8-K
Amplify Energy Corp. (AMPY)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENTREPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): May 6, 2020
AMPLIFY ENERGY CORP.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-35512 | 82-1326219 |
|---|---|---|
| (State or other jurisdiction<br><br><br>of Incorporation or Organization) | (Commission<br><br><br>File Number) | (I.R.S. Employer<br><br><br>Identification No.) |
| 500 Dallas Street, Suite 1700<br><br><br>Houston, Texas | 77002 | |
| --- | --- | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (713)490-8900
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<br> |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act<br>(17 CFR 240.14a-12) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| --- | --- |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| --- | --- |
Securities Registered Pursuant to Section 12(b):
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | AMPY | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On May 6, 2020, Amplify Energy Corp., a Delaware corporation (the “Company”), issued a press release reporting the Company’s financial and operating results for the first quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference. The Company is currently unable to quantify the impact that the ongoing COVID-19 pandemic will have on its future financial results and cannot presently predict when it will be able to do so. The Company therefore believes it is appropriate to withdraw its previously issued full year 2020 financial guidance at this time.
The information contained in this Item 2.02 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
| Item 7.01. | Regulation FD Disclosure. |
|---|
On May 6, 2020, the Company issued a press release announcing, among other things, the Company’s financial and operating results for the first quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
On May 6, 2020, the Company posted to its website an update to its hedging overview presentation entitled “Supplemental Presentation — Commodity Hedging Overview.” The updated hedging presentation includes hedging transactions from April 2020 through 2022, and may be accessed by going to the Company’s Investor Relations website at http://investor.amplifyenergy.com/ and selecting Events and Presentations.
The information contained in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.
Cautionary NoteRegarding Forward-Looking Statements
This Current Report on Form 8-K, including the exhibit hereto, includes “forward-looking statements.” All statements, other than statements of historical fact, included in this Current Report on Form 8-K that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “may,” “will,” “would,” “should,” “expect,” “plan,” “project,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “pursue,” “target,” “outlook,” “continue,” the negative of such terms or other comparable terminology are intended to identify forward-looking statements. These statements include, but are not limited to, statements about the Company’s expectations of plans, goals, strategies (including measures to implement strategies), objectives and anticipated results with respect thereto. These statements address activities, events or developments that we expect or anticipate will or may occur in the future, including things such as projections of results of operations, plans for growth, goals, future capital expenditures, competitive strengths, references to future intentions and other such references. These forward-looking statements involve risks and uncertainties and other factors that could cause the Company’s actual results or financial condition to differ materially from those expressed or implied by forward-looking statements. These include risks and uncertainties relating to, among other things: the Company’s evaluation and implementation of strategic alternatives; the Company’s efforts to reduce leverage; the Company’s level of indebtedness, including its ability to satisfy its debt obligations; the Company’s need to make accretive acquisitions or substantial capital expenditures to maintain its declining asset base, including the ability to make acquisitions on favorable terms or to integrate acquired properties; continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids; the Company’s ability to access funds on acceptable terms, if at all, because of the terms and conditions governing the Company’s indebtedness or otherwise; general political and economic conditions, globally and in the jurisdictions in which we operate, including the impact of legislation and governmental regulations, including those related to climate change and hydraulic fracturing; the occurrence or threat of epidemic or pandemic diseases, such as the recent outbreak of COVID-19, or any government
response to such occurrence or threat; and changes in commodity prices and hedge positions and the risk that the Company’s hedging strategy may be ineffective or may reduce its income. Please read the Company’s filings with the Securities and Exchange Commission (the “SEC”), including “Risk Factors” in the Company’s Annual Report on Form 10-K, and if applicable, the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available on the Company’s Investor Relations website at http://investor.amplifyenergy.com/ or on the SEC’s website at http://www.sec.gov, for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. All forward-looking statements in this Current Report on Form 8-K are qualified in their entirety by these cautionary statements. Except as required by law, the Company undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
| Item 9.01. | Financial Statements and Exhibits. |
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(d) Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Press Release dated May 6, 2020 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: May 6, 2020 | AMPLIFY ENERGY CORP. | ||
|---|---|---|---|
| By: | /s/ Martyn Willsher | ||
| Name: | Martyn Willsher | ||
| Title: | Interim Chief Executive Officer, Senior Vice President and Chief Financial Officer |
EX-99.1
Exhibit 99.1
| News<br><br><br>For Immediate Release |
|---|
Amplify Energy Announces First Quarter 2020 Results and
Over $80 Million of Liquidity Enhancement Initiatives
HOUSTON, May 6, 2020—Amplify Energy Corp. (NYSE: AMPY) (“Amplify” or the “Company”) announced today its operating and financial results for the first quarter of 2020.
