Amplify Energy Corp. (NYSE: AMPY) (“Amplify” or the “Company”)
announced today its operating and financial results for the fourth
quarter and full-year 2022, year-end 2022 proved reserves and
guidance for full-year 2023.
Key Highlights
-
During the fourth quarter of 2022, the Company:
-
Achieved average total production of 20.8 MBoepd
-
Generated net cash provided by operating activities of $15.2
million and net income of $30.0 million
-
Delivered Adjusted EBITDA of $21.9 million
-
Generated $12.3 million of free cash flow
-
For full-year 2022, the Company:
-
Generated net cash provided by operating activities of $64.5
million and net income of $57.9 million
-
Delivered Adjusted EBITDA of $93.8 million
-
Generated $43.6 million of free cash flow
-
Reduced debt outstanding by $40 million
-
Amplify’s year-end 2022 total proved reserves, utilizing Securities
and Exchange Commission (“SEC”) pricing of $93.67/Bbl for oil and
NGLs and $6.36/MMBtu for natural gas, totaled 124 million barrels
of oil equivalent (MMBoe) and had a PV-10 value of approximately
$1.6 billion
-
At February 28, 2023 strip pricing, the Company’s year-end 2022
proved reserves had a PV-10 value of approximately $743
million
-
Appointed James (“Jim”) Craddock to the Board of Directors
-
As of February 28, 2023, net debt was $167 million, consisting of
$185 million outstanding under the revolving credit facility and
$18 million of cash on hand
-
Net Debt to Last Twelve Months (“LTM”) Adjusted EBITDA of
1.8x1
-
Southern California Release Incident (the “Incident”) Updates:
-
On March 1, 2023, Amplify announced that the vessels that struck
and damaged the pipeline and their respective owners and operators
have agreed to pay the Company $96.5 million in a settlement. The
Marine Exchange, which failed to notify Amplify of the anchor
strikes, has agreed to non-monetary terms, as well. The overall
resolution includes subrogation claims by Amplify’s property damage
and loss of production income insurers, with Amplify ultimately
receiving a net payment of approximately $85 million. The
settlement resolves Amplify’s affirmative claims related to the
Incident.
-
The Company intends to use proceeds from the settlement to reduce
its debt outstanding and for general corporate purposes
-
The Company successfully completed scheduled repair operations and
is awaiting approval by federal pipeline safety regulators to
restart production
(1) Net debt as of February 28, 2023, and LTM
Adjusted EBITDA as of the fourth quarter of 2022
Martyn Willsher, Amplify’s President and Chief
Executive Officer, commented, “I am proud of all we accomplished at
Amplify in 2022. The Company performed well operationally and
financially during the year, while resolving the civil and criminal
matters related to the Incident in Southern California,
successfully repairing the pipeline, and preparing our facilities
for the return of Beta’s production.”
Willsher continued, “Amplify is looking forward
to 2023 as we seek the final remaining approval to restart our
pipeline and bring the Beta field back online. This year we
anticipate allocating capital to high-return workover and
non-operated development projects across our mature, diverse
portfolio of assets, generating sustainable free cash flow and
further improving our balance sheet.”
“Lastly, the additional unhedged oil production
from the planned return of our Beta field, combined with the
proceeds from the settlement, will provide us with additional
strategic opportunities to enhance shareholder value in the near
future,” Mr. Willsher concluded.
Southern California Pipeline
Incident
For more information and disclosures regarding
the Incident, please see our Annual Report on Form 10-K for the
year-end December 31, 2022 filed with the SEC.
2022 Year-End Proved Reserve
Update
The Company’s estimated proved reserves at SEC
pricing for year-end 2022 totaled 124 MMBoe, which consisted of 123
MMBoe of proved developed reserves and 1 MMBoe of proved
undeveloped (“PUD”) reserves. Total proved reserves were comprised
of 39% oil, 19% NGLs, and 42% natural gas. Geographically, 28% are
in Oklahoma, 35% are in East Texas and Northern Louisiana, 23% are
in the Rockies (Bairoil), 11% are in Southern California (Beta),
and 2% are in the Eagle Ford (Non-op).
At year-end 2022, Amplify’s proved reserves had
a PV-10 value of approximately $1.6 billion using SEC pricing.
Utilizing strip pricing as of February 28, 2023, the Company’s
year-end 2022 proved reserves and proved developed reserves had
PV-10 values of approximately $743 million and $732 million,
respectively.
|
|
Estimated Net Proved Reserves |
Producing Wells(1) |
|
|
|
|
% Oil and |
|
% Proved |
|
|
|
|
|
|
Region |
MMBoe |
|
NGL |
|
Developed |
|
Gross |
|
Net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Oklahoma |
35.0 |
|
47 |
% |
100 |
% |
385 |
|
286 |
|
| Rockies (Bairoil) |
28.4 |
|
100 |
% |
100 |
% |
137 |
|
137 |
|
| Southern California
(Beta) |
13.7 |
|
100 |
% |
100 |
% |
- |
|
- |
|
| East Texas/ North
Louisiana |
43.9 |
|
24 |
% |
100 |
% |
1,580 |
|
875 |
|
| Eagle Ford (Non-Op) |
2.9 |
|
90 |
% |
64 |
% |
384 |
|
25 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
124.0 |
|
58 |
% |
99 |
% |
2,486 |
|
1,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Beta Producing Wells of 63 gross (63 net)
wells are excluded as a result of the Incident
Amplify’s reserves estimates were prepared by
its third-party independent reserve consultant, Cawley, Gillespie
& Associates, Inc.
Key Financial Results
During the fourth quarter of 2022, Amplify
generated $21.9 million of Adjusted EBITDA, a decrease of
approximately $8.9 million from $30.8 million in the prior quarter.
The decrease was primarily attributable to lower realized commodity
prices, which were intensified by large natural gas basis
differentials experienced in the fourth quarter, partially offset
by lower fourth quarter commodity hedge settlement payments and
higher loss of production income (“LOPI”) proceeds. For the fourth
quarter, the Company recognized $15.2 million of LOPI proceeds,
which represents three months of LOPI payments and includes a $1.5
million true-up for prior period settlements, compared to $13.3
million for the prior quarter.
