Core Viewpoint - Amplify Energy Corp. is set to report its fourth quarter 2024 financial and operating results on March 5, 2025, after U.S. market close, with a conference call scheduled for March 6, 2025, to discuss these results [1]. Company Overview - Amplify Energy Corp. is an independent oil and natural gas company involved in the acquisition, development, exploitation, and production of oil and natural gas properties [2]. - The company's operations are primarily located in Oklahoma, the Rockies (Bairoil), federal waters offshore Southern California (Beta), East Texas/North Louisiana, and the Eagle Ford (Non-op) [2]. Investor Relations - Key contacts for investor relations include Jim Frew, SVP & Chief Financial Officer, and Michael Jordan, Director of Finance and Treasurer [3].

Group 1 - Monteverde & Associates PC is investigating Amplify Energy Corp. regarding its proposed merger with Juniper Capital, where Amplify shareholders will retain approximately 61% of the outstanding equity [1] - Monteverde & Associates PC has a successful track record in recovering millions of dollars for shareholders and is recognized as a Top 50 Firm by ISS Securities Class Action Services Report [1] - The firm operates from the Empire State Building in New York City and specializes in class action securities litigation [2][3] Group 2 - The firm encourages shareholders with concerns to contact them for additional information free of charge [3] - Monteverde & Associates PC emphasizes that no company, director, or officer is above the law, highlighting their commitment to shareholder rights [3] - The firm has a history of litigating and recovering money for shareholders, including cases that have reached the U.S. Supreme Court [2][4]

Core Viewpoint - Amplify Energy Corp. has entered into a definitive merger agreement with Juniper Capital to combine with certain Juniper portfolio companies, enhancing its oil-weighted producing assets and leasehold interests in the DJ and Powder River Basins [1] Strategic Rationale and Benefits - The transaction will add approximately 19 million barrels of oil equivalent (MMBoe) of Proved Developed Reserves, with a present value (PV10) exceeding $330 million [2] - Amplify will gain around 287,000 net acres in the DJ and Powder River Basins, with over 115,000 acres being operated and held-by-production, allowing for opportunistic development over time [2] Operating Metrics and Corporate Efficiency - The acquired assets had an average daily production of approximately 7,900 net barrels of oil equivalent (Boe) in Q3 2024, with 81% being oil and 90% liquids [3] - The integration of these assets is expected to improve operating metrics and corporate efficiency with minimal incremental overhead costs [3] Organic Growth Opportunities - Amplify has identified hundreds of potential high-quality drilling locations to complement its existing development inventory, targeting formations in the DJ and Powder River Basins [4] Accretion and Synergies - The transaction is anticipated to be significantly accretive to free cash flow in 2025 and over a five-year horizon, with expected material synergies from optimizing overhead and income tax savings [5] Future Consolidation Opportunities - The merger creates a new core area for future consolidation opportunities, allowing for potential accretive acquisitions from smaller private companies or non-core assets of larger operators [6] Management and Board Changes - Edward Geiser and Josh Schmidt from Juniper Capital will join Amplify's Board of Directors, while Amplify's management team will lead the combined company [8]

Core Viewpoint - Amplify Energy Corp. has entered into a definitive merger agreement with Juniper Capital to combine with certain Juniper portfolio companies, significantly enhancing its asset base and operational scale in the oil sector [1] Strategic Rationale and Benefits - The transaction will add approximately 19 million barrels of oil equivalent (MMBoe) of proved developed reserves, with a present value (PV10) of over $330 million, and approximately 287,000 net acres in the DJ and Powder River Basins [2] - Over 115,000 of the net acres are operated and held-by-production, with a high average working interest of approximately 90%, allowing for opportunistic development over time [2] Operating Metrics and Corporate Efficiency - In Q3 2024, the acquired assets had an average daily production of approximately 7,900 net barrels of oil equivalent (Boe), with 81% being oil and 90% liquids [3] - The assets are expected to improve operating metrics across the combined company due to strong margins and low operating costs, with minimal incremental overhead costs anticipated from integration [3] Organic Growth Opportunities - Amplify has identified hundreds of potential high-quality drilling locations to complement its existing development inventory, targeting formations in the DJ and Powder River Basins [4] Accretion and Synergies - The transaction is expected to be significantly accretive to free cash flow in 2025 and over a five-year horizon, with material synergies anticipated from optimizing overhead and income tax savings [5] Future Consolidation Opportunities - The large acreage position in premier Rocky Mountain Basins provides a core area for future consolidation opportunities, allowing for accretive bolt-on acquisitions from smaller private companies or non-core assets of larger operators [6] Management and Board Changes - Edward Geiser and Josh Schmidt from Juniper Capital will join Amplify's Board of Directors, while Amplify's management team will lead the combined company [8]

Group 1 - Amplify Energy Corp. will participate in a fireside chat hosted by Jeff Grampp on January 23, 2025, at 12:00 p.m. ET [1] - A replay of the fireside chat will be available for at least 30 days on the investor relations section of the Company's website [1] - Amplify Energy is an independent oil and natural gas company focused on the acquisition, development, exploitation, and production of oil and natural gas properties [2] Group 2 - The Company's operations are concentrated in Oklahoma, the Rockies (Bairoil), federal waters offshore Southern California (Beta), East Texas/North Louisiana, and the Eagle Ford (Non-op) [2] - For further information, the Company provides contact details for its investor relations team, including the Senior Vice President and Chief Financial Officer, Jim Frew, and the Director of Finance and Treasurer, Michael Jordan [3]

Core Viewpoint - Amplify Energy (AMPY) reported third-quarter 2024 results that exceeded earnings expectations, but underlying issues such as rising capital expenditures, increasing debt, and declining production levels raise concerns about the company's financial health and operational efficiency [1][2]. Financial Performance - Amplify's capital expenditures are projected to reach the high end of its annual guidance of $60-$65 million, primarily due to accelerated non-operated development costs, which could negatively impact free cash flow, reported at $3.6 million for Q3 2024, a decline from previous periods [5][6]. - The company's total production for Q3 averaged 19,000 barrels of oil equivalent per day (BOE/d), reflecting a sequential decline of 1,300 BOE/d, attributed to planned shut-ins and facility upgrades [6]. - Amplify's net debt increased to $120 million by the end of the quarter, with interest expenses rising to $3.8 million, indicating a growing financial burden that may limit the company's operational flexibility [7]. Growth Opportunities - The Beta development program continues to yield positive results, with the newly completed C59 well achieving an initial production rate of 590 barrels per day, exceeding expectations [9]. - Amplify has secured extensive hedges covering 75-80% of its forecasted crude production for 2024 and 2025, with a weighted average price of $69.39 per barrel for 2025, providing a stable revenue stream [10]. - The company has demonstrated consistent free cash flow generation, achieving positive free cash flow in 17 out of the last 18 quarters, which underscores its financial resilience [11]. Valuation Perspective - From a valuation standpoint, Amplify Energy appears attractive, trading below its five-year median and at a significant discount compared to peers like W&T Offshore and Ring Energy, which have comparable market caps [12]. Market Sensitivity - Amplify Energy is sensitive to fluctuations in oil prices, which directly affect its cash flow and profitability. Recent declines in crude prices below $70 due to concerns over global demand and economic conditions pose risks to the company's earnings [14]. Investment Outlook - While Amplify's Beta development enhances long-term production potential and its ability to generate positive free cash flow strengthens financial flexibility, the current challenges suggest it may not be the ideal time to invest in the company. Existing shareholders may consider maintaining their positions [15].

