Amplify Energy Corp.
Amplify Energy Corp (Form: 8-K, Received: 11/07/2017 17:22:45)

 

 

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): November 7, 2017 (November 7, 2017)

 

 

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 November 7, 2017, Amplify Energy Corp., a Delaware corporation (the “Company”), issued a press release reporting the Company’s financial and operating results for the quarter ended September 30, 2017. 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 November 7, 2017, the Company issued a press release announcing, among other things, its updated 2017 guidance. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

On November 7, 2017, 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 2017 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; 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 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 November 7, 2017


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: November 7, 2017     AMPLIFY ENERGY CORP.
    By:   /s/ Robert L. Stillwell, Jr.
     

Name:

  Robert L. Stillwell, Jr.
     

Title:

  Senior Vice President and Chief Financial Officer

Exhibit 99.1

 

LOGO  

News

For Immediate Release

Amplify Energy Announces Third Quarter 2017 Results

HOUSTON,  November 7, 2017— Amplify Energy Corp. (OTCQX: AMPY) (“Amplify” or the “Company”) announced today its operating and financial results for the third quarter of 2017 and provided updated guidance for the fourth quarter and for the full year 2017.

Strategic Updates

 

    Launched divestiture processes in October for the Company’s East Texas assets and Rockies CO2 assets in Wyoming

 

    Conducted a broad process to market the Company’s South Texas conventional and Eagle Ford assets; the Company has received multiple bids on both assets and is currently in active discussions to maximize value

 

    Received $15.5 million in October related to a third-party midstream transaction; proceeds were used to pay down debt under the Company’s revolving credit facility

 

    As of November 3, 2017, Amplify had $17 million of cash and total debt of $388 million under its revolving credit facility, down from $418 million as of June 30, 2017

Key Third Quarter Highlights

 

    Successfully initiated East Texas drilling program by bringing on-line three horizontal Cotton Valley wells with an average peak rate of 10 MMcfe/d per well, in-line with expectations

 

    Increased daily production 4% to 177.4 MMcfe/d, in-line with quarterly guidance

 

    Reduced lease operating expenses to $1.78 per Mcfe, beating the low end of the guidance range of $1.80 to $1.91 per Mcfe

 

    Net cash provided by operating activities of $37 million for the quarter, exceeding the midpoint of guidance of $27 million

 

    Generated Adjusted EBITDA of $38 million, exceeding the high end of the guidance range of $30 million to $36 million

 

    Generated $7 million of free cash flow, exceeding the high end of the guidance range of $2 million to $5 million

 

    Reduced total debt to annualized Adjusted EBITDA to 2.7x for the third quarter from 3.2x at the end of the second quarter

 

    Actively mitigated commodity volatility through hedging activity with mark-to-market value of approximately $39 million as of November 3, 2017

 

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“This has been another strong quarter for Amplify. We continued to execute across our asset base at a high level and met or exceeded guidance metrics for production, costs and cash flow, and meaningfully enhanced liquidity,” said Bill Scarff, President and Chief Executive Officer of Amplify. “We are working closely with our Board to evaluate strategic alternatives that will maximize value for our shareholders, including potential asset divestitures and cost cutting initiatives to stream-line the business.”

Key Financial Results

 

$ in millions

   Third Quarter
2017
     Second Quarter  (1)
2017
 

Average daily production (MMcfe/d)

     177.4        171.4  

Total revenues

   $ 75.6      $ 70.2  

Total assets

   $ 951.4      $ 966.6  

Net Income (loss)

   $ (7.5    $ (75.5

Adjusted EBITDA (a non-GAAP financial measure)

   $ 37.8      $ 32.9  

Total debt (2)

   $ 403.0      $ 418.0  

Total debt / Adjusted EBITDA (3)

     2.7x        3.2x  

Net cash provided by (used in) operating activities (4)

   $ 37.3      $ 12.7  

Total capital

   $ 25.4      $ 19.2  

 

