Earnings call transcript Q2 2023

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Operator

Welcome to Amplify Energy' Second Quarter 2023 Investor Conference Call. Amplify's operating and financial results were released yesterday after market closed on August 8, 2023, and are available on amplified website at www.amplifyenergy.com. [Operator Instructions]. Today's call is being recorded.

A replay of the call will be accessible on Wednesday, August 23, by dialing (800) 654-1563, and then entering access code 76231111.

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

Jim Frew

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

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

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

and made for from press this list results Please a factors cause statements our materially to that differ refer forward-looking during to SEC the filings may actual call. in release those of

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

to be we detailed earnings website this afternoon. yesterday GAAP or Form our which XX-Q, measures additional to www.amplifyenergy.com. those read at may our on encourage filed For non-GAAP of measures Reconciliations be measures disclosed was financial call. found may during in Also, you our comparable release disclosure,

revolving our Martyn During facility. regarding and will quarter second Officer, our credit update the Willsher, an performance new call, closing Amplify's President Executive and provide Chief the of

Senior of Furbee, Dan and Operating second overview Next, President performance. an Chief operational will Officer, Vice quarter provide

and quarter on additional liquidity on I an balance discuss our sheet update details second that, provide provide results, will Following hedge book. financial and our

call update questions. strategic a for provide up will before opening Martyn the Finally,

to I hand it Martyn. With that, over

Martyn Willsher

and volumes result, Since have both expected. start royalty continued And a Jim. online continued production the back as previously higher have late restarting production to are had Amplify April, and anticipated. lower financially. than costs pure than Thank strong to initial exceed And is at Beta in projections. operations you, XXXX, its operationally issues

Eagle Ford the the also In quarter, company second at wells the first to the of due production the quarter. brought in online realized higher end

NGL of flow compared to company EBITDA and significantly Although the $XX.X free natural adjusted still were first $X.X the million second generated million. quarter cash gas and quarter, of lower prices

longer-term August we successfully provide on challenging revolving credit to are appreciate completed As and closely providing announced forward credit near-term revolving on the on call, initiatives closed goals. will this new a We despite credit but the and execute of pursue liquidity to greatly support four-year our pleased our forward. we them details facility The X, a moving to new very strategic sufficient lenders, with Jim on working additional deal facility. flexibility to have market. very look we

from With discuss highlights that, it to the turn operational Dan to quarter. now over I'll

Dan Furbee

Thank production after the averaged in of Beta of execution production the restart brought you, of up Martyn. with our natural barrels quarter line for approximately X% which and The XX% equivalent was and consisting XX% the gas. previous oil XX,XXX from production NGLs, XX% oil, approximately quarter, Total per Eagle day, high-return development was of and the Ford in projects. low-cost, first end the that workover the by a continued at was quarter late partial increase in second of driven quarter quarter April. online expectations

production. we For increasing the flat slightly year, remainder of the to expect

while critical preventive our driven and maintenance by on facilities a in temporarily September. to equipment, be also will Bairoil turnaround which partially by production at be will optimization accretive Though projects. Beta impacted production, the scheduled we in incremental intend in workover shutdown depressor oil the the by lower reduce volumes injection quarter and and all half year second upgrading increases Bairoil, will Production third of third be will offset system. quarter This perform

water more reduce COX production inject expect These and already of and, the changes turn, ahead improve flood acquire the low efficiency us report, is assets. program progressing our into in schedule. the will of the further of we which respect data, enable to workover natural the to will With

we utilizing to a are compared are responses to seeing tubing very efficiently encouraging lines. are more of as well perform historic production The we unit the workovers. now coiled

to to asset on in year. expect We be the across all reduction efficiencies pre-shutdown remain production of areas. and in rates quarter We cost focused operational initiatives back this fourth improving

per and For a the these and prior second total, $XX.X million. the operating taxes production basis. was lower on million, transportation costs quarter, $X.X processing were million. than quarter were In costs these costs BOE Gathering, $X X% were

XXXX further Beta through significant the platform efficient compressors operating reduce intend such to company-owned opportunities, other to in-sourcing our by costs more Texas as to artificial total in expenses lift replace power portion high-cost reduce and East compression of of We pursuing a the in converting rental remainder Oklahoma. to wells electrifying method

upgrading be will future, Our the reduce total programs the utilizing of and continuing opportunities for near service the investment configurations The approximately savings evaluate failures different in-sourcing cost the capital of lift artificial will implementing team critical equipment is that to our lower increase $X.X to consisting company's chemical operate, company that million. cost. efficacy specific oilfield and and in to at we own quarter a was additional

the wells, invested associated Oklahoma as continue in online to win company The net $X.X workover projects $X.X production we with which Ford, $X.X Beta million brought the of the million Beta, optimize expenditures Eagle on the million XX first we remaining and at end also at facilities. were field gross quarter. the invested the In and