Financial Data and Key Metrics Changes - The company reported net income of approximately $22.7 million for Q3 2024, compared to $7.1 million in the prior quarter, primarily due to a non-cash unrealized gain on commodities derivatives [26] - Adjusted EBITDA for Q3 2024 was $25.5 million, in line with expectations [27] - Lease operating expenses (LOE) were approximately $33.3 million, a decrease of $3 million from the previous quarter, driven by optimization initiatives [16][28] - Free cash flow for Q3 2024 was $3.6 million, with positive free cash flow generated in 17 of the last 18 quarters [32][33] Business Line Data and Key Metrics Changes - Total production averaged approximately 19,000 BOE per day in Q3 2024, a decrease of 1,300 BOE per day from Q2 2024 [15] - The production commodity mix for the quarter was 43% oil, 17% NGLs, and 40% natural gas [16] - The company invested approximately $18.2 million in capital during Q3 2024, with about 66% allocated to Beta facility projects and development drilling [31] Market Data and Key Metrics Changes - The company is participating in 14 gross new development wells and 2 gross recompletion projects in East Texas and Eagle Ford [20] - The C59 well achieved an initial production (IP30) gross oil rate of approximately 590 barrels of oil per day [22] - The company expects to generate a run rate adjusted EBITDA of over $3 million per year from Magnify Energy Services after just over one year of operations [18] Company Strategy and Development Direction - The company is focused on maximizing shareholder value by retaining ownership of Wyoming assets while evaluating monetization proposals [10] - The development program at Beta is expected to deliver outstanding returns on investment and significant incremental free cash flow [12] - The company is refining its development program schedule and plans to provide an updated plan in Q1 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong early results from the Beta development program and the potential for transformative growth [38] - The company anticipates that taxes as a percentage of revenue will remain within the previously announced guidance range for 2024 [30] - Management is optimistic about the combination of Beta and non-operated development opportunities enhancing flexibility and market performance [39] Other Important Information - The company issued its second annual sustainability report, highlighting significant progress in emissions reduction and corporate governance [12] - The borrowing base was reduced by $5 million while elected commitments were increased by $10 million, improving liquidity [34] - The company executed crude oil swaps for 2025 and 2026 at weighted average prices of $69.39 and $68.12 per barrel, respectively [36] Q&A Session Summary Question: Can you provide insights on the Beta development and potential new locations? - Management indicated that the C59 well proved up a significant portion of the southern acreage, with expectations for a decent number of locations to be discussed in future reports [41][44] Question: What drove the cost difference in well drilling? - The C59 well's higher cost was attributed to additional drilling days and challenges faced during the process, but management remains comfortable with the $5 million to $6 million range for future wells [46][48] Question: What is the expected timeline for monetization opportunities in Haynesville? - Management expects to realize monetization opportunities between now and the middle of Q1 2025, with potential values in the range of several million dollars [61][62] Question: When might the company consider returning capital to shareholders? - Management indicated that a return to capital could be considered in 2025, depending on development activity and free cash flow generation [63] Question: How many currently permitted locations are there at Beta? - The company currently has 7 to 10 permits at Beta, with ongoing efforts to secure more [66] Question: What is the status of non-operated interests in East Texas? - Management noted that they are participating in wells in East Texas and Eagle Ford, with visibility into future activity expected to improve [74]

The Zacks Oil and Gas - Exploration and Production - United States industry faces growing headwinds. With potential Republican-led policies encouraging increased domestic production, U.S. output could see a rise, expanding supply and likely softening oil prices. Additionally, China’s slowing oil demand, despite government stimulus efforts, may contribute to weaker global prices, especially if OPEC+ production cuts don’t offset the lagging demand. Further, rising renewable energy and electric vehicle adoptio ...

Group 1: Earnings Performance - Amplify Energy reported quarterly earnings of $0.54 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, compared to a loss of $0.34 per share a year ago, representing an earnings surprise of 68.75% [1] - The company posted revenues of $69.86 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 11.43%, and down from $76.77 million year-over-year [2] Group 2: Stock Performance and Outlook - Amplify Energy shares have increased approximately 13.5% since the beginning of the year, while the S&P 500 has gained 21.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.40 on revenues of $82.34 million, and for the current fiscal year, it is $0.65 on revenues of $317.01 million [7] Group 3: Industry Context - The Oil and Gas - Exploration and Production - United States industry is currently ranked in the bottom 8% of over 250 Zacks industries, indicating potential challenges for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that investors should monitor these revisions closely [5][6]

Glossary of Oil and Natural Gas Terms This section defines key terms in the oil and natural gas industry for consistent understanding - This section provides definitions for key terms used in the oil and natural gas industry, such as 'Analogous Reservoir,' 'Bbl,' 'Boe,' 'Economically Producible,' 'Proved Reserves,' and 'Working Interest,' to ensure clarity and consistent understanding of the report's content[5](index=5&type=chunk)[10](index=10&type=chunk)[18](index=18&type=chunk) Names of Entities This section defines key entities like Amplify Energy, Legacy Amplify, and OLLC for clarity - The report defines key entities: 'Amplify Energy' refers to Amplify Energy Corp. and its subsidiaries; 'Legacy Amplify' refers to Amplify Energy Holdings LLC; and 'OLLC' refers to Amplify Energy Operating LLC, the wholly-owned subsidiary through which properties are operated[24](index=24&type=chunk) Cautionary Note Regarding Forward-Looking Statements This section highlights that the report contains forward-looking statements subject to various risks and uncertainties - This report contains forward-looking statements subject to risks and uncertainties beyond the company's control, including business strategies, cash flows, financial strategy, and the ongoing impact of the Beta Pipeline Incident[26](index=26&type=chunk) - Important factors that could cause actual results to differ materially include risks related to the Revolving Credit Facility borrowing base redetermination, volatility in commodity prices, substantial future capital requirements, and the impact of governmental regulations[29](index=29&type=chunk)[30](index=30&type=chunk) PART I—FINANCIAL INFORMATION This part presents the company's financial information, including statements, notes, and management's discussion [ITEM 1. FINANCIAL STATEMENTS.](index=12&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS.) This section presents Amplify Energy Corp.'s unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, cash