Amplify Energy (AMPY) 8 Aug 212021 Q2 Earnings call transcript

Welcome to Amplify Energy's Second Quarter 2021 Investor Conference Call. Amplify's operating and financial results were released yesterday after market close on August 4, 2021 and are available on Amplify's website at www.amplifyenergy.com.

During this conference call, all participants will be placed in a listen-only mode. Today's call is being recorded. A replay of the call will be accessible until Thursday, August 19, by dialing (855) 859-2056 and then entering conference ID 5076814 or by visiting Amplify's website, 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 second 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

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

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

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

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

Thank you, Jason.

and give review guidance. details sheet. improved will performance, second general a operations full year program financial and I additional balance including then During overview our will provide on the recent provide our hedging highlights, company update our performance, quarter an regarding Jason XXXX of call,

prepared the have comments. call and remarks, conclude we a few conference I'll our a will session, then question-and-answer with closing Following

BOE an from Uri the of East per and quarter first new return February per increase the performance of of averaged off-line Ford. day quarter in quarter-over-quarter Oklahoma increase Storm Eagle XXXX. by BOE XX,XXX the in production approximately driven XX,XXX Winter The in and X% by production day, Second in largely well caused Texas was

EBITDA quarter adjusted than supported realizations. by exceeded due $X to internal $XX.X approximately further outperformance price million cost were quarter more million the Second efficiencies, was and of production and continued previous which stronger projections

from of As $XX.X was spending a capital and of cash the from EBITDA defined second XXXX, quarter time CapEx decrease quarter primarily expense result, The cash XXXX. margin cash purchase spending long the adjusted internal second for increase to rod-lift earlier. million our Bairoil's previously improved previous unhedged approximately and interest was the projections. million, quarter-over-quarter XX% materials XX%. primarily announced increased and Free approximately as in nearly The increase conversation of was Beta. to of lead quarter acceleration operating which Oklahoma the flow, the first maintenance of $X.X at development million was an for quarter program the million capital quarter-over-quarter of Cash program the $X.X turnaround, $X.X result less annual mentioned of in the exceeded attributable

full cash and generation detail foreseeable increased flow for project have later which consequently free flow will free to continue on the I our cash call. We substantial future XXXX guidance, year the

our operations. on update an for Now

capital materials Beta at platform we procuring rig towards During to program. in upgrades quarter and of continued the the addition development deploying second for XXXX,

will with wells to produce results price asset. expected our nature Beta incremental current commodity initial quarter these cash and and according Beta asset case recompletion, XXXX, free is first strong environment, of in cost variable sidetracks hole results with will significant the projects preliminary be in schedule low fourth by of flow The our September. expected Because two project by production existing project, year-end. reserves This we progressing of followed add production the to a the believe of

optimizations, high-return least Oklahoma program production third operational for which from expect reduce help Our conversations ESP XXXX. accelerated environment, second focused of and we in Due rod-lift future conversion mitigate the to which and the and commodity workover workover costs remains quarter downtime on to the weather the rod-lift events. price program we continue strong quarter, at

Oklahoma expect as to currently The strong the a converted a the XX% nearly converted of to workover projects results rod-lift have of Louisiana efficacy we and optimization result, generation. North East in and of operational flow again testament outperformed Texas in this field cash corporate to strategy quarter this by have projections in operations As in our stand Operational field year-end. aligning XX% these roughly with quarter. internal the and free for Oklahoma production results

prices margins. best in workover have the rates We of gas yielded cost-effective some coupled to periods. through have efforts company's in Bairoil, and flow continued with of completed At also The accretive, free on anticipates under in natural projects budget the with improved opportunities June. the mitigate decline quick quarter starting NGL XXXX. provides cash These and development company payout facility participating annual beginning in additional time which nonoperative fourth was XXXX, turnaround

based with reservoir. technical cash targeted improvements production continue further new from WAG to of drive operational curves using on activity to nonoperated the rates we and operational and patterns surpass and rates from achieved in quarter, our Eagle along incremental workover evaluation Ford flow asset. assets from continue and we drive wells technologies, During strong the new of In XXXX, Production type COX facilities, injection efficiencies. to continues second reliability expect team the continuous refine and the the to injection half

joint elected the second to guidance. to year of projects as to and they and completed half participate projects, new the which the evaluate quarter have to in in development continue of be development arise XXXX. We in second scheduled drilled are On

for free guidance XXXX adjusted for average XXX BOE our production and or BOE As year detailed day per daily day. per X% night, production, increased by midpoint last release ranges full EBITDA in the XX,XXX to The flow. earnings increased we've cash

and was million, our we the to result Most an increase prices, prior million, commodity in in from have materially which the also EBITDA have production the or of free Oklahoma. midpoint program We of $XX XX% acceleration increase of a of above importantly, million flow $XX XX% $XXX an performance increased by the increased as guidance strong our our midpoint prior million to of guidance. workover adjusted cash $XX guidance increase of

earnings be over to found I that, our are the can details guidance provided presentation website. available now turn in Jason. call currently With yesterday Additional on release our investor the latest and in will

