range operating result per on of slightly of of $XX.XX unit guidance our above expense

$XX was Capital additional for approximately at the to the due the spending end guidance, quarter at Beta was start-up. assets expansion in million, costs to activity Eagle workovers, Bairoil new which the capital our Ford company's non-operated the development high fourth of related

BOE million per Amplify's announced proved natural of natural classified as XX% SEC our reserve of year-end were we XX% reserves developed. XXX on pricing reserves approximately approximately approximately gas for for MMBtu. based proved reserves gas the crude and $XX.XX liquids, was per of oil crude oil, mix natural today, The gas Earlier XX% XX% proved proved $X.XX and XXXX and flat of pricing barrel

at at SEC prices to XX% year-end our or price down XXXX reductions. and were reserves PV-XX standardized was pricing $XXX impacted SEC which oil was The measure gas was significantly NGL down pricing crude XX%, Compared for proved at was million, natural by XX%. for down

the company's XX% SEC pricing Amplify's is as or approximately had of higher $XXX $XXX value a reserves developed PV-XX Based value enterprise million, of than approximately which XX. year-end on this of proved $XXX million XXXX February million

pricing operating CapEx. our production, today, forecast including issued for for we initial and also expectations costs guided XXXX, differentials, Earlier

Our to full forecast full boe year production XXXX XX,XXX XX,XXX ranging is day. per production for year average XXXX from

a oil properties, our will of of the our more result and decline the Bairoil quarter production oil the of expansion rates quarter from of XXXX low As fourth that XX% we than of production fourth anticipate XXXX. to increase XX% by

million facilities XXXX efficiencies to forecast stability. million midpoint is projects, with million. production reduction program capital Our of cost includes for projects, full to and XXXX other estimate are expected million $XX for capital and which initiatives, the cost $XX create workovers million million $XX $XX for $XX for capital development The $XX year and

drilling Amplify's Eagle net development the X.X has million where program, Amplify a capital will and in wells includes CapEx completing which gross XXXX. primarily Ford, in be XX budgeted $XX spent

the As this Amplify substantial Amplify's had for demonstrates XXXX, of gross A in received activity in area net proposals core year-end County, Karnes superior development of in projects. X.X XX Texas. increase well return from well acreage potential the

spent rod be spent Oklahoma, we in spending lift approximately and additional further projects, to successful initiated million submersible The will enhance Texas. workover be the electric capital be reduction back spent on East projects wells area. in in Bairoil project production conversion Beta. offline pump spent will another significantly capital Bairoil reducing $XX operating bring The our late cost primarily margins in remaining will The facility which been Beta, at where lift has Approximately budget on and and $XX and optimizations. $XX rod for anticipate be our maintenance operated across conversions and costs, XXXX at million million capital on will properties

million budgeted have Amplify's non-operated acreage. In X offsets and previously which $X well additional the East we Jones Viper Texas, to drilled an complete

that way the continuing strategy. consolidation and return look prudent capital and its allowing current firmly also program XXXX, price cost-effective in production As while to our value I towards environment to costs, shareholder a capital execute reduce is the maximize in drive proposed company by believe I of corporate on to

intensify cost to strong the creation events demonstrate flow generation, operating the in cash We that value will integration falling despite potential believe strongly industry synergies of push and that lead weighted PDP merger for consolidation. Midstates successful commodity prices. recent can our free The capturing market platform

And in retained Evercore consolidation consolidation additional to financial will pursue generate position for with adviser shareholders. mind, capitalize have opportunities that further transactions. and Amplify Amplify team on value as outstanding Evercore's to accretive we our

