HOUSTON, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Amplify Energy Corp. (NYSE: AMPY) ("Amplify,” the "Company,” "us,” or "our”) announced today its operating and financial results for the third quarter of 2024.
Key Highlights
- During the third quarter of 2024, the Company:
- Achieved average total production of 19.0 MBoepd
- Generated net cash provided by operating activities of $15.7 million and net income of $22.7 million
- Delivered Adjusted EBITDA of $25.5 million
- Generated $3.6 million of free cash flow
- Drilled and completed the C59 development well at Beta, achieving an IP30 oil rate of approximately 590 Bopd (gross), which exceeded Company projections
- In the process of completing the C48 development well at Beta, which the Company expects to bring online in mid-November
- On October 25, 2024, the Company completed its semi-annual borrowing base redetermination
- The borrowing base and elected commitments are now $145.0 million, increasing Amplify's liquidity by $10.0 million
- As of September 30, 2024, Amplify had $120.0 million outstanding under the revolving credit facility
- Net Debt to Last Twelve Months ("LTM”) Adjusted EBITDA of 1.1x1
- The Company issued its annual sustainability report which is now available on its website
Martyn Willsher, Amplify's President and Chief Executive Officer, commented, "Amplify continued to deliver strong operating and financial performance in the third quarter. We are excited about the tremendous progress and results of our development program at Beta, where we successfully drilled and completed the C59 well in early October. The well's 30-day IP rate of 590 gross barrels of oil per day exceeded projections, and based on early results and current commodity prices, we expect it will pay out in six to nine months. We are also in the process of completing the C48 well, and we are excited to see how it will perform. Having successfully drilled wells from both the Ellen and Eureka platforms, we are increasingly confident about the future inventory and development plan for Beta.”
"As discussed in our prior earnings release, we evaluated several proposals regarding the monetization of our Wyoming assets. While we were initially encouraged by the interest we received, in the current commodity price environment, we believe retaining the assets and continuing to benefit from the asset cash flows maximize shareholder value at this time. We remain open to exploring future monetization opportunities as they develop.”
Mr. Willsher concluded, "So far, 2024 has been a strong year for Amplify. Our base assets are performing well, and we have made significant progress in demonstrating the upside potential of the Beta field. We look forward to continuing the successes of our development program at Beta and remain confident that the initiatives we are actively pursuing this year will be transformative for the Company.”
Key Financial Results
During the third quarter of 2024, the Company reported net income of approximately $22.7 million compared to net income of $7.1 million in the prior quarter. The increase was primarily attributable to a non-cash unrealized gain on commodity derivatives during the period compared to an unrealized loss in the prior period.
Amplify generated $25.5 million of Adjusted EBITDA for the third quarter, a decrease of approximately $5.2 million from $30.7 million in the prior quarter. Second quarter Adjusted EBITDA benefited from a one-time $7.0 million accounting adjustment related to the release of suspense from prior quarters. Further detail on the adjustment can be found at the end of this release and in our quarterly report on Form 10-Q.
Free cash flow was $3.6 million for the third quarter, a decrease of $5.6 million compared to the prior quarter, which was also impacted by the second quarter suspense release. Amplify has now generated positive free cash flow in 17 of the last 18 fiscal quarters.
| Third Quarter | Second Quarter | |||||||
| $ in millions | 2024 | 2024 | ||||||
| Net income (loss) | $22.7 | $7.1 | ||||||
| Net cash provided by operating activities | $15.7 | $15.4 | ||||||
| Average daily production (MBoe/d) | 19.0 | 20.3 | ||||||
| Total revenues excluding hedges | $69.9 | $79.5 | ||||||
| Adjusted EBITDA (a non-GAAP financial measure) | $25.5 | $30.7 | ||||||
| Total capital | $18.2 | $18.0 | ||||||
| Free Cash Flow (a non-GAAP financial measure) | $3.6 | $9.2 | ||||||
On October 25, 2024, Amplify completed the regularly scheduled semi-annual redetermination of its borrowing base. The borrowing base was reduced $5.0 million while elected commitments were increased $10.0 million, bringing the borrowing base and elected commitments under the revolving credit facility to $145.0 million. The next regularly scheduled borrowing base redetermination is expected to occur in the second quarter of 2025.
