Amplify Energy (AMPY) 8 Aug 242024 Q2 Earnings call transcript

Welcome to Amplify Energy's Second Quarter 2024 Investor Conference Call. Amplify's operating and financial results were released yesterday after market close on August 7, 2024, and are available on Amplify's website at www.amplifyenergy.com. [Operator Instructions] Today's call is being recorded A replay of this call will be accessible until August 22, 2024 by dialing (800) 654-1563 and then entering access code at 71724901.

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

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

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

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

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

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

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

Amplify's Willsher, the call, Executive provide review Officer, will second and During Martyn quarter update our President previously initiatives. Chief regarding our an and performance announced strategic

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

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

I to up remarks the will for that, with With will final prepared thoughts call Finally, over Martyn hand Martyn. it opening conclude questions. our before

guidance. both of of second has a quarter the $XX.X company our Due Ford, in performance, Texas have XXXX. quarter exceeding the flow revised non-operated company's during stronger-than-expected $X.X free participate Eagle and million expectations. you, second combined with we and in generated high-return EBITDA of to Thank our Amplify adjusted wells The cash quarter annual the election with strong development East Jim. million to

in and last night. our our can our You earnings guidance presentation posted to investor updated release find website

to our marketing respect received our of following they his With both multiple and Bairoil a monetization strategic provide the highlighted actively calls, The we'll an previous advisers assets as we outright company partial available. updates working evaluate comprehensive bids proposals on to process. sale continue the become with and for initiatives

details but is XXXX in we committed Beta, company progress that that we will pursuing the make continue Dan shareholder early in drilled The to results. development pleased path value. our very the are to June Well successfully moment AXX believes strong in to a brought provide more announce program. with maximize will At online and we

to which on from end limited wells this of The based cumulative drilled analogous previously date production subset well were our to the exceed received of the expectations upper continues up a platforms. Beta

results anticipate and AXX productivity. the we comparable future expectations results the from wells, of well undeveloped increasing With our for development would

In only we that to drill proved the to include addition, is our XXXX. SEC it X wells current Beta in reserves important plan note of

number reserve Beta substantial this to potential of has locations may impact our that combination the to add prolific a value inventory. materially of have we additional the locations the proved value and productivity acid. success, increased continued With of additional and of our strategic demonstrate development forecasts The we reserves

Dan. strategic and future With in Beta the it full Amplify's strategy unlock East this Bairoil optimizing long-term over In summary, initiatives pursuing and that, hand capitalizing to will generation assets value diverse investment porfolio on the we believe to continue Ford. potential deliver cash substantial We to our shareholders. Texas and of of Eagle benefits our on I'll opportunities incremental non-operated at flow and by focus on

quarter second Martyn. per day. you, production for the Thank Total approximately averaged BOE XX,XXX

adjustment period significant prior onetime which a from events. East flooding benefited related partially in X,XXX by of BOE approximately Texas curtailments was to production day, per production offset quarter Second

high level base. excellent East team river ] have and the this across XXX Sabine significantly forcing a job days, the For of [ of flooding Texas, over an the The significant the shuttings of did improved conditions as of number asset impeased this access month. minimizing impact wells in to of

the for and NGLs adjustment, was our from impact mix gas. Excluding oil, quarter the commodity prior natural XX% production period XX% the XX%

the expenses first and production transportation quarter, were were a processing $X.X second and decrease million were the approximately lease $XX.X taxes costs operating $X.X quarter. For million, million, $X Gathering, from million.

place from decrease the cost persist taking in related maintenance are to team. the in expenses as annual lease of partly as the for quarter expected remainder year. which the is first expenses well continued The operating efforts reduction to

These slip with generated Energy Magnify our rentals, testing services. Magnify efforts initiatives wholly quarter discussed owned include work well truck services, line in Services, of adjusted $XXX,XXX through approximately EBITDA previously vacuum subsidiary. and the compression