Amplify will continue to recognize LOPI proceeds
at the time they are approved by insurers for the remainder of the
policy period which ends on March 31, 2023.
Free cash flow, defined as Adjusted EBITDA less
cash interest and capital spending, was $12.3 million in the fourth
quarter of 2022.
| |
Fourth Quarter |
|
Third Quarter |
|
$ in millions |
|
2022 |
|
|
|
2022 |
|
| Net
income (loss) |
$ |
30.0 |
|
|
$ |
47.2 |
|
| Net
cash provided by operating activities |
$ |
15.2 |
|
|
$ |
18.9 |
|
| Average
daily production (MBoe/d) |
|
20.8 |
|
|
|
21.0 |
|
| Total
revenues |
$ |
98.9 |
|
|
$ |
126.3 |
|
|
Adjusted EBITDA (a non-GAAP financial measure) |
$ |
21.9 |
|
|
$ |
30.8 |
|
| Total
capital |
$ |
5.5 |
|
|
$ |
9.9 |
|
| Free
Cash Flow (a non-GAAP financial measure) |
$ |
12.3 |
|
|
$ |
17.0 |
|
| |
|
|
|
|
|
|
|
Revolving Credit Facility
On December 9, 2022, the Company completed its
regularly scheduled semi-annual borrowing base redetermination and
entered into an amendment to extend its credit agreement from
November 2, 2023 to May 31, 2024. The redetermination resulted in a
revised borrowing base of $215 million, effective December 9, 2022,
with scheduled monthly reductions beginning on December 31, 2022 of
$5 million until otherwise redetermined or adjusted in accordance
with the provisions of the credit agreement. The next regularly
scheduled borrowing base redetermination is expected to occur in
the second quarter of 2023. As of February 28, 2023, the Company’s
borrowing base was $200 million.
As of February 28, 2023, Amplify had net debt of
$167 million, consisting of $185 million outstanding under the
revolving credit facility and $18 million of cash on hand. Net Debt
to LTM Adjusted EBITDA was 1.8x (net debt as of February 28, 2023
and 4Q22 LTM Adjusted EBITDA).
Corporate Production and Pricing
Update
During the fourth quarter of 2022, average daily
production was approximately 20.8 MBoepd, a decrease of 1% from
21.0 MBoepd in the third quarter, due to natural field declines.
The Company’s product mix for the quarter consisted of 30% crude
oil, 18% NGLs, and 52% natural gas.
Total oil, natural gas and NGL revenues for the
fourth quarter of 2022 were approximately $88.2 million, before the
impact of derivatives, compared to $112.8 million in the third
quarter. The Company realized a loss on commodity derivatives of
$27.9 million during the quarter, compared to a $40.8 million loss
during the previous quarter. Revenues for the fourth quarter were
impacted by weak market conditions, which caused lower realized
commodity prices and were intensified by unseasonably large natural
gas basis differentials in East Texas and Oklahoma that have
subsequently improved.
The following table sets forth information
regarding average realized sales prices for the periods
indicated:
| |
|
Crude Oil ($/Bbl) |
NGLs ($/Bbl) |
Natural Gas ($/Mcf) |
|
|
|
Three Months Ended December 31,
2022 |
|
Three Months Ended September 30,
2022 |
|
Three Months Ended December 31,
2022 |
|
Three Months Ended September 30,
2022 |
|
Three Months Ended December 31,
2022 |
|
Three Months Ended September 30,
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average sales price exclusive of realized derivatives and
certain deductions from revenue |
|
$ |
80.26 |
|
|
$ |
89.82 |
|
|
$ |
27.99 |
|
|
$ |
36.56 |
|
|
$ |
5.43 |
|
|
$ |
7.88 |
|
| Realized derivatives |
|
|
(23.37 |
) |
|
|
(29.63 |
) |
|
|
- |
|
|
|
- |
|
|
|
(2.42 |
) |
|
|
(3.91 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average
sales price with realized derivatives exclusive of
certain deductions from revenue |
|
$ |
56.89 |
|
|
$ |
60.19 |
|
|
$ |
27.99 |
|
|
$ |
36.56 |
|
|
$ |
3.01 |
|
|
$ |
3.97 |
|
| Certain deductions from
revenue |
|
|
- |
|
|
|
- |
|
|
|
(3.32 |
) |
|
|
(3.60 |
) |
|
|
0.11 |
|
|
|
0.11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average
sales price inclusive of realized derivatives
and certain deductions from revenue |
|
$ |
56.89 |
|
|
$ |
60.19 |
|
|
$ |
24.67 |
|
|
$ |
32.96 |
|
|
$ |
3.12 |
|
|
$ |
4.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Costs and Expenses
Lease operating expenses in the fourth quarter
of 2022 were approximately $33.4 million, or $17.43 per Boe, an
increase of approximately $1.4 million compared to $32.0 million,
or $16.56 per Boe, in the third quarter. The increase was primarily
attributable to higher facility and workover expense projects at
Bairoil and modest cost inflation across the asset base.
Severance and Ad Valorem taxes in the fourth
quarter were approximately $8.0 million, a decrease of $1.2 million
compared to $9.2 million in the third quarter. The
quarter-over-quarter decrease was a result of lower commodity
pricing. On a percentage basis, Amplify paid approximately 9.0% of
total oil, NGL and natural gas sales revenue in taxes this quarter
compared to 8.1% in the previous quarter.
Amplify incurred $6.3 million, or $3.30 per Boe,
of gathering, processing and transportation expenses in the fourth
quarter of 2022, compared to $7.5 million, or $3.87 per Boe, in the
previous quarter. The reduction was primarily attributable to lower
expenses in East Texas, attributable to the expiration of our
minimum volume commitment (“MVC”) in October 2022, and in Oklahoma,
as a result of lower commodity prices and volumes compared to the
prior quarter. We expect gathering costs in East Texas to continue
decreasing from prior quarters from the contractual reduction of
committed volumes over time and in Oklahoma from the expiration of
the MVC in June 2023.
