8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): May 9, 2018 (May 9, 2018)

 

 

AMPLIFY ENERGY CORP.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001-35364   82-1326219

(State or other jurisdiction of Incorporation

or Organization)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

500 Dallas Street, Suite 1600

Houston, Texas

  77002
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (713) 490-8900

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On May 9, 2018, Amplify Energy Corp., a Delaware corporation (the “Company”), issued a press release reporting the Company’s financial and operating results for the quarter ended March 31, 2018. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

The information contained in this Item 2.01 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

 

Item 7.01. Regulation FD Disclosure.

On May 9, 2018, the Company issued a press release announcing, among other things, its updated 2018 guidance. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On May 9, 2018, the Company posted to its website an update to its hedging overview presentation entitled “Supplemental Presentation — Commodity Hedging Overview.” The updated hedging presentation includes hedging transactions with respect to the years 2018 through 2019, and may be accessed by going to the Company’s Investor Relations website at http://investor.amplifyenergy.com/ and selecting Events and Presentations.

The information contained in this Item 7.01 shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any of the Company’s filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing.

Cautionary Note Regarding Forward-Looking Statements

This Current Report on Form 8-K, including the exhibit hereto, include “forward-looking statements.” All statements, other than statements of historical facts, included in this Current Report on Form 8-K that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “will,” “would,” “should,” “could,” “expect,” “anticipate,” “plan,” “project,” “intend,” “estimate,” “believe,” “target,” “continue,” “potential,” the negative of such terms or other comparable terminology are intended to identify forward-looking statements. These statements include, but are not limited to, statements about financial restructuring or strategic alternatives and the Company’s expectations of plans, goals, strategies (including measures to implement strategies), objectives and anticipated results with respect thereto. These statements are based on certain assumptions made by the Company based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances, but such assumptions may prove to be inaccurate. Such statements are also subject to a number of risks and uncertainties, many of which are beyond the control of the Company, which may cause the Company’s actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks and uncertainties relating to, among other things: the ability to improve the Company’s financial results and profitability following its emergence from bankruptcy; the Company’s efforts to reduce leverage; the Company’s level of indebtedness, including its ability to satisfy its debt obligations; the Company’s ability to generate sufficient cash flow to make payments on its obligations and to execute its business plan; the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties following its emergence from bankruptcy; the effect of changes in the Company’s senior management; continued low or further declining commodity prices and demand for oil, natural gas and natural gas liquids; the Company’s ability to access funds on acceptable terms, if at all, because of the terms and conditions governing the Company’s indebtedness or otherwise; and changes in commodity prices and hedge positions and the risk that the Company’s hedging strategy may be ineffective or may reduce its income. Please read the Company’s filings with the Securities and Exchange Commission (the “SEC”), including “Risk Factors” in the Company’s Annual Report on Form 10-K, and if applicable, the Company’s Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, which are available on the Company’s Investor Relations website at http://investor.amplifyenergy.com/ or on the SEC’s website at http://www.sec.gov, for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. You are


cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Current Report on Form 8-K. All forward-looking statements in this Current Report on Form 8-K are qualified in their entirety by these cautionary statements. Except as required by law, the Company undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit

Number

  

Description

99.1    Press Release dated May 9, 2018


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 9, 2018     AMPLIFY ENERGY CORP.
    By:   /s/ Martyn Willsher
      Name:   Martyn Willsher
      Title:   Senior Vice President and Chief Financial Officer
EX-99.1

Exhibit 99.1

 

LOGO   

News

For Immediate Release

Amplify Energy Announces First Quarter 2018 Results

and Updated 2018 Guidance

HOUSTON, May 9, 2018—Amplify Energy Corp. (OTCQX: AMPY) (“Amplify” or the “Company”) announced today its operating and financial results for the first quarter 2018 and updated guidance for the full year 2018.