overall Beta will Beta will upgrades to be The the allow power as asset part the incurred LOE. focus remainder projects. reducing company will the facility emissions lower operated The significantly credit with much costs, of emissions. by expenses while and greatly company's emission capital investments primarily on reduce XXXX reduction of the currently for facility Bairoil The of also

flood. the Bairoil of The will of the greatly the efficiency COX capital improve improve overall the and operations asset

to a in Beta upside, high-impact of our to workover oilfield prolific remaining of in across drive of assets, significant low-cost, extremely operating large organization. With base of second inventory this to Beta with the projects will liquid-rich, fruition have consisting the coming return the which year, onshore decline and a half of initiatives the for a continue production, accretive higher margins asset all we field cost-saving several low

that, turn I'll it over With to Jim.

Jim Frew

$X.X Thank reported quarter. you, $XXX.X With company performance, I quarter to compared discuss second million income financial and sheet to liquidity, performance, in of Dan. balance would the hedging. now second to quarter like and the financial approximately prior million net respect

As $XX.X a settlement items. were net the Beta deferred proceeds tax previously net in from of benefit, million which nonrecurring included receipt a income reported, recognition million of both first quarter $XXX.X income and

As mentioned, EBITDA was quarter Martyn second previously adjusted $XX.X million.

The of down million So Compared down was quarter-over-quarter to net the quarter, results loping prior our prices from prices decreases the XX%, decrease XX%. commodity prices while in $X.X with in proceeds. to primarily quarter, the line and EBITDA down terminated adjusted were prior hedges, due annual in the guidance. were gas are NGL

to prior per costs, expenses improvement to prices our range Beta we BOE to EBITDA back versus $XXX recent are respect of adjusted were XXXX. quarter online, oil the $XX due compared the the back a quarter, Beta quarter. down primarily guidance reaffirming X% and lease for On coming With basis, online. million With in to second up we million were million prior of $X.X operating

to year. half there As further reduce Dan think are the of the opportunities LOE several mentioned, in second we

our lower Comparing transportation, were XX% lower the costs commodity production the while cost expenses. processing due BOE second volume and were prices. on production physical first NGL primarily were XX, to a on will our of ended future quarter savings minimum quarter, per June further GPT which gathering, reduce to Oklahoma taxes note, with Also, XX% associated These lower commitments basis.

$X.X from line second the with which prior was $X.X down the in million expectations. in quarter G&A was Cash million, quarter and

expect $X.X primarily selling. outstanding the This Beta throughout compared at the G&A was quarter. expense remain We down in In due paying The $X the million expense. debt million interest portion from XXXX. to the we of proceeds significantly this down a second was of decrease remainder cash of with our incurred to first interest quarter, to the level

flow, line cash Similar year, the first EBITDA million of flow guidance full-year has free Amplify $XX.X expectations. adjusted the in $X.X interest Free the was reaffirming of $XX million. EBITDA, we second free less quarter cash defined to to as million with million in flow. cash half of generated XXXX Through in of was our cash adjusted CapEx expense and are $XX

quarter XX, the administrative redetermined base Martyn of redetermination XXXX, reserve-based KeyBank July of company The to basis will As senior on an term mentioned, fourth borrowing base a facility expected revolving borrowing next $XXX as the with new acting a on recur with million. four-year facility semiannual has XXXX. into The be credit in a secured initial agent. the the with entered

months its like Amplify, At was had syndicate to and and providing $X was company. the EBITDA on $XXX successfully the for to debt and $XX closing XX company's thank $XXX X.X resolve closing, deal. credit adjusted support The XX, facility million, approximately under hand. of close our KeyBank approximately July their debt the revolving on net net consisting credit liquidity of million outstanding I'd million, After committed participants of Similar lenders the to million $XXX facility last of of million ample for approximately the cash times. and Martyn, liquidity

like I'd hedge Finally, our book. to discuss

XXXX oil XX% hedged crude and forecasted for XXXX. approximately in our XX, July of As production was X% hedged

approximately were hedged for and XXXX we On the hedged XXXX. XX% GAAP for side, XX%

program new the new to expected executing before We quarterly covering company credit a XX requirements now credit next With our under to facility is months our hedge increase conditions, call. the the provide updated production. information conference are hedge its The place, next we required hedging of currently meet to in facility. plan

that, I'll back to the Martyn. call turn With

Martyn Willsher

Jim. you, Thank

to pricing. current At leverage, free expect Beta's time, XXXX prudent our but management cash we we return XXXX XXXX forecasted progress full-year to flow $XXX guidance, increasing million our increase XXXX, this allocation, and increasing at and cash through production. free through capital asset reaffirming lower approximately are As profile strip through our contribution to we flow from

and strategic at Dan is cost-cutting outlined build production to near while earlier. to investments continue Our that term Beta the pursuing rates focus initiatives accretive

financing, direction coming the management decisions able team our several last to discussions have our finalize be strategic on collaborative to and certain recent over forward, and been path months. Amplify's expect we our Board the months, the provided in Additionally, on with by certainty in

our value-enhancing put of of moving to couple us we options us support and events all focus continue on of available the years We the last behind shareholders forward. over appreciate the to as the

now open With that, are we for operator, questions.

