Amplify Energy (AMPY) 11 Mar 212020 Q4 Earnings call transcript

Welcome to Amplify Energy's Fourth 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. [Operator Instructions]. Today's call is being recorded. A replay of the call will be accessible until Thursday, March 25, by dialing 855-859-2056, and entering conference ID# 3731609, or by visiting Amplify's website at www.amplifyenergy.com. to Vice conference Officer President Energy like Jason over of now Corp. Senior McGlynn, and would turn call the to Amplify I Chief Financial

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

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

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

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

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

release Form For measures GAAP today. measures encourage to additional over those XX-K, on to comparable the to I'll call during be website of file or measures now be you our With detailed that, Martyn. this to may which in disclosed Also, read disclosure, expect may our we at financial earnings our turn we later non-GAAP www.amplifyenergy.com. call. found Reconciliation

Jason. you, Thank

position I'll turn financial details balance provide reserves XXXX sheet. Jason to full quarter will the operating liquidity the for call and performance, hedging our additional year-end then on over XXXX. expectations guidance I fourth program, guidance, our call, During year and XXXX on proved provide comments to results,

was was after the from managing defined million of was $X $XX realized to capital largely CapEx controlling focus million cycles. low-decline $X.X and cash reduced and prudent the cash as $XX the that only commodity full adjusted flexibility quarter CapEx Free quarter cash third first million demonstrates reduced spent workover with the reduced approximately for mature capital assets year spending XXXX in and through Amplify's million, a attributable a activity. to flow, to the flow approximately fourth capital highest through on and $XX quarter. less The a of remarks. X% result the the flat XX,XXX maintaining decline strong with efficiencies million our the will day, we XX,XXX BOE per primarily averaging BOE Production decrease internal and the forecasts, approximately questions, third in remarks, closing of will and capital exceeded Following This conclude above of production per day prepared million, natural decline reduced improved million in decrease higher activity quarter workover was the production XXXX. for projected take I from principally fourth by a quarter quarter the commodity associated was to of which projections. a quarter-over-quarter decrease spending the of internal for quarter the Fourth declines, approximately projects, profile EBITDA, operating remained the production. $X.X adjusted relentless partially despite was from is quarter, during represented and prior million, due was $X.X $XX.X operating attention during was quarter EBITDA costs. approximately prices Amplify's interest quarter. free Capital commitment to expense, with fourth margins offset return deployment in

was barrel with XXX MMBtu for $X.XX and strongest inception. pricing of the The cost we product approximately achieved oil XXXX, operating down result, estimates of developed. of $XXX XX% and reduction million was approximately a proved year-end reserves crude on XX% Earlier was its pricing $XX.XX approximately Amplify's natural in MMboe XXXX company year XX% gas, for based per value of natural liquids PV-XX as down oil proved reserve today, for year-end SEC As reserves with the gas announced to pricing a proved since oil, SEC XX% and Compared classified crude per crude proved natural XX%. gas gas. our natural XX% for mix

and XXXX a pricing had year-end stark as prices impact of SEC reflect reminder not PV-XX is of XXXX, COVID-XX with year-end pricing March pricing of of X, While approximately XXX $XXX proved reserves. dramatic XXX to commodity of environment. the MBOE million, reserve the in value reserves proved which developed in is PV-XX a classified XXXX, MMBoe commodity Utilizing XXXX the value the reserves our $XXX company's does million on of strip as increased current

provided full expectations now have we our for guidance Additionally, year XXXX.

daily XXXX to forecast from average BOE Our full day. ranges XX,XXX XX,XXX year production per

material of our be approximately result XX% of our that production we increasingly will gas. a more we over our product oil time, to continue in the low-decline XX% to and anticipate natural rates oil-weighted properties, and XXXX anticipate XX% become NGLs mix As oil,

