HOUSTON, March 19, 2020 (GLOBE NEWSWIRE) — Amplify Energy Corp. (NYSE: AMPY) (“Amplify” or the “Company”) announced today that it has lowered its 2020 capital expenditure budget by approximately $17 million or 37% in response to the recent severe decline in commodity prices and overall downturn in the market attributed to COVID-19 and OPEC’s decision to increase production. Full year capital expenditure guidance has been reduced from a midpoint estimate of $46 million to a midpoint estimate of $29 million. This revised capital budget is expected to be spent primarily in the first quarter of 2020, where Amplify is maintaining its prior guidance for capital spending of $13 to $19 million.
Amplify also maintains a strong hedge book with 61% of forecasted 2020 production hedged, including 77% of crude oil hedged at $56.29 per barrel. As of March 18, 2020, Amplify’s mark-to-market value was a net asset position of approximately $130 million. Due to Amplify’s prudent hedging activities, the Company still expects to generate strong free cash flow for 2020 at current strip pricing. Additional detailed information on Amplify’s hedge positions was posted on March 5, 2020 and is available on its website, www.amplifyenergy.com, under the Investor Relations section.
Further, as a result of the oil price reduction, Amplify should qualify for statutory royalty relief at its Beta field following the end of the first quarter. This relief will reduce Amplify’s royalty rate at Beta by 50%, resulting in an increase in production of approximately 500 Bbls/d and additional revenue of approximately $7 million per year at current prices. The company currently expects to receive this relief in the third quarter of 2020, subject to an application process which is expected to take approximately ninety days.
“Due to further material declines in commodity prices, Amplify is proactively reducing capital costs across all asset areas to preserve free cash flow,” said Ken Mariani, Amplify’s President and Chief Executive Officer. “In addition to these capital reductions, Amplify has also initiated several additional cost reduction projects that will materially reduce LOE and G&A, and positively impact free cash flow during the remainder of 2020 and beyond.”
It is important to note that despite current commodity prices, Amplify maintains over $170 million in liquidity and remains in full compliance with the financial covenants under its credit facility. Amplify is currently working collaboratively with the administrative agent on the upcoming Spring redetermination and will update the market at the appropriate time on our progress.
About Amplify Energy
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 Oklahoma, the Rockies, offshore California, East Texas / North Louisiana and South Texas. For more information, visit www.amplifyenergy.com.
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.
Investor Relations Contacts
Martyn Willsher – Chief Financial Officer
Eric Chang – Treasurer