Key Highlights
| • | Liquidity Enhancement Initiatives: |
|---|---|
| ^○^ | Reduced future operating expenses by approximately $18 million annually |
| --- | --- |
| ^○^ | Reduced annualized general and administrative (“G&A”) expenses by approximately $2.5 million<br>annually |
| --- | --- |
| ^○^ | Reduced budgeted capital spending for the year by $19 million (41%) from $46 million to<br>$27 million |
| --- | --- |
| ^○^ | Monetized approximately $18 million of 2021 hedges |
| --- | --- |
| ^○^ | Received $5.5 million of proceeds under the Paycheck Protection Program (“PPP”)<br> |
| --- | --- |
| ^○^ | Applied for Beta royalty relief that is expected to generate $5 million per year of incremental revenue<br>(assuming a $30/Bbl WTI price) |
| --- | --- |
| ^○^ | Suspended quarterly dividend program |
| --- | --- |
| • | During the first quarter this year we generated the following: |
| --- | --- |
| ^○^ | Daily production of 29.7 MBoe/d, which was at the high end of quarterly guidance |
| --- | --- |
| ^○^ | Net cash provided by operating activities of $13.1 million |
| --- | --- |
| ^○^ | Adjusted EBITDA of $17.2 million |
| --- | --- |
| • | Current mark-to-market hedge book<br>value of $77 million as of May 1, 2020 |
| --- | --- |
| • | Pro forma^(1)^ Net Debt to Last Twelve Months<br>(“LTM”) EBITDA of 2.8x as of March 31, 2020 |
| --- | --- |
| • | As of May 1, 2020, net debt was $263 million, inclusive of $27 million of cash on hand<br> |
| --- | --- |
“The first quarter of 2020 was extremely challenging for the oil and gas industry and the global economy due to OPEC+ production increases and the COVID-19 pandemic. Our first priority during this period has been the well-being of our workforce and their families, and accordingly we have implemented strict measures to avoid infection and maintain employee safety at all of our locations. At this time, we are pleased to report that no Amplify employee has tested positive for COVID-19, and we are committed to exercising caution and remaining focused on safety as states endeavor to reopen their economies,” said Martyn Willsher, interim Chief Executive Officer and Chief Financial Officer of Amplify. “During this time of unprecedented and extremely low commodity prices, Amplify has executed several initiatives to better position the Company through
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the downturn, including significant decreases to operating and G&A expenses, substantial reductions to capital programs, the monetization of a portion of the Company’s 2021 in-the-money crude oil hedges, the receipt of loan proceeds from the federal government’s PPP program, Beta royalty relief and the suspension of the quarterly dividend.”
Mr. Willsher continued, ”Moving forward, our attractive hedge positions and low-decline asset base will be instrumental in generating positive free cash flow for the remainder of 2020 and beyond. While volatility and market headwinds have tested the Company, we remain confident that we are well-positioned to weather this unprecedented downturn and capitalize on the recovery in both commodity prices and the global economy.”
| ^(1)^ | Pro forma numbers include Amplify and Midstates Petroleum Company, Inc. (“Midstates”) results as<br>though the companies were combined for the full period |
|---|
Liquidity Enhancement Initiatives
Operating Cost and Corporate Overhead Reductions **** – **** The Amplify team performed a bottom-up evaluation to identify cost saving opportunities and has implemented several cost reduction projects that will significantly reduce operating cost and overhead (“cash G&A”). The Company has worked closely with its vendors to decrease costs associated with supplies and services, which are forecasted to generate approximately $18 million of annual savings. Additionally, the Company is expecting to deliver a $2.5 million annual savings in cash G&A expenses. These savings are expected to be partially realized in the second quarter and fully realized by the third quarter of 2020 and will positively impact Amplify’s free cash flow profile for the remainder of 2020 and beyond.