As of September 30, 2024, Amplify had $120.0 million outstanding under its revolving credit facility, and net debt to LTM Adjusted EBITDA was 1.1x (net debt as of September 30, 2024 and 3Q24 LTM Adjusted EBITDA). Third quarter net debt increased slightly from the prior quarter due to expected changes in working capital and increased development activity, primarily at Beta. The Company's net debt to LTM Adjusted EBITDA ratio improved quarter-over-quarter to 1.1x from 1.2x due to increased LTM Adjusted EBITDA.
Sustainability Report Update
The Company issued its second annual sustainability report, which is available on its website, www.amplifyenergy.com, under the "Sustainability” tab.
The report provides updated information about Amplify's environmental, social and governance ("ESG”) initiatives, practices and related metrics.
Corporate Production and Pricing
During the third quarter of 2024, average daily production was approximately 19.0 Mboepd, a decrease of 1.3 Mboepd from the prior quarter. The second quarter benefitted from a one-time, prior-period accounting adjustment, which added approximately 1.2 Mboepd. Adjusting for the one-time benefit in the second quarter, third quarter production was relatively flat compared to the prior quarter despite a planned multi-day shut-in at Beta for the electrification and emissions reductions project and the C59 well coming online just after quarter-end. The Company's product mix for the quarter was 43% crude oil, 17% NGLs, and 40% natural gas.
| Three Months | Three Months | |||||
| Ended | Ended | |||||
| September 30, 2024 | June 30, 2024 | |||||
| Production volumes - MBOE: | ||||||
| Bairoil | 294 | 301 | ||||
| Beta | 304 | 277 | ||||
| Oklahoma | 454 | 492 | ||||
| East Texas / North Louisiana | 638 | 709 | ||||
| Eagle Ford (Non-op) | 62 | 64 | ||||
| Total - MBoe | 1,752 | 1,843 | ||||
| Total - MBoe/d | 19.0 | 20.3 | ||||
| % - Liquids | 60 | % | 60 | % | ||
The following table sets forth information regarding average realized sales prices for the periods indicated:
| Crude Oil ($/Bbl) | NGLs ($/Bbl) | Natural Gas ($/Mcf) | ||||||||||||||||||||||
| Three Months Ended September 30, 2024 | Three Months Ended June 30, 2024 | Three Months Ended September 30, 2024 | Three Months Ended June 30, 2024 | Three Months Ended September 30, 2024 | Three Months Ended June 30, 2024 | |||||||||||||||||||
| Average sales price exclusive of realized derivatives and certain deductions from revenue | $ | 71.74 | $ | 76.51 | $ | 21.63 | $ | 20.05 | $ | 1.84 | $ | 1.78 | ||||||||||||
| Realized derivatives | (0.24 | ) | (3.17 | ) | - | - | 1.38 | 1.36 | ||||||||||||||||
| Average sales price with realized derivatives exclusive of certain deductions from revenue | $ | 71.50 | $ | 73.34 | $ | 21.63 | $ | 20.05 | $ | 3.22 | $ | 3.14 | ||||||||||||
| Certain deductions from revenue | - | - | (1.33 | ) | (1.06 | ) | 0.00 | 0.02 | ||||||||||||||||
| Average sales price inclusive of realized derivatives and certain deductions from revenue | $ | 71.50 | $ | 73.34 | $ | 20.30 | $ | 18.99 | $ | 3.22 | $ | 3.16 | ||||||||||||
Lease operating expenses in the third quarter of 2024 were approximately $33.3 million, or $18.98 per Boe, a $3.0 million decrease compared to the prior quarter. Approximately $1.2 million of this decrease was due to a reclassification of certain expenses to taxes other than income with the remaining decrease attributable to continued optimization initiatives. Lease operating expenses also do not reflect $0.8 million of income generated by Magnify Energy Services in the third quarter.