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

Martyn Willsher

$X followed its dividend first progress of our on of update and Thank return-of-capital you, liquidity discuss shareholders update fourth an $X.XX on to to on paid positions. approximately policy on quarter December XX share per by our and record financial we've like quarterly Ken. I'd our on X. dividend the programs, Amplify the results, made million December hedge or

our which first industry. As announced for decided press reduced to in dividend in per dividend we the share to release effective an highest reduce yield XXXX provides among approximately our still $X.XX while of XX% earlier is our today, which quarter

induced Amplify's While to for to to liquidity coronavirus demand may recent sheet balance action to transitory, best related this destruction the time maximize be conservatively reductions we is believe stakeholders. our price the of value and manage prove at course long-term

the an the March dividend program of of be on quarterly the XX. to of business paid merger on close of closing record XX the $XX of repurchase stock. shareholders outstanding company's had upcoming common at to March open up $X.XX of shares to initiated share Amplify as per million will share of repurchase market The

shares common approximately XX, for cost total February X.X $XX.X company the of had repurchased million. approximately of stock a million As of

which was Moving below million earlier. quarter on to results expectations fourth $XX to and activities EBITDA was net for production were discussed results, from fourth cash of our both our quarter operating -- $XX adjusted due due largely million the the

fourth the quarter final which included from and million which severance of adjustment Midstates merger. the $X.X primarily costs the for $X.X G&A transaction million was were onetime

costs of compensation quarter expenses of $X.X was or below non-cash Excluding million the the was and guidance. fourth per cash our $X.XX midpoint onetime $X.X G&A BOE which million merger-related

in and million million we one We quarter promise But had our a the of rate we delivered $X.X the to G&A able than run for fourth for finalize execute previously earlier projected. as recurring on merger. quarter cash anticipated the integration were G&A, $X

flow fourth quarter range. to that guidance adjusted $X.X and the cost Due per $XX expected was able less after XXXX million, remainder cash be approximately first for EBITDA cash approximately cash expense will quarter to G&A for initiatives believe we of to reduce approximately CapEx of cash G&A additional reduction quarter which as $X.X which the was of million our we end define Free below million interest XXXX. low the we

was This coupled higher-than-forecasted by operating with results capital driven our slightly expenditures. previously discussed

credit of available million liquidity $XXX $XXX Amplify As revolving base its with borrowing borrowing million XX, under million million. hand million. Amplify's of of of of cash total a $X $XXX of on consisting was current facility February $XXX had and capacity debt XXXX

in time, this borrowing scheduled we due in forecasting redetermination bank base expected is material Our to XXXX. next April price a in at And reductions forecast. decrease our are regularly

degrees despite forward this free cash outstanding we will borrowings. However, reduce flow Amplify our will anticipated to and moving maintain liquidity will continue generate sufficient that incremental

us oil are oil guidance at hedge percentage crude cash on mitigating on gas. pricing based on the us exposure our specifically, XX,XXX hedged guidance and production BOE opportunistically positions natural midpoint Moving last hedged production and full Across hedge to while midpoint attractive positions in flows, call, day. to our XX% approximately are Amplify upside the allowing earnings lock benefit barrels of to year to we XX,XXX certain also Since our XX% future On added to from XXXX day. a commodities, to positions. has our downside. XXXX per These of relative our in latest allow our we of per

gain under was February details Relations presentation current XXXX of positions today net million. our As on the website our posted position contains Amplify's our was $XX XX, quarter and value Investor a earlier on section. of mark-to-market hedged fourth additional hedge

risk. of steps by this the stability sheet to significant our maintain taking is to During period and turbulence, proactive commitment prioritizing reducing shareholders Amplify balance market

headwinds, the be and lower As we response. capital budget we market to weather dividend prudent and to reduction conservative continue consider

boost intensified profile challenging steps the savings cash this these further have While efforts opportunities, also cost help, to identify which company will flow will free our during we of environment. the additional

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

Operator

question Capital. Northland first go Jeff from [Operator Grampp come with Instructions] will Please The ahead.