Capital Reductions **** – **** Amplify has reduced its capital spending budget for the year by 41% from an initial estimate of $46 million to a current estimate of $27 million. Amplify’s remaining capital expenditure budget for 2020 is approximately $12 million and is focused principally on maintenance capital projects, which are essential to equipment integrity and operational efficiency, and high rate of return workover projects.
Hedge Monetization **** –****Amplify added additional liquidity to its balance sheet by monetizing 990,000 barrels of 2021 crude oil hedges (100% swaps) for total cash proceeds of approximately $18 million.
PPP Loan **** – **** On April 24, 2020, the Company received a $5.5 million loan under the PPP. The PPP was established as part of the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) to provide loans to qualifying businesses. The loans and accrued interest are forgivable after eight weeks provided that the borrower uses the loan proceeds for eligible purposes. At this time, the Company anticipates that a substantial majority of the loan proceeds will be forgiven under the program. The term of the Company’s PPP loan is two years with an annual interest rate of 1% and no payments of principal or interest due during the six-month period beginning on April 24, 2020.
Beta Field RoyaltyRelief **** – **** As discussed in the Company’s March 19, 2020 press release, due to the significant oil price reduction, Amplify expects to qualify for statutory royalty relief at its Beta field in the third quarter of 2020, subject to standard review by the US Bureau of Safety and Environmental Enforcement. Once approved, Amplify’s royalty rate at Beta will decrease by 50%, resulting in increased production of approximately 500 Bbls/d and additional revenue of approximately $5 million per year assuming $30/Bbl WTI price.
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Suspension of Quarterly Dividend Program **** – **** Amplify’s Board of Directors has decided to suspend the quarterly dividend program until further notice. This dividend suspension will result in increased retained cash of approximately $15 million annually (based on a quarterly dividend rate of $0.10 per share), which will further improve the Company’s liquidity.
Key Financial Results
| $ in millions | First Quarter 2020 | Fourth Quarter 2019 | ||||
|---|---|---|---|---|---|---|
| Average daily production (MBoe/d) | 29.7 | 29.9 | ||||
| Total revenues | $ | 58.1 | $ | 77.9 | ||
| Total assets | $ | 507.1 | $ | 877.5 | ||
| Net Income (loss) ^(1)^ | ($ | 367.2 | ) | ($ | 27.5 | ) |
| Adjusted EBITDA (a non-GAAP financial measure) | $ | 17.2 | $ | 27.0 | ||
| Net debt ^(2)^ | $ | 288.1 | $ | 285.0 | ||
| Net cash provided by (used in) operating activities | $ | 13.1 | $ | 21.4 | ||
| Total capital | $ | 15.3 | $ | 11.9 | ||
| (1) | Net loss for first quarter driven by $455.0 million asset impairments | |||||
| --- | --- | |||||
| (2) | As of March 31, 2020 and December 31, 2019, respectively | |||||
| --- | --- |
Revolving Credit Facility and Liquidity Update
Amplify’s Spring 2020 borrowing base redetermination process has been delayed relative to prior years due to the volatility in commodity prices, but Amplify utilized the time to increase liquidity and free cash flow in future periods. While the Company currently expects a decrease in the borrowing base due to lower bank price decks, Amplify continues to work collaboratively with the banks and expects that the redetermination process will be completed later in the second quarter. As of May 1, 2020, Amplify had total debt of $290 million under its revolving credit facility, with a current borrowing base of $450 million. Amplify’s liquidity was $187 million as of May 1, 2020, consisting of $27 million of cash on hand and available borrowing capacity of $160 million.