Fourth quarter cash G&A expenses were $6.1
million, held flat compared to $6.1 million in the third quarter of
2022.
Depreciation, depletion and amortization expense
for the fourth quarter of 2022 totaled $6.2 million, or $3.21 per
Boe, compared to $6.3 million, or $3.25 per Boe, in the prior
quarter.
Net interest expense was $4.6 million this
quarter, an increase of $0.6 million from $4.0 million in the third
quarter of 2022.
Amplify had an effective tax rate of 0.4% and
recorded an income tax expense of $0.1 million for the fourth
quarter of 2022.
Capital Spending Update
Cash capital spending during the fourth quarter
of 2022 was approximately $5.5 million, a $4.4 million decrease
from $9.9 million in the third quarter. The majority of the capital
expenditures in the fourth quarter were related to workover
activity in Oklahoma and non-operated development activity in the
Eagle Ford.
The following table details Amplify’s capital
incurred during the quarter and full-year 2022:
| |
|
Fourth Quarter |
|
Full-Year |
|
|
|
2022 Capital |
|
2022 Capital |
|
|
|
Spend ($ MM) |
|
Spend ($ MM) |
|
Oklahoma |
|
$ |
2.8 |
|
|
$ |
13.5 |
|
| Rockies (Bairoil) |
|
$ |
0.5 |
|
|
$ |
4.9 |
|
| Southern California
(Beta) |
|
$ |
0.4 |
|
|
$ |
3.3 |
|
| East Texas / North
Louisiana |
|
$ |
0.5 |
|
|
$ |
6.3 |
|
| Eagle Ford (Non-Op) |
|
$ |
1.3 |
|
|
$ |
7.8 |
|
| Total Capital
Spent |
|
$ |
5.5 |
|
|
$ |
35.8 |
|
| |
|
|
|
|
|
|
|
|
Asset Operational Update and
Statistics
Oklahoma:
-
Production: 605 MBoe; 6.6 MBoepd
-
Commodity Mix: 20% oil, 28% NGLs, 52% natural gas
-
LOE: $6.1 million; $10.06 per Boe
- Capex:
$2.8 million
Amplify’s operating strategy in Oklahoma remains
focused on prioritizing a stable free cash flow profile and
managing production through an active workover program, which held
full-year 2022 production flat compared to 2021, despite severe
weather and incremental third-party interruptions. During the
fourth quarter, the Company shifted from three to two workover rigs
as it continued working through its inventory of offline wells and
artificial lift enhancements. Amplify intends to maintain this less
capital-intensive workover pace going forward, focusing on rod-lift
conversions and ESP optimizations, which offset natural production
declines and reduce future operating expenses and downtime.
Additionally, gathering costs in Oklahoma are also expected to
continue decreasing as the asset’s MVC expires in June 2023.
Rockies (Bairoil):
-
Production: 343 MBoe; 3.7 MBoepd
-
LOE: $13.1 million; $38.19 per Boe
- Capex:
$0.5 million
Production at Bairoil in the fourth quarter of
2022 reflected the strong operational reliability of the production
facilities and was 100 Boepd higher than the previous quarter. As a
result of the technical team’s efforts to optimize reservoir
performance, full-year production in 2022 averaged just 1% less
than 2021. Going forward, we expect to reduce operating expenses,
while focusing on enhancing water alternating gas injection
performance through targeted well recompletions and conversions,
which will offset nominal production declines and support a stable
free cash flow profile.
Southern California (Beta):
-
Production: 0 MBoe; 0.0 MBoepd
-
LOE: $6.4 million
- Capex:
$0.4 million
As previously disclosed, all of the Company’s
production and pipeline operations at the Beta field have been
suspended. Amplify has successfully repaired the pipeline and
remains focused on restarting the pipeline as soon as practicable,
pending federal regulatory approval. In anticipation of returning
the field to production, the Company is also completing necessary
facilities projects.
East Texas and North Louisiana:
-
Production: 5.2 Bcfe; 56.8 MMcfepd (872 MBoe; 9.5 MBoepd)
-
Commodity Mix: 5% oil, 19% NGLs, 76% natural gas
-
LOE: $6.5 million; $1.24 per Mcfe ($7.41 per Boe)
- Capex:
$0.5 million
Amplify’s strategy in East Texas continues to
focus on prudent management of production by prioritizing
high-return workover projects and opportunistically participating
in non-operated development opportunities. The asset team is
working to optimize field compression in order to enhance
production and lower lease operating costs. During the fourth
quarter, the East Texas MVC expired, and such expiration will
contribute to a reduction in gathering costs going forward.
Non-Operated Eagle Ford:
-
Production: 98 MBoe; 1.1 MBoepd
-
Commodity Mix: 77% oil, 12% NGLs, 11% natural gas
-
LOE: $1.4 million; $14.35 per Boe
- Capex:
$1.3 million
Amplify continues to participate in attractive
non-operated Eagle Ford development and recompletion projects as
they arise. We are currently participating in 11 gross (1.0 net)
new development projects with highly accretive returns, including
two recompletion projects, which are projected to be online in the
second quarter of 2023.
Full-Year 2023 Guidance
The following guidance is subject to the
cautionary statements and limitations described under the
"Forward-Looking Statements" caption at the end of this press
release. Amplify's 2023 guidance is based on its current
expectations regarding capital expenditure levels and on the
assumption that market demand and prices for oil and natural gas
will continue at levels that allow for economic production of these
products. The guidance below assumes Beta returns to production in
April 2023.