(1)   All amounts reflect the combined results of the successor period (May 5, 2017 through June 30, 2017) and the predecessor period (April 1, 2017 through May 4, 2017)
(2)   As of September 30, 2017 and June 30, 2017
(3)   Annualized for the respective quarter ended
(4)   Includes $16.9 million of restructuring expenses in the second quarter

Drilling Program Update

During the third quarter of 2017, Amplify increased average daily production by 4% to 177.4 MMcfe/d, in-line with quarterly guidance. The Company initiated its East Texas drilling program and successfully completed 3.0 gross (3.0 net) horizontal wells in the Cotton Valley formation. The three completed wells had average peak rate of 10 MMcfe/d per well, in-line with the Company’s expectations. The average lateral length for the three completed horizontal wells was approximately 6,000 feet with an average of thirty stages, or 200 foot stage spacing. Compared to historical wells, completion designs for the first three wells were implemented with higher proppant loadings and closer stage spacing.

Prior to year-end 2017, the Company expects to have drilled three additional horizontal Cotton Valley wells with completion of the wells expected in 2018. The Company’s East Texas development program is focused on the Joaquin and Tatum fields in Shelby, Rusk and Panola counties.

The Company also participated in 14.0 gross (0.9 net) non-operated wells brought on-line in the third quarter in the Eagle Ford Shale formation. Well results exceeded expectations with an average peak rate of 1,762 Boe/d per well (93% liquids). Prior to year-end 2017, three additional wells are expected to achieve first production.

 

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Capital Spending

Amplify’s capital spend for the quarter was approximately $25 million, in-line with quarterly guidance. Third quarter capital was allocated 82% in East Texas, 11% 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 fourth quarter of 2017 is expected to be approximately $10 to $15 million. Amplify anticipates spending approximately 68% of this capital in East Texas and 10% in the Eagle Ford, with the remainder focused primarily on infrastructure related capital in California, the Rockies and South Texas.

Third-Party Midstream Transaction Payment

In October 2017, Amplify received approximately $15.5 million in connection with the sale of a third-party midstream entity with whom the Company’s natural gas gathering and processing agreements entitled Amplify to a percentage of the proceeds in the event of a sale. The proceeds from this transaction were used to pay down debt under the Company’s revolving credit facility. The sale will have no impact on the Company’s gathering and processing costs.

Revolving Credit Facility and Liquidity

As of November 3, 2017, Amplify had total debt of $388 million under its revolving credit facility, with a current borrowing base of $475 million. Amplify’s liquidity was $101 million as of November 3, 2017, consisting of $17 million of cash on hand and available borrowing capacity of $84 million (including the impact of $2.5 million in outstanding letters of credit). The Company expects the fall redetermination of its revolving credit facility to occur in November.

Divestiture Update – East Texas, Bairoil, South Texas and Eagle Ford

Amplify continues to work with Jefferies LLC to explore strategic alternatives for the Company to maximize value for its shareholders. The Company launched divestiture processes in October for its East Texas assets and Rockies CO2 assets in Wyoming. As previously announced, the Company launched divestiture processes for its South Texas conventional and Eagle Ford assets. Amplify received multiple bids for both assets and is in active discussions to maximize value.

 

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Comparison of Third Quarter Guidance vs Actual Results

 

     Q3 2017 Guidance (1)     Q3  
     August 9, 2017     2017  
     Low            High     Actuals  

Net Average Daily Production

 

      

Oil (MBbls/d)

     9.3              9.8       10.0  

NGL (MBbls/d)

     5.2          5.6       4.7  

Natural Gas (MMcf/d)

     87              92       88.7  

Total (MMcfe/d)

     174              185       177.4  

Commodity Price Differential / Realizations (Unhedged)

 

          

Crude Oil Differential ($ / Bbl)