long-term zones is million capital projects, for million, our $XX includes which where field, incremental oil we and stack million The high-density and of X billion at program X approximately $XX $XX includes We projects longer also the cash expensive phase our workover features has existing beta operating the to year target half current full $XX approximately the Our the more Ford at the derisking future reservoir limited short-term in with that hole only development as XXXX view to the Beta's to provide Beta at primarily development commence It's nature increasing development Eagle development separate to original in capital development most of million note of deployed of economic program The not recompletion impact XX% program XXXX, unlock a approximately a the a of or development CapEx with be Beta margins. this time, results. the and program any company's facilities begin cased the Beta costs. sidetracks anticipate to in zoned. plans substantial work place in value also in flow enhance to estimated budgeted important our the initial means in hold at profile a forecast and on to The second prolific at phase of and approximately intervals recovered while of million Beta regulatory completion date. phased the for $XX with based impact is in bolstering we to to environment. development potential do free X scheduled barrels realized will largely to that and that wells asset reservoir the our program

spending focus our and in conversion operating return successful The recurring anticipate capital be all budget late of be the $X Eagle incur nonoperated net in rod-lift prepaid XXXX XXXX, to been the projects. in has maintenance our $X the million will XXXX Oklahoma X.X deployed budgeted in will Ford. of capital additional In We of on our capital additional optimizations. our project approximately for initiated and fourth asset million addition participate The DUCs ESP costs. of expenditures strongest in million reducing we to Roughly but expect and across development reflected rod-lift areas in $X to financials. the Beta, approximately of of remainder completion will conversions in significantly was quarter approximately

Lastly, East workovers and Beta the Bairoil, for facility has capital $XX at in work and company million budgeted Texas. XXXX approximately

a Our platform, in for even a this with operating price and order over our free to adaptability capital the equity file the driving our efficiency value robust to balance company's improving additional I we now outlook, market opportunities commitment when mature demonstrate stakeholders. the and program, coupled will operational cash and evaluating Jason. access our With to an potential value volatile transaction we will environment. a sheet XXXX weighted mind, results the led flow turn to intend that registration sustainable hedging commodity end, With arise. in shelf in markets our they statement strong provide PDP of call maintain generation to To as flexibility a improving

Thank I'll finish our guidance expenses. balance our an and provide Martyn. on fourth then numbers provide a discussion update and I'll production sheet with you, XXXX details up book. on hedge quarter and the company's first on

and BOE was $X.XX totaled XXXX. rates. approximately per per spending cash are flat this mix BOE period $X of other to XXXX. steady BOE projections. trend BOE for quarter largely in quarter. lower $XX.XX million the to $XX.XX quarter this $X.X held same BOE million fourth for to $XX.X mainly through continue and line per in moving periods quarter million decrease associated in prior the or projection year-end continue quarter on Capital a and timing or forward. $X.X XX,XXX mix from and and $X.XX XX% tax The of call. operating increase income first the our quarter to the Lease third the or XX% the an million approximately and we production or totaled and to third was of adjustments. quarter. with $X.XX averaged the throughout quarter quarter mix million was $X.XX earnings in million $X.XX G&A production expected shift, BOE in reductions expect the compared increase or with valorem per fourth $X.X LOE production favorable million day GP&T our million from relatively quarter for from NGLs BOE or majority were $X.X fourth our provided fourth relatively of oil the of third $X.X mentioned, compared per decreased was approximately or is in gas. our with quarter Fourth previously the last or per of As XX% of quarter a XX% to XX% approximately per production in was XX% the the BOE oil, XXXX. XXXX $X.XX in ad below Taxes fourth down attributed This XXXX, per is with Notably, during $X.X this million BOE expenses $XX.X This minor per

workover million drilling of year essential the and completion spent on rate operational projects Amplify full Ford. efficiency, capital XXXX, approximately focused to activity primarily expenditures, $XX.X equipment projects high in nonoperated in and maintenance and integrity return Eagle the facility the For

to base would flow attractive requires provide cash free and at us like strip, economics maintain now Our flexibility mature Winter the adapt allowing a to above changing update conditions. at prices Uri. and asset presents market on current lower quick I Storm to minimal the to CapEx

million. $XXX Eagle original is successfully Production full we to reaffirmed to Oklahoma, Ford our returned completed are November XXXX, day XX our fall in field the our was and to interruptions Winter estimates. pre-storm balance BOE supporting Storm the company's liquidity efficiency experienced extreme forward. XX, days As borrowing borrowing morning, improving swift return base and a Texas within the due and XXX production operating of redetermination Amplify's The mentioned our On of our the levels this On assets by targets per and top-tier snow East within testament produced cold, production production moving levels fall of ice release leverage Uri. The and staff. our to of base redetermination in significant sheet. profile approximately