Key First Quarter Highlights

 

    Announced the sale of the Company’s South Texas assets for $20 million, with closing expected in May 2018

 

    Daily production of 174.0 MMcfe/d, in-line with quarterly guidance

 

    Generated net cash provided by operating activities of $42 million for the quarter, exceeding the midpoint of guidance of $35 million

 

    Generated Adjusted EBITDA of $43 million that was at the high end of the guidance range of $37 million to $43 million

 

    Generated $23 million of free cash flow that was at the high end of the guidance range of $19 million to $24 million

 

    Maintained total debt to annualized Adjusted EBITDA of 2.0x

 

    As of May 7, 2018, Amplify reduced net debt to $325 million inclusive of $15 million of cash on hand

“This has been another strong quarter for Amplify. The Company’s first quarter performance continues Amplify’s impressive trend of target-focused operational and financial results,” said Bill Scarff, President and Chief Executive Officer of Amplify. “During the quarter, we kicked-off our capital drilling program in East Texas, and we expect the Company to generate significant free cash flow during 2018 that will be used to further enhance liquidity. We are also continuing to work closely with our Board to optimize strategies, increase investment returns and enhance shareholder value.”


Key Financial Results

 

$ in millions    First Quarter
2018
     Fourth Quarter
2017
 

Average daily production (MMcfe/d)

     174.0        184.3  
  

 

 

    

 

 

 

Total revenues

   $ 87.9      $ 87.5  
  

 

 

    

 

 

 

Total assets

   $ 886.5      $ 917.5  
  

 

 

    

 

 

 

Net Income (loss)

   $ 3.2      $ 9.7  
  

 

 

    

 

 

 

Adjusted EBITDA (a non-GAAP financial measure)

   $ 43.3      $ 48.2  
  

 

 

    

 

 

 

Total debt (1)

   $ 347.0      $ 376.0  
  

 

 

    

 

 

 

Total debt / Adjusted EBITDA (2)

     2.0x        2.0x  
  

 

 

    

 

 

 

Net cash provided by (used in) operating activities

   $ 42.1      $ 44.3  
  

 

 

    

 

 

 

Total capital

   $ 14.9      $ 11.6  
  

 

 

    

 

 

 

 

(1) As of March 31, 2018 and December 31, 2017, respectively
(2) Annualized for the respective quarter ended

Divestiture of South Texas Properties

On March 13, 2018, the Company entered into a definitive agreement to sell its interest in non-core conventional dry gas assets in Live Oak, McMullen, Webb and Duval counties in South Texas to an undisclosed buyer for $20 million, subject to customary closing adjustments. The transaction is expected to close in May 2018 with an effective date of January 1, 2018. Proceeds from the transaction are expected to be used to pay down outstanding borrowings under the Company’s revolving credit facility.

First quarter net production for the South Texas properties was 15 MMcfe/d derived from over 500 gross producing wells with proved developed producing reserves of 52.4 Bcfe (88% natural gas), based on SEC proved developed producing reserves as of year-end 2017. First quarter capital expenditures for the properties were approximately $173,000.

TenOaks Energy Advisors LLC acted as the sole financial advisor and Kirkland & Ellis LLP acted as legal counsel during the transaction.

Revolving Credit Facility and Liquidity

As of May 7, 2018, Amplify had total debt of $340 million under its revolving credit facility, with a current borrowing base of $435 million. Amplify’s liquidity was $108 million as of May 7, 2018, consisting of $15 million of cash on hand and available borrowing capacity of $93 million (including the impact of $2.4 million in outstanding letters of credit).

We are currently finalizing the spring redetermination of the Company’s revolving credit facility with our lending banks. At this time, the Company does not expect this redetermination to materially impact our liquidity or ability to execute our business strategies.

 

2


Comparison of First Quarter Guidance vs Actual Results

 

     1Q2018 Guidance (1)     Q1(2)  
     March 7, 2018     2018  
     Low            High     Actuals  

Net Average Daily Production

         

Oil (MBbls/d)

     9.3       —          9.9       10.0  

NGL (MBbls/d)

     4.6       —          4.8       4.6  

Natural Gas (MMcf/d)

     86       —          91       86.4  

Total (MMcfe/d)

     169       —          179       174.0  

Commodity Price Differential / Realizations (Unhedged)

         

Crude Oil Differential ($ / Bbl)

   $ 3.35       —        $ 4.00     $ 2.21  

NGL Realized Price (% of WTI NYMEX)

     38     —          45     42

Natural Gas Realized Price (% of Henry Hub)

     96     —          100     95

Gathering, Processing and Transportation Costs

         