flows, and equity, along with detailed notes explaining the company's accounting policies, financial instruments, debt, equity, and significant events like the Beta Pipeline Incident [Unaudited Condensed Consolidated Balance Sheets](index=12&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's unaudited condensed consolidated balance sheets as of September 30, 2024, and December 31, 2023 Unaudited Condensed Consolidated Balance Sheets | ASSETS | September 30, 2024 (In thousands) | December 31, 2023 (In thousands) | |:---|:---|:---| | **Current assets:** | | | | Cash and cash equivalents | $ **—** | $ **20,746** | | Accounts receivable, net | 32,295 | 39,096 | | Short-term derivative instruments | 15,556 | 17,669 | | Prepaid expenses and other current assets | 22,306 | 20,672 | | **Total current assets** | **70,157** | **98,183** | | Property and equipment, net | 378,871 | 346,741 | | Long-term derivative instruments | 4,419 | 9,405 | | Restricted investments | 27,451 | 19,935 | | Operating lease - long term right-of-use asset | 4,613 | 5,756 | | Deferred tax asset | 250,713 | 253,796 | | Other long-term assets | 2,992 | 3,858 | | **Total assets** | **$ 739,216** | **$ 737,674** | | **LIABILITIES AND EQUITY** | | | | **Current liabilities:** | | | | Accounts payable | $ 18,107 | $ 23,616 | | Revenues payable | 11,362 | 21,944 | | Accrued liabilities | 36,699 | 50,871 | | **Total current liabilities** | **66,168** | **96,431** | | Long-term debt | 120,000 | 115,000 | | Asset retirement obligations | 127,556 | 122,001 | | Operating lease liability | 3,806 | 5,090 | | Other long-term liabilities | 7,016 | 8,116 | | **Total liabilities** | **324,546** | **346,638** | | **Stockholders' equity (deficit):** | | | | Common stock | 400 | 393 | | Additional paid-in capital | 438,309 | 435,095 | | Accumulated deficit | (24,039) | (44,452) | | **Total stockholders' equity (deficit)** | **414,670** | **391,036** | | **Total liabilities and equity** | **$ 739,216** | **$ 737,674** | [Unaudited Condensed Consolidated Statements of Operations](index=13&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the company's unaudited condensed consolidated statements of operations for the reported periods Unaudited Condensed Consolidated Statements of Operations | | For the Three Months Ended September 30, | | For the Nine Months Ended September 30, | |:---|:---|:---|:---|:---| | | **2024** | **2023** | **2024** | **2023** | | **Revenues:** | | | | | | Oil and natural gas sales | $ 68,135 | $ 76,403 | $ 215,803 | $ 210,080 | | Other revenues | 1,723 | 367 | 9,857 | 18,531 | | **Total revenues** | **69,858** | **76,770** | **225,660** | **228,611** | | **Costs and expenses:** | | | | | | Lease operating expense | 33,255 | 36,493 | 107,850 | 103,953 | | Gathering, processing and transportation | 4,290 | 4,984 | 13,959 | 15,735 | | Taxes other than income | 5,997 | 5,532 | 15,539 | 16,433 | | Depreciation, depletion and amortization | 8,102 | 7,489 | 24,168 | 20,369 | | General and administrative expense | 8,251 | 8,255 | 26,409 | 24,547 | | Accretion of asset retirement obligations | 2,125 | 2,005 | 6,282 | 5,922 | | Loss (gain) on commodity derivative instruments | (25,047) | 23,328 | (7,258) | 4,371 | | Pipeline incident loss | 247 | 559 | 1,454 | 15,682 | | Other, net | 38 | 449 | 187 | 728 | | **Total costs and expenses** | **37,258** | **89,094** | **188,590** | **207,740** | | **Operating income (loss)** | **32,600** | **(12,324)** | **37,070** | **20,871** | | **Other income (expense):** | | | | | | Interest expense, net | (3,756) | (4,470) | (10,915) | (13,908) | | Litigation settlement | — | — | — | 84,875 | | Other income (expense) | (130) | 124 | (334) | 319 | | **Total other income (expense)** | **(3,886)** | **(4,346)** | **(11,249)** | **71,286** | | **Income (loss) before income taxes** | **28,714** | **(16,670)** | **25,821** | **92,157** | | Income tax (expense) benefit - current | (412) | (1,441) | (2,364) | (7,115) | | Income tax (expense) benefit - deferred | (5,650) | 4,708 | (3,082) | 264,130 | | **Net income (loss)** | **$ 22,652** | **$ (13,403)** | **$ 20,375** | **$ 349,172** | | **Earnings (loss) per share:** | | | | | | Basic and diluted earnings (loss) per share | $ 0.54 | $ (0.34) | $ 0.49 | $ 8.57 | | **Weighted average common shares outstanding:** | | | | | | Basic and diluted | 39,783 | 39,063 | 39,608 | 38,911 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's unaudited condensed consolidated statements of cash flows for the reported periods Unaudited Condensed Consolidated Statements of Cash Flows | Cash flows from operating activities: | For the Nine Months Ended September 30, | |:---|:---| | | **2024** | **2023** | | Net income (loss) | $ 20,375 | $ 349,172 | | Depreciation, depletion and amortization | 24,168 | 20,369 | | Loss (gain) on derivative instruments | (7,258) | 4,371 | | Cash settlements (paid) received on expired derivative instruments | 13,564 | (5,082) | | Deferred income tax expense (benefit) | 3,082 | (264,130) | | Net cash provided by operating activities | **38,838** | **113,228** | | Cash flows from investing activities: | | | | Additions to oil and gas properties | (54,102) | (23,065) | | Additions to restricted investments | (7,516) | (6,399) | | Net cash used in investing activities | **(62,655)** | **(29,965)** | | Cash flows from financing activities: | | | | Advances on Revolving Credit Facility | 85,000 | 125,000 | | Payments on Revolving Credit Facility | (80,000) | (195,000) | | Net cash used in financing activities | **3,071** | **(76,876)** | | Net change in cash and cash equivalents | (20,746) | 6,387 | | Cash and cash equivalents, end of period | $ — | $ 6,387 | [Unaudited Condensed Consolidated Statements of Equity (Deficit)](index=15&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Equity%20(Deficit)) This section presents the company's unaudited condensed consolidated statements of equity (deficit) for the reported periods Unaudited Condensed Consolidated Statements of Equity (Deficit) | | Common Stock | Additional Paid-in Capital | Accumulated Earnings (Deficit) | Total Stockholders' Equity (Deficit) | |:---|:---|:---|:---|:---| | **Balance at December 31, 2023** | **$ 393** | **$ 435,095** | **$ (44,452)** | **$ 391,036** | | Net income (loss) | — | — | (9,396) | (9,396) | | Share-based compensation expense | — | 1,120 | — | 1,120 | | Shares withheld for taxes | — | (1,745) | — | (1,745) | | Other | 5 | (5) | — | — | | **Balance at September 30, 2024** | **$ 400** | **$ 438,309** | **$ (24,039)** | **$ 414,670** | | **Balance at December 31, 2022** | **$ 386** | **$ 432,251** | **$ (437,202)** | **$ (4,565)** | | Net income (loss) | — | — | 352,759 | 352,759 | | Share-based compensation expense | — | 941 | — | 941 | | Shares withheld for taxes | — | (2,141) | — | (2,141) | | Other | 5 | (5) | — | — | | **Balance at September 30, 2023** | **$ 392** | **$ 433,675** | **$ (88,030)** | **$ 346,037** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes to the unaudited condensed consolidated financial statements [Note 1. Organization and Basis of Presentation](index=16&type=section&id=Note%201.%20Organization%20and%20Basis%20of%20Presentation) Amplify Energy Corp. operates as a publicly traded Delaware corporation in one reportable segment focused on the acquisition, development, exploitation, and production of oil and natural gas properties, primarily located in Oklahoma, the Rockies, offshore Southern California (Beta), East Texas/North Louisiana, and the Eagle Ford (non-op) - Amplify Energy Corp. operates in a **single reportable segment** focused on oil and natural gas properties[40](index=40&type=chunk) - The company's **primary assets are producing oil and natural gas properties** in Oklahoma, the Rockies (Bairoil), federal waters offshore Southern California (Beta), East Texas/North Louisiana, and the Eagle Ford (non-op)[40](index=40&type=chunk) [Note 2. Summary of Significant Accounting Policies](index=17&type=section&id=Note%202.