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): August 8, 2018 (August 8, 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 August 8, 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 June 30, 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 August 8, 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 August 8, 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 Company’s results of evaluation and implementation of strategic alternatives; the Company’s ability to maintain relationships with suppliers, customers, employees and other third parties 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 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 August 8, 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: August 8, 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 Second Quarter 2018 Results

and Updated 2018 Guidance

HOUSTON, August 8, 2018—Amplify Energy Corp. (OTCQX: AMPY) (“Amplify” or the “Company”) announced today its operating and financial results for the second quarter 2018 and updated guidance for the full year 2018.

Key Second Quarter Highlights

 

   

Announced key changes to the Company’s executive management team, including new President and CEO, Ken Mariani

 

   

Completed the sale of the Company’s South Texas assets for $18.4 million on May 30, 2018, including estimated post-closing adjustments

 

   

Daily production of 168.9 MMcfe/d was in line with quarterly guidance after adjusting for the impact of the South Texas divestiture

 

   

Generated net cash provided by operating activities of $42 million for the quarter, compared to the midpoint of guidance of $40 million

 

   

Generated Adjusted EBITDA of $46 million that was at the high end of the guidance range of $41 million to $47 million

 

   

Generated $17 million of free cash flow that was within the guidance range of $14 million to $20 million

 

   

Reduced ratio of total debt to annualized Adjusted EBITDA to 1.7x

 

   

Forecasted annual recurring cash G&A has been reduced by more than 25%, or $9 million, since 2017

 

   

As of August 6, 2018, Amplify reduced net debt to $297 million, inclusive of $6 million of cash on hand

“During the second quarter of 2018, Amplify pivoted to reassess its strategic plans and direction,” said Ken Mariani, President and Chief Executive Officer of Amplify. “While our operating and financial results remain strong, we made the decision to suspend drilling activity in East Texas while we undertake a thorough review of all of the Company’s internal and external growth opportunities. The Company’s strategy going forward will be driven by strong alignment with our shareholders and will balance cash flow generation with a disciplined approach to capital spending. As an integral part of that strategy, Amplify’s management continues to work closely with our Board to evaluate growth strategies, manage operating costs and enhance shareholder value.”


Key Financial Results

 

$ in millions

   Second Quarter
2018
     First Quarter
2018
 

Average daily production (MMcfe/d)

     168.9        174.0  

Total revenues

   $ 90.9      $ 87.9  

Total assets

   $ 848.3      $ 886.5  

Net Income (loss)

   ($ 25.3    $ 3.2  

Adjusted EBITDA (a non-GAAP financial measure)

   $ 45.8      $ 43.3  

Total debt (1)

   $ 314.0      $ 347.0  

Total debt / Adjusted EBITDA (2)

     1.7x        2.0x  

Net cash provided by (used in) operating activities

   $ 42.1      $ 42.1  

Total capital

   $ 23.4      $ 14.9  

 

(1)

As of June 30, 2018 and March 31, 2018, respectively

(2)

Annualized for the respective quarter ended

Divestiture of South Texas Properties

On May 30, 2018, the Company announced that it closed the previously announced transaction to sell certain assets located in South Texas for cash consideration of approximately $18.4 million, including estimated post-closing adjustments. The proceeds from the sale were used to reduce outstanding borrowings under the Company’s revolving credit facility.

Net production for the South Texas properties was approximately 15 MMcfe/d derived from over 500 gross producing wells with proved developed producing reserves of 52.4 Bcfe (88% natural gas), as of year-end 2017. Second quarter capital expenditures for the properties were approximately $60,000.

Suspension of California Royalty Relief

Due to low oil and gas prices, Amplify’s California properties were granted royalty relief by the U.S. Department of Interior in July 2016. This relief reduced the average royalty rate on the Company’s California production from 24.8% to 12.4%, subject to certain production and price tests. One of those tests stipulated that if trailing twelve-month weighted average prices exceeded $55.16 per BOE, or 25% above the prices when royalty relief was granted, the royalty relief would be suspended. Through the period ending June 2018, the average price for the trailing twelve months exceeded $55.16 per BOE, and as such the royalty rate for the Company’s California properties reverted to 24.8%.

Revolving Credit Facility and Liquidity

As of August 6, 2018, Amplify had total debt of $303 million under its revolving credit facility, with a current borrowing base of $400 million. Amplify’s liquidity was $101 million as of August 6, 2018, consisting of $6 million of cash on hand and available borrowing capacity of $95 million (including the impact of $2.4 million in outstanding letters of credit).