EBITDA which adjusted inception, rate million over operations. $X.X is year of a to only approximately year Since run projected has per generate Magnify, Amplify million X of after $X in invested

quarters. We the for Magnify will coming explore services continue additional in to

the company's this in we continue where invested approximately emission was investment and facility Beta, project electrification reduction our for million, development drilling was total quarter $XX capital The capital our and program. of $XX million

across East to projects capital be at Capital Beta and enhancements development in XXXX of allocated projects base. Ford invested non-operated the the was continued Texas. and in capital half facility asset and for remaining Eagle various our workovers second and primarily will The facility drilling

to formation and X development with targeting X Ford, participate gross, the new net targeting participate the Texas, X wells the Haynesville XX In East in the net formation. company and to the Cotton Valley X.X recompletion in wells company projects. gross net In wells remaining X Eagle gross, X.X wells X and expects the expects

] Shale provide projects additional has Amplify, acreage new development as to activity new The continued increased of [ and move XXXX. will opportunity in early position. the wells These cash represent and development volumes Haynesville new flow in the has to west two for Haynesville

in extract project additional and electrification on area will we Beta, and to and platform third position of At rig this a the from the selective the reducers provided generators installation we Haynesville involving future. engines. value the incremental emission the opportunities, With optionality in reduction final that of the catalytic strong phase by believe continue we be

are this on purchases, lower standards. across redundancy complete operations quality bring year, this which fourth project to line and reducing in quarter increased credit regional multiyear schedule expenses in with usage will the emission of by operating We air diesel and our us

years. We we this are anticipate to capital significant And invest once of coming completed, million project investments do towards projected this the year. Beta in not facility $XX

from the in massive use can drilling field. the believe recover remaining we the With we the upgrades of beta in our and reserves cost these improvements fixed modern program, technologies

program, online Ellen day. development the well AXX we XXX early XX well oil the than from oil and gross day. X Asset excess barrels brought well from of successfully of a achieved per of months the production peak less The XXX oil per June. barrels after days in approximately IPXX rate of Rates drilled approximately completed and in of platform were

we payback And previous Beta a These high invested well accessible utilizing this through end of of laterals excellent drilling that the oil results successful technology upside in cumulative months. approximately early programs. exceed achieved development a well. to can approximately quick We our in production The field of production modern of this the the Extended-reach in were reinforce million project current to that range investor $X.X prices, campaign, not at be the X results presented drill substantial deck. parts

the returning Eureka drilling In a before well, with year. third AXX the the second the from fourth we in deferred finish draw And are intend to to platform was will well late turn over well the likely earlier that, Eureka to I quarter, CXX in and it to which then quarter Jim. this Ellen

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

the The commodity derivatives losses noncash to unrealized on change was primarily quarter. attributable in lower

above adjusted Martyn which $XX.X mentioned, quarter well previously was As was second expectations. EBITDA million,

by undertook benefited comprehensive accounts. on In portion we a be balance that of of Amplify of our a suspense Dan, our performance In the half strong to onetime the a first its from prior Amplify. suspense research, addition should the the Based the determined year, accounting of period results released credited company to outlined adjustment. review operating and

adjustments of impacted EBITDA impact $X the net second positively these approximately in adjusted The million by quarter.

onetime $XX.X lower primarily Second LOE which quarter were was impacted due prior that expenses the quarter, million, costs in lease operating prior expectations. approximately to than with line the quarter. was

year taxes $X.X half Amplify lower the to GPT be costs half respect expects than per full Valorem of million the prices X.X% guidance LOE gas With XXXX, low we in with lower will $X.XX taxes or LOE reflect for second range. other guidance quarter were change. be the million production within will expect we $X.X remaining were and while or updated BOE, of costs, to have second original and Due Ad first revenue. year the that gas oil to remainder

$X.XX in that the primarily quarter. which was was or $X.X year-end in and first Cash million increased to quarter due the per with in costs prior million was $X.X BOE, G&A decrease processes from second down the This line quarter. expectations

quarter. range. be we The prior the in up respect line of G&A In adjusted our that million interest have through With internal And result, company capital, anticipates million of $XX expectations. second second Amplify relatively as not $X.X expenses flat to with guidance the to will which a compared the G&A quarterly cash remainder $X.X we incurred quarter, invested was year. the in the quarter, original expense million

million in As in and $X Dan accordingly. in to Ford $XX totaling XXXX. participate $XX expect $X the invest now Eagle to now have million updated projects Texas to East and our We guidance to mentioned, capital non-operated development have we elected of million million

of XX has flow, generated base. diversified cash expense, free cash mature and defined adjusted XX potential last the Amplify strong cash quarters, as generating cash million the positive CapEx interest less quarter of of asset flow second in was XXXX. for illustrating sustainable our EBITDA Free the $X.X now

revolving debt consisting $X.X adjusted equivalents. As XX-month cash company's to quarter, was and under million Amplify approximately X.Xx. the of was cash had last $XXX of of facility $XXX.X EBITDA million, the the net and debt XX, second of outstanding end At million million, June net of and our $XX.X credit liquidity

capital beta. and The debt primarily slight investment due the versus increase increased activity in primarily at changes working prior to in was expected quarter net

