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Amplify Energy and Midstates Petroleum Announce Merger-of-Equals


HOUSTON, May 06, 2019 (GLOBE NEWSWIRE) — Amplify Energy Corp. (OTCQX: AMPY) (“Amplify”) and Midstates Petroleum Company, Inc. (NYSE: MPO) (“Midstates”) announced today that they have entered into a definitive merger agreement pursuant to which Amplify will merge with a subsidiary of Midstates in an all-stock merger-of-equals. Under the terms of the merger agreement, Amplify stockholders will receive 0.933 shares of newly issued Midstates common stock for each Amplify share of common stock.  The merger is expected to close in the third quarter of 2019, at which time Amplify and Midstates stockholders will each own 50% of the outstanding shares of the combined company.

The combined company will be headquartered in Houston and trade on the NYSE under the ticker AMPY. Amplify’s President and Chief Executive Officer Ken Mariani will lead the combined company. The new Board of Directors will include members who currently serve on the Amplify and Midstates Boards. A detailed presentation describing the rationale and merits of the merger can be found at www.amplifyenergy.com or www.midstatespetroleum.com.

Transaction Highlights

  • Achieves benefits of scale by combining two PDP-weighted independent producers
    • Pro forma total enterprise value >$720 million and market capitalization >$430 million1
    • Pro forma 4Q18 production of ~40 MBoe/d
    • Pro forma 4Q18 Annualized Adjusted EBITDA of ~$241 million
  • Strong balance sheet and liquidity that will allow for acceleration of capital return programs
  • Low-decline assets expected to generate 2019E levered free cash flow of at least $65 million, which results in a top-tier pro forma free cash flow yield >15%2
  • Maintains low-leverage with pro-forma leverage ratio of 1.2x3
  • Expected annual G&A synergies of at least $20 million creates top-tier pro-forma G&A efficiency
  • Combined company current enterprise value of $729 million before synergies is a significant discount to pro forma combined proved developed reserve value of $960 million (of which 95% is PDP) based on April 30, 2019 strip pricing
  • Greater than 50% of Amplify and approximately 36% of Midstates’ stockholders have committed to vote their shares in favor of the merger, pursuant to support agreements entered into in connection with the merger agreement

______________________________

1 As of May 3, 2019
2 2019E levered free cash flow yield = (2019E adjusted EBITDA – 2019E capital expenditures – 2019E interest expense) / market capitalization as of 5/3/19
3 Combined net debt as of March 31, 2019 divided by annualized fourth quarter 2018 EBITDA

Mr. Mariani stated, “Amplify and Midstates are both well positioned to generate significant free cash flow from proved developed producing assets, and we believe that stockholders of both companies will benefit from the reduced costs and enhanced scale achieved by this transaction.  The combined company’s strong balance sheet, liquidity and free cash flow create additional capacity to return capital to stockholders and support improved market performance.  In addition, we believe that there are significant benefits in continuing to increase scale in this market, and moving forward we intend to consider other opportunistic combinations and acquisitions that create value through cost synergies and free cash flow accretion.”

David Sambrooks, President and Chief Executive Officer of Midstates, stated “This merger-of-equals with Amplify is exactly the type of value maximizing transaction we hunted for when we announced our strategic review process earlier this year.  The stock-for-stock combination provides for substantial value enhancing synergies and the potential to accelerate additional capital returns moving forward, creating significant value for shareholders of both Midstates and Amplify.  Ken and the Amplify management team have a demonstrated focus on capital discipline and capital returns to stockholders, while operating safely and efficiently and are well suited to run the combined Company.”

Transaction Details

The merger agreement was unanimously approved by the participating directors of both boards.  The Midstates Board of Directors has recommended that the Midstates stockholders vote their shares in favor of the issuance of Midstates common stock to Amplify stockholders in connection with the merger and the Amplify Board of Directors has recommended that the Amplify stockholders vote their shares in favor of the merger.

The transaction is subject to the terms and conditions set forth in the merger agreement, including holders of a majority of Midstates stock present at the special meeting having voted in favor of the stock issuance, holders of a majority of Amplify stock having voted in favor of the merger, the waiting period under the U.S. Hart-Scott-Rodino Act having expired or been terminated early, the Midstates stock being issued to Amplify stockholders in connection with the merger being listed on the NYSE and other customary conditions. Amplify sought, and has received, a technical consent from the lenders in its existing credit facility permitting the consummation of the merger.

Advisors

Amplify’s financial advisor is UBS Investment Bank and its legal advisor is Kirkland & Ellis LLP. Midstates’ financial advisor is Houlihan Lokey Capital, Inc. and its legal advisor is Latham & Watkins LLP.

Conference Call/Webcast

Amplify and Midstates will conduct a conference call to discuss the proposed transaction on May 6, 2019 at 7:30 a.m. CT.  Interested parties are invited to participate in the conference call by dialing (833) 883-4379 (Conference ID: 6827856) at least 15 minutes prior to the start of the call.  A replay of the call will be available by phone at 855-859-2056 (Conference ID: 6827856) for a fourteen day period following the call.

About Amplify

Amplify Energy Corp. is an independent oil and natural gas company engaged in the acquisition, development, exploration and production of oil and natural gas properties. Amplify’s operations are focused in the Rockies, offshore California, East Texas / North Louisiana and South Texas.  For more information, visit www.amplifyenergy.com.

About Midstates

Midstates Petroleum Company, Inc. is an independent exploration and production company focused on the application of modern drilling and completion techniques in oil- and liquids-rich basins in the onshore U.S. Midstates’ operations are currently focused on oilfields in the Mississippian Lime play in Oklahoma. For more information, visit www.midstatespetroleum.com.



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