Operator

Instructions]. [Operator take question ahead. with White MKM. Roth our go Please first will I John from

John White

a could. credit on facility. good congratulations A quarter on if and more Beta, little detail And congrats morning. on your Good we new

it, currently? it's have where was compared to you incident the pipeline what If production before

Martyn Willsher

to a we day Sure. Obviously, X,XXX incident, prior barrels the approximately around gross. were

the into away got are as that of We from quarter, that than reaching approaching now we're hundred barrels more few day third a kind we a target.

to expect we later in maybe our So, or workovers, last rate we've current the fourth so of the couple get in third lot there progress of made of a and quarter quarter over either with months. the early

Beta April production close in our you quarter full little least quarter May LOPI offset up the quarter, the at this we reduce in this obviously, revenue and the will didn't and asset, which quarter, more Obviously, that of at of loss June. much a you're incurred pretty But to more during than a in ramping production all bit. from much third you'll see any and see through

John White

expectations? that. line with Okay. in is your the I And water production appreciate

Martyn Willsher

Yes, absolutely.

water a anyway it's the So, a like no, seeing said, results. we're -- we there. kind waterflood use good And out is I of

reinjecting said, seeing back across we're come And real of good wells like results and degradation we're online. the no have that So, I water. the

Operator

Research. with Jeff Water Tower Robertson from Please go Next ahead.

Jeffrey Robertson

Amplify that some California, where Can Beta. for plans today Martyn, in the sit before deals back has the online? about you now you come redevelopment those talk incident with

Martyn Willsher

Yes. Jeff. Thank you. Great question,

we the the go middle program. permits, We to continue when a had well materials up obviously, first couple. finishing have that actually ready lot of in in off-line, the We're we So, pipe, that already of program we went the kind second were to had of we

that the beginning program We evaluating Board. next that as year, bringing as will of our be are maybe discussed with back early currently

the and able at to again. kind before decisions. update to over from we're economics that that look is the up on any expect give that call. an discussion, of at upside bottom going really the is risks going next make something quarterly and But So, We're the under to all we the look and by currently be that to you certainly evaluate I

Jeffrey Robertson

Thanks.

in are permits the still right? force, So,

Martyn Willsher

Absolutely.

Operator

Please And we follow-up John White a Roth have from with go MKM. ahead.

John White

of coming Martyn, in remarks threw possible over of you the direction that strategic reduction the include considered one last dividend? being months, that your does the

Martyn Willsher

Yes, John.

out with near obviously, not to financing we as how carefully of fit look that more at we certainly primary options create the So one of currently, There the was the But are focus. future lot term. it strategy. had when things liquidity kind the to acquisitions did a at in looking a we're there

and So more program means some a portfolio optimization likely return look flow of some to at kind as free opportunities to shareholders. look at of capital to cash reserve

forward. strategic we that determined would kind decisions And with be forward. that's Board going mentioned of of going to the that the all be That's I discussing the part

shareholders to As there we we to next I shareholders. we mentioned, -- of I able need part before going are under by on But can plans that obtain credit basically, be have our there's returning that's will that resume forward, moving fully the update capital our expect the forward. -- requirements some and be to facility quarter revolving to conversation

John White

great. that Well, sounds

to sure is of the so. there's the focus like workovers? workouts or the spot where in the year Regionally, You're for on in It good a compared rest the last of year. sounds budget a lot

Martyn Willsher

workover Primarily, got Oklahoma program. a has continuing

So get offline online that like of as I primary obviously, then us we the quite And where are planning should next back to of that not wells earlier. is still Oklahoma. full And that production back some couple Texas, we it's have to in same rates months. East said, mentioned California, level bring in the to

an do up workover a program near-term have a higher the methods Bairoil. of of maintain of we kind our of we accretive in but workover we lot also -- production hitting don't as of consider active kind because those do program drilling, We of kind most whole rates It's and return.

Operator

the session. to I Thank Q&A management. you. now call will our turn And this concludes over

Martyn Willsher

and Thank of from employees and like the dedication of we've years. our sport to company's all patience couple for specially to express you. our appreciation and for of shareholders the express their KeyBank, In as over closing, appreciation support and outstanding I'd efforts the and our to syndicate forward for my their lenders again moved last what

to I'd also the thank like call everyone participating for in today.

there always, hesitate you. please don't if to out. are As Thank any reach questions,

Operator

conclude And your for today's you program. this participation. Thank does

time. at disconnect may You any

Amplify Energy (AMPY) 9 Aug 232023 Q2 Earnings call transcript