A summary of the guidance is presented
below:
| |
FY 2023E |
|
|
|
|
|
| |
Low |
|
High |
| Net Average Daily
Production |
|
|
|
|
Oil (MBbls/d) |
7.3 |
- |
7.9 |
|
NGL (MBbls/d) |
3.4 |
- |
3.8 |
|
Natural Gas (MMcf/d) |
55.7 |
- |
61.7 |
| Total
(MBoe/d) |
20.0 |
- |
22.0 |
| |
|
|
|
| Commodity Price
Differential / Realizations (Unhedged) |
|
|
|
|
Oil Differential ($ / Bbl) |
($3.00) |
- |
($3.50) |
|
NGL Realized Price (% of WTI NYMEX) |
33% |
- |
37% |
|
Natural Gas Realized Price (% of Henry Hub) |
95% |
- |
100% |
| |
|
|
|
| Gathering, Processing
and Transportation Costs |
|
|
|
|
Oil ($ / Bbl) |
$0.70 |
- |
$0.95 |
|
NGL ($ / Bbl) |
$3.50 |
- |
$4.00 |
|
Natural Gas ($ / Mcf) |
$0.65 |
- |
$0.85 |
| Total ($ /
Boe) |
$2.80 |
- |
$3.50 |
| |
|
|
|
| Average
Costs |
|
|
|
|
Lease Operating ($ / Boe) |
$17.75 |
- |
$19.75 |
|
Taxes (% of Revenue) (1) |
7.5% |
- |
8.5% |
|
Recurring Cash General and Administrative ($ / Boe) (2) |
$3.30 |
- |
$3.80 |
| |
|
|
|
| Adjusted EBITDA ($
MM) (3)(5) |
$80 |
- |
$100 |
| Cash Interest Expense ($
MM) |
$12 |
- |
$16 |
| Capital Expenditures ($
MM) |
$30 |
- |
$40 |
| Free Cash Flow ($
MM) (4)(5) |
$30 |
- |
$50 |
| |
|
|
|
(1) Includes production, ad valorem and franchise
taxes(2) Recurring cash general and administrative cost
guidance excludes reorganization expenses and non-cash
compensation(3) Refer to “Use of Non-GAAP Financial Measures”
for Amplify’s definition and use of Adjusted EBITDA, a non-GAAP
measure(4) Refer to “Use of Non-GAAP Financial Measures” for
Amplify’s definition and use of free cash flow, a non-GAAP
measure(5) Amplify believes that a quantitative reconciliation of
such forward-looking information to the most comparable financial
measure calculated and presented in accordance with GAAP cannot be
made available without unreasonable efforts. A reconciliation of
these non-GAAP financial measures would require Amplify to predict
the timing and likelihood of future transactions and other items
that are difficult to accurately predict. Neither of these
forward-looking measures, nor their probable significance, can be
quantified with a reasonable degree of accuracy. Accordingly, a
reconciliation of the most directly comparable forward-looking GAAP
measures is not provided.
Hedging Update
The following table reflects the hedged volumes
under Amplify’s commodity derivative contracts and the average
fixed, floor and ceiling prices at which production is hedged for
January 2023 through December 2024, as of March 9, 2023:
|
|
|
2023 |
|
|
|
2024 |
|
|
|
|
|
|
| Natural Gas
Collars: |
|
|
|
| Two-way collars |
|
|
|
|
Average Monthly Volume (MMBtu) |
|
1,251,667 |
|
|
|
220,833 |
|
|
Weighted Average Ceiling Price ($) |
$ |
5.83 |
|
|
$ |
4.73 |
|
|
Weighted Average Floor Price ($) |
$ |
3.49 |
|
|
$ |
3.31 |
|
| |
|
|
|
| Oil
Swaps: |
|
|
|
| Average Monthly Volume
(Bbls) |
|
55,000 |
|
|
|
| Weighted Average Fixed Price
($) |
$ |
57.30 |
|
|
|
| |
|
|
|
| Oil
Collars: |
|
|
|
| Three-way collars |
|
|
|
|
Average Monthly Volume (Bbls) |
|
30,000 |
|
|
|
|
Weighted Average Ceiling Price ($) |
$ |
67.15 |
|
|
|
|
Weighted Average Floor Price ($) |
$ |
55.00 |
|
|
|
|
Weighted Average Sub-Floor Price ($) |
$ |
40.00 |
|
|
|
|
|
|
|
|
|
|
Amplify posted an updated investor presentation
containing additional hedging information on its website,
www.amplifyenergy.com, under the Investor Relations section.
Annual Report on Form 10-K
Amplify’s financial statements and related
footnotes will be available in its Annual Report on Form 10-K for
the year ended December 31, 2022, which Amplify expects to file
with the Securities and Exchange Commission on March 9, 2023.
About Amplify Energy
Amplify Energy Corp. is an independent oil and
natural gas company engaged in the acquisition, development,
exploitation and production of oil and natural gas properties.
Amplify’s operations are focused in Oklahoma, the Rockies
(Bairoil), federal waters offshore Southern California (Beta), East
Texas / North Louisiana, and the Eagle Ford (Non-op). For more
information, visit www.amplifyenergy.com.
Conference Call
Amplify will host an investor teleconference
tomorrow at 10:00 a.m. Central Time to discuss these operating and
financial results. Interested parties may join the call by dialing
(800) 225-9448 at least 15 minutes before the call begins and
providing the Conference ID: AEC4Q22. A telephonic replay will be
available for fourteen days following the call by dialing (800)
654-1563 and providing the Conference ID: 21021351.