%20Summary%20of%20Significant%20Accounting%20Policies) There have been no changes to the Company's significant accounting policies from its 2023 Form 10-K. However, the company is evaluating the impact of new FASB accounting standard updates on reportable segment and income tax disclosures, effective for periods beginning after December 15, 2023, and December 15, 2024, respectively - No changes to significant accounting policies from the 2023 Form 10-K[47](index=47&type=chunk) - Evaluating new FASB guidance on reportable segment disclosure (effective after December 15, 2023, for annual periods) and income tax disclosure (effective after December 15, 2024, for annual periods)[48](index=48&type=chunk)[49](index=49&type=chunk) [Note 3. Revenue](index=17&type=section&id=Note%203.%20Revenue) Revenue is recognized when performance obligations for crude oil, unprocessed natural gas, residue gas, and NGLs are satisfied at the delivery location. The transaction price is variable, based on market prices less fees. The company disaggregates revenue into oil, NGLs, and natural gas streams - Revenue is recognized upon transfer of control at the delivery location for crude oil, natural gas, and NGLs, with transaction prices based on variable market rates[52](index=52&type=chunk) Revenues Disaggregated by Stream (In thousands) | Revenues | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | Oil | $ 54,353 | $ 57,214 | $ 169,563 | $ 146,780 | | NGLs | 6,096 | 7,777 | 20,187 | 21,973 | | Natural gas | 7,686 | 11,412 | 26,053 | 41,327 | | **Oil and natural gas sales** | **$ 68,135** | **$ 76,403** | **$ 215,803** | **$ 210,080** | - Accounts receivable from revenue contracts were **$25.6 million** at September 30, 2024, down from **$31.1 million** at December 31, 2023[56](index=56&type=chunk) [Note 4. Fair Value Measurements of Financial Instruments](index=18&type=section&id=Note%204.%20Fair%20Value%20Measurements%20of%20Financial%20Instruments) The company measures financial instruments at fair value using a three-tier hierarchy, with all derivative instruments classified as Level 2. Asset retirement obligations (AROs) and proved oil and natural gas properties are measured at fair value on a nonrecurring basis, with AROs being Level 3 due to unobservable inputs. No impairment expense was recorded on proved oil and natural gas properties during the reported periods - All derivative instruments are classified as Level 2 in the fair value hierarchy, based on estimated forward commodity prices[57](index=57&type=chunk)[59](index=59&type=chunk) Gross Derivative Assets and Liabilities at Fair Value (In thousands) | | September 30, 2024 | December 31, 2023 | |:---|:---|:---| | **Assets:** | | | | Commodity derivatives | $ 26,174 | $ 39,439 | | Interest rate derivatives | — | — | | **Total assets** | **$ 26,174** | **$ 39,439** | | **Liabilities:** | | | | Commodity derivatives | $ 6,199 | $ 12,365 | | Interest rate derivatives | — | — | | **Total liabilities** | **$ 6,199** | **$ 12,365** | - No impairment expense was recorded on proved oil and natural gas properties for the three and nine months ended September 30, 2024 and 2023[65](index=65&type=chunk) [Note 5. Risk Management and Derivative Instruments](index=20&type=section&id=Note%205.%20Risk%20Management%20and%20Derivative%20Instruments) Amplify Energy uses commodity derivatives (swaps, put options, costless collars) to manage exposure to commodity price volatility and interest rate fluctuations, aiming for predictable cash flow. The company does not designate these as hedging instruments for accounting purposes, so all gains and losses are recognized in the statements of operations - The company uses commodity derivatives (fixed-price swaps, two-way collars) to manage exposure to natural gas (NYMEX-Henry Hub) and crude oil (NYMEX-WTI) price volatility[68](index=68&type=chunk) Commodity Derivative Contracts at September 30, 2024 | Contract Type | Metric | Remaining 2024 | 2025 | 2026 | |:---|:---|:---|:---|:---| | **Natural Gas Fixed Price Swap** | Avg. Monthly Volume (MMBtu) | 660,000 | 585,000 | 500,000 | | | Wtd-Avg Fixed Price | $3.74 | $3.75 | $3.79 | | **Natural Gas Collar** | Avg. Monthly Volume (MMBtu) | 333,333 | 250,000 | 354,167 | | | Wtd-Avg Floor Price | $3.50 | $3.50 | $3.57 | | | Wtd-Avg Ceiling Price | $4.08 | $4.06 | $4.18 | | **Crude Oil Fixed Price Swap** | Avg. Monthly Volume (Bbls) | 83,000 | 78,583 | 30,917 | | | Wtd-Avg Fixed Price | $74.34 | $71.79 | $70.68 | | **Crude Oil Collar** | Avg. Monthly Volume (Bbls) | 102,000 | 59,500 | — | | | Wtd-Avg Floor Price | $70.00 | $70.00 | — | | | Wtd-Avg Ceiling Price | $80.20 | $80.20 | — | Loss (Gain) on Derivative Instruments (In thousands) | Statements of Operations Location | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | Commodity derivative contracts | $ (25,047) | $ 23,328 | $ (7,258) | $ 4,371 | [Note 6. Asset Retirement Obligations](index=22&type=section&id=Note%206.%20Asset%20Retirement%20Obligations) The company's asset retirement obligations primarily consist of future plugging and abandonment costs for wells and related facilities. For the nine months ended September 30, 2024, AROs increased due to accretion expense and revisions of estimates, partially offset by liabilities settled Changes in Asset Retirement Obligations (In thousands) | | Nine Months Ended September 30, 2024 | |:---|:---| | Asset retirement obligations at beginning of period | $ 123,494 | | Liabilities added from acquisition or drilling | 1 | | Liabilities settled | (750) | | Accretion expense | 6,282 | | Revision of estimates | 105 | | **Asset retirement obligation at end of period** | **129,132** | | Less: Current portion | 1,576 | | **Asset retirement obligations - long-term portion** | **$ 127,556** | [Note 7. Long-Term Debt](index=22&type=section&id=Note%207.%20Long-Term%20Debt) Amplify Energy's long-term debt primarily consists of a $120.0 million outstanding balance on its senior secured reserve-based Revolving Credit Facility as of September 30, 2024. The facility, which matures on July 31, 2027, had a borrowing base of $150.0 million and elected commitments of $135.0 million at that date, and the company was in compliance with all covenants Consolidated Debt Obligations (In thousands) | | September 30, 2024 | December 31, 2023 | |:---|:---|:---| | Revolving Credit Facility | $ 120,000 | $ 115,000 | | **Total long-term debt** | **$ 120,000** | **$ 115,000** | - As of September 30, 2024, the Revolving Credit Facility had an outstanding principal of **$120.0 million**, a borrowing base of **$150.0 million**, and elected commitments of **$135.0 million**[78](index=78&type=chunk) - Subsequent to the quarter, on October 25, 2024, the borrowing base was reduced to **$145.0 million**, and elected commitments increased to **$145.0 million**[80](index=80&type=chunk) - The company was in **compliance** with all financial and non-financial covenants of the Revolving Credit Facility as of September 30, 2024[81](index=81&type=chunk) [Note 8. Equity](index=24&type=section&id=Note%208.%20Equity) This note summarizes the changes in the company's common stock for the nine months ended September 30, 2024, showing an increase in outstanding shares primarily due to restricted stock units vesting, partially offset by shares withheld for taxes Changes in Common Stock Issued (Nine Months Ended September 30, 2024) | | Common Stock | |:---|:---| | Balance, December 31, 2023 | 39,147,205 | | Restricted stock units vested | 903,898 | | Shares withheld for taxes | (261,603) | | **Balance, September 30, 2024** | **39,789,500** | [Note 9. Earnings (Loss) per Share](index=24&type=section&id=Note%209.