Amplify Energy (US:AMPY)2024-11-07 22:17Financial Data and Key Metrics Changes - The company reported net income of approximately $22.7 million for Q3 2024, compared to $7.1 million in the prior quarter, primarily due to a non-cash unrealized gain on commodities derivatives [26] - Adjusted EBITDA for Q3 2024 was $25.5 million, in line with expectations [27] - Lease operating expenses (LOE) were approximately $33.3 million, a decrease of $3 million from the previous quarter, driven by optimization initiatives [16][28] - Free cash flow for Q3 2024 was $3.6 million, with positive free cash flow generated in 17 of the last 18 quarters [32][33] Business Line Data and Key Metrics Changes - Total production averaged approximately 19,000 BOE per day in Q3 2024, a decrease of 1,300 BOE per day from Q2 2024 [15] - The production commodity mix for the quarter was 43% oil, 17% NGLs, and 40% natural gas [16] - The company invested approximately $18.2 million in capital during Q3 2024, with about 66% allocated to Beta facility projects and development drilling [31] Market Data and Key Metrics Changes - The company is participating in 14 gross new development wells and 2 gross recompletion projects in East Texas and Eagle Ford [20] - The C59 well achieved an initial production (IP30) gross oil rate of approximately 590 barrels of oil per day [22] - The company expects to generate a run rate adjusted EBITDA of over $3 million per year from Magnify Energy Services after just over one year of operations [18] Company Strategy and Development Direction - The company is focused on maximizing shareholder value by retaining ownership of Wyoming assets while evaluating monetization proposals [10] - The development program at Beta is expected to deliver outstanding returns on investment and significant incremental free cash flow [12] - The company is refining its development program schedule and plans to provide an updated plan in Q1 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong early results from the Beta development program and the potential for transformative growth [38] - The company anticipates that taxes as a percentage of revenue will remain within the previously announced guidance range for 2024 [30] - Management is optimistic about the combination of Beta and non-operated development opportunities enhancing flexibility and market performance [39] Other Important Information - The company issued its second annual sustainability report, highlighting significant progress in emissions reduction and corporate governance [12] - The borrowing base was reduced by $5 million while elected commitments were increased by $10 million, improving liquidity [34] - The company executed crude oil swaps for 2025 and 2026 at weighted average prices of $69.39 and $68.12 per barrel, respectively [36] Q&A Session Summary Question: Can you provide insights on the Beta development and potential new locations? - Management indicated that the C59 well proved up a significant portion of the southern acreage, with expectations for a decent number of locations to be discussed in future reports [41][44] Question: What drove the cost difference in well drilling? - The C59 well's higher cost was attributed to additional drilling days and challenges faced during the process, but management remains comfortable with the $5 million to $6 million range for future wells [46][48] Question: What is the expected timeline for monetization opportunities in Haynesville? - Management expects to realize monetization opportunities between now and the middle of Q1 2025, with potential values in the range of several million dollars [61][62] Question: When might the company consider returning capital to shareholders? - Management indicated that a return to capital could be considered in 2025, depending on development activity and free cash flow generation [63] Question: How many currently permitted locations are there at Beta? - The company currently has 7 to 10 permits at Beta, with ongoing efforts to secure more [66] Question: What is the status of non-operated interests in East Texas? - Management noted that they are participating in wells in East Texas and Eagle Ford, with visibility into future activity expected to improve [74]