 

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Comparison of Second Quarter Guidance vs Actual Results

 

     2Q 2018 Guidance (1)     2Q 2018 (2)
 
     Low            High     Actuals  

Net Average Daily Production

         

Oil (MBbls/d)

     9.4       —          9.9       9.8  

NGL (MBbls/d)

     4.6       —          4.8       4.3  

Natural Gas (MMcf/d)

     86.6       —          92.0       84.2  

Total (MMcfe/d)

     170.1       —          180.6       168.9  

Commodity Price Differential / Realizations (Unhedged)

         

Oil Differential ($ / Bbl)

   $ 3.65       —        $ 4.30     $ 2.31  

NGL Realized Price (% of WTI NYMEX)

     39     —          45     41

Natural Gas Realized Price (% of Henry Hub)

     94     —          98     99

Gathering, Processing and Transportation Costs

         

Oil ($ / Bbl)

   $ 0.60       —        $ 0.70     $ 0.68  

NGL ($ / Bbl)

   $ 4.00       —        $ 4.50     $ 4.18  

Natural Gas ($ / Mcf)

   $ 0.46       —        $ 0.56     $ 0.49  

Average Costs

         

Lease Operating ($ / Mcfe)

   $ 1.73       —        $ 1.83     $ 1.79  

Taxes (% of Revenue) (3)

     5.5     —          6.5     6.1

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

   $ 0.51       —        $ 0.55     $ 0.53  

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

     $ 40        $ 42  

Adjusted EBITDA ($MM) (6)

   $ 41       —        $ 47     $ 46  

Cash Interest Expense ($MM)

   $ 3       —        $ 5     $ 5  

Capital Expenditures ($MM)

   $ 20       —        $ 26     $ 23  

Free Cash Flow ($MM) (6)

   $ 14       —        $ 20     $ 17  

 

(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)

Actual results for 2Q18 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

Production and Drilling Program Update

During the second quarter of 2018, Amplify produced 168.9 MMcfe/d, which was below quarterly guidance due to the impact of the previously mentioned South Texas divestiture.

In regards to the 2018 East Texas capital program, since the start of the year Amplify has completed three wells drilled in 2017 and drilled and completed an additional well from the 2018 drilling program. The four wells were completed in the Cotton Valley formation in the Joaquin Field in Panola County, TX, and produced an average IP30 of 5.5 MMcfe/d, which was below expectations. Due to these results and a recent decline in forecasted natural gas prices, the Company made the decision to suspend its 2018 East Texas drilling program in the second quarter of 2018. The Company is currently evaluating these drilling results and future East Texas activity will be considered as part of the Company’s overall asset exploitation plan.

 

3


In the Eagle Ford, first production from 13 gross (0.6 net) new non-operated Eagle Ford shale wells in the second quarter of 2018 performed above expectations with average IP 30 rates of 1,631 Boe/d per well (90% liquids). The Company expects these wells to have rates of return in excess of 100% and payout in less than 11 months at current commodity prices.

Capital Spending Update and Outlook

Amplify’s capital spend for the second quarter was approximately $23 million, and in-line with quarterly guidance. Second quarter capital was allocated 84% in East Texas, 6% in the Eagle Ford, with the remainder focused primarily on workover and infrastructure related projects in California, the Rockies and South Texas.

Due to the suspension of the East Texas drilling program, the Company’s capex program for the third quarter of 2018 has been reduced to approximately $5 to $7 million.

Third 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


Amplify’s third quarter and full year guidance has been adjusted for the recent South Texas asset divestiture, as well as the suspension of drilling in East Texas. A summary of the guidance is presented below:

 

     3Q 2018E (1)     FY 2018E (1)  
     Low            High     Low            High  

Net Average Daily Production

              

Oil (MBbls/d)

     8.6       —          9.2       8.9       —          9.8  

NGL (MBbls/d)

     3.9       —          4.1       3.9       —          4.4  

Natural Gas (MMcf/d)

     72.0       —          76.4       74.2       —          82.1  

Total (MMcfe/d)

     147.0       —          156.1       151.0       —          166.9  

Commodity Price Differential / Realizations (Unhedged)

              

Oil Differential ($ / Bbl)

   $ 3.00       —        $ 3.30     $ 2.80       —        $ 3.10  

NGL Realized Price (% of WTI NYMEX)

     41     —          46     40     —          45

Natural Gas Realized Price (% of Henry Hub)

     95     —          99     95     —          99

Gathering, Processing and Transportation Costs

              

Oil ($ / Bbl)

   $ 0.60       —        $ 0.70     $ 0.58       —        $ 0.68  

NGL ($ / Bbl)

   $ 4.25       —        $ 4.75     $ 4.00       —        $ 4.50  

Natural Gas ($ / Mcf)

   $ 0.50       —        $ 0.60     $ 0.45       —        $ 0.55  
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total ($ / Mcfe)

   $ 0.37       —        $ 0.47     $ 0.36       —        $ 0.46  

Average Costs

              