The next fourth borrowing XXXX. expected of in redetermination quarter base of our the is

the producing oil to XX% production As approximately to proved X, our of has XX% for August for crude XX% and hedged XX% XX% XX% forecasted hedged in XXXX. developed hedged XXXX, XXXX second of half was to

portion a gas to XX% quarter, XX% year with our for production hedged XXXX of and crude XXXX added covering to production. XXXX, XXXX. gas portion hedges On we our XX% covering the hedges of full side, remainder a is forecasted expected in XX% our of second the hedged PDP the In expected and production for XXXX

$X.XX of average natural XXXX per per collars at of swaps gas natural and executed a average a stops MMBtu. a barrel. MMBtu of per weighted price executed oil $X.XX and XXXX gas of a per $X.XX crude also at Amplify ceiling Amplify with MMBtu for $XX.XX floor weighted price

We to monitoring with Martyn. continue turn that, back And market. call the will the I'll

you, Thank Jim.

$X.XX on Amplify's in mentioned based Natural based strong crude election updated East for full and participate the guidance prices and I non-operated this development of on the As to Eagle Hub $XX XXXX company's and of a half Henry on earlier commodity Ford. is Gas MMBtu. barrel year wells WTI in first call, results are updating per guidance we our Texas

to disclosed, quarters with XX% primarily to the previously capital in expects Beta X XX% the in first company connection its of projects. As the invest

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

key the half first development our of asset. initial about Beta the and strategic of is are of of development XXXX program Beta. demonstrating exceeded we program The the potential summary, In results excited at has expectations the successful to

open strong for for that The and development consider flow potential and we materially the with focus cash also for transformative we exciting and Beta future flexibility potential non-operated With questions. combination company, opportunities, market remain our as a sheet be on operator, balance we company, the enhancing cost to value our increase that, periods. providing potential the options have coupled return to outperformance, now catalyst while and for relentless are structure in capital evaluate the long-term confident of our

Grampp [Operator Jeff Instructions]. Partners. first take with will And from Global Alliance we question our

the Congrats wanted news on getting unsurprisingly I out. to Beta there. start

so we wells case constraints I guys you the program. plan for as I those far, about how Or just doing in included when officially still It more X derisk to I X talked 'XX? given the So X wells 'XX. acceleration you about. this as, potential do know guys guys this, development wells a you year, think was this what to there? And wells think, continue announced have have in think than results the I to then but think few more a generally are the

a we Yes, in I additional of these XX days. especially half can going drill to think continue closer the to that's something look as second at take results. Obviously, that we're approximately we get this through complete and year,

using So do we the the the course in mix rigs year. workovers same of during

the the we our as a we'll as always And to that's results something continue obviously keep adjust eye fourth capital, do quarter. at, and And but that in we forward. that flexibility little like want get to here have third to said, total I we additional on look bit we go

think the originally the came on repeatability level side up of I $X million. This to expensive What's initial if to things of kind in I learnings continue nature. of of range? of in, you on $X would well front, kind ramp to What's that? million and the kind the and earlier Xs. in wells your assessment guys to of as I And efficiencies then guys Okay. would targeting that come cost the think one mean, million low the confidence $X were more of under be that you million $X Understood. anything, kind

this million $X $X Dan. million The to Jeff, estimate. is

AXX. great efficient, here. start done We're well on So see as drilling out time. a on that did we We'll very obviously, team the made we go. job before we wells The

a million. less get to wells for our possible few lower will our before we than more We expectation, it's but these under belt certainly overall wells $X drill

what popped then could not get your Texas? potential these wanted where right guys I of to wondering Obviously, sneak are you in maybe a road. a setting And kind but that economics kind capital elected in. up Texas. couple, East the met participate kind you guys Great. I hurdle your prices up participate Or assessment a just Okay. of in and tremendously allocation of to down The what just kind in wells one more they is? look Is well that now, non-op just but kind the this of longer-term potential is this gas could rate, one-offs be of if assume high East new for