Crude Oil ($ / Bbl)

   $ 0.63       —        $ 0.70     $ 0.49  

NGL ($ / Bbl)

   $ 4.75       —        $ 5.00     $ 3.84  

Natural Gas ($ / Mcf)

   $ 0.55       —        $ 0.65     $ 0.46  
  

 

 

    

 

 

   

 

 

 

Mcfe ($ / Mcfe)

   $ 0.43       —        $ 0.51     $ 0.36  

Average Costs

         

Lease Operating ($ / Mcfe)

   $ 1.81       —        $ 1.92     $ 1.89  

Taxes (% of Revenue) (3)

     5.0     —          6.3     5.7

Recurring Cash General and Administrative ($ / Mcfe) (4)

   $ 0.59       —        $ 0.63     $ 0.59  

Net Cash Provided by Operating Activities ($MM) (5)

     $ 35        $ 42  

Adjusted EBITDA ($MM) (6)

   $ 37       —        $ 43     $ 43  

Cash Interest Expense ($MM)

   $ 4       —        $ 6     $ 5  

Capital Expenditures ($MM)

   $ 10       —        $ 16     $ 15  

Free Cash Flow (MM) (6)

   $ 19       —        $ 24     $ 23  

 

(1) Guidance based on NYMEX strip pricing as of February 23, 2018; Average prices of $61.87 / Bbl for crude oil and $2.80 / Mcf for natural gas for 2018
(2) Actual results for 1Q18 impacted by adoption of new GAAP revenue recognition standard that reduced revenue and GP&T, but had no net impact on Net Cash Provided by Operating Activities or Adjusted EBITDA
(3) Includes production, ad valorem and franchise taxes
(4) Recurring cash general and administrative cost guidance excludes reorganization expenses and non-cash compensation
(5) Net Cash Provided by Operating Activities guidance does not include certain restructuring and reorganization expenses or changes in working capital
(6) Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Please see “Use of Non-GAAP Financial Measures” for a description of Adjusted EBITDA and Free Cash Flow and the reconciliation to the most comparable GAAP financial measure

 

3


Production and Drilling Program Update

During the first quarter of 2018, Amplify produced 174 MMcfe/d, in-line with quarterly guidance. During the quarter, Amplify completed two wells that were drilled in 2017. Initial production rates from these two wells were below expectations due to higher than anticipated water saturation. While the wells are at a very early juncture in their respective lifecycles and decline rates on both wells appear to be lower than normal, it is too early to project ultimate recoveries. The Company will continue to monitor the performance of these wells and provide updates at a later date, if appropriate.

The Company also initiated its 2018 drilling program in the first quarter of 2018, with the expectation of drilling an additional seven horizontal wells targeting the Cotton Valley formation, four of which are expected to be online prior to year-end.

Amplify also expects first production from 10 gross (0.5 net) new non-operated Eagle Ford shale wells in the second quarter of 2018.

Capital Spending Update and Outlook

Amplify’s capital spend for the first quarter was approximately $15 million, in-line with quarterly guidance. First quarter capital was allocated 66% in East Texas, 21% in the Eagle Ford and the remainder focused primarily on workover and infrastructure related projects in California, the Rockies and South Texas.

Based on the current drilling program, the Company’s capex program for the second quarter of 2018 is expected to be approximately $20 to $26 million. Amplify anticipates spending approximately 84% of this capital in East Texas, with the remainder focused primarily on infrastructure related capital in California, Eagle Ford and the Rockies.

Second Quarter and Full Year 2018 Guidance

The following guidance included in this press release is subject to the cautionary statements and limitations described under the “Forward-Looking Statements” caption at the end of this press release. Amplify’s updated 2018 guidance is based on its current expectations regarding capital expenditure levels and on the assumption that market demand and prices for oil and natural gas will continue at levels that allow for economic production of these products.