%20Earnings%20(Loss)%20per%20Share) This note details the calculation of basic and diluted earnings (loss) per share for the three and nine months ended September 30, 2024 and 2023, reflecting net income available to common stockholders and weighted average shares outstanding Earnings (Loss) per Share Calculation (In thousands, except per share amounts) | | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | Net income (loss) | $ 22,652 | $ (13,403) | $ 20,375 | $ 349,172 | | Basic and diluted earnings available to common stockholders | $ 21,569 | $ (13,403) | $ 19,392 | $ 333,401 | | Common shares outstanding — basic and diluted | 39,783 | 39,063 | 39,608 | 38,911 | | **Basic and diluted earnings (loss) per share** | **$ 0.54** | **$ (0.34)** | **$ 0.49** | **$ 8.57** | [Note 10. Long-Term Incentive Plans](index=25&type=section&id=Note%2010.%20Long-Term%20Incentive%20Plans) The company's shareholders approved the 2024 Equity Incentive Plan (EIP), replacing the prior plan. This note details the activity and accounting for Restricted Stock Units (TSUs) with service vesting conditions and Performance Stock Units (PSUs) with market and service vesting conditions, including their reclassification to equity awards in May 2024 and associated compensation expenses - The **2024 Equity Incentive Plan (2024 EIP)** was **approved by shareholders on May 15, 2024**, replacing the prior Legacy Equity Incentive Plan[88](index=88&type=chunk) Restricted Stock Units (TSUs) Activity | | Number of Units | Weighted-Average Fair Value per Unit | |:---|:---|:---| | TSUs outstanding at December 31, 2023 | 1,331,456 | $ 5.77 | | Granted | 851,456 | $ 6.37 | | Forfeited | (5,922) | $ 5.04 | | Vested | (796,854) | $ 5.29 | | **TSUs outstanding at September 30, 2024** | **1,380,136** | **$ 6.42** | Performance Stock Units (PSUs) Activity | | Number of Units | Weighted-Average Fair Value per Unit | |:---|:---|:---| | PSUs outstanding at December 31, 2023 | 402,701 | $ 9.31 | | Granted | 312,843 | $ 7.55 | | Forfeited | — | $ — | | Vested | (107,044) | $ 2.63 | | **PSUs outstanding at September 30, 2024** | **608,500** | **$ 9.58** | Share-Based Compensation Costs (In thousands) | | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | TSUs | $ 1,322 | $ 1,027 | $ 3,685 | $ 2,965 | | PSUs | 494 | 300 | 1,428 | 643 | | **Total** | **$ 1,816** | **$ 1,327** | **$ 5,113** | **$ 3,608** | [Note 11. Leases](index=28&type=section&id=Note%2011.%20Leases) Amplify Energy holds operating leases for office, warehouse, equipment, and vehicles, with most being short-term or month-to-month. The company recognized $1.5 million and $1.6 million in operating lease costs for the nine months ended September 30, 2024 and 2023, respectively, and provides a maturity analysis of its non-cancelable operating lease obligations - The company recognized approximately **$1.5 million** and **$1.6 million** in operating lease costs for the nine months ended September 30, 2024 and 2023, respectively[103](index=103&type=chunk) Right-of-Use Assets and Lease Liabilities (In thousands) | | September 30, 2024 | December 31, 2023 | |:---|:---|:---| | Right-of-use asset | $ 4,613 | $ 5,756 | | Current lease liability | 1,772 | 1,737 | | Long-term lease liability | 3,806 | 5,090 | | **Total lease liability** | **$ 5,578** | **$ 6,827** | Maturity Analysis of Minimum Lease Payment Obligations (In thousands) | Year | Office and warehouse leases | Leased vehicles and office equipment | Total | |:---|:---|:---|:---| | 2024 | $ 357 | $ 188 | $ 545 | | 2025 | 1,429 | 573 | 2,002 | | 2026 | 1,206 | 87 | 1,293 | | 2027 | 836 | 4 | 840 | | 2028 and thereafter | 1,798 | — | 1,798 | | **Total lease payments** | **5,626** | **852** | **6,478** | | Less: interest | 856 | 44 | 900 | | **Present value of lease liabilities** | **$ 4,770** | **$ 808** | **$ 5,578** | [Note 12. Supplemental Disclosures to the Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Cash Flows](index=30&type=section&id=Note%2012.%20Supplemental%20Disclosures%20to%20the%20Unaudited%20Condensed%20Consolidated%20Balance%20Sheets%20and%20Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This note provides detailed breakdowns of current accrued liabilities and accounts receivable, net, as well as supplemental cash flow information for the reported periods Current Accrued Liabilities (In thousands) | | September 30, 2024 | December 31, 2023 | |:---|:---|:---| | Accrued lease operating expense | $ 11,491 | $ 14,239 | | Accrued liability - pipeline incident | 1,691 | 9,331 | | Accrued capital expenditures | 7,914 | 8,019 | | Accrued general and administrative expense | 3,790 | 5,335 | | Accrued production and ad valorem tax | 3,572 | 3,502 | | Operating lease liability | 1,772 | 1,737 | | Asset retirement obligations | 1,576 | 1,493 | | Accrued current income tax payable | 784 | — | | Accrued interest payable | 221 | 1,792 | | **Accrued liabilities** | **$ 36,699** | **$ 50,871** | Accounts Receivable (In thousands) | | September 30, 2024 | December 31, 2023 | |:---|:---|:---| | Oil and natural gas receivables | $ 25,618 | $ 31,131 | | Insurance receivable - pipeline incident | 1,697 | 3,571 | | Joint interest owners and other | 6,680 | 6,042 | | Total accounts receivable | 33,995 | 40,744 | | Less: allowance for doubtful accounts | (1,700) | (1,648) | | **Total accounts receivable, net** | **$ 32,295** | **$ 39,096** | Supplemental Cash Flows (In thousands) | Supplemental cash flows: | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---| | Cash paid for interest, net of amounts capitalized | $ 9,162 | $ 8,142 | | Cash paid for taxes | 1,040 | 5,725 | | Increase (decrease) in capital expenditures in payables and accrued liabilities | (1,323) | 5,880 | [Note 13. Related Party Transactions](index=31&type=section&id=Note%2013.%20Related%20Party%20Transactions) The company reported no material transactions with related parties for the three and nine months ended September 30, 2024 and 2023 - **No material related party transactions occurred** for the three and nine months ended September 30, 2024 and 2023[112](index=112&type=chunk) [Note 14. Commitments and Contingencies](index=31&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) This note addresses various commitments and contingencies, including litigation, environmental matters, and an out-of-period adjustment for improperly classified non-operated revenue. It also details funding obligations for decommissioning liabilities related to the Beta properties, supported by surety bonds and escrow accounts - An out-of-period adjustment of **$2.8 million** was recorded in 2024 to release improperly classified non-operated revenue in suspense from 2015-2024[116](index=116&type=chunk) - The company has a sinking fund trust agreement for decommissioning the San Pedro Bay Pipeline, with an account balance of approximately **$4.5 million** as of September 30, 2024[118](index=118&type=chunk) Updated Funding Commitment for Decommissioning Escrow Accounts (In thousands) | Funding commitment | Total | Remaining 2024 | Payment 2025 | Due by 2026 | Period 2027 | 2028 | Thereafter | |:---|:---|:---|:---|:---|:---|:---|:---| | Federal escrow fund payments | $140,728 | $ 2,000 | $8,000 | $8,000 | $8,000 | $8,000 | $106,728 | | State escrow fund payments | 9,253 | 258 | 1,034 | 1,034 | 1,034 | 1,034 | 4,859 | | **Total sinking fund payments** | **$149,981** | **$ 2,258** | **$9,034** | **$9,034** | **$9,034** | **$9,034** | **$ 111,587** | [Note 15. Income Taxes](index=32&type=section&id=Note%2015.