Amplify Energy (AMPY) - 2024 Q1 - Quarterly Results

Executive Summary & Key Highlights Amplify Energy reported strong Q1 2024 results, raising full-year guidance due to robust performance and strategic initiatives Q1 2024 Key Metrics | Metric | Value | | :--- | :--- | | Average Total Production | 20.2 MBoepd | | Net Cash from Operating Activities | $7.7 million | | Net Loss | ($9.4) million | | Adjusted EBITDA | $24.9 million | | Free Cash Flow | $2.3 million | | Net Debt (as of Mar 31, 2024) | $112 million | | Net Debt to LTM Adjusted EBITDA | 1.3x | - The company is increasing its 2024 guidance based on better-than-expected first-quarter results and higher forecasted crude oil prices[2] - Strategic initiatives are progressing, including the Bairoil monetization process and the Beta development program, which commenced with the drilling of the A45 well[2] - The company successfully replaced surety bonds and renegotiated sinking fund payments, resulting in annual savings of approximately $7 million[2] - Renegotiated iodine royalty contracts in Oklahoma are expected to increase Other Revenue in 2024 by $2 - $3 million[2] Financial Performance Despite a net loss from derivative changes, Q1 2024 saw stable Adjusted EBITDA, positive free cash flow, and reaffirmed borrowing base Key Financial Results Q1 2024 net loss of $9.4 million was driven by non-cash derivative losses, while Adjusted EBITDA remained stable at $24.9 million with positive free cash flow Q1 2024 vs Q4 2023 Financials | Metric ($ in millions) | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Net Income (Loss) | $(9.4) | $43.6 | | Net Cash from Operating Activities | $7.7 | $28.4 | | Adjusted EBITDA | $24.9 | $25.2 | | Free Cash Flow | $2.3 | $14.4 | - The decrease in net income compared to the prior quarter was primarily attributable to non-cash unrealized losses on commodity derivatives[4] - Amplify has now generated positive free cash flow in 15 of the last 16 fiscal quarters[4] Revolving Credit Facility and Debt Net debt stood at $112 million as of March 31, 2024, with a 1.3x leverage ratio, and the borrowing base was reaffirmed at $150 million Debt and Liquidity as of March 31, 2024 | Metric | Value | | :--- | :--- | | Borrowing Base | $150 million | | Elected Commitments | $135 million | | Revolving Credit Facility Outstanding | $115 million | | Cash and Cash Equivalents | $3 million | | Net Debt | $112 million | | Net Debt to LTM Adjusted EBITDA | 1.3x | - The semi-annual borrowing base redetermination was completed on May 2, 2024, with the base reaffirmed at $150 million[5] Operational Performance Q1 2024 production averaged 20.2 MBoepd with increased oil output and higher realized prices, despite rising operating expenses Production and Pricing Q1 2024 average daily production was 20.2 MBoepd, with 61% liquids and an average realized oil price of $71.81 per barrel including hedges - Q1 2024 production averaged 20.2 MBoepd, with a product mix of 43% crude oil, 18% NGLs, and 39% natural gas[6] Production Volumes by Area (MBOE) | Area | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Bairoil | 293 | 314 | | Beta | 281 | 275 | | Oklahoma | 488 | 506 | | East Texas / North Louisiana | 676 | 731 | | Eagle Ford (Non-op) | 104 | 84 | | Total | 1,842 | 1,910 | Average Realized Sales Prices (Q1 2024 vs Q4 2023) | Product | Metric | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | :--- | | Crude Oil ($/Bbl) | w/o Hedges | $72.98 | $75.31 | | | w/ Hedges | $71.81 | $68.47 | | NGLs ($/Bbl) | w/o Hedges | $22.61 | $21.89 | | Natural Gas ($/Mcf) | w/o Hedges | $2.39 | $2.49 | | | w/ Hedges | $3.60 | $2.96 | Costs and Expenses Q1 2024 lease operating expenses increased to $20.78/Boe due to maintenance, while cash G&A rose to $7.9 million from annual processes Key Expenses per Boe | Expense Category ($/Boe) | Q1 2024 | Q4 2023 | | :--- | :--- | :--- | | Lease operating expense | $20.78 | $18.14 | | Gathering, processing and transportation | $2.59 | $2.66 | | Taxes other than income | $2.67 | $3.09 | | General and administrative expense | $5.32 | $4.42 | - Lease operating expenses increased by $3.7 million quarter-over-quarter due to scheduled maintenance and other routine annual expenses, with future quarters expected to be lower[11] - Cash G&A expenses increased by $1.7 million from the prior quarter, primarily due to annual year-end processes and a one-time office lease termination cost, with future quarters