Asset Impairments
Due to the significant decrease in commodity prices during the first quarter, Amplify incurred non-cash impairment charges of $455 million. This included impairments of Amplify’s operated East Texas, Beta and Bairoil fields along with an impairment of certain leasehold acreage in Oklahoma.
Operations Update
During the first quarter of 2020, Amplify produced 29.7 MBoe/d, which was at the high end of the Company’s guidance range of 27.2 to 30.1 MBoe/d for the quarter. This outperformance was due to strong results across all assets, including at the Bairoil asset, which produced steadily following start-up challenges in connection with the expansion project. In addition, Mississippi Lime production stabilized following targeted, increased workover rig activity, which substantially reduced the backlog of offline wells from the fourth quarter.
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After strong production in the first quarter, Amplify, like most operators, faces uncertainty regarding future production in this low demand and tight storage capacity environment. At this time, Amplify’s only identified production limitation is an expected 30% curtailment of the Company’s non-operated Eagle Ford production effective April 1, 2020. In addition, the Company’s Bairoil plant will conduct its regularly scheduled, but cost limited, annual turnaround in the second quarter of 2020, which will temporarily reduce crude volumes. Other than these two situations, Amplify currently anticipates being able to continue producing without limitation or shut-ins. However, the Company acknowledges that access to markets for our products may change at any time due to capacity limitations for the gathering and transportation systems or the ultimate end-user.
Capital Spending Update
Amplify’s capital spending for the first quarter was approximately $15.3 million and in line with the first quarter 2020 guidance range of $13 million to $19 million, which the Company reaffirmed on March 19, 2020. Of the $15.3 million, a significant portion ($5.4 million or 35%) was attributed to the Company’s Mississippi Lime assets related to rod lift conversions and electric submersible pump optimizations. An additional $5.0 million was incurred in the Eagle Ford for non-operated drilling and completion activity, which primarily occurred prior to the commodity price collapse in mid-March.
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Comparison of First Quarter Guidance vs Actual Results
| 1Q 2020 Guidance ^(1)^ | 1Q20 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Low | High | Actuals | ||||||||
| Net Average Daily Production | ||||||||||
| Oil (MBbls/d) | 10.3 | — | 11.4 | 10.8 | ||||||
| NGL (MBbls/d) | 4.4 | — | 4.9 | 5.0 | ||||||
| Natural Gas (MMcf/d) | 75.1 | — | 83.0 | 83.4 | ||||||
| Total (MBoe/d) | **** | 27.2 | **** | — | **** | 30.1 | **** | **** | 29.7 | **** |
| Commodity Price Differential / Realizations (Unhedged) | ||||||||||
| Oil Differential ($ / Bbl) | ($ | 2.00 | ) | — | ($ | 2.50 | ) | ($ | 3.54 | ) |
| NGL Realized Price (% of WTI NYMEX) | 23 | % | — | 28 | % | 24 | % | |||
| Natural Gas Realized Price (% of Henry Hub) | 70 | % | — | 75 | % | 74 | % | |||
| Gathering, Processing and Transportation Costs | ||||||||||
| Oil ($ / Bbl) | $ | 0.30 | — | $ | 0.45 | $ | 0.51 | |||
| NGL ($ / Bbl) | $ | 3.00 | — | $ | 3.50 | $ | 3.10 | |||
| Natural Gas ($ / Mcf) | $ | 0.35 | — | $ | 0.45 | $ | 0.42 | |||
| Total ($ / Boe) | $ | 1.50 | **** | — | $ | 2.00 | **** | $ | 1.87 | **** |
| Average Costs | ||||||||||
| Lease Operating ($ / Boe) | $ | 13.00 | — | $ | 14.00 | $ | 13.23 | |||
| Taxes (% of Revenue) ^(2)^ | 6.5 | % | — | 7.5 | % | 6.9 | % | |||
| Recurring Cash General and Administrative ($ / Boe)<br>^(3)^ | $ | 2.30 | — | $ | 2.60 | $ | 3.21 | |||
| Cash Interest Expense ($MM) | $ | 4 | — | $ | 5 | $ | 4 | |||
| Capital Expenditures ($MM) | $ | 13 | — | $ | 19 | $ | 15 | |||
| ^(1)^ | Guidance based on NYMEX strip pricing as of February 24, 2020; Average prices of $52.08 / Bbl for crude oil and<br>$2.03 / Mcf for natural gas for 2020 | |||||||||
| --- | --- | |||||||||
| ^(2)^ | Includes production, ad valorem and franchise taxes | |||||||||
| --- | --- | |||||||||
| ^(3)^ | Recurring cash general and administrative cost guidance excludes reorganization expenses and non-cash<br>compensation | |||||||||
| --- | --- |
Full Year 2020 Guidance
Due to the high level of market volatility and uncertainty in connection with the impact of the ongoing COVID-19 pandemic, commodity prices and the broader US economy, the Company is withdrawing its previously issued full year 2020 guidance.
