Release Date: March 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Amplify Energy Corp (NYSE:AMPY) announced a definitive merger agreement with Juniper Capital, expected to increase scale and operating margins.
• The Juniper transaction is anticipated to provide substantial synergies, including overhead and tax benefits.
• Recent transactions in East Texas generated $7.6 million in net proceeds while retaining an overriding royalty interest.
• Successful completion of the multi-year electrification and emissions reduction project at Beta.
• Amplify has generated positive free cash flow for 10 consecutive quarters, demonstrating strong cash-generating potential.

Negative Points

• Fourth quarter production decreased by 0.5 MBOE per day due to gas volume interruptions in East Texas.
• Net loss of $7.4 million in the fourth quarter, primarily due to a non-cash unrealized loss on commodity derivatives.
• Unexpected downtime at Beta due to increased well failures, reducing production and increasing workover costs.
• Lease operating expenses increased by $1.8 million in the fourth quarter due to unplanned workovers.
• Volatility in oil prices could impact future capital expenditure plans and free cash flow management.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with AMPY.

Q: Can you provide context on the CSAN versus DSAN dynamic with the upcoming well result at Beta? How productive is the CSAN across the acreage, and should we adjust expectations for well performance? A: Dan Fury, Senior Vice President and Chief Operating Officer, explained that historically, most wells were drilled vertically by Shell in the 1980s, cutting through multiple sands. The CSAN and DSAN performance as standalone horizontal wells is not well-documented. However, the CSAN reservoir looks promising, and while its characteristics are not as favorable as the DSAN, it is still expected to yield good results.

Q: For the planned new drills this year, how much of a step out are these relative to prior wells? Are you targeting new fault blocks or offsetting proven areas? A: Dan Fury stated that the new drills are considered low risk compared to previous wells. The initial wells will be drilled in the same fault blocks as previous successful wells, indicating a focus on proven areas rather than new fault blocks.

Q: Is there an oil price at which you might review your 2025 CapEx plan? A: Martin Wilshire, President and CEO, mentioned that while they are comfortable with the current price range, they would reassess if prices continue to decline significantly. The company has hedging in place, which provides some protection, and they are not planning adjustments for East Texas projects due to their gas-heavy nature.

Q: Will there be any stub CapEx from the Juniper portfolio by the time the deal closes, or is their portfolio more front-loaded? A: Martin Wilshire noted that Juniper is finishing drilling two DJ Basin wells, expected to be completed after the merger closes. The company has flexibility in planning for the remainder of 2025 and 2026, with most acreage held by production or long-term leases.

Q: What is the potential for Magnify Energy Services with the Juniper assets? A: Dan Fury indicated that while Magnify currently operates in East Texas and Oklahoma, they are considering expanding services to the Wyoming area, which includes the Powder River and DJ Basins, as well as Bear Oil assets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.