Forward-Looking Statements
This press release includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. All statements, other than statements of
historical fact, included in this press release that address
activities, events or developments that the Company expects,
believes or anticipates will or may occur in the future are
forward-looking statements. Terminology such as “may,” “will,”
“would,” “should,” “expect,” “plan,” “project,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“pursue,” “target,” “outlook,” “continue,” the negative of such
terms or other comparable terminology are intended to identify
forward-looking statements. These statements include, but are not
limited to, statements about the Company’s expectations of plans,
goals, strategies (including measures to implement strategies),
objectives and anticipated results with respect thereto. These
statements address activities, events or developments that we
expect or anticipate will or may occur in the future, including
things such as projections of results of operations, plans for
growth, goals, future capital expenditures, competitive strengths,
references to future intentions and other such references. These
forward-looking statements involve risks and uncertainties and
other factors that could cause the Company’s actual results or
financial condition to differ materially from those expressed or
implied by forward-looking statements. These include risks and
uncertainties relating to, among other things: the ongoing impact
of the Incident, the Company’s evaluation and implementation of
strategic alternatives; the Company’s ability to satisfy debt
obligations; the Company’s need to make accretive acquisitions or
substantial capital expenditures to maintain its declining asset
base, including the existence of unanticipated liabilities or
problems relating to acquired or divested business or properties;
volatility in the prices for oil, natural gas and NGLs; the
Company’s ability to access funds on acceptable terms, if at all,
because of the terms and conditions governing the Company’s
indebtedness, including financial covenants; general political and
economic conditions, globally and in the jurisdictions in which we
operate, including escalating tensions between Russia and Ukraine
and the potential destabilizing effect such conflict may pose for
the European continent or the global oil and natural gas markets
and effects of inflation; the impact of legislation and
governmental regulations, including those related to climate change
and hydraulic fracturing; and the occurrence or threat of epidemic
or pandemic diseases, including the COVID-19 pandemic, or any
government response to such occurrence or threat. Please read the
Company’s filings with the SEC, including “Risk Factors” in the
Company’s Annual Report on Form 10-K, and if applicable, the
Company’s Quarterly Reports on Form 10-Q and Current Reports on
Form 8-K, which are available on the Company’s Investor Relations
website at
https://www.amplifyenergy.com/investor-relations/sec-filings/default.aspx
or on the SEC’s website at http://www.sec.gov, for a discussion of
risks and uncertainties that could cause actual results to differ
from those in such forward-looking statements. You are cautioned
not to place undue reliance on these forward-looking statements,
which speak only as of the date of this press release. All
forward-looking statements in this press release are qualified in
their entirety by these cautionary statements. Except as required
by law, the Company undertakes no obligation and does not intend to
update or revise any forward-looking statements, whether as a
result of new information, future results or otherwise.
Use of Non-GAAP Financial
Measures
This press release and accompanying schedules
include the non-GAAP financial measures of Adjusted EBITDA, free
cash flow, net debt and PV-10. The accompanying schedules provide a
reconciliation of these non-GAAP financial measures to their most
directly comparable financial measures calculated and presented in
accordance with GAAP. Amplify’s non-GAAP financial measures should
not be considered as alternatives to GAAP measures such as net
income, operating income, net cash flows provided by operating
activities, standardized measure of discounted future net cash
flows, or any other measure of financial performance calculated and
presented in accordance with GAAP. Amplify’s non-GAAP financial
measures may not be comparable to similarly titled measures of
other companies because they may not calculate such measures in the
same manner as Amplify does.
Adjusted EBITDA. Amplify
defines Adjusted EBITDA as net income or loss, plus interest
expense; income tax expense; depreciation, depletion and
amortization; accretion of asset retirement obligations; losses on
commodity derivative instruments; cash settlements received on
expired commodity derivative instruments; share-based compensation
expenses; exploration costs; loss on settlement of AROs; bad debt
expense; pipeline incident loss; pipeline incident settlement; and
LOPI-timing differences. Adjusted EBITDA is commonly used as a
supplemental financial measure by management and external users of
Amplify’s financial statements, such as investors, research
analysts and rating agencies, to assess: (1) its operating
performance as compared to other companies in Amplify’s industry
without regard to financing methods, capital structures or
historical cost basis; (2) the ability of its assets to generate
cash sufficient to pay interest and support Amplify’s indebtedness;
and (3) the viability of projects and the overall rates of return
on alternative investment opportunities. Since Adjusted EBITDA
excludes some, but not all, items that affect net income or loss
and because these measures may vary among other companies, the
Adjusted EBITDA data presented in this press release may not be
comparable to similarly titled measures of other companies. The
GAAP measures most directly comparable to Adjusted EBITDA are net
income and net cash provided by operating activities.
Free cash flow. Amplify defines
free cash flow as Adjusted EBITDA, less cash interest expense and
capital expenditures. Free cash flow is an important non-GAAP
financial measure for Amplify’s investors since it serves as an
indicator of the Company’s success in providing a cash return on
investment. The GAAP measures most directly comparable to free cash
flow are net income and net cash provided by operating
activities.
Net debt. Amplify defines net
debt as the total principal amount drawn on the revolving credit
facility less cash and cash equivalents. The Company uses net debt
as a measure of financial position and believes this measure
provides useful additional information to investors to evaluate the
Company's capital structure and financial leverage.
PV-10. PV-10 is a non-GAAP
financial measure that represents the present value of estimated
future cash inflows from proved oil and natural gas reserves that
are calculated using the unweighted arithmetic average
first-day-of-the-month prices for the prior 12 months, less future
development and operating costs, discounted at 10% per annum to
reflect the timing of future cash flows. The most directly
comparable GAAP measure to PV-10 is standardized measure. PV-10
differs from standardized measure in its treatment of estimated
future income taxes, which are excluded from PV-10. Amplify
believes the presentation of PV-10 provides useful information
because it is widely used by investors in evaluating oil and
natural gas companies without regard to specific income tax
characteristics of such entities. PV-10 is not intended to
represent the current market value of our estimated proved
reserves. PV-10 should not be considered in isolation or as a
substitute for the standardized measure as defined under GAAP.
The Company also presents PV-10 at strip
pricing, which is PV-10 adjusted for price sensitivities. As GAAP
does not prescribe a comparable GAAP measure for PV-10 of reserves
adjusted for pricing sensitivities, it is not practicable for us to
reconcile PV-10 at strip pricing to a standardized measure or any
other GAAP measure.