$XXX our and allocating credit We improving outstanding. debt As continue the revolving our sheet XXXX, intend of was our March flow the we redetermination total $XX million In on XXXX balance to million, net cash approximately and million of our of before May. hand. spring majority X, anticipate XXXX, outstanding under $XXX the free to end cash completing consisting process reducing debt our of of

guidance. to Moving

year our mentioned, $XX the BOE is per forecast to forecast daily ranges As average and our CapEx XXXX to from XX,XXX million. Martyn million $XX previously day; XX,XXX for production full year

BOE the we required primarily our and of will forecast inspections of be Beta, forecasting fourth during On range for XX which another $XX.XX. XXXX quarter not approximately per per of LOE above This the $XX.XX expense for is to due LOE range years. to production per $XX.XX BOE, BOE required statutorily $X.XX side, are

Lastly, between the to per $X.XX G&A recurring $X.XX for we cash BOE expenses anticipate and range year.

price on and our in were in cash GP&T earnings the currently expense on release interest realizations, and website. be our Additional can morning latest this cost commodity presentation found available details provided investor

approximately for XXXX. XX% in and last earnings hedged gas and XX% for our XXXX. call November, hedged added hedge commodities, crude and our substantial hedged we're have to oil XXXX is XX% in XX% hedges Since hedged for Now Currently, we oil Across XXXX. production our XXXX XXXX in book. and

XXXX monitor Investor Amplify's several our We for remarks. That prepared positions now market current to posted next additional to March and layer section. today regarding the contains was to website concludes we ready incremental earlier presentation under Operator, hedges are for our the opportunities continue the years. questions. details for hedge on our Relations

[Operator Instructions].

ROTH The will come first John the of question White from line with Capital.

results. Nice

with significant I'm On debt and the flow modeling free XXXX shelf cash registration, reduction.

is registration shelf opportunities the you again, confirm of? for any order to in want to just I So become prepared acquisition might be aware

right. on transactions item a should position exactly is quickly SX arise. move the that's housekeeping The to put to opportunities simply in John, us Yes. accretive

I've I Yes. bit on And the are activity. seeing been little far impression a initiatives the calls up so Are get from that? that of you picking seller

Yes.

out last think is the And what I of that are been have year that is packages last we've differentiates thing than what I it think over there's one coming months. a recently. the we've bit seen came couple packages number from up of that quality the a seen better little of

anticipate of gives continuing that seeing lot -- to So some more that us throughout very of a XXXX. we're excited

we're normal and looking for as that through is XXXX, we obviously, the just -- into mergers to to John, potentially going continue And that as way return And certainly add And to Yes. that's scale additional were certainly XXXX, looking something acquisitions. us process. to to to or another SX there continue just -- get in at needed. opportunities things

last, And count? of a -- you Okay. new a you number on or did my did mention that well drilled Beta, be give will wells

in differently the to around of existing extensions to basically -- going a little of and we're little wells be they're primarily a planning capture So drilled bit that X XXXX, are wells, more Best zones. it's

spending program. it's lag starting on XXXX. continues But and impact and as -- there's a money program, in your a rewards we program of you between production XXXX. 'XX capital that -- said in a always Obviously, receiving the the starts the So we into the like a not of have kind there's start call, big in we're

going So is a in program, you're as half uplift the weighted of more this second production 'XX to see XXXX.

between little spend see the like you production where impacts. EBITDA So see you I disconnect capital probably one that's and said, where the and

Parks will with next from Brothers. of come line Noel Our question the Touhy

so cost will sort there was tell nonrecurring of curious, in that item? much like a aggregate was you the we And inspection, be? break I could just about I wondering, how the you will -- can

Yes.

every So every stage per very million, and stage they not do X platforms. recur nonrecurring years. which is X, $X.XX of, infrequently, call do call actually stage our run obviously, anticipating any it, them them want $X.X call $X we -- X call why XX on costs million alluded issues, don't to just between, to doing years, you year I required are to we're BOE they it, XX because and inspections this We're but and