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

second for quarter quarter XX% of XXXX with BOE production commodity approximately X% averaged mentioned, day, day increase gas. XX% XX% previously per of NGLs of mix XX,XXX an fromXX,XXX and BOE a As the first the oil, in per

higher BOE to $X.XX to quarter of per BOE maintenance a Bairoil to second This per BOE $XX.XX expenses or $X.XX As taxes due XX% volumes offset of should valorem was were higher totaled pricing. to BOE the in this second is in minimum commodity per in approximately of ad BOE production expected, were third on compared increase per quarter, return oil or GP&T decrease in and the Production was the and quarter. higher by $XX.XX production production $X.XX and down in turnaround $X.X $XX.X or million due the Oklahoma decrease or certain compared or for annual in from approximately to at volumes prior operating this this quarter volume first $X.XX a This per million quarter. or $X.X and quarter quarter. the the increase commitment approximately quarter. $XX.X the revenue quarter outperformance $XXX,XXX the largely million Lease Texas. compared properties partially $X.X million function East per million million first a to sustained $X.X BOE, in

to per first million or quarter cash per in totaled compared $X $X.XX BOE million Second $X.X G&A $X.XX the BOE quarter. or

in quarter expense year-over-year reduction plan second transformative $X.X addition, G&A In corporate undertook cash Amplify as million decreased XXXX. a

projected full $XX year XXXX current estimate cash remains approximately Our million. G&A

previously quarter of Martyn from our was million primarily of turnaround, increase quarter-over-quarter materials $X.X was annual increase As the program. cash approximately $XX.X the in Oklahoma mentioned, for first The rod-lift Beta Bairoil's quarter for conversions the acceleration spending XXXX. second to of capital of procurement attributable the development an million, and

XXXX. raised Now our floors hedged in XX% to weighted commodity commodities, additional Amplify materially XX% hedge XXXX, fixed in significant XXXX, we has of balance book. our taken of approximately recovery advantage average on prices prices. hedged in layer for had are and hedged which the XX% and Across XXXX ceiling and XXXX in the to hedges

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

of yesterday focused section. market, allow investor to we posted on current strip cash was structures positions secure utilizing Relations the various our attractive as remains XXXX presentation continue the hedge As upside under and August regarding baseline flow improves. for additional to free contains commodity the substantial our forward monitor details Amplify's and strategy our an Investor to website

Moving on to the balance sheet.

with cash on revolving XX, outstanding approximately million $XXX under credit had $XXX of As of of million hand. Amplify and net its million debt facility July $XX

in expect end amount over fall total half to months flow For a XXXX reducing to the XXXX, our the I'll of debt we of majority sheet debt anticipate call EBITDA now allocating our our X.Xx cash improving last to by the below remainder of XXXX. of of continue year generate cash With balance full to flow last the turn will now free free XXXX, significant we and we the Martyn. and XX to net outstanding. the

continued enhancing balance improvement cash remains materially operational and Amplify's Jason. conditions, delevering for you, strategy sheet. With free we've Thank market increased continuously XXXX. flow guidance sustainable profile expectations and our excellence in on our focused

cash $XXX leverage should detailed As The projections the X.Xx XXXX. XXXX. flow XXXX free cumulative investor million the through and of internal our our us to approximately ratio of a by substantial free of by end reach end in forecast in enable flow currently X.Xx cash below presentation,

with strip of Amplify of substantially proved that XXXX. million flow we in as pricing XXXX our year-end reserve of With reserves our believe PV-XX $X.X have the remains a July significant free $XXX undervalued outlook, developed Additionally, market. proved at and total cash reserves current XX, strong now value value billion

asset reinvestment, ability mature are enhance corporate Amplify's asset flow. leader also strong our of and in to With that our cash create in base dedication efficiencies, we return generating with value for shareholders open operator, free and long-term differentiates and to now will significant for questions. enhancing through accretive transactions diverse cash mind, and flow sustainable a Our free as outlook Amplify coupled leverage initiatives. capital operational

White question John ROTH first Capital. from of is Your Instructions] [Operator

the see and improvements to morning, your Good on nice congratulations always It's new in business. guidance.

John. Thanks,

too get an $XX in the to Using weeds EBITDA the of But much number mean old guidance, guidance, old the got here. I've I don't using almost million.

