Amplify Energy (US:AMPY)2025-08-06 20:22PART I—FINANCIAL INFORMATION Financial Statements H1 2025 saw improved net income and operating cash flow, despite lower revenues and an impairment charge Note 3 – Revenue Total oil and natural gas sales decreased to $137.1 million in H1 2025, primarily due to lower oil sales, partially offset by increased natural gas sales Disaggregation of Revenue (in thousands) | Revenue Stream | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Oil | $49,705 | $57,789 | $99,686 | $115,210 | | NGLs | $5,648 | $6,565 | $11,806 | $14,091 | | Natural gas | $11,421 | $7,992 | $25,623 | $18,367 | | Total | $66,774 | $72,346 | $137,115 | $147,668 | Note 4 – Acquisition and Divestitures The company divested Eagle Ford and Haynesville assets, incurring an $8.4 million impairment, and terminated its merger agreement with Juniper Capital - On June 30, 2025, the company approved a plan to sell its non-operated Eagle Ford assets. On July 1, 2025, a definitive agreement was signed for a contract price of $23.0 million. An impairment expense of approximately $8.4 million was recognized in Q2 2025 in connection with this planned divestiture81 - The company monetized interests in the Haynesville basin through two transactions in 2025, generating total net proceeds of $7.8 million ($6.3 million in January and $1.5 million in May)8283 - On April 25, 2025, the company mutually terminated its previously announced merger agreement with Juniper Capital85 Note 6 – Risk Management and Derivative Instruments The company reported a $7.8 million net gain on commodity derivatives in H1 2025, reversing a prior-year loss, and holds various fixed-price swaps and collars Open Commodity Positions as of June 30, 2025 | Contract Type | 2025 | 2026 | 2027 | 2028 | | :--- | :--- | :--- | :--- | :--- | | Natural Gas Swaps | | | | | | Avg. Monthly Volume (MMBtu) | 560,000 | 515,000 | 197,500 | 20,000 | | W.A. Fixed Price | $3.75 | $3.80 | $3.96 | $3.86 | | Natural Gas Collars | | | | | | Avg. Monthly Volume (MMBtu) | 500,000 | 517,500 | 640,000 | 67,500 | | W.A. Floor/Ceiling Price | $3.50 / $3.90 | $3.58 / $4.11 | $3.54 / $4.31 | $3.50 / $4.52 | | Crude Oil Swaps | | | | | | Avg. Monthly Volume (Bbls) | 170,000 | 146,500 | 45,667 | — | | W.A. Fixed Price | $70.32 | $65.77 | $62.57 | — | | Crude Oil Collars | | | | | | Avg. Monthly Volume (Bbls) | 17,000 | — | — | — | | W.A. Floor/Ceiling Price | $70.00 / $80.20 | — | — | — | - For the six months ended June 30, 2025, the company recorded a net gain of $7.8 million on commodity derivative instruments, compared to a net loss of $17.8 million for the same period in 2024100 Note 8 – Long-Term Debt The company had $130.0 million outstanding on its Revolving Credit Facility, received a waiver for a current ratio covenant breach, and saw its borrowing base reduced post-asset sale - As of June 30, 2025, $130.0 million was outstanding under the Revolving Credit Facility, with a borrowing base of $145.0 million102104 - The company's current ratio was 0.90 to 1.00 as of June 30, 2025, below the required minimum of 1.00 to 1.00. A waiver for this noncompliance was obtained from lenders on July 31, 2025107 - Subsequent to the Eagle Ford asset sale, the borrowing base was reduced from $145.0 million to $135.0 million on July 2, 2025108 Note 16 – Commitments and Contingencies The company incurred $0.6 million in Beta Pipeline Incident expenses and faces $142.4 million in future Beta decommissioning funding commitments - For the six months ended June 30, 2025, the company incurred $0.6 million in non-reimbursable expenses related to the Beta Pipeline Incident, classified as 'Pipeline Incident Loss'144 - The company has future funding commitments of $142.4 million for federal and state escrow funds related to Beta decommissioning obligations. Payments for the remainder of 2025 are $4.5 million148 Note 18 – Subsequent Events The company completed the $23.0 million sale of its Eagle Ford assets on July 1, 2025, resulting in a reduced borrowing base - On July 1, 2025, the company completed the sale of its non-operated Eagle Ford assets for an aggregate cash purchase price of $23.0 million155 - In connection with the asset sale, the company's borrowing base was reduced (See Note 8 for details)156 Condensed Consolidated Balance Sheet Data (in thousands) | | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $70,013 | $71,777 | | Property and equipment, net | $383,929 | $386,218 | | Total assets | $771,307 | $747,076 | | Total current liabilities | $83,254 | $68,138 | | Long-term debt | $130,000 | $127,000 | | Total liabilities | $360,002 | $338,164 | | Total stockholders' equity | $411,305 | $408,912 | Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | | Three Months Ended June 30 | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Total revenues | $68,361 | $79,503 | $140,411 | $155,802 | | Total costs and expenses | $55,802 | $65,951 | $131,846 | $151,332 | | Impairment expense | $8,448 | $— | $8,448 | $— | | Loss (gain) on commodity derivative instruments | $(22,162) | $1,225 | $(7,845) | $17,789 | | Net income (loss) | $6,384 | $7,119 | $523 | $(2,277) | | Basic and diluted EPS | $0.15 | $0.17 | $0.01 | $(0.06) | Condensed Consolidated Statements of Cash Flows (in thousands) | | Six Months Ended June 30 | | | :--- | :--- | :--- | | | 2025 | 2024 | | Net cash provided by operating activities | $49,190 | $23,101 | | Net