expected to be significantly lower[13] Capital Investments and Development Projects Q1 2024 capital focused on Beta development, completing electrification phase 2, despite A45 well completion deferral Capital Investments Total Q1 2024 capital investment was $19.1 million, with $15.7 million primarily allocated to the Beta asset for development and facility upgrades Q1 2024 Capital Invested by Asset ($MM) | Asset | Capital Invested ($MM) | | :--- | :--- | | Beta | $15.7 | | Bairoil | $1.5 | | Oklahoma | $0.8 | | Magnify Energy Services | $0.7 | | Eagle Ford (Non-op) | $0.4 | | East Texas / North Louisiana | $0.1 | | Total | $19.1 | - Capital allocation for Q1 was approximately 80% for Beta projects and 8% for Bairoil projects, with the remainder spread across other assets[14] Beta Development and Facility Upgrade Phase 2 of Beta's electrification project is complete, but the A45 well's completion is deferred to Q4 2024 due to drilling complications, despite promising formation logs[2][15] - Phase 2 of the Beta electrification and emissions reduction project was completed in Q1, with the final phase underway for a Q4 2024 compliance deadline[15] - The A45 well experienced equipment issues during drilling, leading to a change in completion plans, now deferred to Q4 2024 to maintain the overall development schedule[2][15] - Despite complications, formation logs for the A45 well reinforce the company's view of high oil saturation in the target interval, with the next development well scheduled to be spudded in May 2024[3][15] Corporate Updates and Outlook Corporate updates include cost savings and increased 2024 guidance for Adjusted EBITDA and Free Cash Flow, supported by hedging Corporate Initiatives Amplify successfully restructured surety bonds for $7 million annual savings and renegotiated iodine royalty agreements, expected to add $2-$3 million to 2024 Other Revenue - Successfully replaced prior surety bonds and restructured sinking fund obligations, which will lower annual payments by approximately $7 million per year[16] - Renegotiated iodine agreements in Oklahoma to increase future royalty payments, which is expected to increase Other Revenue by $2 - $3 million in 2024[18] Updated Full-Year 2024 Guidance Full-year 2024 guidance for Adjusted EBITDA increased to $95-$115 million and Free Cash Flow to $25-$45 million, based on strong Q1 results and commodity price assumptions Full-Year 2024 Guidance Update ($MM) | Metric ($MM) | Previous Guidance | Updated Guidance | Change | | :--- | :--- | :--- | :--- | | Adjusted EBITDA | $90 - $110 | $95 - $115 | +$5M | | Free Cash Flow | $20 - $40 | $25 - $45 | +$5M | | Other Revenue | $2 - $4 | $4 - $7 | +$2-3M | - The updated guidance is based on flat commodity price assumptions of $78/Bbl (WTI) and $2.25/MMBtu (Henry Hub)[19] Hedging As of May 8, 2024, Amplify has hedged a significant portion of its production through 2026 using oil and natural gas swaps and collars Hedged Volumes and Prices (April 2024 - Dec 2026) | Commodity & Type | 2024 | 2025 | 2026 | | :--- | :--- | :--- | :--- | | Natural Gas Swaps | | | | | Avg. Monthly Vol (MMBtu) | 716,667 | 675,000 | 416,667 | | Avg. Fixed Price ($) | $3.72 | $3.74 | $3.76 | | Natural Gas Collars | | | | | Avg. Monthly Vol (MMBtu) | 544,444 | 500,000 | 416,667 | | Avg. Floor Price ($) | $3.46 | $3.50 | $3.52 | | Oil Swaps | | | | | Avg. Monthly Vol (Bbls) | 85,889 | 53,000 | 30,917 | | Avg. Fixed Price ($) | $74.04 | $70.68 | $70.68 | | Oil Collars | | | | | Avg. Monthly Vol (Bbls) | 102,000 | 59,500 | - | | Avg. Floor Price ($) | $70.00 | $70.00 | - | Appendix: Financial Statements and Reconciliations This appendix provides detailed unaudited financial statements, operating statistics, and non-GAAP reconciliations for Q1 2024 Statements of Operations This section presents the unaudited statements of operations data for the specified periods Operating Statistics This section provides key operating statistics for the company's production and sales volumes Asset Operating Statistics This section details operating statistics broken down by individual asset areas Balance Sheet Data This section presents the unaudited balance sheet data as of March 31, 2024 Statements of Cash Flows This section provides the unaudited statements of cash flows for the reporting period Non-GAAP Reconciliations This section reconciles GAAP financial measures to non-GAAP measures, including Adjusted EBITDA and Free Cash Flow