   $ 5.00            $ 5.50     $ 4.04  

NGL Realized Price (% of WTI NYMEX)

     42            47     47

Natural Gas Realized Price (% of NYMEX to Henry Hub)

     96            100     102

Gathering, Processing and Transportation Costs

 

          

Crude Oil ($ / Bbl)

   $ 0.65            $ 0.80     $ 0.61  

NGL ($ / Bbl)

   $ 4.75            $ 5.00     $ 4.45  

Natural Gas ($ / Mcf)

   $ 0.55            $ 0.65     $ 0.56  

Mcfe ($ / Mcfe)

   $ 0.44            $ 0.51       $0.43  

Average Costs

         

Lease Operating ($ / Mcfe)

   $ 1.80            $ 1.91     $ 1.78  

Taxes (% of Revenue) (2)

     6.7            7.1     5.6

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

   $ 0.54            $ 0.57     $ 0.60  

Net Cash Provided by Operating Activities (4)

     $ 27        $ 37  

Adjusted EBITDA ($MM) (5)

   $ 30            $ 36     $ 38  

Cash Interest Expense ($MM)

   $ 5            $ 7     $ 5  

Capital Expenditures ($MM)

   $ 21            $ 27     $ 25  

Free Cash Flow (MM) (5)

   $ 2            $ 5     $ 7  

 

(1) Guidance based on NYMEX strip pricing as of July 28, 2017; Average prices of $49.74 / Bbl for crude oil and $3.14 / Mcf for natural gas for 2017
(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, settlements on terminated derivatives 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

 

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Fourth Quarter and Full Year 2017 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 2017 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. 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:

 

     Q4 2017E (1)     FY 2017E (1)  
     Low            High     Low            High  

Net Average Daily Production

              

Oil (MBbls/d)

     9.5              10.2       9.4              10.1  

NGL (MBbls/d)

     4.7              5.0       4.5              4.9  

Natural Gas (MMcf/d)

     89              96       90              97  

Total (MMcfe/d)

     174              188       173              188  

Commodity Price Differential / Realizations (Unhedged)

              

Oil Differential ($ / Bbl)

   $ 3.50            $ 4.00     $ 4.25            $ 4.75  

NGL Realized Price (% of WTI NYMEX)

     47            53     44            49

Natural Gas Realized Price (% of NYMEX to Henry Hub)

     97            101     98            102

Gathering, Processing and Transportation Costs

              

Oil ($ / Bbl)

   $ 0.75            $ 0.85     $ 0.65            $ 0.75  

NGL ($ / Bbl)

   $ 4.75            $ 4.90     $ 4.75            $ 4.90  

Natural Gas ($ / Mcf)

   $ 0.52            $ 0.60     $ 0.52            $ 0.60  

Total ($ / Mcfe)

   $ 0.43            $ 0.50     $ 0.43            $ 0.50  

Average Costs

              

Lease Operating ($ / Mcfe)

   $ 1.63            $ 1.75     $ 1.63            $ 1.75  

Taxes (% of Revenue) (2)

     5.8            6.4     5.0            5.6

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

   $ 0.60            $ 0.64     $ 0.59            $ 0.64  

Net Cash Provided by Operating Activities (4)

     $ 35          $ 126     

Adjusted EBITDA ($MM) (5)

   $ 37            $ 42     $ 147            $ 152  

Cash Interest Expense ($MM)

   $ 4            $ 6     $ 23            $ 25  

Capital Expenditures ($MM)

   $ 10            $ 15     $ 59            $ 64  

Free Cash Flow (MM) (5)

   $ 20            $ 25     $ 62            $ 67  

 

(1) Guidance based on NYMEX strip pricing as of October 27, 2017; Average prices of $50.40 / Bbl for crude oil and $3.06 / Mcf for natural gas for 2017
(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, settlements on terminated derivatives 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

 

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Hedging Update

Since June 30, 2017, the Company has added oil swaps of approximately 1,000 barrels per day in 2018 and approximately 2,600 barrels per day in 2019. The Company also added approximately 10 million cubic feet per day of gas swaps in 2019. As a percentage of our full year 2017 guidance, the Company’s production is now 44% hedged in 2018 and 14% 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 October 2017 through December 2019, as of November 3, 2017.

