AMPY - Earnings call transcript Q1 2021

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Operator

Welcome to Amplify Energy’s First Quarter 2021 Investor Conference Call. Amplify’s operating and financial results were released yesterday after market close on May 5, 2021 and are available on Amplify’s website at www.amplifyenergy.com. [Operator Instructions] Today’s call is being recorded. A replay of the call will be accessible until Thursday, May 20, by dialing (855) 859-2056, and then entering conference ID number 6187289, or by visiting Amplify’s website www.amplifyenergy.com. I would now like to turn the conference call over to Jason McGlynn, Senior Vice President and Chief Financial Officer of Amplify Energy Corp.

Jason McGlynn

to financial Energy quarter results welcome discuss call of and and operating for morning, the conference Amplify to XXXX. Good the first

Amplify’s Officer. on and me the today Martyn Joining call Chief Willsher, Executive is President

some Before we like of reflect remarks and we’d risks, get future which events contain statements, current subject assumptions. of to uncertainties, you forward-looking various to may management’s our remind started, that views and are expectations

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

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

over we this disclosure, those to detailed non-GAAP at was in found comparable or our Martyn. measures I’ll our measures release Also, on to to call disclosed yesterday you Form of website XX-Q, www.amplifyenergy.com. additional For that quarterly report turn filed be may be may financial call. afternoon. read Reconciliation during on encourage GAAP measures the our earnings now

Martyn Willsher

you, Thank Jason.

details financial During balance and quarter run highlights. program. then with hedging provide Jason company the performance, provide on on performance, I call, through will operational our update and start additional an comments sheet first some our will

XX,XXX decline. the will natural BOE and from will take BOE remainder of day the Production Storm closing to in Following anticipated a with approximately of XX,XXX per decrease due a our prepared averaged Uri quarter quarter the remarks. questions X% attributable conclude per to was decrease I BOE first with day, we day remarks, or of production Approximately fourth XXXX. half XXX Winter per for

the was internal million previous $XX.X to approximately was Capital First quarter during our Eagle $X on million for primarily Ford workover focused first asset, $XX.X exceeded cash less enhanced flow realizations EBITDA free cash approximately generation non-operated efficiencies, this upgrades than quarter the third preparations of the defined program, cash Beta $X.X quarter Oklahoma quarter. program controlling the EBITDA and adjusted which million projects, realizations costs. and activity as at for XXXX. million price quarter CapEx and quarter. was development projections in our was the the attention Amplify’s of in operating relentless approximately commitment price completion was first to expense will stronger prudent commence deployment adjusted the highest return and strong facility capital flow the Free and spending quarter. rig This interest to attributable increase more in to supported by of the stronger

beginning for update an the announced Beta program. our quarter major for development previously A of was this on Now operations. preparations milestone our

first approximately for scheduled deployed and towards $X.X XXXX, prepare million facility first the During we upgrades year. restimulation third quarter the to the this of of rig quarter in project

production and are two XXXX, in aspects quarter and currently a majority first intends our convert the help to expects and the of prolific cash workover reserve of with of in Oklahoma additional flow Beta Field. these sidetracks accelerate All drill flow to use Amplify from generation addition, our fourth on incremental to cash projects portion program XXXX. expansive Amplify adding of the the program additional schedule, In to while of online rising ESPs our free will relief with and quarter mitigate coming Amplify flow optimization exploitation of conversions this reduce will a phase and the the to future begin structure to comprehensive asset. production along generation. environment incremental in with operational variable our special price expects operations case of to lead eager impact lift. cost royalty Beta are Oklahoma for disruptions commodity The of cash to asset, we costs, strategy our low the additional and development aligning weather rod

curves we in oil IP the saw gross wells quarter, barrels During of of exceeded also non-operated Eagle asset our oil per These DUCs have come rates XX Ford our X,XXX online. average type day. with

Eagle these non-operated with We projects pleased strategy in production initial viability. opportunistically the highest are our Ford to remains wells, with from attractive the rates and participate economic

managing one in continue Louisiana to COX based of we potential WAG in responsibly Amplify and economic production Bairoil, feasibility. assets, committed decline highest the we our area as actively remain high-return Texas the development refining North will pursuing the been projects margin company’s on Regarding while to opportunities workover and projects our East and have remains area injection participate joint opportunistically monitor rates. patterns At assets.

experienced has to the the in injection been the and of and attributable for March. scheduled maintenance during operational and the production production technological has strong facilities and analysis production which reservoir to the The is beginning trend since injection overall approximately days increasing XX will applied turnaround reduce the favorable improvements annual oil second first quarter. of are results in reliability XXXX June workflow patterns. Bairoil’s XXXX, of quarter The

capabilities will further along we drive enhanced to technological implementation workover the and Jason. improvements turn with to the now over turnaround, operational call activity efficiencies. targeted will Following of continue the I

Jason McGlynn

book. I’ll the first update expenses. our up an you, details wrap first provide and I’ll Thank company’s production balance our sheet and on quarter on then give Martyn. with hedge