Contacts
Martyn Willsher – President and Chief Executive
Officer(832) 219-9047martyn.willsher@amplifyenergy.com
Michael Jordan – Director, Finance and
Treasurer(832) 219-9051michael.jordan@amplifyenergy.com
Selected Operating and Financial Data
(Tables)
|
Amplify Energy Corp. |
|
|
|
| Selected Financial Data -
Unaudited |
|
|
|
|
Statements of Operations Data |
|
|
|
| |
|
|
|
| |
Three Months |
|
Three Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
| Revenues: |
|
|
|
|
Oil and natural gas sales |
$ |
88,199 |
|
|
$ |
112,812 |
|
|
Other revenues |
|
10,748 |
|
|
|
13,487 |
|
|
Total revenues |
|
98,947 |
|
|
|
126,299 |
|
| |
|
|
|
| Costs and Expenses: |
|
|
|
|
Lease operating expense |
|
33,422 |
|
|
|
32,048 |
|
|
Pipeline incident loss |
|
2,999 |
|
|
|
2,606 |
|
|
Pipeline incident settlement |
|
- |
|
|
|
12,000 |
|
|
Gathering, processing and transportation |
|
6,336 |
|
|
|
7,483 |
|
|
Exploration |
|
31 |
|
|
|
- |
|
|
Taxes other than income |
|
7,980 |
|
|
|
9,152 |
|
|
Depreciation, depletion and amortization |
|
6,155 |
|
|
|
6,296 |
|
|
General and administrative expense |
|
6,800 |
|
|
|
6,965 |
|
|
Accretion of asset retirement obligations |
|
1,839 |
|
|
|
1,773 |
|
|
Realized (gain) loss on commodity derivatives |
|
27,929 |
|
|
|
40,771 |
|
|
Unrealized (gain) loss on commodity derivatives |
|
(29,667 |
) |
|
|
(44,071 |
) |
|
Other, net |
|
400 |
|
|
|
93 |
|
|
Total costs and expenses |
|
64,224 |
|
|
|
75,116 |
|
| |
|
|
|
| Operating Income (loss) |
|
34,723 |
|
|
|
51,183 |
|
| |
|
|
|
| Other Income (Expense): |
|
|
|
|
Interest expense, net |
|
(4,602 |
) |
|
|
(3,974 |
) |
|
Other income (expense) |
|
25 |
|
|
|
25 |
|
|
Total Other Income (Expense) |
|
(4,577 |
) |
|
|
(3,949 |
) |
| |
|
|
|
|
Income (loss) before reorganization items, net and income
taxes |
|
30,146 |
|
|
|
47,234 |
|
| |
|
|
|
| Income tax benefit
(expense) |
|
(111 |
) |
|
|
- |
|
| |
|
|
|
|
Net income (loss) |
$ |
30,035 |
|
|
$ |
47,234 |
|
| |
|
|
|
| Earnings per share: |
|
|
|
|
Basic and diluted earnings (loss) per share |
$ |
0.74 |
|
|
$ |
1.17 |
|
| |
|
|
|
|
|
|
|
|
Selected Financial Data - Unaudited |
|
|
|
|
Operating Statistics |
|
|
|
| |
|
|
|
| |
Three Months |
|
Three Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
| Oil and natural gas
revenue: |
|
|
|
|
Oil Sales |
$ |
46,836 |
|
|
$ |
54,394 |
|
|
NGL Sales |
|
8,609 |
|
|
|
11,704 |
|
|
Natural Gas Sales |
|
32,754 |
|
|
|
46,714 |
|
|
Total oil and natural gas sales - Unhedged |
$ |
88,199 |
|
|
$ |
112,812 |
|
| |
|
|
|
| Production
volumes: |
|
|
|
|
Oil Sales - MBbls |
|
584 |
|
|
|
606 |
|
|
NGL Sales - MBbls |
|
349 |
|
|
|
355 |
|
|
Natural Gas Sales - MMcf |
|
5,914 |
|
|
|
5,844 |
|
|
Total - MBoe |
|
1,918 |
|
|
|
1,935 |
|
|
Total - MBoe/d |
|
20.8 |
|
|
|
21.0 |
|
| |
|
|
|
| Average sales price
(excluding commodity derivatives): |
|
|
|
|
Oil - per Bbl |
$ |
80.26 |
|
|
$ |
89.82 |
|
|
NGL - per Bbl |
$ |
24.67 |
|
|
$ |
32.96 |
|
|
Natural gas - per Mcf |
$ |
5.54 |
|
|
$ |
7.99 |
|
|
Total - per Boe |
$ |
45.98 |
|
|
$ |
58.31 |
|
| |
|
|
|
| Average unit costs per
Boe: |
|
|
|
|
Lease operating expense |
$ |
17.43 |
|
|
$ |
16.56 |
|
|
Gathering, processing and transportation |
$ |
3.30 |
|
|
$ |
3.87 |
|
|
Taxes other than income |
$ |
4.16 |
|
|
$ |
4.73 |
|
|
General and administrative expense |
$ |
3.55 |
|
|
$ |
3.60 |
|
|
Depletion, depreciation, and amortization |
$ |
3.21 |
|
|
$ |
3.25 |
|
| |
|
|
|
|
|
|
|
|
Selected Financial Data - Unaudited |
|
|
|
|
| Balance
Sheet Data |
|
|
|
|
| |
|
|
|
|
| (Amounts in $000s, except per
share data) |
|
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
|
| Assets |
|
|
|
|
|
Cash and Cash Equivalents |
|
$ |
- |
|
|
$ |
10,944 |
|
|
Accounts Receivable |
|
|
80,455 |
|
|
|
78,929 |
|
|
Other Current Assets |
|
|
18,789 |
|
|
|
16,502 |
|
|
Total Current Assets |
|
$ |
99,244 |
|
|
$ |
106,375 |
|
| |
|
|
|
|
|
Net Oil and Gas Properties |
|
$ |
339,292 |
|
|
$ |
333,689 |
|
|
Other Long-Term Assets |
|
|
20,942 |
|
|
|
18,118 |
|
|
Total Assets |
|
$ |
459,478 |
|
|
$ |
458,182 |
|
| |
|
|
|
|
|
Liabilities |
|
|
|
|
|
Accounts Payable |
|
$ |
38,414 |
|
|
$ |
25,034 |
|
|
Accrued Liabilities |
|
|
58,449 |
