Amplify Energy (AMPY) 6 Aug 222022 Q2 Earnings call transcript

Good morning, and welcome to the Amplify Energy conference call to discuss operating and financial results for the second quarter of 2022.

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

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

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

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

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

year. assets provide full and will quarter California, an will Martyn in call, our comments and strategic quarter revised Southern an greater provide the balance by update the and regarding projections and then the year and second Martyn to our detail During results regarding quarter, in our second followed current update I additional the discuss sheet highlights will remarks the guidance. prepared performance hedging guidance conclude details during with our program regarding goals. of for remainder

this session We will then concluding question-and-answer have before call. a

Thank to Southern you, start update California assets. Jason. our brief a I regarding by providing would like

we of for As continuing pipeline. year, Engineers and to proceed company to the the Corps with obtain is with order Army Army from permanent are Engineers and approvals of the to the the permanent repair obtain repair this remaining PHMSA Corps mid-April, to approval discussed In of required received we earlier PHMSA's in the permit. plan, work cooperatively the

platform's and we the complete safely approval requirements restart we from when from Although expect satisfy date, receive predict X return pipeline we and and repairs, test the the X can we months the the that cannot Corps, production. the inspect, approval PHMSA-approved regulatory within to

Boe downtime quarter. which averaged approximately annual to per of facilities flat quarter at days to despite Production quarter compared for second for the the prior the day, maintenance Bairoil. on XX was Now XX,XXX

higher recognition to quarter. attributable of The timing variances million in decrease was the Second $XX.X $XX.X at regarding to related the Beta, prices. proceeds compared adjusted to quarter primarily offset was EBITDA incident million commodity by LOPI approximately insurance the prior partially

For which prior of the X payments million recognized LOPI the the the in during for to and million Beta. $X.X months $XX.X compared Texas Eagle X or LOPI to million, Ford, proceeds, and quarter, payments LOPI quarter quarter. $XX.X company months second of Bairoil of activity primarily and at spending related was development Capital facilities approximately East second workover in Oklahoma activity maintenance the represents

due EBITDA and increased million. of Free Boe online development EBITDA primarily capital Second the of timing initial the quarter operating Texas Ford, and where our in quarter expense, midpoint cash our noted. CapEx negative schedule. million of of X increased per $XXX,XXX and than success outperformance $XXX by Due midpoint expenditures accelerated guidance program The impacted in brought we in of the Texas XX,XXX to cash adjusted and projects from the development from defined second of ahead and previously activity forecasted of as full the Eagle the Oklahoma flow, wells XXXX increased was LOPI workover to guidance. recognition and interest to year in to $XX.X day, production XX,XXX was East timing higher CapEx adjusted our the the partners less have East

December In cumulative XX, in generate we cash $XXX to free addition, now million are to million $XXX projected XXXX. through flow

a In focused to lift production Oklahoma, to we workover on for wells run returning X-rig on continue and optimization. an our Now operations. update artificial program offline

focused lift artificial program the and downtime. lift optimizations, operational conversions and expenses is disclosed, As on reduce future previously which ESP rod operating

per X,XXX day. X,XXX in X% Boe second As to from the a result, Oklahoma production increased approximately quarter

production incremental free manage to we projects bring to our North back to to In workover flow. committed Texas online For of additional pace expect wells cash the drive continue East remain and remainder XXXX, to Louisiana, managing joint been of X cost and schedule gross participated the The development we profile wells, in projects. preliminary X.X results and quarter in workover net ahead brought and production the company pursuing while which second encouraging. costs have efficiently of were high-return online and non-operated development

wells We continue are non-operated In initial XXXX. projects cash the to online intend which and generate exceeded opportunities additional additional the and high-return in We these new half X.X development be X in wells projections. in the company's evaluate net of Eagle area in gross the and during to our rates completed first incremental projects second production Ford, production partners free the participate comparable profile projected intend to in to have to manage development second operating of development quarter, flow. 'XX, participate with profile the from return quarter

for to participated due addition, that a been from The the interest have And in is this in In we well completion the legacy project this technology in have second refrac substantial this outperformed latest higher quarter project returns initial XX%. utilize methods. well, rates production internal curves. our type economic which work and approximately materially

reliability help to our perform expect technical and production this we improve this optimization. approach of time annual continued reservoir turnaround a the The facilities pattern performance facilitating is and a alternating injection evaluation At second project, on outperformance completed maintenance XX-day of As the in the nature team's proactive maintenance and gas similar the to while quarter, Bairoil, of water operational production result which COX with future. on be projects conjunction budget. field-wide shut-in we of formed during in to the