has a both, it's And our acreage. I'll now is So Haynesville our that obviously area, I but that getting been activity of think Haynesville prospective a but is in say prospective. we obviously combination closer meaningful the keeps of now amount the on have closer acreage and

of want drilling acres to some with learn where an we we do do could to what firsthand, we you look those whether different obviously, contiguous and as different -- or And entirely with to especially up decide program have some we have partner want something acres. to

lower interesting working yes, low, interest kind Haynesville. risk to next in better But have do participating a of some we And this opportunities to of obviously, forecasted an And now a are level. kind learn so gas while prices more is opportunity be they're in year. XX%

to projected, they're an comfortable is, said, us where with the And like is which this our with the and in even an increase going said, feel returns. 'XX to importance what currently like I which be could area, I we road area down beyond. But like optionality understanding we for

White And question with comes Roth our John next from Capital.

and Congratulations in on the bids a getting Bairoil strong quarter on your property.

maximizing value. times several mentioned You shareholder

Would from a instituting have of stock time buyback dividend excuse this sale Bairoil, it returns close for . or a preference assuming a capital do stock a be a amount a Assuming initiating me, program? and robust you closing -- proceeds at

Yes.

So that. take both kind of parts me of let

careful discussion, obviously, in disclose. So we active have information to be you're when an very what about we

we sure love to sell I'm that of while it so we'd the to outright. kind And more say option have

for that's the There it what's to is or we just think best it term. monetize the to option potentially the partially longer if option company hold

So the more currently like we active, they're process said, can that's a updates provide that's still all and very that's once -- definitive. in only I

always capital what done time. dividends that and the I at of same this both kind dependent buybacks. stock see going say is to In time, the returns, we've be on the we in of At terms past,

both or be So could could certainly are both. It other. the combination table. be one on It of those of the a

at that will time. Board basically in we'll accelerate speculate options we of those do we monetizing to me inappropriate evaluate beyond, by for considerably flow will on time. to at the whether So point, QX pick or appropriate way be that some and cash whether Bairoil it what where But through both decide the at this generation, do which up in

I in addressing your it. understand and thanks for communication, your constraints

from And we Chandra next question will Subash our take with Benchmark.

value the too, Beta. showing Yes, it expected Were what was they pretty finally -- on congrats, on the times you or were much AXX of the cycle faster?

expected. Drill and well is different. little here than less expect a a It's about what's month. complete out we Every time,

will every this did, little month looking less and in the a drilling will be currently well is a we Some should one at shorter. expect little to. But we it a if inventory take pace longer take than are than as the

Got it.

Okay.

question had maybe think back to I Jeff So asked. a that

to or what the California take taking look So a you I a it this and of the wells. with cost-effective a the more way could at guess of been value maybe is look have acreage is arguably play, Haynesville want two

sort you proposition? walk So of of sort do that? how How that did value through

be on capital. think ultimate going don't constraint our California the Yes. to I is

can -- it we to quick to if payback so. ability sense makes have I of think, with obviously, ramp do the up the you're wells, -- these we

capital of cognizant And so we'll that's I said, like allocation. something obviously be that,

participate makes flow if so optionality we'll in in like both with that Haynesville, I starting said, sense. there have fourth the quarter, the think more But generating, free I to we're cash

decide and a we California, in if do well. to that can we But little go increase also, as faster activity

one of the next to don't other. online should next as we're speed in going on of before precludes I X advantage our coming -- and and with So this obviously now right take opportunities the they be think -- to got come full after Beta we're you've and quarter also up ahead so -- call. It's kind up, wells right

for you of understanding a in do to makes both free need we you walking mean, of -- both that sure, can are material let's you think the that acceleration events a through free be Do say, say, materially that but all looking out acceleration. lot have see flow the accelerate to then Or a sort because Would cash occur? No, acceleration the of sense. California Yes. monetization I guess coming I just they significant results potential. you have these flows? you're let's AXX. and you that wells, need through Do come but like organic cash

levels think third example, free XXXX, is will -- through lot in flow to quarter to that. look which if generate about we'll full continue start are that the a we I through the that clearly -- Beta is at cash but from go-forward quarter, and impactful free where on that to fixed you fourth we'll as I can why that a cost perspective we've have of how also platform. project obviously really of think more is cash talked activity more has than dug sufficient do infrastructure just doubled we free even organic flow a an The cash