 

4


This guidance has not been adjusted for announced asset divestitures but will be adjusted upon successful transaction completion. A summary of the guidance is presented below:

 

     Q2 2018E (1)     FY 2018E (1)  
     Low            High     Low            High  

Net Average Daily Production

              

Oil (MBbls/d)

     9.4       —          9.9       8.7       —          9.6  

NGL (MBbls/d)

     4.6       —          4.8       4.5       —          5.0  

Natural Gas (MMcf/d)

     86.6       —          92.0       86.0       —          95.0  

Total (MMcfe/d)

     170.1       —          180.6       165.3       —          182.8  

Commodity Price Differential / Realizations (Unhedged)

              

Oil Differential ($ / Bbl)

   $ 3.65       —        $ 4.30     $ 3.20       —        $ 3.85  

NGL Realized Price (% of WTI NYMEX)

     39     —          45     39     —          45

Natural Gas Realized Price (% of Henry Hub)

     94     —          98     94     —          98

Gathering, Processing and Transportation Costs

              

Oil ($ / Bbl)

   $ 0.60       —        $ 0.70     $ 0.60       —        $ 0.70  

NGL ($ / Bbl)

   $ 4.00       —        $ 4.50     $ 4.00       —        $ 4.50  

Natural Gas ($ / Mcf)

   $ 0.46       —        $ 0.56     $ 0.45       —        $ 0.55  
  

 

 

      

 

 

   

 

 

      

 

 

 

Total ($ / Mcfe)

   $ 0.37       —        $ 0.47     $ 0.37       —        $ 0.47  

Average Costs

              

Lease Operating ($ / Mcfe)

   $ 1.73       —        $ 1.83     $ 1.69       —        $ 1.87  

Taxes (% of Revenue) (2)

     5.5     —          6.5     5.5     —          6.5

Recurring Cash General and Administrative ($ / Mcfe) (3)

   $ 0.51       —        $ 0.55     $ 0.47       —        $ 0.52  

Net Cash Provided by Operating Activities ($MM) (4)

     $ 40          $ 151     

Adjusted EBITDA ($MM) (5)

   $ 41       —        $ 47     $ 164       —        $ 174  

Cash Interest Expense ($MM)

   $ 3       —        $ 5     $ 16       —        $ 20  

Capital Expenditures ($MM)

   $ 20       —        $ 26     $ 68       —        $ 82  

Free Cash Flow ($MM) (5)

   $ 14       —        $ 20     $ 70       —        $ 82  

 

(1) Guidance based on NYMEX strip pricing as of April 27, 2018; Average prices of $65.60 / Bbl for crude oil and $2.85 / Mcf for natural gas for 2018
(2) Includes production, ad valorem and franchise taxes
(3) Recurring cash general and administrative cost guidance excludes reorganization expenses and non-cash compensation
(4) Net Cash Provided by Operating Activities guidance does not include certain restructuring and reorganization expenses or changes in working capital
(5) Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. Please see “Use of Non-GAAP Financial Measures” for a description of Adjusted EBITDA and Free Cash Flow and the reconciliation to the most comparable GAAP financial measure

Hedging Update

Since Amplify’s previous hedge update as of March 7, 2018, the Company has added oil swaps of approximately 1,700 Bbls/d in 2018 and 2,500 Bbls/d in 2019. The Company also added NGL swaps of approximately 700 Bbls/d in 2018 and 1,100 Bbls/d in 2019, in addition to approximately 31 MMcf/d of natural gas swaps in 2019. As a percentage of its full year 2018 guidance, the Company’s production is now 66% hedged in 2018 and 52% hedged in 2019. The following table reflects the hedged volumes under Amplify’s commodity derivative contracts and the average fixed or floor prices at which production is hedged for April 2018 through December 2019, as of May 9, 2018.

 

5


Hedge Summary  
     Year Ending
December 31,
 
     2018      2019  

Natural Gas Derivative Contracts:

     

Total weighted-average fixed/floor price ($/MMbtu)

   $ 3.54      $ 2.82  

Total natural gas volumes hedged (MMcf/d)

     59.0        41.1  

Oil Derivative Contracts:

     

Total weighted-average fixed/floor price ($/Bbl)

   $ 69.14      $ 54.08  

Total oil volumes hedged (MBbl/d)

     6.7        6.1  

Natural Gas Liquids Derivative Contracts:

     

Total weighted-average fixed/floor price ($/Bbl)

   $ 25.85      $ 29.96  

Total NGL volumes hedged (MBbl/d)

     2.8        2.4  

Total Derivative Contracts:

     

Total weighted-average fixed/floor price ($/Mcfe)

   $ 6.42      $ 5.62  

Total equivalent volumes hedged (MMcfe/d)

     116.3        92.0  

Amplify posted an updated hedge presentation containing additional information on its website, www.amplifyenergy.com, under the Investor Relations section.