Jeff Grampp

guys. morning Good

Ken Mariani

morning, Jeff. Good

Jeff Grampp

guys that are you coming I where dividend the topics thinking just $X.XX of you I was guys they're specific on after balance evaluating, integrity. something reduction quarter. even maybe maintaining improve And I'll at least quarter wondering if obviously maintaining seeing you comfortable about two just leverage focus and would I looking with dividend rate getting how guess first sheet dividend? on from to dividend high a or up this of rate? Or really up are wanted the is within kind start kind Can that appreciate But front. first maybe leverage maintain that after of the you back talk you $X.XX creep level, towards that or are how guys for to guys over the prioritize kind that

the then fixed a maybe or of related cash on flow outperformance board of and have And maybe guys dividend can terms -- given and in a kind more if topic, you variable component? level of at dividend you use any to the a consideration more layer internally sustainable to variable strategy rate of of of a kind a whereby plus have type periods

Martyn Willsher

felt down more had destruction. Obviously, little $X.XX. long dividend where discussions what's the lot of a cutting with that. back period and and uncertainty dividend a should bit demand to $X.XX in about whether globally on of take maintain I'll happening conservative chains it a we're the -- we in Obviously, be we the the or Jeff, supply we

quickly. this -- we could While rebound

a leverage our time We also sometimes long And take and sure make that remains we at reasonable play out. sheet level. want realize that our things a to to can these balance

step balance And a also commitment to of proactive we two, while liquidity, the to reasonable what was so leverage we a shareholders. capital return just maintaining thought our took kind to

all a uncertainty. risk a wanting them increased during really of take So, of and combination of to additional period really not just

Ken Mariani

this I'll just Ken, that. Jeff to And add is

lot And external obviously, factors, a Our et are company have on performance, cetera. by et a made Board. of we around robust dividend basis cetera, discussions centered quarterly the decisions

So, everything quarterly on a is table basis. on the

to closely. skis will implications. to So, is that next quarterly with the the of regarding short-term significant team I have you the long-term point dividend along everything never situation assure to decisions the our on again monitors Board you management your Martyn's want the And discussion get ahead But will be make table.

Jeff Grampp

that little And more guess, those you Appreciate slower a fourth you side it. progressing comments. the my saw think maybe bit quarter. on year? of baked ramp of kind we of maybe give the quarter given, what's bit I incremental follow-up for the the kind the for how And in into Bairoil that Got Can of a remainder how operational over in of out from sense of terms seeing of start field? should ramp first production kind guide about the you that are little maybe us guys a play

Ken Mariani

great deferred ramp very Yes, months. that Jeff. question the We still excited project. about three about basically We're

imagine were it that complex project. were the of the during our we start-up we had some It while can compressors very had just some outages start-up And to didn't. revamp legacy some which you unexpected As and importantly, timeframe. large expansion which overhaul was of anticipate a with we some we as going live able complications some

of is a wellhead. in benefits you there a switch So, work floods, at everything basically up these waterflood, delay flipping not like the lined once your seeing the get COX it's

your And in initial a forecasting our specific lag three-month we're forecast. so to with question be

But to changed our et really about et And with rates, the ultimate ultimate have peak not expectations we're excited regards recoveries, cetera, project. cetera. benefits, still

the months three I Did of With delay. answer that the Jeff? question exception

Jeff Grampp

hop someone else I it. No, I'll Appreciate on. that's perfect. let

Ken Mariani

Thank you.

Operator

[Operator John go Please come Instructions] Capital. White ROTH will ahead. next with question from The

John White

missed I basis? oil your boe hedge caught at percentage a I on position your on but XX%, hedge

Martyn Willsher

at Hey, John XX% across We're approximately commodities. Martyn. this is hedged

and including with on you're on XX% that NGLs hedged rest gas the the obviously gas we're and if component, so oil. and So, hedged XX% to between NGLs

John White

was XXXX, dividend dividend. about for commodity I cash In XXXX And X.X And I $X X.X quarter admittedly updated oil. new and coverage you. well dividend your prices, dividend. a numbers of again morning with I flow And Thank the by on times pretty and free new divided your and modeled my this dividend coverage. CapEx $XX higher had times with see the gas fourth

on with in if are the you dividend given coverage, increasing you it more time if on what prices point X.X year? times – conservative you're the expectations what stay looks that? flat, coverage being dividend could like in So this at than were this later comment and maybe quarter fourth your are the And commodity your

