Amplify Energy (US:AMPY)2024-03-06 23:03Reserves and Production - As of December 31, 2023, the total estimated proved reserves were approximately 98.1 MMBoe, consisting of approximately 42% oil, 38% natural gas, and 20% NGLs, with 98% classified as proved developed reserves[42] - The average net production for the three months ended December 31, 2023, was 20.8 MBoe/d, implying a reserve-to-production ratio of approximately 12.9 years[42] - The Oklahoma region accounted for approximately 30% of the estimated proved reserves and 27% of the average daily net production for the three months ended December 31, 2023, with 29.5 MMBbls of estimated net proved reserves[46] - The Bairoil properties contained 23.5 MMBbls of estimated net proved oil and NGLs reserves as of December 31, 2023, generating average net production of 3.4 MBoe/d for the same period[48] - The East Texas/North Louisiana region had 29.9 MMBoe of estimated proved reserves, with an average production of 8.0 MBoe/d, representing 38% of total reserves[45] - The average daily net production for the three months ended December 31, 2023, was 11.9 MBoe/d, with 3.0 MBoe/d from the Beta field and 8.0 MBoe/d from the East Texas/North Louisiana region[51][52] - The company produced from 2,516 gross (1,348 net) producing wells across its properties, with an average working interest of 54%[42] - The average net production from the Dacoma field for the year ended December 31, 2023, was 4.6 MBoe/d, down from 4.9 MBoe/d in 2022[47] - Total production volumes for the year ended December 31, 2023, were 2,145 MBoe with an average sales price of $30.36 per Boe[70] - The average net production for the year was 20.5 MBoe/d[70] Financial Performance and Risks - During 2023, commodity prices generally declined compared to the same period in 2022, leading to a decrease in revenues, with expectations of continued price volatility in 2024[43] - The standardized measure of discounted future net cash flows attributable to the company’s properties was approximately $626.1 million as of December 31, 2023[61] - The company added 868 MBoe of proved undeveloped reserves during the year ended December 31, 2023, primarily due to the addition of 4 Beta PUD locations[66] - Total costs incurred to develop proved undeveloped reserves were approximately $4.4 million, with $2.6 million incurred in fiscal year 2023[67] - The average unhedged sales price for oil was $78.22 per Bbl, and for natural gas, it was $2.64 per MMBtu as of December 31, 2023[61][62] - A prolonged decline in commodity prices could render many of the company's development and production projects uneconomical[172] - The company may incur impairment charges that could adversely affect its results of operations in the period taken[173] - Inflationary factors, such as increases in labor costs and material costs, may adversely affect the company's financial position and operating results[174] - A significant increase in the differential between benchmark prices and the wellhead price could significantly reduce cash flow and adversely affect financial condition[189] - The estimated reserves and future production rates are based on many assumptions that may turn out to be inaccurate, which could materially affect the quantities and present value of estimated reserves[191] Regulatory and Environmental Compliance - The company is subject to numerous risks, including volatility in oil, natural gas, and NGL prices, which could materially affect its financial condition and results of operations[35] - The company is subject to stringent federal, state, and local environmental regulations, which may impose significant compliance costs and affect operational growth[97] - The Oil Pollution Act of 1990 imposes strict liability on the company for oil spills, requiring significant financial assurance for environmental cleanup and restoration costs[106] - The company generates solid and hazardous wastes regulated under the Resource Conservation and Recovery Act, with potential future changes in classification that could increase disposal costs[107] - The company is required to develop and implement stormwater pollution prevention plans, which may incur costs related to monitoring and treatment[111] - The company has maintained compliance with all required discharge permits necessary for operations, mitigating risks of administrative, civil, and criminal penalties[112] - The company utilizes hydraulic fracturing extensively in onshore operations, which is subject to increasing scrutiny and potential regulatory changes[115] - The EPA's proposed rules aim to establish stricter standards for methane and VOC emissions from oil and gas facilities, with compliance deadlines extending over the next few years[123] - The company anticipates potential capital expenditures for air pollution control equipment to maintain compliance with air emissions regulations, which could impact operations[125] - The U.S. aims to reduce GHG emissions by 50-52% by 2030 compared to 2005 levels, with periodic updates on progress[127] Workforce and Safety - The company had 214 employees as of December 31, 2023, with no employees represented by labor unions[157] - The company emphasizes safety as a top priority, implementing a robust health and safety program that includes training, risk assessment, and incident reporting[158] - The compensation program is designed to attract and retain talent, aligning employee interests with those of stakeholders[160] - Employees are provided with training opportunities to develop skills in leadership, safety, and technical acumen, supporting career advancement[161] - As of December 31, 2023, approximately 17% of the total workforce self-identified as a racial or ethnic minority and approximately 18% self-identified as female[162] Market and Competitive Landscape - The company is dependent on a small number of significant customers, with three customers accounting for 10% or more of total reported revenues for the year ended December 31, 2023, posing a risk to revenue stability[219] - The competitive landscape in the oil and natural gas industry may hinder the company's ability to acquire properties and discover reserves, affecting overall business operations[223] - The company faces trade credit risk due to potential nonperformance by vendors and counterparties, which could impact financial condition and cash flows[222] - The cyclical nature of the industry may lead to shortages of rigs, equipment, and personnel, which could restrict the company's ability to conduct planned operations and affect financial performance[214] Debt and Financial Management - The company is required to maintain a maximum total debt to EBITDAX ratio of 3.00 to 1.00 under its Revolving Credit Facility[179] - The company must hedge at least 50% - 75% of its estimated production from total proved developed producing reserves[179] - The company’s Revolving Credit Facility allows borrowing up to the borrowing base, which is primarily based on the estimated value of oil and natural gas properties and commodity derivative contracts, subject to semiannual redetermination[185] - The company intends to maintain a portfolio of commodity derivative contracts covering at least 50%-75% of estimated production from proved developed producing reserves over a one-to-three-year period[188]