Lastly, capital projects. over financial and call workover second on stimulation the additional now from review detailed of are our results of based results. for year will provide turn a recent incremental to Jason the the I workover well to and half operational positive activity, we in allocating

a gas. million $X.X XX% compared approximately impact Martyn natural the to quarter before Boe recognition you, mix this XX% primarily LOPI revenues second second the Production and Thank of compared to of the in million of XX% $XX.X quarter previously revenues derivatives $XX.X call. were $XXX.X the on approximately for and with noted was NGL quarter. oil, and the for oil, million commodity other the Martyn. quarter averaged in per NGLs decrease quarter. Total million day gas proceeds timing The XX,XXX Other in the first related were first revenues to in

is quarter call, receive expiration insurance production. our As earnings effective policy the prior to increase or Amplify's compared $X.XX first approximately for for per Boe million the the million in Lease to policy in GP&T is or $X.X company following per until the or the were discussed of $XX.X $X.XX operating Boe And or $XX.XX LOPI first of quarter. was $XX.X to $X million expenses incident. million during XX of Boe second $XX.XX full date earlier will months continue the the quarter slight a this Beta per from returned Boe, quarter. the or payments per the

from increase resulting Boe revenue $X.XX million higher ad of accounting or GP&T in revenue gas $X.X natural As its Oklahoma, exceeds of previously in million greatly compared expenses. the pricing. company improved noted, taxes pricing which is $X.XX quarter resulting $X.X differential, improved to now a Boe the from Oklahoma, reclassification gas this certain natural in gas By in quarter. its the has marking GP&T taking were per valorem in and This per increase prior commodity Production our deductions a company or the to largely is the function reclassification. in kind related

for Second in the per $XX.X quarter of Boe and prices. approximately compared or million due to of million, was quarter-over-quarter attributable quarter, in increase LOPI increase fees. maintenance million $X.XX partially discussed, previously and second $X.X an a $X.X development in quarter $X.X to by adviser in Adjusted recognition Eagle accelerated G&A professional million, and first spending The in or the capital prior the non-operated cash EBITDA Boe in to $X.XX the activity facilities workover million was the Texas the decrease to decrease higher attributable primarily Oklahoma was $X.X from and in onetime million totaled Bairoil of certain the the quarter payments million approximately Ford, increase Beta. XXXX. second second quarter from at activity commodity first totaled quarter. The primarily $XX.X East $XX.X of quarter offset per Cash

expect cash of second related than payment As primarily negative spending capital the quarters. recognition second on second this first LOPI was during quarter reflected capital spending the differences the $XXX,XXX, our to to Free the increased half updated guidance, for discussed we in call in and the XXXX. flow be lower and

commodity Now down in hedge which scheduled to position half our and hedge price our capture stepped development programs our of and company to non-operated book. workover With year, forecasts activity has our the the environment. book, enable roll-off the commodity will hedge the upside first current from materially of production exceeding the

XX% the balance for We in are all approximately of XX% XXXX hedged across commodities. and XXXX hedged

for for hedged XX% to to XX% the approximately is and hedged remainder production year XX% XX% oil crude Our the of XXXX.