%20Income%20Taxes) This note details the company's current and deferred income tax expenses/benefits and explains the factors contributing to the difference between the statutory U.S. federal income tax rate of 21% and the effective tax rates for the reported periods - Current income tax expense was ($**0.4**) million for Q3 2024 and ($**2.4**) million for the nine months ended September 30, 2024[122](index=122&type=chunk) - Deferred income tax expense was ($**5.7**) million for Q3 2024 and ($**3.1**) million for the nine months ended September 30, 2024[123](index=123&type=chunk) - The effective tax rates for the three and nine months ended September 30, 2024, were both **21.1%**, primarily influenced by higher state taxes, marginal well tax credits, and a windfall tax benefit from stock compensation[124](index=124&type=chunk) - The significant impact on the 2023 effective tax rate was the release of the valuation allowance due to achieving three years of cumulative book income[124](index=124&type=chunk) [Note 16. Beta Pipeline Incident](index=32&type=section&id=Note%2016.%20Beta%20Pipeline%20Incident) This note provides an update on the Beta Pipeline Incident, including the restart of operations in April 2023, the resolution of federal and state criminal matters, and the settlement of civil claims. The company estimates total costs for the incident to be between $190.0 million and $210.0 million, with insurance covering a material portion - The Beta Field pipeline operations **restarted on April 10, 2023**, after receiving required regulatory approvals[126](index=126&type=chunk) - The company **resolved all criminal matters**, agreeing to a **$7.1 million** federal fine and **$5.8 million** reimbursement, plus a **$4.9 million** state fine[127](index=127&type=chunk) - A **$50.0 million** class action civil settlement was **finalized in April 2023**, funded by insurance, and the company received **$96.5 million** from vessels that struck the pipeline[130](index=130&type=chunk) - Estimated total costs for the Incident are between **$190.0 million** and **$210.0 million**, with insurance covering a **material portion**[133](index=133&type=chunk)[135](index=135&type=chunk) [Note 17. Subsequent Events](index=35&type=section&id=Note%2017.%20Subsequent%20Events) This note refers to the borrowing base redetermination as a subsequent event, with further details provided in Note 7 - A subsequent event on October 25, 2024, involved an amendment to the Revolving Credit Facility, reducing the borrowing base from **$150.0 million** to **$145.0 million** and increasing elected commitments to **$145.0 million**[80](index=80&type=chunk)[137](index=137&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.](index=36&type=section&id=ITEM%202.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS.) This section provides management's perspective on Amplify Energy's financial condition and results of operations, discussing industry trends, recent developments, operational focus, revenue sources, critical accounting policies, and a detailed comparison of financial performance for the three and nine months ended September 30, 2024 and 2023 [Overview](index=36&type=section&id=Overview) This section outlines the company's primary sources of liquidity and expected funding for operations and development activities - Amplify Energy operates in a **single reportable segment** focused on the acquisition, development, exploitation, and production of oil and natural gas properties[140](index=140&type=chunk) - The company's **primary assets are producing oil and natural gas properties** in Oklahoma, the Rockies (Bairoil), federal waters offshore Southern California (Beta), East Texas/North Louisiana, and the Eagle Ford (non-op)[140](index=140&type=chunk) [Industry Trends](index=36&type=section&id=Industry%20Trends) This section covers industry trends - The company monitors factors influencing commodity prices, including OPEC actions, geopolitical conflicts (Russia-Ukraine, Middle East), global inventories, inflation, monetary policy, and governmental policies on lower carbon energy[141](index=141&type=chunk) - Commodity prices are **expected to remain volatile** due to these factors, creating uncertainty for the business[141](index=141&type=chunk) [Recent Developments](index=36&type=section&id=Recent%20Developments) This section covers recent developments - On October 25, 2024, the Revolving Credit Facility's borrowing base was reduced from **$150.0 million** to **$145.0 million**, and aggregate elected commitments increased from **$135.0 million** to **$145.0 million**[142](index=142&type=chunk) [Business Environment and Operational Focus](index=36&type=section&id=Business%20Environment%20and%20Operational%20Focus) This section covers business environment and operational focus - Key financial and operational metrics used to assess performance include production volumes, realized prices, cash settlements on commodity derivatives, lease operating expense, gathering, processing and transportation, general and administrative expense, and Adjusted EBITDA[143](index=143&type=chunk) [Sources of Revenues](index=36&type=section&id=Sources%20of%20Revenues) This section covers sources of revenues - Revenues are derived from the sale of natural gas, oil, and NGLs, with all production revenues originating from the continental United States[144](index=144&type=chunk) - The company uses derivative contracts to mitigate the impact of volatile commodity prices, recognizing changes in fair value of unsettled instruments in earnings[144](index=144&type=chunk) [Critical Accounting Policies and Estimates](index=37&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section covers critical accounting policies and estimates - Significant estimates include oil and natural gas reserves, fair value estimates, revenue recognition, and contingencies and insurance accounting[145](index=145&type=chunk) - These estimates are subjective, require professional judgment, and involve complex analysis, with potential for significant impact on financial position, results of operations, and cash flows due to future revisions[145](index=145&type=chunk)[146](index=146&type=chunk) [Revenue Payables in Suspense](index=37&type=section&id=Revenue%20Payables%20in%20Suspense) This section covers revenue payables in suspense - For the nine months ended September 30, 2024, the company released **$8.4 million** of net revenues in suspense[147](index=147&type=chunk)[148](index=148&type=chunk) Impact of Revenue Payables in Suspense Releases (Nine Months Ended September 30, 2024) | | In thousands | |:---|:---| | Oil and natural gas sales | $ 4,023 | | Other revenues | 4,829 | | Severance tax and other deducts | (433) | | **Total net revenue** | **$ 8,419** | | **Production volumes:** | | | Oil (MBbls) | 33 | | NGLs (MBbls) | 31 | | Natural gas (MMcf) | 441 | | Total (MBoe) | 138 | | Total (MBoe/d) | 0.50 | [Results of Operations](index=38&type=section&id=Results%20of%20Operations) This section covers results of operations [For the Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023](index=39&type=section&id=For%20the%20Three%20Months%20Ended%20September%2030,%202024%20Compared%20to%20the%20Three%20Months%20Ended%20September%2030,%202023) For the three months ended September 30, 2024, Amplify Energy reported net income of $22.7 million, a significant improvement from a net loss of $13.4 million in the prior year. This was driven by a net gain on commodity derivative instruments and lower operating expenses, despite a decrease in total revenues and production volumes - Net income was **$22.7 million** for Q3 2024, compared to a net loss of **$13.4 million** for Q3 