AMPY - Earnings call transcript Q2 2020

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Operator

Welcome to the Amplify Energy's Second Quarter 2020 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 conference call, all participants will be placed in a listen-only mode. Today's call is being recorded. A replay of the call will be accessible until Thursday, August 19, by dialing 855-859-2056 and then entering conference ID number 4185547, or by visiting Amplify's website, www.amplifyenergy.com. to President conference Amplify and like Willis, to Energy now Vice Senior General would turn over the Eric Corporation. I Counsel of

Eric Willis

and liquidity call quarter management Interim subject financial of lead comments based And initiatives may are discuss positions you with These you to of Officer assumptions. enhancement joining morning. current management’s welcome will team. Martyn are the the contain results like regard Officer hedge that appreciate outlook Energy We remind Good and Amplify’s and on statements comments Willsher, and on liquidity, remarks future various today. for reflect Amplify's Financial to XXXX. certain the We with half to operating Executive concluding our the events with remarks results, uncertainties and forward-looking views XXXX. assumptions our conference and second and us some and second risks, to our Chief of second quarter call before of Amplify would expectations about to Chief

reflected does believes those update earnings forward-looking during from events factors materially expectations that of such list Please this be or the actual release refer statements and to reflect to call. will occurring filings after differ for expectations a obligation call. that forward-looking and may it in no to circumstances management the this to Although reasonable, SEC statements our press results in cause made prove forward-looking statements such no undertakes correct not can give intend that and are assurance to these

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

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

Martyn Willsher

Eric. you, Thank

were that I first outstanding initiatives the discussing Before team. quarter call. our by an our and to COVID-XX during delivered across to expectation we Despite regarding demonstrated and for in previously extremely related liquidity the an our my pandemic, earnings discussed like exceeded enhancement the appreciation would focused the organization commitment quarter grateful quarterly Amplify's our and ongoing efficient company. professionalism I'm safety operate again Amplify market and reaffirm in results, the employees for to dedication disruptions express

provide levels During returned initiatives turnaround earnings quarter to call our economic. half completed previously in non-operated and updates July. hedging day, anticipated At Eagle and during liquidity average this comments personally our enhancement as within first we're levels quickly April our first and on the Ford have production the that plant budget schedule June pre-turnaround discussed curtailment of due to annual the was workover quarter Oklahoma concluded please plan expected. Eagle in since production in returned performance and non-operated as in Bairoil, and The Ford as previously call, annual the attributed to turnaround, Bairoil I reductions incremental will Boe offline schedule for the temporary announced the second wells second despite quarter Production on are only announced XX,XXX program. on regarding per our well assets curtailment

result in backlog as depressed. commodity Finally, as second the the minor offline a wells of of quarter, prices reductions experienced production in Oklahoma remained increase staying

which April Ford, or the remaining which operations and non demonstrated team. These $X.X of activity XX% Capital turnarounds, drilling our assets. were spend $XX.XX operators attributed these projects A in with million finalized expenses capital and wells occurred back for million, results by of as type our facility in previously per or was plan. $X to maintenance $XX.X our the return across $X rebound estimates significantly workover high to second We the online the bring savings outstanding in future as expect quarter-over-quarter million, and Boe. primarily periods $X approximately completion in was operated was internal development prices related was operating in-line million million Eagle activity economics for quarter and initiated expectations. workover significant improve. capital the $X of were portion that reflect to many spending operated to our The Bairoil second of quarter quarter quarter Lease of second execution million savings exceeded the

in cash GNA per million $X.XX expectations. our or Second line was quarter was $X.X with Boe, which

that expect in down the trend relatively third thereafter. $X.X to to expense million G&A remained and We approximately cash quarter will flat continue