XX% XX,XXX first Uri. the natural management the serve quarter dedicated reducing will mix BOE and $X.XX moving XX% operational in per Taxes forward. production generally costs million mentioned, increase approximately quarter composition of actions million storm increase mainly in to XXXX BOE NGLs as with compared remains production $X.X to $X.X impacts fourth we an partially prime company’s XX% was or previously a storm The continue the the minimize Lease the operating $X.XX or adjustment positive the oil, This same a BOE primarily decrease quarter decline was period. over $XX.X a expect increase quarter teams Winter first oil quarter per a million operational or moving fourth from of to and Amplify related gas. the this natural per explore in fourth Notably and This will or in XX% the impact our As $XX.XX of This we increase the BOE, approximately $X.X the the reduction favorable quarter, averaged from first financial was is the an with expenses along XX% million BOE higher attributed example of represents of the day the XXXX. impacts expenses approximately of million of a quarter. for $X.X in to compared per methods expense with disciplined production attributed quarter. additional XXXX. continue million is from for and Storm forward. totaled this commodity in operating BOE team pricing, GP&T shift, BOE which the quarter per $X.XX tax quarter the totaled of incurred per per prompt to of first associated in the quarter the per $XX.XX BOE $XX.X $X.XX or million our efficiency. or to operations workover as prior in $X the increase $X.X or of increase production offset decline $X.XX million by production

highest BOE compared per $X.X in the and quarter-over-quarter quarter G&A of per million the or in quarter of cash $X.XX the $X.XX typically G&A expectations. quarter $X.X BOE million within First the or the to increase totaled of XXXX. first Cash $X.X was are million fourth year expenses

This $XX Capital was XXXX Beta spending approximately increase to the in to Ford Our for remains the completion estimate from program. increase was attributable activity million, the largely the of development approximately fourth current and $X.X projected $X.X expenses the quarter million. G&A of in full quarter million incurred prepare Eagle an year cash first XXXX.

and position. balance the current onto Moving liquidity our sheet

credit approximately under XXXX its revolving net million As of of April with outstanding XX, debt million Amplify $XXX had facility. $XXX

of net of borrowing debt Amplify’s and to $XX position hand last current $XX approximately on EBITDA XX million cash is million capacity. X.Xx. million $XX Our liquidity consisting months is of

will For majority to continue cash sheet our allocating reducing improving and total XXXX, we the flow of our debt the our free balance of remainder outstanding.

Our spring any anticipate and not our we process base. underway do borrowing changes borrowing base material to existing redetermination is

XX% to of hedged in in Now in XXXX our oil our approximately balance March, earnings commodities, and call in hedge last book. hedged crude we the Since hedged were XXXX. X% XXXX. we in XX% XXXX, Across added have hedges

XXXX. the Specifically, remainder is year, hedge our XX% oil crude hedge and XX% the XX% for for of hedge for XXXX production

strong website our hedge under Relations additional flow our and now Martyn. the free to that opportunities current call continue to Amplify’s for will pricing regarding monitor yesterday May We presentation in I’ll supports lock posted to market section. turn was performance. over the contains to our details positions Investor XXXX cash

Martyn Willsher

Thank you, Jason.

have prices value trended April strip PV-XX XXXX our at reserves have of of earnings XXXX. call, previous now XX, total million XXX million higher oil barrels of since of year-end commodity our approved pricing a As equivalent $XXX as

$XXX million XXX barrels valued are equivalent Our pricing. reserves million the developed same at of of strip using

of since volume we Our increased improvement for our outlook as in basis see PV-XX March, update reserves in this valuation Amplify. previous and component a important materially on have our an positive

guidance guidance free with provided and and year March our reaffirming are flow. initial full we projections for in cash EBITDA our have supplemented adjusted Additionally,

million Our million of to of $XXX $XX in the free million the year XXXX. $XX for to EBITDA and current $XX adjusted guidance full range projects flow range in million cash

greater guidance release provided the In detail in and to and update, addition our presentation. investor on operational performance we earnings our financial

additional into to this Amplify’s transparency order financial provide better multiyear with outlook. our including are We in investors information

on focused free continuously Our cash strategy our profile. remains enhancing flow

We free expect expenses carry we over corporate cash beyond. which generation our to XXXX and profitability reductions improved through during transformative flow and our have and will XXXX, through materially operational

April over forecast result, our internal in a strip cash than free currently projections flow XXXX. cumulative million the of pricing $XXX more three next as years at XX, As

free asset nature a the a increase recover. materially this potential low variable our as low our to decline flow Given base continues commodity has and to of assets, pricing forward oil cost long-lived environment cumulative cash

value flow enhancing for with in generating cash Amplify substantially value dedication sustainable remains significant outlook, and free questions. cash leader in With and long-term asset that differentiates strong we as With are now shareholders. reserve significant creating and Amplify corporate coupled to market. Our a operational mind, we base, our undervalued our mature that the in efficiencies, flow for free believe current and open diverse

Operator

with [Operator Instructions] John Capital. White go ROTH come will question Please of from the Our line ahead. first