Severance and ad valorem taxes in the third quarter were approximately $6.0 million, an increase of $1.4 million compared to $4.6 million in the prior quarter primarily due to the reclassification of certain lease operating expenses, as noted above. Severance and ad valorem taxes as a percentage of revenue were approximately 8.8% this quarter compared to 6.4% in the prior quarter due to this adjustment. The Company anticipates that taxes as a percentage of revenue will remain within its previously announced guidance range for 2024.
Amplify incurred $4.3 million, or $2.45 per Boe, of gathering, processing and transportation expenses in the third quarter, compared to $4.9 million, or $2.66 per Boe, in the prior quarter.
Third quarter cash G&A expenses were $6.2 million, a decrease of $0.4 million from the prior quarter and in-line with expectations. This decrease was primarily due to lower legal fees. The Company expects quarterly cash G&A expenses will remain at approximately this same level in the fourth quarter.
Depreciation, depletion and amortization expense for the third quarter totaled $8.1 million, or $4.62 per Boe, compared to $7.8 million, or $4.25 per Boe, in the prior quarter.
Net interest expense was $3.8 million for the third quarter, an increase of $0.2 million from $3.6 million in the prior quarter.
Amplify recorded a current income tax expense of $0.4 million for the third quarter.
Capital Investments
Cash capital investment during the third quarter of 2024 was approximately $18.2 million. During the third quarter, the Company's capital allocation was approximately 66% for Beta development drilling and facility projects, with the remainder distributed across the Company's other assets.
The following table details Amplify's capital invested during the third quarter of 2024:
| Third Quarter | Year to Date | |||||||
| 2024 Capital | 2024 Capital | |||||||
| ($ MM) | ($ MM) | |||||||
| Bairoil | $ | 1.2 | $ | 2.7 | ||||
| Beta | $ | 12.0 | $ | 43.7 | ||||
| Oklahoma | $ | 1.5 | $ | 3.0 | ||||
| East Texas / North Louisiana | $ | 2.3 | $ | 2.9 | ||||
| Eagle Ford (Non-op) | $ | 1.2 | $ | 2.0 | ||||
| Magnify Energy Services | $ | 0.0 | $ | 1.0 | ||||
| Total Capital Invested | $ | 18.2 | $ | 55.3 | ||||
Beta Development and Facility Upgrade Update
In the third quarter, the Company invested approximately $5.9 million to successfully drill the C59 well from the Eureka platform, which was brought online in early October and achieved an IP-30 oil rate of approximately 590 Bopd. The C48 well is in the process of being completed and is expected to come online in mid-November.
In 2024, the Company completed two wells with better-than-anticipated results and short projected payback periods on its investment and is the process of completing its third well. The Company is refining its long-term development plans at Beta based on these initial successes and anticipates communicating these plans in the first quarter of 2025.
During the third quarter, the Company continued the final phase of the electrification and emissions reduction project at Beta, which involves installing selective catalytic reducers on the platform generators and rig engines. This multi-year facility project is scheduled to be completed in the fourth quarter of 2024.
Hedging
Recently, the Company took advantage of volatility in the futures market to add to its hedge position, further protecting future cash flows. Amplify executed crude oil swaps for 2025 and 2026 at a weighted-average price of $69.39 per barrel and $68.12 per barrel, respectively, while monetizing a small portion of in-the-money gas hedges to stay in compliance with the Company's revolving credit facility.
The following table reflects the hedged volumes under Amplify's commodity derivative contracts and the average fixed floor and ceiling prices at which production is hedged for October 2024 through December 2026, as of November 6, 2024:
| 2024 | 2025 | 2026 | |||||||||
| Natural Gas Swaps: | |||||||||||
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