Hedging Update
Since Amplify’s previous hedge update on March 5, 2020, the Company has made opportunistic additions to its natural gas hedge position in 2021 as well as monetized certain 2021 crude oil swaps for total cash proceeds of $18 million. As of May 1, 2020, Amplify’s mark-to-market value remained a significant net asset position of $77 million and based on 2019 year-end reserve report’s PDP forecast, the Company has hedged over 90% of its expected second quarter oil production. The following table reflects the hedged volumes under Amplify’s commodity derivative contracts and the average fixed or floor prices at which production is hedged for April 2020 through December 2022, as of May 6, 2020.
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| 2020 | 2021 | 2022 | ||||||
|---|---|---|---|---|---|---|---|---|
| Natural Gas Swaps: | ||||||||
| Average Monthly Volume (MMBtu) | 650,000 | 925,000 | 300,000 | |||||
| Weighted Average Fixed Price ($) | $ | 2.54 | $ | 2.49 | $ | 2.46 | ||
| Natural Gas Collars: | ||||||||
| Two-way collars | ||||||||
| Average Monthly Volume (MMBtu) | 420,000 | 925,000 | — | |||||
| Weighted Average Floor Price ($) | $ | 2.60 | $ | 2.10 | $ | — | ||
| Weighted Average Ceiling Price ($) | $ | 2.88 | $ | 3.28 | $ | — | ||
| Natural Gas Basis Swaps: | ||||||||
| Average Monthly Volume (MMBtu) | 600,000 | 500,000 | — | |||||
| Weighted Average Spread ($) | $ | (0.46 | ) | $ | (0.40 | ) | $ | — |
| Oil Swaps: | ||||||||
| Average Monthly Volume (Bbls) | 209,300 | 33,750 | 30,000 | |||||
| Weighted Average Fixed Price ($) | $ | 57.44 | $ | 56.57 | $ | 55.32 | ||
| Oil Collars: | ||||||||
| Two-way collars | ||||||||
| Average Monthly Volume (Bbls) | 14,300 | — | — | |||||
| Weighted Average Floor Price ($) | $ | 55.00 | $ | — | $ | — | ||
| Weighted Average Ceiling Price ($) | $ | 62.10 | $ | — | $ | — | ||
| Three-way collars | ||||||||
| Average Monthly Volume (Bbls) | 30,500 | — | — | |||||
| Weighted Average Ceiling Price ($) | $ | 65.75 | $ | — | $ | — | ||
| Weighted Average Floor Price ($) | $ | 50.00 | $ | — | $ | — | ||
| Weighted Average Sub-Floor Price ($) | $ | 40.00 | $ | — | $ | — | ||
| NGL Swaps: | ||||||||
| Average Monthly Volume (Bbls) | 65,450 | 22,800 | — | |||||
| Weighted Average Fixed Price ($) | $ | 25.27 | $ | 24.25 | $ | — |
Amplify posted an updated hedge presentation containing additional information on its website, www.amplifyenergy.com, under the Investor Relations section.
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Quarterly Report on Form 10-Q
Amplify’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, which Amplify expects to file with the Securities and Exchange Commission on May 6, 2020.