Quarterly Report on Form 10-Q

Amplify’s financial statements and related footnotes will be available in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, which Amplify expects to file with the Securities and Exchange Commission on May 9, 2018.

About Amplify Energy

Amplify Energy Corp. was formed in May 2017 as the reorganized successor to Memorial Production Partners LP. Amplify is headquartered in Houston, Texas and is an independent oil and natural gas company engaged in the acquisition, development, exploitation and production of oil and natural gas properties. The Company’s operations are focused in East Texas / North Louisiana, the Rockies, offshore California and South Texas. For more information, visit www.amplifyenergy.com.

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that Amplify expects, believes or anticipates will or may occur in the future are forward-looking statements. Terminology such as “will,” “would,” “should,” “could,” “expect,” “anticipate,” “plan,” “project,” “intend,” “estimate,” “believe,” “target,” “continue,” “potential,” the negative of such terms or other comparable

 

6


terminology are intended to identify forward-looking statements. Amplify believes that these statements are based on reasonable assumptions, but such assumptions may prove to be inaccurate. Such statements are also subject to a number of risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Amplify, which may cause Amplify’s actual results to differ materially from those implied or expressed by the forward-looking statements. Please read the Company’s filings with the Securities and Exchange Commission, including “Risk Factors” in its Annual Report on Form 10-K, and if applicable, its Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, and other public filings and press releases for a discussion of risks and uncertainties that could cause actual results to differ from those in such forward-looking statements. All forward-looking statements speak only as of the date of this press release. All forward-looking statements in this press release are qualified in their entirety by these cautionary statements. Amplify undertakes no obligation and does not intend to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-GAAP financial measures of Adjusted EBITDA and Free Cash Flow. The accompanying schedules provide a reconciliation of these non-GAAP financial measures to their most directly comparable financial measure calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flows provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP. Amplify’s non-GAAP financial measures may not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner as Amplify does.

Adjusted EBITDA. Amplify defines Adjusted EBITDA as net income or loss, plus interest expense; income tax expense; depreciation, depletion and amortization; impairment of goodwill and long-lived assets; accretion of asset retirement obligations; losses on commodity derivative instruments; cash settlements received on expired commodity derivative instruments; losses on sale of assets; unit-based compensation expenses; exploration costs; acquisition and divestiture related expenses; amortization of gain associated with terminated commodity derivatives, bad debt expense; and other non-routine items, less interest income; gain on extinguishment of debt; income tax benefit; gains on commodity derivative instruments; cash settlements paid on expired commodity derivative instruments; gains on sale of assets and other, net; and other non-routine items. Adjusted EBITDA is commonly used as a supplemental financial measure by management and external users of Amplify’s financial statements, such as investors, research analysts and rating agencies, to assess: (1) its operating performance as compared to other companies in Amplify’s industry without regard to financing methods, capital structures or historical cost basis; (2) the ability of its assets to generate cash sufficient to pay interest and support Amplify’s indebtedness; and (3) the viability of projects and the overall rates of return on alternative investment opportunities. Since Adjusted EBITDA excludes some, but not all, items that affect net income or loss and because these measures may vary among other companies, the Adjusted EBITDA data presented in this press release may not be comparable to similarly titled measures of other companies. The GAAP measure most directly comparable to Adjusted EBITDA is net cash provided by operating activities.

Free Cash Flow. Amplify defines Free Cash Flow as Adjusted EBITDA, less cash income taxes; cash interest expense; and total capital expenditures. Free cash flow is an important non-GAAP financial measure for Amplify’s investors since it serves as an indicator of the Company’s success in providing a cash return on investment. The GAAP measure most directly comparable to distributable cash flow is net cash provided by operating activities.

 

7


Selected Operating and Financial Data (Tables)

 

 

Amplify Energy Corp.