John White

reduction we for the year this focuses debt ahead focus you is Good it on very as thought all morning, reduction guys. strong the are the – was a main my quarter debt of Congratulations. and quarter. I know, first estimates and of one on

to good really So see that.

forward guidance included with question. you the Looking your and in that’s at work start in year Beta, The later that a published. Bairoil the housekeeping I’ll to of obviously off kind turnaround

Martyn Willsher

We include so Yes, as that John time That’s the barrel well. to that’s it bit approximately turnaround shutdown, from correct. little takes a complete XX for recover of a days.

projected So the included into long-term that’s projections we’ve deck well. that and fully investor into our into as projections our

quarter the that we So every next over years. include few second

John White

use Okay. you capitalized that? Bairoil, Thank you. And you explain Can W-A-G again, in term patterns. your on comments the

Martyn Willsher

it that’s wells. in WAG, push Sure. tertiary then the to with with gas. That’s method hitting where COX it water water it adhere recovery is you’re used producing and basically flooding to projects towards W-A-G, to alternating in or oil these to a basically the order the

So field. then There’s concept there different pressure two, different over zones it’s is are gas. a The to mixture that number managing obviously the of then throughout and field. we obviously a of water, areas within it’s alternate the those

sometimes move as some basically the those. pressures need field, made modifications to throughout field. through our online in last patterns obviously over new we’ve you had to you we’ve As the the the And year, to order compressors manage adjust

what additional And so and better I with at the the well. we’re plant that’s throughput at better wells managing as this through think getting at pressure

in after through like are, what June kind – as feel said, from like you’re have we matriculate the turnaround, obviously we we’ll moving see Bairoil that’s to the do an And get but results we we bit we’ll interruption little turnaround, of I especially. of have so we the better a forward results. starting And as

John White

Thank you for that.

of a higher prices. have other prices had than natural expected. I liquids companies And higher-than-expected similarly couple realized You NGL reported gas

talk to little bit strength a about NGL here? the want market driving what’s You and the

Martyn Willsher

previously propane recovery to about specifically CX you talked we’ve Yes. This reason is hedges something added is especially we’ve not we’ve NGL and plus. and that across the a seen get NGL very the all components, any once strong

heavier a in but fixed of a costs few Oklahoma. in in mix, broader a have We Texas, do mix East Oklahoma kind than higher we there’s

specifically up, increase – very have in those prices those impressive. So as been costs Oklahoma the have as gone has

spot kind last we not – Texas, oil we I be kind been wanted we’ve It – the double. is what close keep NGL And see in getting continuing up. low good think be of requirements. year. almost where hedge We have it’s there obviously where piece it’s catch year Xx time to an why we RBL forward But like high probably curve this to like locked had project catching catch up. I of seen starting we’ve then starting returns the and this due upside were to economy, and these and And area seen, been outsized as kind at hasn’t We that previously hasn’t mid-$XXs able trend been East in we’ve but and upside Oklahoma in to see East – to is you’ve there’s of about NGLs assets. to where said, we forward like piece said, current – very to the the needs last curve And to as to some we of and a the the need our very allow levels particular recovery hedged. Texas obviously on the we’ve had that’s up. production for NGLs that’s continued are. of for The NGLs. recovering at feel their prices, the the NGL I It

John White

items you extra that. information all appreciate I but It’s company job. tell part also guidance a this are market. thank smart presentation. on read Those the in I to questions on your I and Well, for Nice have, that quarter’s wanted the the you, additional

Martyn Willsher

be to transparent. wanted very We Yes.

outlook We in for really flow I upside the provided investors cash provided the gives and significant long that in And investing term. of what multiyear free by a present. a think EBITDA of kind details of of kind area. that’s comfort we little of bit – additional just a adjusted they’re view some

the with quarters. As we’ve we and our are stated, numbers that feel at to of we and we executing are capable assured over the we eventually next this market continue of can think we’re that should highly will doing up undervalued some moment, several everything producing investors the catch

of capture. deliver, to So have said, a will and we to I like we left continue lot value

John White

good Well, for a company good and amount your size, it’s of disclosure a see. to very

it. appreciate I again, So

Martyn Willsher

John. you, Thank

Jason McGlynn

Thanks, John.

Operator

this back I’ll turn call Martyn any remarks. At over to time, for closing the Willsher

Martyn Willsher

and We are profitability improvements improvement, strong strongly last that significant took that current and the steps flow undervalued our reserve value With encouraged margin market. have remains by substantially lasting our cash will the cash Amplify overall profiles. recovery in the in outlook, on year market free believe flow expect conditions we we transformative and

stakeholders to my long-term company’s delivering the our to on Focusing I’d potential the stakeholders on executing joining questions. tend for have always, efforts reach to their XXXX, Thank of And we like you hesitate appreciation And like as company. initiatives don’t express I’d us support. additional demonstrating today. closing, dedication. and our continued for In key their any for to to continue can also thank for for the if our out outstanding employees you and please

Operator

That does for conclude joining. Thank call. you today’s all

disconnect. now may You

Amplify Energy (AMPY) 8 May 212021 Q1 Earnings call transcript