Hedge Summary

 

     Year Ending December 31,  
     2017 (1)      2018      2019  

Natural Gas Derivative Contracts:

        

Total weighted-average fixed/floor price

   $ 3.96      $ 3.91      $ 2.91  

Total natural gas volumes hedged (MMcf/d)

     42.2        36.2        9.9  

Oil Derivative Contracts:

        

Total weighted-average fixed/floor price

   $ 69.53      $ 71.31      $ 50.70  

Total oil volumes hedged (Mbbl/d)

     4.5        5.0        2.6  

Natural Gas Liquids Derivative Contracts:

        

Total weighted-average fixed/floor price

   $ 30.29      $ 24.13        —    

Total NGL volumes hedged (Mbbl/d)

     2.6        2.2        —    

Total Derivative Contracts:

        

Total weighted-average fixed/floor price

   $ 6.60      $ 6.95      $ 5.64  

Total equivalent volumes hedged (Mmcfe/d)

     84.8        79.2        19.7  

 

(1) Represents October through December 2017

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 September 30, 2017, which Amplify expects to file with the Securities and Exchange Commission on or before November 7, 2017.

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: 96863387. 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: 96863387.

 

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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, exploration 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 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, that 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

 

7


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.

 

8


Selected Operating and Financial Data (Tables)

Amplify Energy Corp.

Selected Financial Data – Unaudited

Statements of Operations Data

 

     Successor     Predecessor  
(Amounts in $000s, except per unit data)    Three Months
Ended
September 30, 2017
    Period from
May 5, 2017
through
June 30, 2017
    Period
April 1, 2017
through
May 4, 2017
 

Revenues:

      

Oil and natural gas sales

   $ 75,534     $ 42,228     $ 27,686  

Other revenues

     55       167       135  
  

 

 

   

 

 

   

 

 

 

Total revenues

     75,589       42,395       27,821  
  

 

 

   

 

 

   

 

 

 

Costs and Expenses:

      

Lease operating expense

     29,119       18,842       9,582  

Gathering, processing and transportation

     7,077       4,114       2,737  

Exploration

     4       7       5  

Taxes other than income

     4,214       1,933       921  

Depreciation, depletion and amortization

     13,467       8,351       9,835  

Impairment of proved oil and natural gas properties

     —         —         —    

General and administrative expense

     11,097       7,382       8,236  

Accretion of asset retirement obligations

     1,665       1,027       912  

Realized (gain) loss on commodity derivatives

     (12,992     (8,284     (5,069

Unrealized (gain) loss on commodity derivatives

     27,209       6,369       (7,766

(Gain) loss on sale of properties

     —         —         —    

Other, net

     772       —         44  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     81,632       39,741       19,437  
  

 

 

   

 

 

   

 

 

 

Operating Income (loss)

     (6,043     2,654       8,384  
     —        

Other Income (Expense):

     —        

Interest expense, net

     (5,808     (3,797     (1,843

Other income (expense)

     —         (6     2  

Gain on early extinguishment of debt

     —         —         —    

Amortization of investment premium

     —         —         —    
  

 

 

   

 

 

   

 

 

 

Total Other Income (Expense)

     (5,808     (3,803     (1,841
  

 

 

   

 

 

   

 

 

 

Income before reorganization items, net and income taxes

     (11,851     (1,149     6,543  

Reorganization items, net

     (33     (349     (81,121

Income tax benefit (expense)

     4,348       592       —    
  

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (7,536   $ (906   $ (74,578

Earnings per share/unit:

      