Beta flow cash So but of it the assets, from reducing just side not cost development kind increase the side, will forward. off the also of going once also again, the

beyond, we going think a not fourth more -- in us if choose to what be it's so don't I it's constraint there impeding much the and to I so the And it's faster to. like program, that's quarter said, meaningful if

Got it. Yes.

to that the that operating really see with begin quarter in we the wells So on. X it's should leverage fourth

from And question Jeff Water we will take with Research. Tower our next Robertson

talk think will additional Martyn, with can following some LOE where up on Beta and at the the volumes? electrification where you color go Can or you in you ended you that. provide on all

required it's Dan. Southern is this doing is by the This project, Air will we the Beta, air project finish Yes. in several standards lower by as things, LOE, Coast redundancy, quality yes, South this and Quality it it's LOE in District and California.

what of it will for But power costs. usage essentially all should from and diesel California overall this our will in it an standpoint reduce reduce operating us, do

Beta, credits right big a And is, project, LOE After offset now this credits, to be in NOx to have our omission buy we emissions almost NOx of part our at NOx to nonexistent. addition emissions. diesel

we'll save So those costs well. as

next Beta year in completed. to sizable this expect fully once LOE So is reduction project a we see total

think, of at BOE me, where know LOE per I excuse second 'XX? $XX, short just quarter $XX in could the and quarter, were -- BOE. think was that fourth I'm Beta Dan, in go? a the Do I of you you sorry, 'XX

some Yes. is And as to of LOE quarter-by-quarter, part our it's work-over as going around well expenses. jump

when to pull drilling our the throughout have out So at in rig crews fail we ESPs there, addition to they times wells, different year.

So quarter, depending if that expense a drilling workovers down. that we're move will up wells or within certain LOE doing and number

year But on for look more to total Beta our is LOE on to we like we basis a down. be about year. and talking expect going in further you're here to what we'll the what basis, of trending as have But a get next like information unit absolute as

to this BOE, right? out we ramp program, that, up ramp So bonds, Jeff, here. as other with the volumes add would drilling fixed as generally thing costs Jim, are is is talking I our per we the you're

per as volumes. BOE to down increase our So we costs our are going come

this think one. but forward, story coming a on more positive have we'll again, is the So that generally I

come down costs Right. up. go and margins

right. That's

on RBL the fall. in the redetermination Jim,

think I million was $XXX offline, to Bairoil borrowing $XXX went base million. before the

RBL an do paper? you will sale redetermination be Bairoil color liquidity the that on the and where any and having development, what just for you on in the With the after might Beta can think give on

it's right, that speculate said, monetization terms what a and to Martyn the little of like barrel think bit in So do. early may I

flow. That right, So being free it makes question. cash it your are a answer said, generating to little we difficult

the us there's a facility of So huge today. increase size to for not need the

do add but value, to assuming we add the think and lenders as reserves as have we will our option we again, are I supportive. that --

a from So And what major perspective, I said, as do right it's upside not just similar than at Beta. more again, now. to concern to we continue our not kind of things

credit the does meaningfully impact Yes. that And facility facility. Bairoil I'll not just add the

capital. So borrowing committed is -- our and our base higher than

selling of on have So credit the huge -- a wouldn't availability the impact it there's facility.

obviously, not sold make nature whether at for we're, or incremental all so for And of whatever We and this you on said, alluding it it we're be want Once liquidity. it where like obviously the to to would to our transact not or again, sure given point. discussions, opportunities. open of just monetize status not that we're to going I or

appears have questions I you. presenters no further for turn now It time. we the program to Thank our this remarks. will back closing at that

I'd to for continuing to our for all our dedication employees this stakeholders all express of their to With year. appreciation say thank like efforts just my Thank their to outstanding you support. I'd you. and also that, of And like

in any participating And follow-up call out all please to today. if directly Thank to don't you have reach everyone. appreciate you, questions, always, We other you our as us. hesitate

Conference Energy's today's conclude for Quarter XXXX does This you. Investor Thank participation. your Thank you Second Amplify Call.

You may any at time. disconnect