Lease Operating ($ / Mcfe)

   $ 1.91       —        $ 2.03     $ 1.82       —        $ 2.01  

Taxes (% of Revenue) (2)

     5.5     —          6.5     5.5     —          6.5

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

   $ 0.47       —        $ 0.50     $ 0.51       —        $ 0.56  

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

     $ 34          $ 145     

Adjusted EBITDA ($MM) (5)

   $ 36       —        $ 42     $ 159       —        $ 169  

Cash Interest Expense ($MM)

   $ 4       —        $ 6     $ 17       —        $ 21  

Capital Expenditures ($MM)

   $ 6       —        $ 8     $ 47       —        $ 53  

Free Cash Flow ($MM) (5)

   $ 25       —        $ 31     $ 90       —        $ 100  

 

(1)

Guidance based on NYMEX strip pricing as of July 27, 2018; Average prices of $67.89 / Bbl for crude oil and $2.83 / 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 on May 9, 2018, the Company has not made any further additions to its hedge position. 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 July 2018 through December 2019, as of August 8, 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)

     58.8        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)

     115.9        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 June 30, 2018, which Amplify expects to file with the Securities and Exchange Commission on August 8, 2018.

Conference Call

Amplify will host an investor teleconference today at 10:00 a.m. Central Time to discuss these operating and financial results. Interested parties may join the webcast by visiting Amplify’s website, www.amplifyenergy.com, and clicking on the webcast link or by dialing (833) 883-4379 at least 15 minutes before the call begins and providing the Conference ID: 2058769. The webcast and a telephonic replay will be available for fourteen days following the call and may be accessed by visiting Amplify’s website, www.amplifyenergy.com, or by dialing (855) 859-2056 and providing the Conference ID: 2058769.

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.

 

6


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 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

 

7


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.

 

8


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
June 30, 2018
    Three Months
Ended
March 31, 2018
 

Revenues:

    

Oil and natural gas sales

   $ 90,894     $ 87,847  

Other revenues

     94       85  
  

 

 

   

 

 

 

Total revenues

     90,988       87,932  
  

 

 

   

 

 

 

Costs and Expenses:

    

Lease operating expense

     27,500       29,570  

Gathering, processing and transportation

     5,975       5,600  

Exploration

     2,988       34  

Taxes other than income

     5,535       5,037  

Depreciation, depletion and amortization

     13,619       12,958  

General and administrative expense

     16,863       10,657  

Accretion of asset retirement obligations

     1,429       1,718  

Realized (gain) loss on commodity derivatives

     (2,027     (4,876

Unrealized (gain) loss on commodity derivatives

     37,679       15,332  

(Gain) loss on sale of properties

     (227     2,373  

Other, net

     (120     —    
  

 

 

   

 

 

 

Total costs and expenses

     109,214       78,403  
  

 

 

   

 

 

 

Operating Income (loss)

     (18,226     9,529  

Other Income (Expense):

    

Interest expense, net

     (6,287     (5,772

Other income (expense)

     2       —    
  

 

 

   

 

 

 

Total Other Income (Expense)

     (6,285     (5,772
  

 

 

   

 

 

 

Income (loss) before reorganization items, net and income taxes

     (24,511     3,757  

Reorganization items, net

     (768     (518

Income tax benefit (expense)

     —         —    

Net income (loss)

   $ (25,279   $ 3,239  
  

 

 

   

 

 

 

Earnings per unit:

    

Basic and diluted earnings (loss) per share/unit

   $ (1.01   $ 0.13  
  

 

 

   

 

 

 

 

9


Selected Financial Data—Unaudited

Operating Statistics

 

(Amounts in $000s, except per unit data)    Three Months
Ended
June 30, 2018
     Three Months
Ended
March 31, 2018
 

Oil and natural gas revenue:

     

Oil Sales

   $ 58,540      $ 54,726  

NGL Sales

     10,931        10,946  

Natural Gas Sales

     21,423        22,175  
  

 

 

    

 

 

 

Total oil and natural gas sales—Unhedged

   $ 90,894      $ 87,847  
  

 

 

    

 

 

 

Production volumes:

     

Oil Sales—MBbls

     892        902  

NGL Sales—MBbls

     391        412  

Natural Gas Sales—MMcf

     7,665        7,775  
  

 

 

    

 

 

 

Total—Mmcfe

     15,369        15,660  
  

 

 

    

 

 

 

Total—Mmcfe/d

     168.9        174.0  
  

 

 

    

 

 

 

Average sales price (excluding commodity derivatives):

     

Oil—per Bbl

   $ 65.57      $ 60.66  

NGL—per Bbl

   $ 27.95      $ 26.57  

Natural gas—per Mcf

   $ 2.79      $ 2.85  
  

 

 

    

 

 

 