Moving adjusted estimates program. and validated consensus adjusted was cash EBITDA second flow onto reduction which execution for the and hedging significantly our of initiatives EBITDA quarter, and free cost million, $XX approximately exceed the quarter exceptional the

million it to adjusted monetized XXXX is $XX that part quarter note as second think of included the important is of also the I not EBITDA. hedges

for a enrollment For interest our the hedge under second capital reduced less covenant flow in to in and credit due anticipate adjusted was budget as CapEx of for the second in timing and purposes hedges wound. cost our calculating strong fund expense across to half adjusted position reflect and the of XXXX cash will of remainder Free defined EBITDA, facility, efforts. the XXXX. million We primarily significant compliance flow that EBITDA the cash quarter, the by the profile the parts cash were of be free driven year due reduction $XX allocated

to like commodity liquidity current volatility. Now proactively the our market of we’re light I implemented initiatives, in enhancing stakeholders on would update

effects and earnings Amplify mitigate market initiatives ongoing call, inactive several to COVID-XX during last of discussed related As the the commodity disruptions to volatility. the quarter’s price pandemic

remaining call these initiatives some that our initiatives without projects these were of success and pleased of executed to critical results. completion While were to prior remaining last we realization I'm the standing completed the to announce to and

are in $X $X.X the million the million quarter expectations $XX.X First, operating to reduced internal first to operating costs quarter. for $XX.X $X from million over our exceeded quarter The quarter. second in and of million the lease corporate overhead the million savings expenses reductions, quarter approximately

that expect estimates. remain future and will to additional increase target committed saving we periods, exceeding executing our operating modestly opportunities we While cost costs in

stated, In materially addition, quarter to in down as from was X.X line and SG&A the second to the reduced G&A expectation $X.X the approximately expect quarter, in with recurring the previously spending quarter trend we million flat thereafter. and team in in first which million remain this third reduction declined million $X.X

allocation and with spending for quarter. during from million capital an $X half Amplify second was our quarter, million reduction first representative remaining $X of and of capital intend second maintenance the workover and our XXXX projects. focused operational high is reductions, principally expectations capital stay on expenditure return prudent equipment the now to which Amplify's the We which approximately was capital in activity Second, line is rate and are efficiency budget essential, projects, $X million. integrity or

year and royalty approximately is economic like conditions incremental effective qualified result relief, emphasize royalty and periods This Finally, developments. assuming case expected Beta XXXX, production per associated relief revenue Xst, would special relief $XX XX%, this Field. in for Beta royalty additional when to its Beta in net you that for relief WTI to price. Amplify day existing production XXX of program by future barrels $X which royalty per provides allow at July rate the Field of for I approximately million production per additional barrel program are both decreased

and group economic and based work announced able redetermination XXXX, we liquidity But The on solution we borrowing deliver challenging COVID-XX our on our provides liquidity delever balance spring with and bank to our we backdrop decks pleased a a driven discussion to current credit work particularly our position, a pandemic. June supportive was recent Moving negative of completion be depressed of with that the process. sufficient price XX, the by the bank spring to facility while redeterminations successful to were foreign sheet. redetermination

November We base take expect in will borrowing next XXXX. the place redetermination

revolving net $XX under of facility July and As $XXX had liquidity debt Amplify XX, total approximately million of million. of its credit

of earnings XXXX in half the Inclusive second collars. well NGL our XX% hedge swaps since its May, latest of second approximately of for has with over the and and for position, the based XXXX gas has of hedges natural in XX% on of as Amplify remainder new half Moving the onto as hedge Company report Amplify positions swapped to added second forecasts, last being for our being XXXX. the end reserve hedges, half those year XXXX XXXX the hedge call

to benefit commodity from hedge improvements. protect opportunity the allow while to us positions future providing also flows, Our market cash

We on posted have contains our for position additional of net prepared XX, of value current analysts hedge relations mark-to-market concludes As our management our hedge they morning. section. under quarter $XX formerly This questions. website for to invite a XXXX investor was would to now our in the any details this open presentation questions ask and asset positions like earlier today please any million. remarks was Amplify's second the Operator, July line team. the

Operator

our question Grampp Capital. [Operator instructions] first Northland And Jeff from comes with

proceed. may You

Jeff Grampp

in I think put or firm it haven't too anything. I of out anything terms for guidance

have in type talk we XXXX look to what So, kind for program guys And any projects of broad you kind may I'm on about put workover thinking of level talk Can you what capital you employ in then, or projects and down, pin but of if not that kind what front to minimum scenario? strip cost would would look of just any just the in, pencil about kind of that prices. spending you to environment? guys And maybe enhancement out maybe of kind type trying maybe and, deploy that you to current environments? facilities, to, that