Conference Call
Amplify will host an investor teleconference today at 10:00 a.m. Central Time to discuss these operating and financial results. Interested parties may join the webcast by visiting Amplify’s website, www.amplifyenergy.com, and clicking on the webcast link or by dialing (833) 883-4379 at least 15 minutes before the call begins and providing the Conference ID: 7947106. The webcast and a telephonic replay will be available for fourteen days following the call and may be accessed by visiting Amplify’s website, www.amplifyenergy.com, or by dialing (855) 859-2056 and providing the Conference ID: 7947106.
About Amplify Energy
Amplify Energy Corp. is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. Amplify’s operations are focused in Oklahoma, the Rockies, offshore California, East Texas / North Louisiana and South Texas. For more information, visit www.amplifyenergy.com.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Amplify expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “will,” “would,” “should,” “could,” “expect,” “anticipate,” “plan,” “project,” “intend,” “estimate,” “believe,” “target,” “continue,” “potential,” the negative of such terms or other comparable terminology are intended to identify forward-looking statements. Amplify believes that these statements are based on reasonable assumptions, but such assumptions may prove to be inaccurate. Such statements are also subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Amplify, which may cause Amplify’s actual results to differ materially from those implied or expressed by the forward-looking statements. Please read the Company’s filings with the Securities and Exchange Commission, including “Risk Factors” in its Annual Report on Form 10-K, and if applicable, its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and other public filings and press releases for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. All forward-looking statements speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Amplify undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
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Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures may not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner as Amplify does.
Adjusted EBITDA. Amplify defines Adjusted EBITDA as net income or loss, plus interest expense; income tax expense; depreciation, depletion and amortization; impairment of goodwill and long-lived assets; accretion of asset retirement obligations; losses on commodity derivative instruments; cash settlements received on expired commodity derivative instruments; losses on sale of assets; unit-based compensation expenses; exploration costs; acquisition and divestiture related expenses; amortization of gain associated with terminated commodity derivatives, bad debt expense; and other non-routine items, less interest income; gain on extinguishment of debt; income tax benefit; gains on commodity derivative instruments; cash settlements paid on expired commodity derivative instruments; gains on sale of assets and other, net; and other non-routine items. Adjusted EBITDA is commonly used as a supplemental financial measure by management and external users of Amplify’s financial statements, such as investors, research analysts and rating agencies, to assess: (1) its operating performance as compared to other companies in Amplify’s industry without regard to financing methods, capital structures or historical cost basis; (2) the ability of its assets to generate cash sufficient to pay interest and support Amplify’s indebtedness; and (3) the viability of projects and the overall rates of return on alternative investment opportunities. Since Adjusted EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the Adjusted EBITDA data presented in this press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to Adjusted EBITDA is net cash provided by operating activities.
Free Cash Flow. Amplify defines Free Cash Flow as Adjusted EBITDA, less cash income taxes; cash interest expense; and total capital expenditures. Free cash flow is an important non-GAAP financial measure for Amplify’s investors since it serves as an indicator of the Company’s success in providing a cash return on investment. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities.