Total—per Mcfe

   $ 5.91      $ 5.61  
  

 

 

    

 

 

 

Average unit costs per Mcfe:

     

Lease operating expense

   $ 1.79      $ 1.89  

Gathering, processing and transportation

   $ 0.39      $ 0.36  

Taxes other than income

   $ 0.36      $ 0.32  

General and administrative expense

   $ 1.10      $ 0.68  

Depletion, depreciation, and amortization

   $ 0.89      $ 0.83  

Selected Financial Data—Unaudited

Balance Sheet Data

 

(Amounts in $000s, except per unit data)    June 30, 2018      March 31, 2018  

Total current assets

   $ 49,154      $ 61,605  

Property and equipment, net

     635,867        625,803  

Total assets

     848,272        886,460  

Total current liabilities

     75,958        48,095  

Long-term debt

     314,000        347,000  

Total liabilities

     475,376        488,320  

Total equity

     372,896        398,140  

Selected Financial Data—Unaudited

Statements of Cash Flows Data

 

(Amounts in $000s, except per unit data)    Three Months
Ended
June 30, 2018
    Three Months
Ended
March 31, 2018
 

Net cash provided from operating activities

   $ 42,128     $ 42,147  

Net cash used in investing activities

     (6,963     (13,284

Net cash provided by (used in) financing activities

     (33,296     (29,213

 

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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
June 30, 2018
    Three Months
Ended
March 31, 2018
 

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

    

Net cash provided by operating activities

   $ 42,128     $ 42,147  

Changes in working capital

     (13,740     (4,810

Interest expense, net

     6,287       5,772  

Amortization of deferred financing fees

     (1,211     (541

Reorganization items, net

     768       518  

Exploration costs

     2,988       34  

Acquisition and divestiture related costs

     679       208  

Third-party midstream transaction

     (105     —    

Severance payments

     7,709       —    

Plugging and abandonment cost

     270       —    
  

 

 

   

 

 

 

Adjusted EBITDA:

   $ 45,773     $ 43,328  
  

 

 

   

 

 

 

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

    

Adjusted EBITDA:

   $ 45,773     $ 43,328  

Less: Cash interest expense

     5,086       5,087  

Less Capital expenditures

     23,356       14,902  
  

 

 

   

 

 

 

Free Cash Flow:

   $ 17,331     $ 23,339  
  

 

 

   

 

 

 

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
June 30, 2018
    Three Months
Ended
March 31, 2018
 

Reconciliation of Adjusted EBITDA to Net Income (Loss):

    

Net income (loss)

   $ (25,279   $ 3,239  

Interest expense, net

     6,287       5,772  

Depreciation, depletion and amortization

     13,619       12,958  

Accretion of asset retirement obligations

     1,429       1,718  

(Gains) losses on commodity derivatives

     35,652       10,456  

Cash settlements on expired commodity derivatives

     2,027       4,876  

Acquisition and divestiture related costs

     679       208  

Reorganization items, net

     768       518  

Share/unit-based compensation expense

     336       1,176  

(Gain) loss on sale of properties

     (227     2,373  

Exploration costs

     2,988       34  

Loss on settlement of AROs

     (110     —    

Third-party midstream transaction

     (105     —    

Severance payments

     7,709       —    
  

 

 

   

 

 

 

Adjusted EBITDA:

   $ 45,773     $ 43,328  
  

 

 

   

 

 

 

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

    

Adjusted EBITDA:

   $ 45,773     $ 43,328  

Less: Cash interest expense

     5,086       5,087  

Less Capital expenditures

     23,356       14,902  
  

 

 

   

 

 

 

Free Cash Flow:

   $ 17,331     $ 23,339  
  

 

 

   

 

 

 

 

11


(in millions)    Mid-Point
For Quarter Ended
9/30/2018
    Mid-Point
For Year Ended
12/31/2018
 

Calculation of Adjusted EBITDA:

    

Net income

   $ 22     $ 95  

Interest expense

     5       19  

Depletion, depreciation, and amortization

     12       50  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 39     $ 164  
  

 

 

   

 

 

 

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

    

Net cash provided by operating activities

   $ 34     $ 145  

Changes in working capital

     —         —    

Cash Interest Expense

     5       19  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 39     $ 164  
  

 

 

   

 

 

 

Reconciliation of Adjusted EBITDA to Free Cash Flow:

    

Adjusted EBITDA

   $ 39     $ 164  

Cash Interest Expense

     (5     (19

Capital expenditures

     (6     (50
  

 

 

   

 

 

 

Free Cash Flow

   $ 28     $ 95  
  

 

 

   

 

 

 

Contacts

Amplify Energy Corp.

Martyn Willsher – Chief Financial Officer

(713) 588-8346

martyn.willsher@amplifyenergy.com

 

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