|
|
|
59,888 |
|
|
Other Current Liabilities |
|
|
42,989 |
|
|
|
70,306 |
|
|
Total Current Liabilities |
|
$ |
139,852 |
|
|
$ |
155,228 |
|
| |
|
|
|
|
|
Long-Term Debt |
|
$ |
190,000 |
|
|
$ |
205,000 |
|
|
Asset Retirement Obligation |
|
|
114,614 |
|
|
|
107,358 |
|
|
Other Long-Term Liabilities |
|
|
19,577 |
|
|
|
25,919 |
|
|
Total Liabilities |
|
$ |
464,043 |
|
|
$ |
493,505 |
|
| |
|
|
|
|
| Shareholders'
Equity |
|
|
|
|
|
Common Stock & APIC |
|
$ |
432,637 |
|
|
$ |
431,914 |
|
|
Warrants |
|
|
- |
|
|
|
- |
|
|
Accumulated Earnings (Deficit) |
|
|
(437,202 |
) |
|
|
(467,237 |
) |
|
Total Shareholders' Equity |
|
$ |
(4,565 |
) |
|
$ |
(35,323 |
) |
| |
|
|
|
|
|
|
|
|
|
Selected Financial Data - Unaudited |
|
|
|
|
Statements of Cash Flows Data |
|
|
|
| |
|
|
|
| |
Three Months |
|
Three Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
| |
|
|
|
|
Net cash provided by (used in) operating activities |
$ |
15,155 |
|
|
$ |
18,934 |
|
| Net cash provided by (used in)
investing activities |
|
(9,972 |
) |
|
|
(14,639 |
) |
| Net cash provided by (used in)
financing activities |
|
(16,127 |
) |
|
|
(10,042 |
) |
| |
|
|
|
|
|
|
|
|
Selected Operating and Financial Data (Tables) |
|
|
|
| Reconciliation of
Unaudited GAAP Financial Measures to Non-GAAP Financial
Measures |
|
|
|
Adjusted EBITDA and Free Cash Flow |
|
|
|
| |
|
|
|
| |
Three Months |
|
Three Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Cash Provided from
Operating Activities: |
|
|
|
Net cash provided by operating activities |
$ |
15,155 |
|
|
$ |
18,934 |
|
|
Changes in working capital |
|
(5,802 |
) |
|
|
(6,801 |
) |
|
Interest expense, net |
|
4,602 |
|
|
|
3,974 |
|
|
Gain (loss) on interest rate swaps |
|
5 |
|
|
|
87 |
|
|
Cash settlements paid (received) on interest rate swaps |
|
(447 |
) |
|
|
(171 |
) |
|
Amortization and write-off of deferred financing fees |
|
(180 |
) |
|
|
(133 |
) |
|
Exploration costs |
|
31 |
|
|
|
- |
|
|
Plugging and abandonment cost |
|
771 |
|
|
|
254 |
|
|
Current income tax expense (benefit) |
|
111 |
|
|
|
- |
|
|
Pipeline incident loss |
|
2,999 |
|
|
|
2,606 |
|
|
Pipeline incident settlement |
|
- |
|
|
|
12,000 |
|
|
LOPI - timing differences |
|
4,636 |
|
|
|
- |
|
| Adjusted EBITDA: |
$ |
21,881 |
|
|
$ |
30,750 |
|
| |
|
|
|
|
Reconciliation of Free Cash Flow to Net Cash Provided from
Operating Activities: |
|
|
| Adjusted EBITDA: |
$ |
21,881 |
|
|
$ |
30,750 |
|
|
Less: Cash interest expense |
|
4,063 |
|
|
|
3,857 |
|
|
Less: Capital expenditures |
|
5,546 |
|
|
|
9,899 |
|
| Free Cash Flow: |
$ |
12,272 |
|
|
$ |
16,994 |
|
| |
|
|
|
|
|
|
|
|
Selected Operating and Financial Data (Tables) |
|
|
|
| Reconciliation of
Unaudited GAAP Financial Measures to Non-GAAP Financial
Measures |
|
|
|
Adjusted EBITDA and Free Cash Flow |
|
|
|
| |
|
|
|
| |
Twelve Months |
|
Twelve Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
December 31, 2021 |
| |
|
|
|
|
Reconciliation of Adjusted EBITDA to Net Cash Provided from
Operating Activities: |
|
|
|
Net cash provided by operating activities |
$ |
64,485 |
|
|
$ |
62,969 |
|
|
Changes in working capital |
|
(14,812 |
) |
|
|
(12,395 |
) |
|
Interest expense, net |
|
14,101 |
|
|
|
12,099 |
|
|
Gain (loss) on interest rate swaps |
|
935 |
|
|
|
217 |
|
|
Cash settlements paid (received) on interest rate swaps |
|
(311 |
) |
|
|
1,912 |
|
|
Amortization of gain associated with terminated commodity
derivatives |
|
- |
|
|
|
17,977 |
|
|
Amortization and write-off of deferred financing fees |
|
(649 |
) |
|
|
(626 |
) |
|
Reorganization items, net |
|
- |
|
|
|
6 |
|
|
Exploration costs |
|
57 |
|
|
|
57 |
|
|
Acquisition and divestiture related costs |
|
41 |
|
|
|
19 |
|
|
Plugging and abandonment cost |
|
1,829 |
|
|
|
307 |
|
|
Current income tax expense (benefit) |
|
111 |
|
|
|
- |
|
|
Pipeline incident loss |
|
11,277 |
|
|
|
1,599 |
|
|
Pipeline incident settlement |
|
12,000 |
|
|
|
- |
|
|
LOPI - timing differences |
|
4,636 |
|
|
|
- |
|
|
Other |
|
122 |
|
|
|
565 |
|
| Adjusted EBITDA: |
$ |
93,822 |
|
|
$ |
84,706 |
|
| |
|
|
|
|
Reconciliation of Free Cash Flow to Net Cash Provided from
Operating Activities: |
|
|
| Adjusted EBITDA: |
$ |
93,822 |
|
|
$ |
84,706 |
|
|