So we That why separately. cost broke around between quarters it third is a of that's incur this out we'll the second and year.

on quarter than seeing the wondering, my partners bad. I year too chance thinking -- even And is activity prices on we're the isn't looking are more strip commodity a Great. operating But there those question side, gas nonoperated of this side, stronger you other is you by and were now a of was the ago?

in any We've Our read obviously is additional not partner Murphy. of Ford we're pickup them. aware Eagle the their and yet conversations, activity had and primary in materials from

the the quarter have quarter. that last which just year the the first into is end drilled of accordingly, of we So the second primarily completion around DUCs we modeled and

can So Obviously, those so that's later now, are they of But the plans we're how it -- choose. of far. not change year aware modeled anything. we've if as in so they right

we're pretty some wells economics we pick primarily, I on do strong. could areas. have from obviously, flexibility we off-line Beta The these prices some on some operated additional some do of that in an going But production of our we levels. up And potentially the focused kind think at be plan. have hold activity level side, development to Oklahoma, where if in are

Rock do Mark Capital Kaufman [ph]. from of a We line the Instructions]. question [Operator Eagle with have

a have just few I questions.

on seems differentials year, a to around natural currently. NGL about also Henry gas. And widened gas. in the in pricing XXXX, somewhat anticipating Last out they and natural tightening Specifically XX% it you're NYMEX or the a discount Hub? idea The

in of of half a has a had what 'XX of saw realization XXXX. but contraction. NYMEX portion back do last have expect is Henry blowout We We year. little to the expect better number a you do XXXX, do some little that Hub we than and bit over contracting that basis of for been years. to bit It's the that something -- pricing. we But yes, hedge into last differential I mean it's

add NGL Yes. on And I'll the side.

primarily We Texas. East and It's from a been Oklahoma Oklahoma East realizing have Oklahoma amount has NGLs propane. fairly of look, strong it's than Texas. significant -- stronger

our those are blended between feel a like guidance the there in a market to East that the So kind But and than seeing spot Texas. strong realizing XX% is on an curves. little actual stronger basis we it the weaker largely has a you're on forward XX% been in on little unhedged, basis Oklahoma, much in of looks

And actually so is like relatively said, I not we've left this been to what -- of projecting. just take seeing that's that But -- it's market. advantage on we're what that open based we're

much a been saw differential more stuff of in the some earlier market it's you So that XXXX. since improved

right you now equivalent. amount $XX a or it mean hedged I Yes. at hedged at least have $X McF or small

And to you or Mcf? blended a that at better you're toward continue on currently than that you're probably so seeing maybe $X I you're going per pointing expect basis that guess least or

correct. That's

Well, now. in seeing math. significant. sense natural offset right that to negative differential It's In Okay. gas you're that's the just a

one, a you. lot Just X/X taking makes of of other, one certainly in the and for the ground it of X/X other, up

is Absolutely. type in how pricing back moved. frame. pricing seen excited 'XX-'XX the We're strongest NGL since with the have realizations mean, this pretty I we've time of

the East the you, not playing but of or Texas out of eastern area? that exporting and producers? use Oklahoma in you are you some also seeing Or Are -- seeing just down necessarily

take our sell economics. obviously, from And obviously, -- the plants. depends there, own our the of NGLs we they obviously to where Most on

at processing have level. plant gathering the agreements the and we obviously So

sure not you has strong through how extremely it So downstream. have usage very the you've seen, exports low. bring addition had in obviously, example, levels for strong propane very, to exactly we'll are Storage been, But as winter.

And And is northeast and obviously, that levels so associated any that's an propane gas, drives butanes without growth, area more then with oil. CX as with all and strong. gas the obviously correlated should stay Ethane the where, well.

the propane fairly is has NGL our kind of the why And barrel. been Oklahoma So for strong. that's key

Okay. about Beta. Can question I another ask

Sure.

you WTI let's a have and is say priced, what's year? what so that not even don't you're a at, And pricing, -- I looking hedged to okay, or so seeing say, in XXXX want blend Brent. better it's blend, this been

Yes. in I'll going it's an that XXXX, to Brent. typically, It moves index called Brent. at Sunset. say it into a but Midway certainly with correlation It's Brent, doesn't discount trade

of kind -- last trading so more below it's correlated to was Brent, WTI so year. line and And with It with it's far although closer most in been lately, for of much WTI.

