Amplify Energy (US:AMPY)2019-05-10 20:10Production and Revenue - Average daily oil production decreased by 24.2% to 3,381 Bbls in Q1 2019 compared to 4,463 Bbls in Q4 2018[152] - Average daily natural gas production decreased by 17.9% to 37,919 Mcf in Q1 2019 compared to 46,161 Mcf in Q4 2018[152] - Total revenues for Q1 2019 were $29.153 million, down from $51.789 million in Q1 2018, reflecting a decrease of 43.8%[160] - The company reported a decrease in net Boe/day production by 19.0% to 13,239 Boe in Q1 2019 compared to 16,351 Boe in Q4 2018[152] - Oil production in the Mississippian Lime decreased by 1,183 Boe/day, or 25.9%, for the three months ended March 31, 2019, compared to the same period in 2018[164] - Average oil sales prices decreased by $8.76 per barrel, or 14.0%, due to lower prevailing market prices[164] - Average natural gas sales prices increased by $0.18 per Mcf, or 10.2%, due to higher prevailing index prices at delivery points[166] Expenses and Impairments - The company incurred operational capital expenditures of $6.4 million in the Mississippian Lime basin during Q1 2019[154] - An impairment of $9.7 million was recognized in Q1 2019 due to the full cost ceiling test, impacting net loss and shareholders' equity[156] - Total expenses decreased by $4.1 million, or 9.5%, to $38.98 million for the three months ended March 31, 2019, compared to $43.09 million for the same period in 2018[168] - General and administrative expenses decreased by $3.4 million, or 34.7%, to $6.4 million for the three months ended March 31, 2019[175] - An impairment charge of $9.7 million was recorded during the three months ended March 31, 2019, primarily due to a decrease in the PV-10 value of proven oil and natural gas reserves[173] Cash Flow and Debt - As of March 31, 2019, cash and cash equivalents were $717,000, down from $11,341,000 on December 31, 2018[179] - Net cash provided by operating activities decreased to $13.2 million for the three months ended March 31, 2019, compared to $22.1 million for the same period in 2018, primarily due to a $23.0 million decrease in revenues[192] - Total long-term debt increased to $59.1 million as of March 31, 2019, from $23.1 million on December 31, 2018[179] - The company had $109.0 million available under its Reserve-Based Lending (RBL) facility as of March 31, 2019, with a current borrowing base of $170.0 million[183] - Net cash used in investing activities was $9.5 million for the three months ended March 31, 2019, a decrease from $31.8 million in the same period of 2018, reflecting a pause in drilling activities[193] - Net cash used in financing activities was $14.3 million for the three months ended March 31, 2019, compared to $50.5 million in the same period of 2018[193] - The company is in compliance with its debt covenants as of March 31, 2019, including an EBITDA to interest expense coverage ratio of not less than 2.50:1.00[186] Risk Management and Hedging - The company engages in hedging activities to manage exposure to oil and natural gas price volatility, which may limit the ability to fully benefit from price increases[182] - The company has hedged a significant portion of its future production to mitigate price risk from fluctuations in oil and natural gas prices[217] - The company utilizes fixed price swaps and three-way collars to manage volatility in oil and natural gas prices on a portion of future expected production[218] - The company is exposed to market risks including commodity price risk, interest rate risk, and counterparty risk, managed through a risk management program[215] - The company has not utilized interest rate derivatives historically but may consider them in the future to manage interest rate exposure[220] Regulatory and Compliance - The company is subject to regulatory risks regarding saltwater disposal, which may affect operational costs and production volumes[159] - The company’s management concluded that its disclosure controls and procedures were effective as of March 31, 2019, ensuring timely reporting of required information[223] - There were no changes in the internal control over financial reporting during the quarter ended March 31, 2019, that materially affected the controls[224] Accounting Policies - The company adopted ASU 2016-02, which requires lessees to record a right-of-use asset and a lease liability for all leases longer than 12 months[212] - The company recognized lease payments related to short-term leases on a straight-line basis over the lease term, impacting profit or loss accordingly[200] - The company has made an accounting policy election not to apply lease recognition requirements to short-term leases, recognizing lease payments on a straight-line basis over the lease term[209] - The company is currently evaluating the impact of ASU 2016-13, which introduces an expected loss model for measuring credit losses, but does not anticipate a material impact on consolidated financial statements[213]