Less: Cash interest expense |
|
14,402 |
|
|
|
13,790 |
|
|
Less: Capital expenditures |
|
35,797 |
|
|
|
30,751 |
|
| Free Cash Flow: |
$ |
43,623 |
|
|
$ |
40,165 |
|
| |
|
|
|
|
|
|
|
|
Selected Operating and Financial Data (Tables) |
|
|
|
| Reconciliation of
Unaudited GAAP Financial Measures to Non-GAAP Financial
Measures |
|
|
|
Adjusted EBITDA and Free Cash Flow |
|
|
|
| |
|
|
|
| |
Three Months |
|
Three Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
September 30, 2022 |
| |
|
|
|
| Reconciliation of
Adjusted EBITDA to Net Income (Loss): |
|
|
|
|
Net income (loss) |
$ |
30,035 |
|
|
$ |
47,234 |
|
|
Interest expense, net |
|
4,602 |
|
|
|
3,974 |
|
|
Income tax expense |
|
111 |
|
|
|
- |
|
|
Depreciation, depletion and amortization |
|
6,155 |
|
|
|
6,296 |
|
|
Accretion of asset retirement obligations |
|
1,839 |
|
|
|
1,773 |
|
|
(Gains) losses on commodity derivatives |
|
(1,738 |
) |
|
|
(3,300 |
) |
|
Cash settlements received (paid) on expired commodity derivative
instruments |
|
(27,929 |
) |
|
|
(40,771 |
) |
|
Share-based compensation expense |
|
740 |
|
|
|
850 |
|
|
Exploration costs |
|
31 |
|
|
|
- |
|
|
Loss on settlement of AROs |
|
400 |
|
|
|
93 |
|
|
Bad debt expense |
|
- |
|
|
|
(5 |
) |
|
Pipeline incident loss |
|
2,999 |
|
|
|
2,606 |
|
|
Pipeline incident settlement |
|
- |
|
|
|
12,000 |
|
|
LOPI - timing differences |
|
4,636 |
|
|
|
- |
|
|
Adjusted EBITDA: |
$ |
21,881 |
|
|
$ |
30,750 |
|
| |
|
|
|
| Reconciliation of Free
Cash Flow to Net Income (Loss): |
|
|
|
|
Adjusted EBITDA: |
$ |
21,881 |
|
|
$ |
30,750 |
|
|
Less: Cash interest expense |
|
4,063 |
|
|
|
3,857 |
|
|
Less: Capital expenditures |
|
5,546 |
|
|
|
9,899 |
|
|
Free Cash Flow: |
$ |
12,272 |
|
|
$ |
16,994 |
|
| |
|
|
|
|
|
|
|
|
Selected Operating and Financial Data (Tables) |
|
|
|
| Reconciliation of
Unaudited GAAP Financial Measures to Non-GAAP Financial
Measures |
|
|
|
Adjusted EBITDA and Free Cash Flow |
|
|
|
| |
|
|
|
| |
Twelve Months |
|
Twelve Months |
| |
Ended |
|
Ended |
| (Amounts in $000s, except per
share data) |
December 31, 2022 |
|
December 31, 2021 |
| |
|
|
|
| |
|
|
|
| Reconciliation of
Adjusted EBITDA to Net Income (Loss): |
|
|
|
|
Net income (loss) |
$ |
57,875 |
|
|
$ |
(32,070 |
) |
|
Interest expense, net |
|
14,101 |
|
|
|
12,099 |
|
|
Gain (loss) on early extinguishment of debt |
|
- |
|
|
|
(5,516 |
) |
|
Income tax expense |
|
111 |
|
|
|
- |
|
|
Depreciation, depletion and amortization |
|
23,950 |
|
|
|
28,068 |
|
|
Accretion of asset retirement obligations |
|
7,081 |
|
|
|
6,611 |
|
|
(Gains) losses on commodity derivatives |
|
106,937 |
|
|
|
142,439 |
|
|
Cash settlements received (paid) on expired commodity derivative
instruments |
|
(148,239 |
) |
|
|
(88,301 |
) |
|
Amortization of gain associated with terminated commodity
derivatives |
|
- |
|
|
|
17,977 |
|
|
Acquisition and divestiture related costs |
|
41 |
|
|
|
19 |
|
|
Reorganization items, net |
|
- |
|
|
|
6 |
|
|
Share-based compensation expense |
|
3,086 |
|
|
|
1,612 |
|
|
Exploration costs |
|
57 |
|
|
|
57 |
|
|
Loss on settlement of AROs |
|
908 |
|
|
|
11 |
|
|
Bad debt expense |
|
1 |
|
|
|
95 |
|
|
Pipeline incident loss |
|
11,277 |
|
|
|
1,599 |
|
|
Pipeline incident settlement |
|
12,000 |
|
|
|
- |
|
|
LOPI - timing differences |
|
4,636 |
|
|
|
- |
|
|
Adjusted EBITDA: |
$ |
93,822 |
|
|
$ |
84,706 |
|
| |
|
|
|
| Reconciliation of Free
Cash Flow to Net Income (Loss): |
|
|
|
|
Adjusted EBITDA: |
$ |
93,822 |
|
|
$ |
84,706 |
|
|
Less: Cash interest expense |
|
14,402 |
|
|
|
13,790 |
|
|
Less: Capital expenditures |
|
35,797 |
|
|
|
30,751 |
|
|
Free Cash Flow: |
$ |
43,623 |
|
|
$ |
40,165 |
|
| |
|
|
|
|
|
|
|
The following table provides a reconciliation of PV-10 to the
standardized measure (in thousands):
| |
As of |
|
As of |
|
|
December 31, |
|
December 31, |
|
|
|
2022 |
|
|
|
2021 |
|
|
Standardized measure of future net cash flows, discounted at 10%
($M) |
$ |
1,337,956 |
|
|
$ |
919,845 |
|
|
Add: PV of future income tax, discounted at 10% ($M) |
$ |
311,412 |
|
|
$ |
- |
|
|
PV-10 ($M) |
$ |
1,649,368 |
|
|
$ |
919,845 |
|
|
|
|
|
|
|
|
|
|
Amplify Energy (NYSE:AMPY)
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