Basic and diluted earnings per share/unit

   $ (0.30   $ (0.04   $ (0.89
  

 

 

   

 

 

   

 

 

 

 

9


Selected Financial Data – Unaudited

Operating Statistics

     Successor     Predecessor  
(Amounts in $000s, except per unit data)    Three Months
Ended
September 30, 2017
     Period from
May 5, 2017
through
June 30, 2017
    Period
April 1, 2017
through
May 4, 2017
 

Oil and natural gas revenue:

       

Oil Sales

   $ 40,750      $ 22,070     $ 14,466  

NGL Sales

     9,927        4,112       3,495  

Natural Gas Sales

     24,857        16,046       9,725  
  

 

 

    

 

 

   

 

 

 

Total oil and natural gas sales – Unhedged

   $ 75,534      $ 42,228     $ 27,686  
  

 

 

    

 

 

   

 

 

 

Production volumes:

       

Oil Sales – MBbls

     923        525       315  

NGL Sales – MBbls

     437        219       160  

Natural Gas Sales – MMcf

     8,158        5,092       3,173  
  

 

 

    

 

 

   

 

 

 

Total – Mmcfe

     16,317        9,576       6,025  
  

 

 

    

 

 

   

 

 

 

Total – Mmcfe/d

     177.4        168.0       177.2  
  

 

 

    

 

 

   

 

 

 

Average sales price (excluding commodity derivatives):

       

Oil – per Bbl

   $ 44.16      $ 41.93     $ 45.81  

NGL – per Bbl

   $ 22.72      $ 18.60     $ 21.90  

Natural gas – per Mcf

   $ 3.05      $ 3.15     $ 3.06  
  

 

 

    

 

 

   

 

 

 

Total – per Mcfe

   $ 4.63      $ 4.41     $ 4.59  
  

 

 

    

 

 

   

 

 

 

Average unit costs per Mcfe:

       

Lease operating expense

   $ 1.78      $ 1.97     $ 1.59  

Gathering, processing and transportation

   $ 0.43      $ 0.43     $ 0.45  

Taxes other than income

   $ 0.26      $ 0.20     $ 0.15  

General and administrative expense

   $ 0.68      $ 0.77     $ 1.37  

Depletion, depreciation, and amortization

   $ 0.83      $ 0.87     $ 1.63  

Selected Financial Data – Unaudited

Balance Sheet Data

 

     Successor         
(Amounts in $000s, except per unit data)    September 30, 2017      June 30, 2017         

Total current assets

   $ 94,996      $ 110,518     

Property and equipment, net

     676,035        663,867     

Total assets

     951,351        966,625     

Total current liabilities

     66,999        60,970     

Long-term debt

     403,000        418,000     

Total liabilities

     568,119        576,874     

Total equity

     383,232        389,751     

 

Selected Financial Data – Unaudited        
Statements of Cash Flows Data        
     Successor      Predecessor  
(Amounts in $000s, except per unit data)    Three Months
Ended
September 30, 2017
    Period from
May 5, 2017
through
June 30, 2017
     Period
April 1, 2017
through
May 4, 2017
 

Net cash provided by operating activities

   $ 37,330     $ 20,544      $ (7,828

Net cash used in investing activities

     (18,380     (9,639      (2,234

Net cash provided by (used in) financing activities

     (15,042     (20,094      (49,820

 

10


Selected Operating and Financial Data (Tables)

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

Adjusted EBITDA and Free Cash Flow

 

     Successor     Predecessor  
(Amounts in $000s, except per unit data)    Three Months
Ended
September 30, 2017
    Period from
May 5, 2017
through
June 30, 2017
    Period
April 1, 2017
through
May 4, 2017
 

Reconciliation of Adjusted EBITDA to Net Income (Loss):

      

Net income (loss)

   $ (7,536   $ (906   $ (74,578

Interest expense, net

     5,808       3,797       1,843  

Income tax expense (benefit)

