Amplify Energy Corp.

Welcome to Amplify Energy's fourth quarter 2020 investor conference call. Amplify's operating and financial results were released earlier today and are available on Amplify's website at www.amplifyenergy.com. During this conference call, all participants will be placed in a listen-only mode. Today's call is being recorded. A replay of the call will be accessible until Thursday, March 25th. by dialing 855-859-2056 and entering conference ID number 3731609, or by visiting Amplify's website at www.amplifyenergy.com. I would now like to turn the conference call over to Jason McGlynn, Senior Vice President and Chief Financial Officer of Amplify Energy Corp.

Good morning and welcome to the Amplify Energy conference call to discuss operating and financial results for the fourth quarter of 2020. Joining me on the call today is Martin Wilshire, Amplify's President and Chief Executive Officer. Before we get started, we'd like to remind you that some of our remarks may contain forward-looking statements, which reflect management's current views of future events and are subject to various risks, uncertainties, expectations, and assumptions. Although management believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct and undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this earnings call. Please refer to our press release and SEC filings for a list of factors that may cause actual results to differ materially from those in the forward-looking statements made during this call. The unaudited financial information that will be highlighted here is derived from our internal financial books, records, and reports. For additional detailed disclosure, we encourage you to read our Form 10-K, which we expect to file later today. Also, non-GAAP financial measures may be disclosed during this call. Reconciliation of those measures to comparable GAAP measures may be found in our earnings release or on our website at www.amplifyenergy.com. With that, I'll now turn the call over to Martin.

Thank you, Jason. During the call, I will provide comments on our fourth quarter operating results, year-end 2020 approved reserves, and guidance expectations for full year 2021. I'll then turn the call over to Jason to provide additional details on our financial performance, 2021 guidance, hedging program, liquidity position, and balance sheet. Following our prepared remarks, we will take questions and I will conclude with closing remarks. Production for the fourth quarter exceeded internal forecasts, averaging approximately 26,300 BOE per day, a 5% decrease from 27,700 BOE per day in the third quarter of 2020. The decrease in production was primarily the result of projected natural decline and reduced capital work over activity during the quarter. Fourth quarter adjusted EBITDA was approximately $21.9 million, which was above internal projections. This represents a decline of $2.9 million quarter over quarter and was principally associated with production declines, partially offset by improved operating margins due to higher commodity prices during the quarter. Capital spending for the fourth quarter was approximately $2.2 million, a decrease of $2.8 million from $5 million in the third quarter, and was largely attributable to reduced capital work over activity. Amplify's full-year capital spending for 2020 was approximately $29 million, with only $14 million spent after the first quarter. The reduced capex demonstrates the flexibility of managing a mature, low-declined asset through commodity cycles. Free cash flow, defined as adjusted EBITDA, less capex and cash interest expense, was approximately $16 million in the fourth quarter and remained flat from the prior quarter despite the reduced production. Amplify's focus on maintaining a strong free cash flow profile was realized through the prudent deployment of capital to the highest return projects, relentless attention to operating efficiencies, and commitment to controlling costs. As a result, the company achieved its strongest year in operating cost reductions since inception. Earlier today, we announced Amplify's 2020 year-end approved reserves estimates of approximately 114 MMBOE with a PV10 value of $298 million based on SEC pricing of $39.57 per barrel for crude oil and $1.99 per mm BTU for natural gas. Compared to year-end 2019, SEC pricing for crude oil was down 29% and natural gas pricing was down 23%. The product mix for approved reserves was approximately 41% crude oil, 19% natural gas liquids, and 40% natural gas, with approximately 85% of the approved reserves classified as proof developed. While year-end 2020 SEC reserve pricing is a stark reminder of the dramatic impact COVID-19 had on commodity prices in 2020, it does not reflect the value of our reserves in the current commodity pricing environment. Utilizing strict pricing as of March 1, 2021, the company's year-end 2020 proved reserves increased to approximately 160 MMBOE with a PV10 of $778 million, of which 118 MMBOE and $594 million of PV10 value is classified as proved developed reserves. Additionally, we have now provided our guidance expectations for full year 2021. Our four-year 2021 average daily production forecast ranges from 23,000 to 25,000 BOE per day. As a result of the low decline rates of our mature oil properties, we anticipate that our product mix will continue to become increasingly more oil-weighted over time, and we anticipate our production in 2021 to be approximately 42% oil, 16% NGLs, and 42% natural gas. Our CapEx forecast for the year is $28 to $39 million, which includes approximately $16 million for development projects at Beta and in the Eagleford, and approximately $18 million in facilities and capital work over projects. Amplified development capital will primarily be deployed at our Beta field, where we budget approximately $10 million to commence a limited phase development program to enhance the asset with minimal incremental operating costs. The Beta reservoir features six separate stacked zones, estimated to hold approximately 1 billion barrels of high-density original oil in place, with only 11% recovered to date. The initial phase of our development program includes a case-toll recompletion and two sidetracks of existing wells that will target longer completion intervals in Beta's most prolific reservoir zones. We view the phase nature of the program as a means of de-risking a more expansive, development program in the future that has the potential to unlock substantial economic value while also bolstering the company's free cash flow profile and increasing margins. The development work at Beta is scheduled to begin in the second half of 2021, with the full impact of the program largely realized in our 2022 results. It is also important to note that at this time, we do not anticipate any impact to our short-term or long-term development plans at Beta based on the current regulatory environment. In addition to Beta, We expect to incur approximately $6 million of additional development capital to participate in the completion of approximately 1.2 net non-operated ducts in the Eagleford. Roughly $3 million of the budgeted capital was prepaid in the fourth quarter of 2020, but will be reflected in our 2021 financials. The remainder of our capital budget will be deployed across all of our asset areas and will focus on our strongest return projects. We anticipate spending approximately $8 million in Oklahoma for additional rod lift conversions and ESB optimizations. The rod lift conversion project, initiated in late 2018, has been successful in significantly reducing operating expenditures and recurring maintenance costs. Lastly, the company has budgeted approximately $10 million in 2021 for facility work and capital workovers at Barrel, Beta, and East Texas. Our 2020 results demonstrate the sustainable value of our mature PDP-weighted operating platform. The company's operational adaptability and efficiency, coupled with a robust hedging program, led to strong free cash flow generation even in a volatile commodity price environment. With an improving market outlook, we will maintain our commitment to improving our balance sheet and driving equity value for our stakeholders. To that end, we intend to file a shelf registration statement in order to access the capital markets and provide additional flexibility when evaluating potential transaction opportunities as they arise. With this in mind, I'll now turn the call over to Jason.