Amplify Energy Corp. Q1 FY2024 earnings call

• Amplify had a strong first quarter of 2024, generating $24.9 million of adjusted EBITDA and $2.3 million of free cash flow. • Increased annual guidance due to better-than-expected first quarter performance and higher forecasted crude oil prices. • Barrel marketing process progressing, exploring divestiture and alternative financing. • Payroll monetization initiative ongoing. • Beta continues progress on 2024 development program; completed second phase of electrification and emission reduction project, proceeding with third phase. • Restructured insurance program, lowering annual sinking fund obligations by ~$7 million per year. • Renegotiated iodine contracts, expecting additional $2 million to $3 million per year in iodine royalties starting Q2 2024. • Capital investment of ~$19.1 million in Q1, with majority at Beta for electrification and development, and other projects. • Non-operated activity in Eagle Ford and East Texas evaluated for well participation.

Total production for the first quarter averaged approximately 20,200 BOE per day, consisting of 43% oil, 18% NGLs, and 39% natural gas. Lease operating expenses were $38 million, gathering, processing, and transportation costs were $4.8 million, and production taxes were $4.9 million for the first quarter. Magnify Energy Services generated approximately $600,000 in income in the first quarter.

• Updated guidance based on flat commodity prices: WTI crude oil at $78 a barrel and Henry Hub Natural Gas at $2.25 per MMBtu. • Expect to invest 85% to 95% of capital in the first three quarters of 2024, primarily for Beta projects. • Increased annual free cash flow guidance range due to better-than-expected Q1 results and strong hedge positions.

• Forward-looking statements subject to various risks, uncertainties, expectations, and assumptions that may cause actual results to differ materially. • Equipment issues during Beta well drilling led to extended downtime and altered completion plan, though no material impact on future productivity expected if learnings applied to future wells.

Q: To start off first with Beta and the mechanical issue that appeared here, specifically wondering if there's any anticipated impact to production from the well given the change in completion plan and then prospectively, if there's any kind of learnings that can be applied to the next wells to, I guess kind of de-risk or mitigate any potential issues rearising on future drilling?

A: Yes, the issues with the well were equipment failures on the rig. Components were replaced, and no material issues foreseen in future. Altered completion is a smaller casing design, no real material difference in productivity expected. Learnings applied to future wells to mitigate issues.

Q: Understood. Great. I appreciate that detail. My follow-up, with respect to the Bairoil Limited turnaround, can you talk a little bit more about the strategy to change that timing? And then, can you clarify, apologies if this was mentioned, but is there expected to be another kind of more traditional turnaround later this year or what's kind of the timeline that you guys might expect for when another turnaround may be needed at Bairoil?

A: We've been looking at the turnaround strategy. Traditionally, turnarounds were annual, but now stretched to 18-24 months. The Bairoil turnaround was accelerated from Q2 to Q1 to take advantage of downtime. No traditional turnaround expected this year; next turnaround anticipated next year.

Q: Yes. Good morning, everyone. Question on Beta. So production now has ticked up every quarter over the past year since the restart. What do you think of base production at this point? And is any of it still being hindered with some of the modifications being made to the platform to where it might argue for a higher base production next year independent of the development work?

A: Outside developments, some pre-shutdown wells still need workovers for incremental production. Base production now is post-shutdown, with large facility projects driving cost savings through reduced diesel usage, NOx credit reductions, etc., mostly on cost side.

Q: And from, I guess the discussion on the direction LOE and CapEx, doesn't sound like there was a lot of A45 related costs in the LOE CapEx in the first quarter. Is that a fair comment that that wasn't the reason for some of the overages?

A: There were some capital costs related to A45, but most overages were due to accelerating the turnaround and Beta facility projects. Downtime was shrunk, and overall guidance not changed as it's an acceleration of planned work.

Q: So the 16 million goes to 9 million, is that fair? And when does that start? And is there any sort of offsetting balances? I don't know how this stuff works, but maybe something on the credit facility or something. Or is this a pretty clean 16 goes to 9 on cash outlays?

A: There's federal and state portions. Originally 16, now 9. Replaced surety group, reallocating to get right people in place. Clean reduction in cash outlays.

Q: Bairoil, when are the final bids due?

A: Bids due towards the end of May. Process includes first round, second round, and negotiating a PSA. Anticipated to happen over summer, potentially in advance of next call.