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Selected Operating and Financial Data (Tables)
| Amplify Energy Corp. | ||||||
|---|---|---|---|---|---|---|
| Selected Financial Data—Unaudited | ||||||
| Statements of Operations<br>Data | ||||||
| (Amounts in $000s, except per share data) | Three MonthsEndedMarch 31, 2020 | Three MonthsEndedDecember 31, 2019 | ||||
| --- | --- | --- | --- | --- | --- | --- |
| Revenues: | ||||||
| Oil and natural gas sales | $ | 57,787 | $ | 77,629 | ||
| Other revenues | 349 | 300 | ||||
| Total revenues | 58,136 | 77,929 | ||||
| Costs and Expenses: | ||||||
| Lease operating expense | 35,723 | 35,739 | ||||
| Gathering, processing and transportation | 5,053 | 4,968 | ||||
| Exploration | 16 | 27 | ||||
| Taxes other than income | 3,986 | 5,660 | ||||
| Depreciation, depletion and amortization | 15,556 | 16,147 | ||||
| Impairment expense | 455,031 | 2,246 | ||||
| General and administrative expense | 8,353 | 8,380 | ||||
| Accretion of asset retirement obligations | 1,513 | 1,488 | ||||
| Realized (gain) loss on commodity derivatives | (12,500 | ) | (1,956 | ) | ||
| Unrealized (gain) loss on commodity derivatives | (95,213 | ) | 27,887 | |||
| Other, net | — | 397 | ||||
| Total costs and expenses | 417,518 | 100,983 | ||||
| Operating Income (loss) | (359,382 | ) | (23,054 | ) | ||
| Other Income (Expense): | ||||||
| Interest expense, net | (7,647 | ) | (3,068 | ) | ||
| Other income (expense) | 16 | (1,013 | ) | |||
| Loss on lease | — | (10 | ) | |||
| Total Other Income (Expense) | (7,631 | ) | (4,091 | ) | ||
| Income (loss) before reorganization items, net and income taxes | (367,013 | ) | (27,145 | ) | ||
| Reorganization items, net | (186 | ) | (373 | ) | ||
| Net income (loss) | $ | (367,199 | ) | $ | (27,518 | ) |
| Earnings per share: | ||||||
| Basic and diluted earnings (loss) per share | $ | (9.77 | ) | $ | (0.71 | ) |
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| Selected Financial Data—Unaudited | ||||||
|---|---|---|---|---|---|---|
| Operating Statistics | ||||||
| (Amounts in $000s, except per share data) | Three MonthsEndedMarch 31, 2020 | Three MonthsEndedDecember 31, 2019 | ||||
| --- | --- | --- | --- | --- | ||
| Oil and natural gas revenue: | ||||||
| Oil Sales | $ | 41,851 | $ | 56,191 | ||
| NGL Sales | 5,122 | 6,840 | ||||
| Natural Gas Sales | 10,814 | 14,598 | ||||
| Total oil and natural gas sales—Unhedged | $ | 57,787 | $ | 77,629 | ||
| Production volumes: | ||||||
| Oil Sales—MBbls | 982 | 1,033 | ||||
| NGL Sales—MBbls | 454 | 436 | ||||
| Natural Gas Sales—MMcf | 7,586 | 7,713 | ||||
| Total—MBoe | 2,700 | 2,755 | ||||
| Total—MBoe/d | 29.7 | 29.9 | ||||
| Average sales price (excluding commodity derivatives): | ||||||
| Oil—per Bbl | $ | 42.64 | $ | 54.40 | ||
| NGL—per Bbl | $ | 11.29 | $ | 15.68 | ||
| Natural gas—per Mcf | $ | 1.43 | $ | 1.89 | ||
| Total—per Boe | $ | 21.41 | $ | 28.18 | ||
| Average unit costs per Boe: | ||||||
| Lease operating expense | $ | 13.23 | $ | 12.97 | ||
| Gathering, processing and transportation | $ | 1.87 | $ | 1.80 | ||
| Taxes other than income | $ | 1.48 | $ | 2.05 | ||
| General and administrative expense | $ | 3.09 | $ | 3.04 | ||
| Depletion, depreciation, and amortization | $ | 5.76 | $ | 5.86 | ||
| Selected Financial Data—Unaudited | ||||||
| --- | ||||||
| Balance Sheet Data | ||||||
| (Amounts in $000s, except per share data) | March 31, 2020 | December 31, 2019 | ||||
| --- | --- | --- | --- | --- | ||
| Total current assets | $ | 116,381 | $ | 52,587 | ||
| Property and equipment, net | 349,062 | 803,723 | ||||
| Total assets | 507,125 | 877,539 | ||||
| Total current liabilities | 55,658 | 61,088 | ||||
| Long-term debt | 290,000 | 285,000 | ||||
| Total liabilities | 445,029 | 443,333 | ||||
| Total equity | 62,096 | 434,206 | ||||