     (4,348     (592     —    

Depreciation, depletion and amortization

     13,467       8,351       9,835  

Accretion of asset retirement obligations

     1,665       1,027       912  

(Gains) losses on commodity derivative instruments

     14,217       (1,915     (12,835

Cash settlements received (paid) on expired commodity derivative instruments

     12,992       8,284       5,069  

Acquisition and divestiture related expenses

     238       —         —    

Reorganization items, net

     33       349       81,121  

Share/Unit based compensation expense

     1,016       526       2,542  

Exploration costs

     4       —         —    

Loss on settlement of AROs

     284       —         44  

Other

     —         —         15  
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

   $ 37,840     $ 18,921     $ 13,968  
  

 

 

   

 

 

   

 

 

 

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

      

Adjusted EBITDA:

   $ 37,840     $ 18,921     $ 13,968  

Less: Cash interest expense

     5,442       3,367       1,796  

Less Capital expenditures

     25,353       14,772       4,438  
  

 

 

   

 

 

   

 

 

 

Free Cash Flow:

   $ 7,045     $ 782     $ 7,734  
  

 

 

   

 

 

   

 

 

 

Selected Operating and Financial Data (Tables)

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

Adjusted EBITDA and Free Cash Flow

 

     Successor     Predecessor  
(Amounts in $000s, except per unit data)    Three Months
Ended
September 30, 2017
    Period from
May 5, 2017
through
June 30, 2017
    Period
April 1, 2017
through
May 4, 2017
 

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

      

Net cash provided by (used in) operating activities

   $ 37,330     $ 20,544     $ (7,828

Changes in working capital

     (6,358     (5,424     3,325  

Interest expense, net

     5,808       3,797       1,843  

Amortization of deferred financing fees

     (570     (346     —    

Reorganization items, net

     33       350       16,533  

Exploration costs

     4       —         —    

Acquisition and divestiture related expenses

     238       —         —    

Plugging and abandonment cost

     458       —         95  

Income tax expense (benefit) – current portion

     897       —         —    
  

 

 

   

 

 

   

 

 

 

Adjusted EBITDA:

   $ 37,840     $ 18,921     $ 13,968  
  

 

 

   

 

 

   

 

 

 

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

      

Adjusted EBITDA:

   $ 37,840     $ 18,921     $ 13,968  

Less: Cash interest expense

     5,442       3,367       1,796  

Less Capital expenditures

     25,353       14,772       4,438  
  

 

 

   

 

 

   

 

 

 

Free Cash Flow:

   $ 7,045     $ 782     $ 7,734  
  

 

 

   

 

 

   

 

 

 

 

11


(in millions)    Mid-Point
For Quarter Ended
12/31/2017
    Mid-Point
For Year Ended
12/31/2017
 

Calculation of Adjusted EBITDA:

    

Net income

   $ 21     $ 53  

Interest expense

     5       24  

Depletion, depreciation, and amortization

     14       73  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 40     $ 150  
  

 

 

   

 

 

 

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

    

Net cash provided by operating activities

   $ 35     $ 126  

Changes in working capital

     —         —    

Cash Interest Expense

     5       24  
  

 

 

   

 

 

 

Adjusted EBITDA

   $ 40     $ 150  
  

 

 

   

 

 

 

Reconciliation of Adjusted EBITDA to Free Cash Flow:

  

Adjusted EBITDA

   $ 40     $ 150  

Cash Interest Expense

     (5     (24

Capital Expenditures

     (12     (62
  

 

 

   

 

 

 

Free Cash Flow

   $ 23     $ 64  
  

 

 

   

 

 

 

Contacts

Amplify Energy Corp.

Bobby Stillwell – Chief Financial Officer

(713) 588-8347

bobby.stillwell@amplifyenergy.com

Martyn Willsher – Treasurer

(713) 588-8346

martyn.willsher@amplifyenergy.com

 

12