So it's get to million to your be easy to pretty going $XXX number.

like sounds several years. like I Beta is well looks life doing asset it well – that things the to the be could that on next given and where cycle, So are into there me in correct? workovers it going its Do have you

John, this Hey is yes, Martyn.

we've a assuming got for through barrels the the obviously, we to the of success successful XX,XXX – platforms for the have going But out planned at year. at projects long to both So want. There's keep projects, up next as middle we capacity the those as day. opportunity – on

lot redundancy and capacity within the system. So of there's additional a

additional phased said, started three half next opportunities year projects thereafter. in there not I completed said, permitting said, keep XA only, projects that like from moving and with two have But quarter we and which there we're this development So excited and to can so getting call we obviously very an is shortly of on year. XB, the ample I success first we the two to project I the going. like about initial from Phase is and keep first assuming, like this the issue, and this the going We've projects

Good.

on your noticed return-of-capital Just you the company type two presentation mentioned of in low-risk up. I follow like new development initiatives. slides, to situation, I'd

assuming important higher, your continued am more place delever, a that's as correct get for the taking company? in in of as you I priorities you for something So list that's production

of leverage it have so when After everything But the in I'll the on it obviously, – everybody on put John, add the back capital story side. to the into kind looking part year, back of ratio in in is early on credit take transaction credit hold first that, XXXX return with that. Yes, and X.Xx at last this of XXXX. if distribution. vogue a XXXX, Yes, XX% we and availability and were than agreement, after the changed agreement a have we a before less specifically to was Martyn wants

capital always the part to targeting those precluding frame. it of to potentially of now, in So XXXX allocation middle being right that's time do of what's type a evaluate position our We're strategy but that. from a it's in

We to potentially discussing that is to have also something we are when do Board line are is future exploring approved be subject to at various to that all approval evaluating it. in accelerate this sure. that ways point time and look that and for given we But the would for time

Yes, shareholders. – in free return the That's our the add whole be methodology flow this said, to that, DNA Jason is I'll this just to capital cash of of been obviously, to could to that returned like of sustainable is be – ultimately kind company shareholders. has kind

to options just at up additional last opportunity that clearly I And bit, return so liquidity, to that, the obviously, for lower the our we very of to subject so. I – year opportunities a thing Like leverage capital. through Jason I when that's said, of which next especially do a rapidly Board substantial that's on which how and looking bring and opens level, think it pandemic it's for if with really certainly And as like to of start something back forward an – so said, because there's and we've we said, issues, the approval, the year into that beginning of but of radar. been little or end out go the year we create to getting those like we're delever there's but window this all

conventional to probably is question in I'll rates course, else another to someone with or of that to hear. come itself but low operator Good with lends back really the kind decline it And of your activity. asset I'll base corporate its two. waiting, case back turn

Okay.

John. Thanks,

any There are to back Martyn no other for in turn it I'd Willsher queue. questions like to remarks. closing

So…

John looks of has couple like a questions. It

line John, open. Okay. is your

So I the you're in seeing describe for without on asking would the that area M&A wouldn't you of go what want to how you let update an market and activity business? in

things see rate that we it there's And really for of really weeks monitor always are to But things couple keep a there's is on and in it, can lines. transactions. around say, shake some everything. the and of looking corporate type operations they in I market will various last internal specifically at that to the I and and of going Texas, evaluate lot those along We an we are obviously, things but talk our and so always look what's equity-backed the at as in issue have Absolutely. a equity. on East since of a last get private assets trying picked packages XX, call smaller loose, Mid-Con it lower hurdle conference people with high has things until what starting to limited I coming pricing the up. market to our May and was where say activity would volatility mean in lot of the eye

a that. So the have to absolutely and things we and a up look point it leverage, A everything are at nothing But picked transaction those to There's point. metrics on shareholders, to the from lot lines. But do both discuss in this a along EBITDA, packages definitely against number quality be we different to process. time. continually at of just look has at market this would involved at in of accretive

the to Eagle that of this such option asset the the But accelerate that the substantially many the just obviously, well Yes. that's move opportunity and an addressed is, that well. said, a obviously market. divest like just we're the options at. of But use forward. And how those capital we – as return at are address But we're I'll work assets avenue program as always and that I as like other given smaller potentially looking for I option undervalued as as we potentially is Ford D said, in we looking the us Jason A, well could to just side one there's one are have that's

updated. Very all much Thanks the Okay. so good. for

Absolutely. Thank John. you,

Willsher I'd other back remarks. queue. are to questions There closing like Martyn no in for it turn any to

my like company's In all outstanding express to to also closing, for dedication. to continued just thank efforts the I'd stakeholders support. their of appreciation like I'd our employees and all for their

us As always, out you for any please joining hesitate additional today. don't if to reach Thank you questions. have

your call. you Ladies you and conference gentlemen, for may disconnect. today’s now Thank this concludes participation,