| Selected Financial Data—Unaudited | ||||||
| --- | ||||||
| Statements of Cash Flows Data | ||||||
| (Amounts in $000s, except per share data) | Three MonthsEndedMarch 31, 2020 | Three MonthsEndedDecember 31, 2019 | ||||
| --- | --- | --- | --- | --- | --- | --- |
| Net cash provided by (used in) operating activities | $ | 13,089 | $ | 21,395 | ||
| Net cash provided by (used in) investing activities | (12,720 | ) | (11,596 | ) | ||
| Net cash provided by (used in) financing activities | 1,200 | (17,207 | ) |
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Selected Operating and Financial Data (Tables)
Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures
Adjusted EBITDA and Free Cash Flow
| (Amounts in $000s, except per share data) | Three MonthsEndedMarch 31, 2020 | Three MonthsEndedDecember 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Reconciliation of Adjusted EBITDA to Net Cash Provided from Operating Activities: | ||||||
| Net cash provided by operating activities | $ | 13,089 | $ | 21,395 | ||
| Changes in working capital | (455 | ) | 1,291 | |||
| Interest expense, net | 7,647 | 3,068 | ||||
| Gain (loss) on interest rate swaps | (3,617 | ) | 1,156 | |||
| Cash settlements paid (received) on interest rate swaps | (22 | ) | (29 | ) | ||
| Amortization and write-off of deferred financing<br>fees | (309 | ) | (1,112 | ) | ||
| Reorganization items, net | 186 | 373 | ||||
| Exploration costs | 16 | 27 | ||||
| Acquisition and divestiture related costs | 481 | 650 | ||||
| Severance payments | 19 | 821 | ||||
| Plugging and abandonment cost | — | 2 | ||||
| Non-cash loss on office lease | — | 10 | ||||
| Other | 201 | (672 | ) | |||
| Adjusted EBITDA: | $ | 17,236 | $ | 26,980 | ||
| Reconciliation of Free Cash Flow to Net Cash Provided from Operating Activities: | ||||||
| Adjusted EBITDA: | $ | 17,236 | $ | 26,980 | ||
| Less: Cash interest expense | 3,825 | 4,173 | ||||
| Less Capital expenditures | 15,276 | 11,901 | ||||
| Free Cash Flow: | $ | (1,865 | ) | $ | 10,906 |
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Selected Operating and Financial Data (Tables)
Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures
Adjusted EBITDA and Free Cash Flow
| (Amounts in $000s, except per share data) | Three MonthsEndedMarch 31, 2020 | Three MonthsEndedDecember 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Reconciliation of Adjusted EBITDA to Net Income (Loss): | ||||||
| Net income (loss) | $ | (367,199 | ) | $ | (27,518 | ) |
| Interest expense, net | 7,647 | 3,068 | ||||
| Depreciation, depletion and amortization | 15,556 | 16,147 | ||||
| Impairment expense | 455,031 | 2,246 | ||||
| Accretion of asset retirement obligations | 1,513 | 1,488 | ||||
| (Gains) losses on commodity derivatives | (107,713 | ) | 25,931 | |||
| Cash settlements on expired commodity derivatives | 12,500 | 1,956 | ||||
| Acquisition and divestiture related costs | 481 | 650 | ||||
| Reorganization items, net | 186 | 373 | ||||
| Share/unit-based compensation expense | (911 | ) | 324 | |||
| Non-cash loss on lease | — | 10 | ||||
| Exploration costs | 16 | 27 | ||||
| Loss on settlement of AROs | — | 2 | ||||
| Bad debt expense | 110 | 35 | ||||
| Severance payments | 19 | 821 | ||||
| Write-off of merger related expenses | — | 1,420 | ||||
| Adjusted EBITDA: | $ | 17,236 | $ | 26,980 | ||
| Reconciliation of Free Cash Flow to Net Income (Loss): | ||||||
| Adjusted EBITDA: | $ | 17,236 | $ | 26,980 | ||
| Less: Cash interest expense | 3,825 | 4,173 | ||||
| Less Capital expenditures | 15,276 | 11,901 | ||||
| Free Cash Flow: | $ | (1,865 | ) | $ | 10,906 |
Contacts
Martyn Willsher – Interim CEO & CFO
(832) 219-9047
martyn.willsher@amplifyenergy.com
Eric Chang – Treasurer
(832) 219-9024
eric.chang@amplifyenergy.com
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