Selected Financial Data - Unaudited

Statements of Operations Data

 

 

(Amounts in $000s, except per unit data)    Three Months
Ended
March 31, 2018
    Three Months
Ended
December 31, 2017
 

Revenues:

    

Oil and natural gas sales

   $ 87,847     $ 87,414  

Other income

     85       81  
  

 

 

   

 

 

 

Total revenues

     87,932       87,495  
  

 

 

   

 

 

 

Costs and Expenses:

    

Lease operating expense

     29,570       26,586  

Gathering, processing and transportation

     5,600       7,461  

Exploration

     34       21  

Taxes other than income

     5,037       4,954  

Depreciation, depletion and amortization

     12,958       14,161  

General and administrative expense

     10,657       11,027  

Accretion of asset retirement obligations

     1,718       1,692  

Realized (gain) loss on commodity derivatives

     (4,876     (9,169

Unrealized (gain) loss on commodity derivatives

     15,332       28,476  

(Gain) loss on sale of properties

     2,373       —    

Other, net

     —         (287
  

 

 

   

 

 

 

Total costs and expenses

     78,403       84,922  
  

 

 

   

 

 

 

Operating Income (loss)

     9,529       2,573  

Other Income (Expense):

    

Interest expense, net

     (5,772     (6,331

Other income (expense)

     —         16,987  
  

 

 

   

 

 

 

Total Other Income (Expense)

     (5,772     10,656  
  

 

 

   

 

 

 

Income before reorganization items, net and income taxes

     3,757       13,229  

Reorganization items, net

     (518     (737

Income tax benefit (expense)

     —         (2,764
  

 

 

   

 

 

 

Net income (loss)

   $ 3,239     $ 9,728  

Earnings per unit:

    

Basic and diluted earnings per share/unit

   $ 0.13     $ 0.38  
  

 

 

   

 

 

 

 

8


 

Selected Financial Data - Unaudited

Operating Statistics

 

 

(Amounts in $000s, except per unit data)    Three Months
Ended
March 31, 2018
     Three Months
Ended
December 31, 2017
 

Oil and natural gas revenue:

     

Oil Sales

   $ 54,726      $ 49,303  

NGL Sales

     10,946        12,779  

Natural Gas Sales

     22,175        25,332  
  

 

 

    

 

 

 

Total oil and natural gas sales—Unhedged

   $ 87,847      $ 87,414  
  

 

 

    

 

 

 

Production volumes:

     

Oil Sales - MBbls

     902        929  

NGL Sales - MBbls

     412        457  

Natural Gas Sales - MMcf

     7,775        8,635  
  

 

 

    

 

 

 

Total - Mmcfe

     15,660        16,957  
  

 

 

    

 

 

 

Total - Mmcfe/d

     174.0        184.3  
  

 

 

    

 

 

 

Average sales price (excluding commodity derivatives):

     

Oil - per Bbl

   $ 60.66      $ 52.98  

NGL - per Bbl

   $ 26.57      $ 27.99  

Natural gas - per Mcf

   $ 2.85      $ 2.93  
  

 

 

    

 

 

 

Total - per Mcfe

   $ 5.61      $ 5.16  
  

 

 

    

 

 

 

Average unit costs per Mcfe:

     

Lease operating expense

   $ 1.89      $ 1.57  

Gathering, processing and transportation

   $ 0.36      $ 0.44  

Taxes other than income

   $ 0.32      $ 0.29  

General and administrative expense

   $ 0.68      $ 0.65  

Depletion, depreciation, and amortization

   $ 0.83      $ 0.84  

 

 

Selected Financial Data - Unaudited

Balance Sheet Data

 

 

(Amounts in $000s, except per unit data)    March 31, 2018      December 31, 2017  

Total current assets

   $ 61,605      $ 78,549  

Property and equipment, net

     625,803        673,432  

Total assets

     886,460        917,466  

Total current liabilities

     48,095        42,601  

Long-term debt

     347,000        376,000  

Total liabilities

     488,320        523,531  

Total equity

     398,140        393,936  

 

 

Selected Financial Data - Unaudited

Statements of Cash Flows Data

 

 

(Amounts in $000s, except per unit data)    Three Months
Ended
March 31, 2018
    Three Months
Ended
December 31, 2017
 