it during gotten areas So a stronger the have year. has gotten differentials stronger the as seen local of on you've lot

I very pricing So at strong it's a costs, -- are been incremental low other with to under rates, said, lot of -- operating like go low advantages the already the it's platforms. royalty got that's rigs of

additional just had excited cost feel doing study operating of potential on of of of got there's from to we in we to very we've a point. program. that we're plan and targeted Obviously, wells some to but strong it's in very program. this very is that's in the are And it, a confident the production about the 'XX the lower starting into that good kind that place, leverage program amount amount and leaning there. fact continue additional time And first, So we've oil bringing area, why with along and substantial by

answer capital about I this for cadence think, year. that your expenditures question, this next question So ties how

to end the quarterly the average a earlier all is the production, decline XXXX the there as Does look Does year? year, flatter change towards you daily a going say, some bring year? cadence average be the in So it quarter? decline -- or the to it in for that starts Beta? does the this year, out And of maybe to start to production, on decline in let's need at

Yes. a grow should It little bit.

have Winter Storm our have is to then May, impact turnaround February Uri. obviously, Bairoil. in the So at of And we annual going do

X production of of to you events plan of second we start half have the as impact are we the development. But of that those all the into some into So year, Eagle always our forecast. Ford get the

impact of of third -- have late coming quarter. You'll like some quarter, the of the middle probably Beta starting wells come kind of more fourth to online

there's overall levels. And a on production to from not so impact it's impactful just But oil the perspective. huge obviously, mix oil

margins. than in driving absolute flow we probably on And heard we're are free it's production focused and driving past, cash an the so more free sustainable on us far flow cash you've And as target level. say

as that's have continue so mix we to get And why on those projects oilier focus that highest our see margins. you'll the

plans planning you I are, now So give XXXX? given hedge for and -- you before discussed does also this book opportunity, an think your this your we've

'XX That's hedged just look on oil correct. forecast the activity XX% roll market what of we into planned about I we the yes, understand at at additional that. into kind numbers allied opportunistically the out. the we production mean like But and as we're decisions from those where add we we'll factor we all look 'XX, Obviously, hedges. move into to as have

come the X the generated change out It I first for cash for other year-end Appreciate put months. could I excuse me, number X see the And in forward what it you cash to just -- this is? have you -- outstanding? what Okay. Look bank is March actually, the actually to don't and question. the the it. have flow How so loan

obviously, most information We but give coming the afternoon. this that K Yes. out is to that's the in all try up-to-date information,

that. have you'll all So

based the there year which alluded into more comments. year, first think, to numbers months end going of the were on fact probably flow of some last prepays the I were in a cash the we X little in we this

ROTH will question of John the come line with next The White from Capital.

the again. that where don't to other you seller detail, compared wanted on M&A East I Rockies certainly provide areas? or Mid-Continent you're Is And activity or understand. to Yes. if more the particular follow-up want just I there than to a seeing Texas say, region,

all our as and operating the our of actually seeing kind areas We're activity No. of a place. There's lot operating outside well. over within out areas

little have where to I and we'd and we over bit But like -- some can the synergies more get to the what accretive on kind can enterprise it's areas the we expanding agnostic that add packages additional business. way can geographic widespread it's think as a operating say where virtually to been to about come on focus is Naturally, value value additional we just drive our from all we're basis. to as activity M&A, of far I'd for off major operating production, basins.

no time. We at questions this are showing further audio

All right.

Just to in conclude, encouraged the the improvement we conditions. really by market are overall

improve transformative the their to expected months, I We profitability want outstanding us the for thank benefit and continued and support. year company's took for appreciation and last greatly employees my dedication stakeholders like efforts their the also over in and to we beyond. I'd steps our to express will XXXX to lasting last XX

joining cash look flow always, in to questions. have any be on out free these value-driving generating state beyond, today. our Thank and reach strategic strong really executing And for the you leveraging and With if forward don't we you as we'll to please additional us XXXX hesitate initiatives. advantages

This you your today's you and We thank please participation your call. conclude disconnect line. ask does conference for that