XX% we side, XX% hedged hedged approximately are for to XXXX the On XXXX. XX% balance and XX% to gas the for of

Lastly, we which to as prices. volumes upside a those completely return provide reminder, the Beta on non-hedged, when crude may depending production, prevailing be will overall additional field

$XXX is sheet. reduction quarter base automatic base million. redetermination our to at monthly of next expected terminated on the On and we XX, redetermination, fourth it The balance which June Moving occur the completed borrowing successfully in affirmed to spring borrowing of the XXXX. the

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

of majority sheet free For On we'll flow guidance. XXXX, balance our our reducing to to the to cash total allocate and the remainder our improving debt outstanding. of continue

and detailed again year XXXX production for night, last our adjusted earnings guidance full our release ranges EBITDA. As increased in have we

adjusted development workover by XX,XXX As our we've $XXX the midpoint our non-op million. X% guidance the our activity of increased a EBITDA projects, of by per the approximately result to of day also and midpoint performance to we production Boe and guidance X% of increased

available website. details be guidance yesterday were in our and provided the release can earnings currently presentation found on latest our Additional investor in

I As uncertainty production, not assume back a online Beta will our Martyn. return reminder, does due back is XXXX. to turn guidance to regarding call in the Beta's now to

environment, operational The the and that that flow sheet generation. increased value. risk projects demonstrate our coupled allowed believe and current flow, with to capital, drive asset operational balance and to performance, projects our cash shareholder advance cash has free mitigation these will of of delevering of stewardship pursue which strong production of us Thank pricing additional We our you, across base have Jason. commodity commitment generation prudent

to continue in believe value reserve our we free and substantially cash flow significant undervalued We projected current market due the remain to that generation.

ensures have XX% the XX% our pricing XXXX. of to proved reiterating through would communities. XXXX approximately our environment strip by safety the committed total a reserves is a year-end to free enterprise forecasted continues and protection remain $XXX approximately surrounding of $XXX million conclude in PV-XX our billion which that $X.X the is approximately that of XX, million, employees, well-being to to We flow XXXX like value. to safely value as cash of year-end July our of and I at current Our priority. be stakeholders our manner operating partners business highest in And

dedication our for all demonstrated value stewardship, to operator, allocation Our capital and are environmental to excellence, operational disciplined With open drive our for delevering ability now efforts long-term have substantial we safety, of stakeholders. that, questions.

Instructions] Our question John will ROTH White from [Operator Capital. come with first

know increased the might on event? would is Engineers are probably when XXXX? of first they I be in Are Congratulations guidance. decision? deliver from that kind detail, more XXXX indicating Corps the that signaling of half but more offer getting they a the can't you Or any nice their results any and of on you

going of No. seeing We in things online, event. we've that a going and process. to a -- -- made the this we've while is which scenes. we've And much there's regulatory behind permit tangible is be the of still in Corps the terms progress very no progress believe on the agent of that made there's lot involved the with other NMFS, kind 'XX remaining And

along sooner have X-month We So this control rather has process don't just Obviously, to specific timing. been this later. point. we're over hoping than to any an move the this

progress making their here, their very and they're understandably preparations I So spending we online. We've said, more Ts, a But think and their also Is, capital time and dotting start crossing come and coming they so. on to we're taken for make eventually have towards I -- get resolution back we'll made on Beta hopefully progress soon. definitely we're like as

that well. progress little So to bit a we see of as you're as starting

done okay. Well, you've Any sure the like on all sounds against it it's updates lawsuits companies? can. you I'm the And frustrating. shipping

jurisdiction. we These what jurisdiction would There's owners a There's are pieces. third practice. lot ships in They're operators large proceeding. call moving very companies shipping and one a motion with in of in jurisdiction, another

a flying there's of lot around. So paperwork

are we coming weeks. but progress the to some per specific in no So hearings are continuing important move se, along. coming There up

a obviously, these of as we litigation you fast ships. to make continue can bit into out situations, can. tend But on progress the get once they as the we with especially to little so will And kind drag --

one luck And that. good may. more on Understood. follow-up, I And if

monthly credit an base the On facility, automatic you'll revolving on when is reductions. in for move extension you redetermination on of congratulations XQ, borrowing the And rid your think maturity? of next the that getting

us, about we're spring and those the we've It's a of lines that that. after we're understand the bank seeing different rolling going November borrowing had focus We of what the key to current a 'XX. John. conversation the incident late happy in It done back are available for end along the results and the go way the Martyn's the next year. And conversations addressing looking continually also really becomes with the Yes, that how we is a in about into QX. group before with of Thanks, had at is that coming items. last best base maturity of mine QX. we even and group, to with it's quarter redetermination is but maturity the up And year on to that and that's number was

time, on address for absolutely point that but updates this in take focused future. the are near we're paths it. various So us in at No to to there

pass I'll it Okay. along.