2023[152](index=152&type=chunk) - Total revenues decreased from **$76.8 million** in Q3 2023 to **$69.9 million** in Q3 2024, primarily due to lower commodity prices and production volumes (**19.0 MBoe/d** vs. **20.6 MBoe/d**)[153](index=153&type=chunk)[151](index=151&type=chunk) - The company recognized a net gain on commodity derivative instruments of **$25.0 million** in Q3 2024, a reversal from a **$23.3 million** net loss in Q3 2023[159](index=159&type=chunk) - Lease operating expenses decreased by **$3.2 million**, and gathering, processing, and transportation expenses decreased by **$0.7 million**[155](index=155&type=chunk)[156](index=156&type=chunk) [For the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023](index=41&type=section&id=For%20the%20Nine%20Months%20Ended%20September%2030,%202024%20Compared%20to%20the%20Nine%20Months%20Ended%20September%2030,%202023) For the nine months ended September 30, 2024, Amplify Energy reported net income of $20.4 million, a significant decrease from $349.2 million in the prior year, primarily due to the absence of the $84.9 million litigation settlement and $17.9 million LOPI insurance proceeds received in 2023. Higher commodity prices and Beta's return to production partially offset this - Net income was **$20.4 million** for the nine months ended September 30, 2024, down from **$349.2 million** in the same period of 2023[164](index=164&type=chunk) - Oil, natural gas, and NGL revenues increased to **$215.8 million** in 2024 from **$210.1 million** in 2023, driven by higher commodity prices, Beta's return to production, and a **$4.0 million** revenue suspense release[165](index=165&type=chunk) - Other revenues decreased from **$18.5 million** in 2023 (including **$17.9 million** LOPI insurance proceeds) to **$9.9 million** in 2024 (including a **$4.8 million** revenue suspense release)[166](index=166&type=chunk) - A net gain on commodity derivative instruments of **$7.3 million** was recognized in 2024, compared to a net loss of **$4.4 million** in 2023[172](index=172&type=chunk) - Litigation settlement of **$84.9 million** was recorded in 2023, with no comparable amount in 2024[175](index=175&type=chunk) [Adjusted EBITDA](index=42&type=section&id=Adjusted%20EBITDA) This section reconciles net income and net cash from operating activities to Adjusted EBITDA, a non-GAAP financial measure - **Adjusted EBITDA** is a non-GAAP financial measure used to evaluate operating performance and compare results without regard to financing methods or capital structure[180](index=180&type=chunk) Reconciliation of Net Income (Loss) to Adjusted EBITDA (In thousands) | | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | Net income (loss) | $ 22,652 | $ (13,403) | $ 20,375 | $ 349,172 | | Interest expense, net | 3,756 | 4,470 | 10,915 | 13,908 | | Income tax expense (benefit) - current | 412 | 1,441 | 2,364 | 7,115 | | Income tax expense (benefit) - deferred | 5,650 | (4,708) | 3,082 | (264,130) | | DD&A | 8,102 | 7,489 | 24,168 | 20,369 | | Accretion of AROs | 2,125 | 2,005 | 6,282 | 5,922 | | Losses (gains) on commodity derivative instruments | (25,047) | 23,328 | (7,258) | 4,371 | | Cash settlements (paid) received on expired commodity derivative instruments | 5,582 | (3,890) | 13,565 | (5,082) | | Pipeline incident loss | 247 | 559 | 1,454 | 15,682 | | Litigation settlement | — | — | — | (84,875) | | Share-based compensation expense | 1,815 | 1,327 | 5,113 | 3,608 | | **Adjusted EBITDA** | **$ 25,544** | **$ 19,483** | **$ 81,194** | **$ 62,841** | Reconciliation of Net Cash from Operating Activities to Adjusted EBITDA (In thousands) | | For the Three Months Ended September 30, 2024 | For the Three Months Ended September 30, 2023 | For the Nine Months Ended September 30, 2024 | For the Nine Months Ended September 30, 2023 | |:---|:---|:---|:---|:---| | Net cash provided by operating activities | $ 15,737 | $ 18,007 | $ 38,838 | $ 113,228 | | Changes in working capital | 5,937 | (4,985) | 27,502 | 2,443 | | Interest expense, net | 3,756 | 4,470 | 10,915 | 13,908 | | Pipeline incident loss | 247 | 559 | 1,454 | 15,682 | | Litigation settlement | — | — | — | (84,875) | | Income tax expense (benefit) - current | 412 | 1,441 | 2,364 | 7,115 | | **Adjusted EBITDA** | **$ 25,544** | **$ 19,483** | **$ 81,194** | **$ 62,841** | [Liquidity and Capital Resources](index=45&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity, capital resources, and cash flow management strategies [Overview](index=45&type=section&id=Overview) This section outlines the company's primary sources of liquidity and expected funding for operations and development activities - **Primary sources of liquidity** are cash flows from operating activities and borrowings under the Revolving Credit Facility[186](index=186&type=chunk) - **Expected cash flows** and Revolving Credit Facility availability are anticipated to fund 2024 development activities and operating needs[186](index=186&type=chunk) [Impact of the Beta Pipeline Incident](index=45&type=section&id=Impact%20of%20the%20Beta%20Pipeline%20Incident) This section discusses the ongoing financial and cash flow impact of the Beta Pipeline Incident and insurance coverage - The Beta Pipeline Incident continues to have an impact on financial condition and cash flow generation[187](index=187&type=chunk) - Customary insurance policies, including loss of production income insurance (expired March 31, 2023), have covered a **material portion** of aggregate costs[187](index=187&type=chunk) [Capital Markets](index=45&type=section&id=Capital%20Markets) This section addresses the company's capital markets strategy for funding future growth projects and acquisitions - **No near-term capital markets activity is anticipated**[188](index=188&type=chunk) - The company will evaluate public debt and equity for future growth projects and acquisitions[188](index=188&type=chunk) [Hedging](index=45&type=section&id=Hedging) This section describes the company's hedging strategy to mitigate commodity price volatility and stabilize cash flows - Hedging is an **important strategy to reduce cash flow volatility** and manage commodity price fluctuations[189](index=189&type=chunk) - The company targets hedging **50%-75%** of estimated production from total proved developed producing reserves over a one-to-three-year period[189](index=189&type=chunk) [Capital Expenditures](index=45&type=section&id=Capital%20Expenditures) This section details the company's capital expenditures for the reported period, focusing on key development programs - Total capital expenditures were approximately **$55.3 million** for the nine months ended September 30, 2024[191](index=191&type=chunk) - Expenditures were primarily for the Beta development program, capital workovers, facilities upgrades in Beta and Oklahoma, and non-operated drilling/completion activities in East Texas and the Eagle Ford[191](index=191&type=chunk) [Working Capital](index=45&type=section&id=Working%20Capital) This section analyzes the company's working capital position, influenced by accounts receivable and payable dynamics - **Working capital requirements** are driven by changes in accounts receivable and accounts payable, influenced by commodity prices and payment timing[192](index=192&type=chunk) - As of September 30, 2024, the company had a working capital deficit (excluding commodity derivatives) of **$11.6 million**[194](index=194&type=chunk) [Debt Agreement](index=47&type=section&id=Debt%20Agreement) This section provides details on the company's Revolving Credit Facility, including outstanding balances and compliance with covenants - Outstanding loans under the Revolving Credit Facility were **$120.0 million** as of September 30, 