cash used in investing activities | $(50,180) | $(44,577) | | Net cash used in financing activities | $990 | $1,232 | | Net change in cash and cash equivalents | $— | $(20,244) | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discussed H1 2025 improved net income despite lower production, ongoing asset divestitures, leadership changes, and sufficient liquidity - The company announced significant management changes effective July 22, 2025: Daniel Furbee was appointed CEO, and James Frew was appointed President and CFO, following the transition of Martyn Willsher to a Special Advisor role163165166 - On July 22, 2025, the company engaged a third-party advisor to explore the complete divestiture of its assets in East Texas and Oklahoma162 - The company received a waiver for non-compliance with its minimum current ratio covenant for the quarter ended June 30, 2025, and expects to maintain compliance in future quarters226 Key Operational Metrics Comparison (per Boe) | | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Average realized sales price | $40.96 | $40.07 | | Lease operating expense | $22.72 | $20.24 | | Gathering, processing and transportation | $2.69 | $2.62 | | General and administrative expense | $6.58 | $4.93 | Results of Operations Q2 2025 net income decreased due to impairment and higher G&A, while H1 2025 net income improved significantly driven by derivative gains and asset sales - Q2 2025 vs Q2 2024: Net income decreased to $6.4 million from $7.1 million. The decline was influenced by an $8.4 million impairment charge and a $2.8 million increase in G&A expenses, which were largely offset by a significant unrealized gain on commodity derivatives176183184 - H1 2025 vs H1 2024: Net income improved to $0.5 million from a net loss of $2.3 million. Key drivers were a $7.8 million gain on commodity derivatives (compared to a $17.8 million loss in H1 2024) and a $7.8 million gain on the sale of properties192201203 - Lease operating expenses per Boe increased to $22.72 for H1 2025 from $20.24 in H1 2024, primarily due to increased electricity costs at the Bairoil property195 Non-GAAP Financial Measures Adjusted EBITDA decreased to $38.4 million and Adjusted Net Income to $1.5 million in H1 2025, primarily due to derivative gain differences from prior year Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | | Three Months Ended June 30 | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net income (loss) | $6,384 | $7,119 | $523 | $(2,277) | | Adjustments | ... | ... | ... | ... | | Adjusted EBITDA | $18,983 | $30,749 | $38,427 | $55,650 | Reconciliation of Net Income (Loss) to Adjusted Net Income (Loss) (in thousands) | | Three Months Ended June 30 | | Six Months Ended June 30 | | | :--- | :--- | :--- | :--- | :--- | | | 2025 | 2024 | 2025 | 2024 | | Net (loss) income | $6,384 | $7,119 | $523 | $(2,277) | | Adjustments | ... | ... | ... | ... | | Adjusted net income (loss) | $(2,270) | $14,166 | $1,499 | $20,945 | Liquidity and Capital Resources The company's liquidity relies on operations and its credit facility, facing a $23.2 million working capital deficit and significant decommissioning commitments - Total capital expenditures were approximately $48.6 million for the six months ended June 30, 2025, primarily for the Beta development program and non-operated activities in East Texas and the Eagle Ford222 - As of June 30, 2025, the company had a working capital deficit of $23.2 million (excluding commodity derivatives)224 - Future commitments for sinking fund payments related to Beta decommissioning total $4.5 million for the remainder of 2025 and $9.0 million per year thereafter until fully funded230 Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide disclosures on market risk - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, Amplify Energy Corp. is not required to provide information for this item242 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls - Based on an evaluation as of June 30, 2025, the principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level243 - There were no changes in internal control over financial reporting during the most recent quarter that have materially affected, or are reasonably likely to materially affect, internal controls244 PART II—OTHER INFORMATION Legal Proceedings The company refers to Note 16 and its 2024 Form 10-K for details on legal proceedings, particularly the Beta Pipeline Incident - For a discussion of legal proceedings, the report refers to Note 16 of the financial statements and the 2024 Form 10-K, specifically mentioning the proceedings associated with the Beta Pipeline Incident247 Risk Factors No material changes to the risk factors previously disclosed in the company's 2024 Form 10-K have occurred - There have been no material changes to the risk factors disclosed in Part I, Item 1A of the company's 2024 Form 10-K249 Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 1,137 common shares in Q2 2025 at $3.74 per share for tax withholding on equity awards Share Repurchase Activity - Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,137 | $3.74 | | May 2025 | — | $— | | June 2025 | — | $— | - The repurchased common shares were net-settled by shareholders to cover required withholding tax upon vesting of equity awards250 Exhibits This section lists all exhibits filed with the quarterly report, including key agreements and required SEC certifications