Net cash provided from operating activities

   $ 42,147     $ 44,329  

Net cash used in investing activities

     (13,284     (25,338

Net cash provided by (used in) financing activities

     (29,213     (27,458

 

9


 

Selected Operating and Financial Data (Tables)

Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures

Adjusted EBITDA and Free Cash Flow

 

 

(Amounts in $000s, except per unit data)    Three Months
Ended
March 31, 2018
    Three Months
Ended
December 31, 2017
 

Reconciliation of Adjusted EBITDA to Net Cash Provided from Operating Activities:

    

Net cash provided from operating activities

   $ 42,147     $ 44,329  

Changes in working capital

     (4,810     15,051  

Interest expense, net

     5,772       6,331  

Amortization of deferred financing fees

     (541     (1,177

Reorganization items, net

     518       737  

Exploration costs

     34       28  

Acquisition and divestiture related costs

     208       371  

Third-party midstream transaction

     —         (16,979

Plugging and abandonment cost

     —         355  

Current income tax expense (benefit)

     —         (867
  

 

 

   

 

 

 

Adjusted EBITDA:

   $ 43,328     $ 48,179  
  

 

 

   

 

 

 

Reconciliation of Free Cash Flow to Net Cash Provided from Operating Activities:

    

Adjusted EBITDA:

   $ 43,328     $ 48,179  

Less: Cash interest expense

     5,087       5,142  

Less Capital expenditures

     14,902       11,626  
  

 

 

   

 

 

 

Free Cash Flow:

   $ 23,339     $ 31,411  
  

 

 

   

 

 

 

 

 

Selected Operating and Financial Data (Tables)

Reconciliation of Unaudited GAAP Financial Measures to Non-GAAP Financial Measures

Adjusted EBITDA and Free Cash Flow

 

 

(Amounts in $000s, except per unit data)    Three Months
Ended
March 31, 2018
     Three Months
Ended
December 31, 2017
 

Reconciliation of Adjusted EBITDA to Net Income (Loss):

     

Net income (loss)

     3,239        9,728  

Interest expense, net

     5,772        6,331  

Income tax expense

     —          2,764  

Depreciation, depletion and amortization

     12,958        14,161  

Accretion of asset retirement obligations

     1,718        1,692  

(Gains) losses on commodity derivatives

     10,456        19,307  

Cash settlements on expired commodity derivatives

     4,876        9,169  

Acquisition and divestiture related costs

     208        371  

Reorganization items, net

     518        737  

Share based compensation expense

     1,176        973  

Gain on sale of properties

     2,373        —    

Exploration costs

     34        28  

(Gain) / Loss on settlement of AROs

     —          (103

Third-party midstream transaction

     —          (16,979
  

 

 

    

 

 

 

Adjusted EBITDA:

   $ 43,328      $ 48,179  
  

 

 

    

 

 

 

Reconciliation of Free Cash Flow to Net Income (Loss):

     

Adjusted EBITDA:

   $ 43,328      $ 48,179  

Less: Cash interest expense

     5,087        5,142  

Less Capital expenditures

     14,902        11,626  
  

 

 

    

 

 

 

Free Cash Flow:

   $ 23,339      $ 31,411  
  

 

 

    

 

 

 

 

10


(in millions)    Mid-Point
For Quarter Ended
6/30/2018
    Mid-Point
For Year Ended
12/31/2018
 

Calculation of Adjusted EBITDA:

    

Net income

   $ 27     $ 98  

Interest expense

     4       18  

Depletion, depreciation, and amortization

     13       53  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 44     $ 169  
  

 

 

   

 

 

 

Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA:

    

Net cash provided by operating activities

   $ 40     $ 151  

Changes in working capital

     —         —    

Cash Interest Expense

     4       18  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 44     $ 169  
  

 

 

   

 

 

 

Reconciliation of Adjusted EBITDA to Free Cash Flow:

    

Adjusted EBITDA

   $ 44     $ 169  

Cash Interest Expense

     (4     (18

Capital expenditures

     (23     (75
  

 

 

   

 

 

 

Free Cash Flow

   $ 17     $ 76  
  

 

 

   

 

 

 

Contacts

Amplify Energy Corp.

Martyn Willsher – Chief Financial Officer

(713) 588-8346

martyn.willsher@amplifyenergy.com

 

11