2024[195](index=195&type=chunk) - Available borrowings under the Revolving Credit Facility were approximately **$15.0 million** as of September 30, 2024[196](index=196&type=chunk) - The company was in **compliance** with all financial and non-financial covenants as of September 30, 2024[196](index=196&type=chunk) - On October 25, 2024, the borrowing base was reduced to **$145.0 million**, and elected commitments increased to **$145.0 million**[197](index=197&type=chunk) [Material Cash Requirements](index=47&type=section&id=Material%20Cash%20Requirements) This section outlines the company's significant contractual cash obligations, including debt, leases, and decommissioning payments - **Contractual commitments** include debt agreements (interest and principal payments) and operating lease obligations[199](index=199&type=chunk)[200](index=200&type=chunk) - Future sinking fund payments for decommissioning liabilities are **$2.3 million** for the remainder of 2024 and **$9.0 million** per year thereafter until fully funded[201](index=201&type=chunk) [Cash Flows from Operating, Investing and Financing Activities](index=47&type=section&id=Cash%20Flows%20from%20Operating,%20Investing%20and%20Financing%20Activities) This section summarizes the company's cash flow performance across operating, investing, and financing activities Summary of Cash Flows (In thousands) | | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | |:---|:---|:---| | Net cash provided by operating activities | $ 38,838 | $ 113,228 | | Net cash used in investing activities | (62,655) | (29,965) | | Net cash used in financing activities | 3,071 | (76,876) | - Operating cash flows decreased significantly due to the **$84.9 million** litigation settlement received in 2023 not recurring in 2024[203](index=203&type=chunk) - Net cash used in investing activities increased to **$62.7 million** in 2024, primarily due to **$54.1 million** in additions to oil and natural gas properties[206](index=206&type=chunk) - Financing activities resulted in net borrowings of **$5.0 million** on the Revolving Credit Facility in 2024, compared to net repayments of **$70.0 million** in 2023[208](index=208&type=chunk) [Off–Balance Sheet Arrangements](index=48&type=section&id=Off%E2%80%93Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet arrangements for the company as of the reporting date - The company had **no off-balance sheet arrangements** as of September 30, 2024[208](index=208&type=chunk) [Recently Issued Accounting Pronouncements](index=48&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section directs readers to Note 2 for information on recently issued accounting pronouncements affecting the company - Refer to Note 2 for a discussion of recently issued accounting pronouncements[209](index=209&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.](index=48&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK.) Amplify Energy Corp. is a smaller reporting company and is therefore not required to provide quantitative and qualitative disclosures about market risk - The company is a **smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk**[210](index=210&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES.](index=49&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES.) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of September 30, 2024, concluding they were effective at a reasonable assurance level. No material changes in internal control over financial reporting occurred during the most recent quarter - Disclosure controls and procedures were evaluated and **deemed effective at the reasonable assurance level** as of September 30, 2024[211](index=211&type=chunk) - **No material changes in internal control over financial reporting occurred** during the most recent quarter[212](index=212&type=chunk) PART II—OTHER INFORMATION This part provides other information, including legal proceedings, risk factors, and equity security sales [ITEM 1. LEGAL PROCEEDINGS.](index=50&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS.) This section refers to Note 16 for details on legal proceedings related to the Beta Pipeline Incident and emphasizes the inherent unpredictability of litigation outcomes, which can impact the company through defense costs, settlements, and diversion of management resources - Legal proceedings associated with the **Beta Pipeline Incident** are discussed in Note 16[214](index=214&type=chunk) - The results of current or future litigation cannot be predicted with certainty and may adversely impact the company due to **costs and diversion of resources**[215](index=215&type=chunk) [ITEM 1A. RISK FACTORS.](index=50&type=page&id=ITEM%201A.%20RISK%20FACTORS.) Amplify Energy's business faces numerous risks, and this section states that there have been no material changes to the risk factors previously disclosed in Part I, Item 1A of its 2023 Form 10-K - **No material changes to the risk factors disclosed** in Part I, Item 1A of the 2023 Form 10-K[216](index=216&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.](index=50&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS.) This section summarizes the company's common share repurchase activity for the three months ended September 30, 2024, which primarily involved net settlements by shareholders to cover tax withholding requirements upon vesting of restricted stock Common Shares Repurchased (Three Months Ended September 30, 2024) | Period | Total Number of Shares Purchased | Average Price per Share | |:---|:---|:---| | July 1, 2024 - July 31, 2024 | 8,871 | $ 6.96 | | August 1, 2024 - August 31, 2024 | 2,877 | $ 7.00 | | September 1, 2024 - September 30, 2024 | — | $ — | - Common shares were generally **net-settled by shareholders** to cover required withholding tax upon vesting[217](index=217&type=chunk) [ITEM 3. DEFAULTS UPON SENIOR SECURITIES.](index=50&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES.) This section confirms that the company reported no defaults on its senior securities during the period - **No defaults upon senior securities were reported**[218](index=218&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES.](index=50&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES.) This section states that mine safety disclosures are not applicable to the company - **This item is not applicable**[218](index=218&type=chunk) [ITEM 5. OTHER INFORMATION.](index=50&type=section&id=ITEM%205.%20OTHER%20INFORMATION.) This section indicates that no other information was reported for this item - **No other information was reported**[218](index=218&type=chunk) [ITEM 6. EXHIBITS.](index=51&type=section&id=ITEM%206.%20EXHIBITS.) This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q Selected Exhibits | Exhibit Number | Description | |:---|:---| | 3.1 | Second Amended and Restated Certificate of Incorporation | | 3.2 | Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation | | 3.3 | Third Amended and Restated Bylaws | | 10.1 | Borrowing Base Redetermination, Commitment Increase and First Amendment to Amended and Restated Credit Agreement | | 31.1* | Certification of Chief Executive Officer | | 31.2* | Certification of Chief Financial Officer | | 32.1** | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18. U.S.C. Section 1350 | | 101.INS* | Inline XBRL Instance Document | | 104* | Cover Page Interactive Data File | [SIGNATURES](index=52&type=section&id=SIGNATURES) This section contains the official signatures certifying the accuracy of the report - The report is signed by James Frew, Senior Vice President and Chief Financial Officer, and Eric Dulany, Vice President and Chief Accounting Officer, on November 6, 2024[220](index=220&type=chunk)[221](index=221&type=chunk)