Martyn Willsher

again. And obviously, And those obviously it's could want strip looking year, where the this same decision – the metrics. some look balancing John, Hey, over Martyn conservative. long-term oil that is being this $X.XX in the to go to you're at we're is gas. same are a at of our when at at sure dividend and We $XX make a maintaining between of regards here a little course we But for time we a shareholders. looking

as leverage you're due want to that drop, we as and coverage well, with raising free We overall dropping seeing what as sure a prices the low to. as EBITDA will cushion obviously more well with to managing to at to the we're leverage obviously if look our price make that flow referring maintaining come adequately back up well profile level. you're wanting reasonable potentially is maintain obviously as cash But it back that

John White

much. very Thanks Okay.

Operator

Jeff a Capital. Grampp Next ahead. from with go Northland follow-up Please question is

Jeff Grampp

Hey, guys.

more one follow-up. Just quick

– necessarily lot conclusion? on is down more the driven kind a resilient front cost is level that in by moving more not just side of about flexibility you and is that curve capital capital program? fair the And kind efficiencies the talk guess, of and if of is the price end since Or or maybe to related of up is a structure kind commodity lot can that on capital just it dictated non-D&C in is the the not bit maybe program that optimizing of and a necessarily relative a the conclude to On more guys what fluctuations? locked of little I or I'm kind of thinking fair

Ken Mariani

We this you can Jeff, million $XX Yes. into we Ford our buckets. completions. at I'll and four non-op look position in to what – have When up County. discretionary in is it's And related is our million Eagle Ken. $XX call the drilling Karnes is take the in One and obviously, million. guidance question. focused that of that $XX break you we of that already bucket

these oil, returns. just And very that well are have they $XX even attractive very at economics superior sense makes some

we with taking Mississippi bucket related reduction submersible savings, installations. to what of to you So what And with capital position, have replacing initiatives. that another Lime call rod-lift predominantly there significant is, where and we're aside, our we a electricity. That's cost pumps cost savings power happens have regards

power-related and weather when rod-lift in submersible weather reduced we that Mississippi mentioned That In had installations addition Lime and is pumps. from impact quarter, in we affected our have much power that, lot to fourth a you of outages issues versus operations. our

initiative commodity and related It's to to operations our price. of again, power So, and weather outages. cost relative is making resilient that independent savings more

-- down, basis. to And on then wells call, return is, we them so pump at the go typical the We well look it economic economics And back production. that we going current we those down again, return run down; makes be strip to submersible production. wells that's the go to what a just, and when third case-by-case might wells example a to good and good a sense want

pump. new or purchasing that may include oftentimes, pump And a a larger submersible

type case-by-case basis. just And expenditures, So, versus to last again, then, our our bucket new to maintain the that it's evaluated production. existing And, on related production again, basic is operations. a facility is expense

or chunk to of at Ford So, the And even returning They're But was detailed your the makes prices. more independent wells I oil related of question, money basically that are side, the sense of in great economics buckets answer. to rest production. Eagle a cost prices. the three is current answer a to long-winded well savings that the on

Jeff Grampp

it, understood. Thank you. Yes, it. I appreciate Ken. Got

Operator

management the closing I comments. to further questions time. no for to back turn over would any this like conference are There at

Ken Mariani

days, want delivering for also team. us I again, for million more Thank savings cost Midstates for transformative our of outstanding the operations year, and with a today. for our thank our an annual joining to making you, shareholders, XX assets integrating XXXX successfully accomplishment employees within all $XX than while

to additional move our on reach investors earnings our today. your presents consolidation call will as overall always, this hesitate we with ready generation This the we us focused environment new appreciate value any platform are executing for conference strategy execute We our don't Although, long-term believe out we opportunities. completes a to remain cash you. support And many as and challenges, on please flow create forward. questions. free Thank of and to

Operator

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

disconnect. now may You

Amplify Energy (AMPY) 5 Mar 202019 Q4 Earnings call transcript