we no in At questions this have the time, further queue.

over turn closing additional for to to like any or would I back remarks. So it Martyn

limited that we do community, questions coverage of from amount a we investors. from With of have Thank number start. analyst you. the I'll get

can So additional forward call. investors on of that some we address send wanted questions we to the bring to and encourage habit along on that

can I'll ask go So forward. can a about we questions this thing and and those ahead couple as addressing move and here of Martyn myself go and

how people a for of number is get then be paid of it we what a to One them the the recognize that but highlight and also, we seems LOPI of is how on. calculation

of So and kind expand I'll I'll let roll address Martyn forward. we that, as it

recognized "approved." previously Certainly, approximately process, a It through a sometimes as works kind volume. paid a million ahead. due the disclosed, we That month. certain as -- $XX of to is we've based out per we $X.X at it's of for basically, get little the on -- it's we're And roughly to kind barrel move when

in through the quarter. right But that's until way of get it online. We're we're you've a Sometimes, we just why doing X process. But and months process has -- every kind quarter little X the behind. is the -- else? hoping now, another months is months quarter we the Anything it streamlined seen back that that get in X X kind now of

put that policy at very $XX think only in the was XXXX. that it were to that barrel, The thing that adjusted in incident relatively the contractual set period of in The hadn't in is. place that add a is I'll back We of time. set you was at the a of was number this the commodity time renewal was is put October And insurance to policy this this place. our in of it's price somewhere to window, at close if what middle beginning so what the incident, applies

So question that's All about. of next barrel -- $XX how calculation right. a comes the The

a there's inflicted damage and been. by before. clarify, of has thing. part our Obviously, a one more as lost add clearly has up actual obviously, price big ships our just we the caused to that on But the what litigation $XX between pipeline. they big this come revenue the against I'll difference That's

against large missing key I amount. to we continue until no one that is that, grow there's piece the it of a or is ships. And online, to timing while parts that will obviously litigation put major get obviously, revenue and that can guarantees back very So of to the our

little we've percentage question hedging little another looking hedge hedged comes and bit a hedges. lot our from And is higher further a out. had we're Perfect. Historically, quite that a up strategy forward what for and bit

and want I'll start to that, I'll just let well. So and address as Martyn expand

Sure.

flip the if year punitive half seen, the most I from a to you've hedging of far first the what perspective. of you was year, first the the you on by as it half think us --

As hedging due have half the I fewer the through flipped hedges. It's think see That's dropped we into XXXX. second to to production, you'll year, the all of flows materially. partially due in partially percentages increase also way and that an the through

hedging example, for not we Even collars, preserve around been trying hedges as been upside predicated our are gas, on to has So -- of actually in can. think, we've as I swaps. all 'XX strategy our much

extremely are payment. mark-to-market negative it have wide doesn't mean cash settle may to you negative of so Some kind it, of it's band on any going them while a with

So preserve long to into are future the we story short, hedging And to that we're preserve go kind as as as upside we can. much of to forward. we looking try upside

Yes. start when we'd in participation and credit to facility we're this out, the difficult The to through I'll at thing have at on point. credit little looking XXXX layering we XXXX. XXXX is, with mark-to-market we through course, for some some out into It's the only banks. hedges and due hedges the be get a to do base-level more where add normal look And add further of

maturity that's on on bit something that the and different or do towards a focused we're as addressing extend So RBL working we the there. little something facility

wanting RBL But this the catalyst just time, of it. not at for point So asset. we're or placed that's but seeing why kind one also hedges any really the to why facility in that's a you're reasoning for XXXX address

received. lot a continually of do that roll we conference was know this we've the prepared we John's questions remarks our these through on -- as and calls. think will something we forward addressed is that I But great, which we questioning,

try final questions we'll highlight of But it send invite X, leave X comments. and we to them every on in conference call. to some anybody So Martyn X, to closing I'll address to

for you well assets again to like call you for our today. We and things demonstrated Beta thank half who the as guidance. as team a remaining second very continue year the -- and just with on along today. say forward once to look to focused by everyone move hard all of I'd increased Thank the work in to very the strong participated obviously, participating