Martyn Willsher

Jeff. Sure,

be capital there's of spending so of year. one kind in is a and year. Oklahoma, on capital layer level level under of we've which a kind in to those in on $XX And the the activity sense, Beta you'd whatever make economically certain calendar about was on As mid-XXs million well going Bairoil probably Eagle the facilities before, Ford, depending some projects $X talking we're and still, environment, million of a to obviously, and with of where is spending, then in discussed base required

work higher high the moving certainly the you going ongoing mid Three a market. it's a closely, workover months XXs, maybe that capital if projects. think in of get looking then prices little the you to slightly probably unless into there higher, projects lot XXs, and be a weren't activity. get subdued level it's the prior years. to we the relative think very XXs, mid obviously, is and a may with Field little of it's and in that, to mid at in makes California I we're But it's a ago, to -- to very And look projects certain I sense commodity dynamic prices be once beyond Beta going

said, very we've a the And will but think still year, so, come, like that's very I think I we're minimal noted to have I a -- to for this of rest budget. capital have going

We cash sense. et we'll will economics, with focus flow a work on closely on see cetera returns, and periods, makes payback what workover

activity higher, higher being line slightly be with we've still may and a there level previously. So in but workover with discussed little prices what

Jeff Grampp

that. Appreciate

you that the And pre-COVID. still Eagle So extent my any was sight on then have you've the guys in maybe half that kind know hanging budget I the in broadly, divestiture the half levels? on second something potentially make touched the you line kind is little Ford that candidate, to Is guys you these on commodity stabilization the about? oils of market Do around burner revisit? of that kind follow-up, talked back of Does that of Or embedded activity? a more bit second here.

Martyn Willsher

a and year. of not No, I wells that think right Eagle of don't Ford remainder there's the proposed projecting some there the we is and for in we're not operate lot ducks, activity the now, we're some completed. Obviously,

inbounds regards activity recently, I be and think likely so perspective, to could back remainder it we've activity doesn't stop year. of attractive, on from well maybe that moving divestiture extent the can't that our revisit those the and but term we'll as to said But become of our there into some projecting. the a that's prices fit in hold expectations operators. time of so, level we and anything, strategy what XXXX our for the latter like put for beyond we've that we're think I of something that there In long deferred additional candidate, is obviously, from the And that's as obviously, what XXXX I up don't being or consider kind asset assets we most into more of this as still some sneaks operated But certainly XXXX. half and that

Operator

Parks Coker & next Palmer. Noel And with from our question comes

proceed. may You

Noel Parks

hedge few kind more more going even not a time? questions. you're guess Could about you though a just in detail bit to just onetime be monetization of included a you talk but that? I event, little cash I mentioned over EBITDA, in the we're and you that Could adjusted have they're into actually go recognized

Martyn Willsher

Absolutely. you, Thank Noel.

cash $XX reflected and adjusted hedge way and XXXX. want what in for gains those perspective, perspective, the credit that an That's facility online calendar million We take that gain. hedge are quarter. of accounting these non-GAAP perspective. place and in we this this monetization free credit GAAP at do any flow a non-GAAP the as for -- from cash our was free and look take in year the flow that realized unwound, XX So, EBITDA flow from not the is, an perspective, perspective sure spread earnings obviously, million XXXX across they from operations second that in From to are cash full we periods were XXXX obviously, they the a which in there's that how in make EBITDA proceeds from included perspective, they and our were hedges perspective, in we From quarter. were actually adjusted a will both From all the so. a unwind

our And million the call facility. into in essentially EBITDA works so put cash free and XXXX be And adjusted $X.X credit way it quarter, per same flow. it

essentially a not that the EBITDA well, is as XXXX. facility facility in And will lost hedges periods perspective, hedges the in which that from credit were calculations value matches locked adjusted actual that be So the credit in. with those

Noel Parks

through basis Gaap current a those a show on up liability, So, do as then?

