Amplify Energy (US:AMPY)2020-11-07 23:16Financial Data and Key Metrics Changes - Production for Q3 2020 averaged approximately 27,700 BOE per day, flat compared to Q2 2020 and exceeding internal expectations [6][12] - Adjusted EBITDA for Q3 was approximately $24.8 million, significantly exceeding internal estimates [7] - Free cash flow for Q3 was $16 million, driven by cost reduction efforts [8] - Total net debt as of October 30, 2020, was $243 million, with $260 million outstanding under the revolving credit facility [10] Business Line Data and Key Metrics Changes - Oil production volumes increased by 5% during the quarter to approximately 10,800 barrels per day [6] - Lease operating expenses for Q3 were $27.6 million or $10.86 per BOE, down from $27.8 million or $11.03 per BOE in Q2 [13] - General and administrative (G&A) expenses for Q3 were $6.4 million, with cash G&A totaling $5.6 million or $2.20 per BOE, down from $6.2 million or $2.45 per BOE in Q2 [14] Market Data and Key Metrics Changes - The company has hedged approximately 75% of its Q4 2020 crude oil production at attractive pricing for 2021 [8] - The hedge mark-to-market value as of October 30, 2020, was a net asset position of $13 million [9] - Pricing realizations for NGLs and gas have improved, with the Mid-Con region showing better net backs [25][26] Company Strategy and Development Direction - The company is focused on operational excellence and efficiency, with ongoing cost reduction initiatives [13] - Future capital deployment will consider gas projects, with a focus on free cash flow and project economics [19][29] - The company plans to layer on incremental hedges for 2022 and 2023 as market conditions allow [8] Management's Comments on Operating Environment and Future Outlook - The ongoing COVID-19 pandemic has impacted demand and prices, but the company has demonstrated resilience [32] - Strong free cash flow is expected for the remainder of 2020 and into 2021, positioning the company for future opportunities [32] - Management believes a flat borrowing base with no additional mandatory reductions is likely in the upcoming redetermination process [17] Other Important Information - Capital spending for Q3 was approximately $5 million, with remaining capital spending for the year expected to be $3 million [7] - The company has reduced indebtedness through internally generated free cash flow [10] Q&A Session Summary Question: Borrowing base outlook - Management believes a flat borrowing base is attainable, with no guarantees [17] Question: Capital deployment for gas projects - The company is evaluating gas projects for the 2021 budget, focusing on free cash flow and project viability [19] Question: CEO search status - There is currently no ongoing search for a new CEO, with a review expected in the coming months [21] Question: Hedge monetizations and settlements - No monetizations occurred in the quarter; normal settlements were performed [23] Question: Price realization trends - NGLs and gas prices have improved, with mixed results across different regions [25][26] Question: Low-hanging fruit projects at higher prices - Workover opportunities and gas projects may become more attractive if prices improve [28][29]