Amplify Energy (US:AMPY)2022-03-10 17:47Financial Data and Key Metrics Changes - Production for Q4 2021 averaged approximately 20,800 BOE per day, a decrease from 25,100 BOE per day in Q3 2021, primarily due to the suspension of operations at Beta [11] - Total oil, natural gas, and NGL revenues in Q4 2021 were approximately $86.3 million, down from $96.8 million in Q3 2021 [12] - Adjusted EBITDA in Q4 totaled $10.8 million, approximately $16 million less than the previous quarter [14] - Cash capital spending for Q4 was approximately $3.5 million, a decrease of $7 million from Q3 2021 [15] - Net debt as of February 28, 2022, was approximately $203 million [18] Business Line Data and Key Metrics Changes - Oil volumes decreased due to the suspension of operations at Beta, which produced an average of 3,700 barrels of crude oil per day in Q3 2021 [11] - Lease operating expenses for Q4 were approximately $29.4 million, or $15.34 per BOE, a decrease from $34.5 million or $14.92 per BOE in Q3 [12] - General and administrative expenses totaled $6.2 million or $3.24 per BOE in Q4, compared to $5.8 million or $2.50 per BOE in Q3 [14] Market Data and Key Metrics Changes - The company is approximately 70% hedged for the balance of 2022 and 40% hedged in 2023 across all commodities, with crude oil production approximately 90% to 100% hedged for the remainder of the year [16] - The year-end 2021 proved reserves were approximately 121 million barrels of equivalent with a PV-10 value of $920 million based on SEC pricing [19] Company Strategy and Development Direction - The company is focused on returning the Beta field to production and has modified future development plans due to the incident [20] - Guidance for full-year 2022 average daily production is forecasted to range from 18,500 to 20,500 BOE per day [20] - The company plans to allocate the majority of free cash flow to improving the balance sheet and reducing total debt outstanding [18][25] Management's Comments on Operating Environment and Future Outlook - Management expressed gratitude for the collaboration with regulatory agencies during the Southern California pipeline incident response [7] - The company remains committed to safely operating and protecting the environment while working to bring the Beta field back online [10] - Management believes the company is undervalued in the current market due to significant reserve value and cash flow generation potential [24] Other Important Information - The company filed complaints against two shipping companies and vessels responsible for the pipeline damage [9] - The company has received approximately $50 million in insurance for costs incurred due to the incident, with an additional $22.1 million collected by March 1 [36] Q&A Session Summary Question: How much insurance payments are included in the guidance numbers? - Management projected approximately $4.4 million per month for LOPI insurance payments for the full 12 months [26] Question: Why is the revolver being reduced by $5 million a month? - The bank group requested a reduction in the revolver starting in February 2022 due to the incident and ongoing assessments [32] Question: How much has been incurred regarding the $90 million to $110 million of associated costs? - Approximately $99 million of average costs were incurred through December 31, with about $40 million spent by the company in 2021 [36][37] Question: What is the expected timeline for Beta to restart production? - Management indicated that if permits are received soon, production could resume by July, but this is contingent on regulatory approvals [39] Question: What federal permits are required for the Beta pipeline? - The company is waiting on two federal permits from PHMSA and the Corps of Engineers for the repair [42] Question: Who is the operator of the non-operated Eagle Ford asset? - The primary operator is Murphy, with other operators including Devon, BPX, and Marathon [44]