Martyn Willsher

realized the No, a cash. in it's gain

we out. so, from adjusted perspective, EBITDA just a we back -- it non-GAAP And just

in statement isn't or and cash EBITDA cash the not isn't flow it there's free published from is it obviously our flow but cash does So the it reflected sheet, operations. on It cash, balance number. adjusted

Noel Parks

Great. Thanks.

guess, Next, a sort I how nonrecurring you you talk I maybe, just, could about, expenses? bit categorize recurring versus little LOE of

Martyn Willsher

be but range term outstanding that's Yes. claim million to items operating type short Obviously, we on $X an time think at were they perspective, from of called We've same we $X not forever. did which they value estimate. longer of recurring of and we're $X executing that, $X.X And to far team term the million job finding I probably -- expenses, a also exceeded an significant one the but million some was drivers, trying time that million in will to expense. operating found

Now, there also savings more bit those but workover of didn't of come May, with at side. until cost some couple look we'll on pieces other is in little a potentially moving the a initiatives

during opportunities of expense million $X non-recurring, to the million that by of that So, executed call I operating substantial team were from that just $X.X would amount the money. a and identified saved quarter

Noel Parks

North we that a curious, relatively of just asset few position days see was Do rare you thought Terryville, and Louisiana. range see ago, was sales I it applicable a I just of the I transaction? and one one to And examples was for of it curious, thing your you believe in what was that Okay, how that did should the sale. as be valued? And great. valuation of

Martyn Willsher

Louisiana. different Terryville that than asset which from Texas higher on history side, more MRD a it's this a the higher in that Cotton is we It's days. and at content our knowing obviously got long is gas Obviously, upside a NGL asset. have Valley, prices got old It is personal little probably the East

think And little bit that. more there's a it's little for and a more I paid risk and little bit bit a so,

thought a it pretty to rallying gas valuation circumstances, decent firm the starting you've but prices I NGL also seen under was So prices and up.

the was So I acquisition. direction I with a said, gas think, well it thought prices to And in continue reasonable then very do transaction. if they'll trend I that

Noel Parks

Okay.

probably any a their, mature. I'm going me, about, lenders, of operator for do I similar them got of suffering type held for around some to sell really Do properties And some didn't going push I relatively something on like you you the in, aware opportunities bank been contract you as basins operate I companies bank didn't heard this of Just have your distressed that some are are role? their sort one see assets. to get state, was in environment. equity running was a with to where that you in I last a that private wondering, into continued hearing want to

this third in. So, they the party to for come look

Martyn Willsher

on set we're those they I as kind think take our obviously themselves. opportunities up to platform, present with of

to now, that as as up actively for pursuing. and look anything we'd said, of circumstances. results full we very is that. go banks at imminent something groups, say think, activity more more don't but could getting of of I opportunities individual basis, present operations say, look But it that And sense specific it you want there contract going or wouldn't a like but and I and under to think quarterly front be I kind team themselves, business lot I different that strong idea on to set teams right a areas. involved massive have an operate we're for a the that these right force model could on as we're of Obviously, those to if in not operating out it's make kind a

would with to minimal we as costs. that would the right consider given certainly, incremental so allow something platform do And for the

Operator

for Willsher Ladies conference gentlemen, would back turn call. to concludes today's over instructions] like any call [Operator closing I Martyn this and remarks. to the

Martyn Willsher

you. Thank

the for now renewed uncertainty, forward Amplify of second As a with optimism with quarter year. team, remainder of the the lot moving an outstanding but efforts the to the of began due organization, we're

forward execute us for While its dampening prices joining With for free are hesitate remainder do COVID-XX and us. related are not have Thank strong to Thank you. cash to stakeholders reach demonstrated recover, slow of today, to future adapt out current the please questions, organization continuing resiliency has for always look and and to our issues demand if for environment. opportunities. to still you, the expected as to ability preparing to you and any XXXX, the we flow

Operator

have Ladies and Thank and you gentlemen, disconnect. this Everyone now day. concludes conference. participants today's you good a may

Amplify Energy (AMPY) 6 Aug 202020 Q2 Earnings call transcript