Amplify Energy Corp.

Welcome to Amplify Energy's second quarter 2021 investor conference call. Amplify's operating and financial results were released yesterday after market close on August 4th, 2021 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, August 19th by dialing 855-859-2056 and then entering conference ID 507-6814 or by visiting Amplify's website, 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 second quarter of 2021. Joining me on the call today is Martin Wilshire, Amplify's President and Chief Executive Officer. Before we get started, we would 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 undertake 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. In addition, 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 quarterly report on Form 10Q that was filed yesterday afternoon. Also, non-GAAP financial measures may be disclosed during this call. Reconciliations of those measures to comparable GAAP measures may be found in our earnings release or on our website at www.amplifyenergy.com. I'll now turn the caller to Martin.

Thank you, Jason. During the call, I will provide a general overview of our second quarter performance, including recent company highlights, give an update on operations, and then review our improved full-year 2021 guidance. Jason will provide additional details regarding our financial performance, hedging program, and balance sheet. Following our prepared remarks, we will have a question and answer session, and then I will conclude the conference call with a few closing comments. Second quarter production averaged approximately 25,300 BOE per day, an increase of 2% from 24,700 BOE per day in the first quarter of 2021. The quarter-over-quarter increase was largely driven by the return of offline production in Oklahoma and East Texas caused by winter storm Uri in February and new well performance in the Eagleford. Second quarter adjusted EBITDA of $23.8 million was approximately $1 million more than the previous quarter and exceeded internal projections due to production outperformance and continued cost efficiencies, which were further supported by stronger price realizations. As a result, unhedged cash operating margin improved nearly 20% quarter over quarter to 45%. Cash capital spending for the second quarter was approximately $10.9 million, an increase of $5.8 million from the first quarter of 2021. The quarter-over-quarter increase was primarily attributable to Barrel's annual maintenance turnaround, the acceleration of our rod lift conversion program in Oklahoma, and the purchase of long lead time materials for the previously announced development program at Beta. Free cash flow, defined as adjusted EBITDA, less capex, and cash interest expense, was approximately $9.5 million in the second quarter of 2021, which exceeded internal projections. The decrease of $4.1 million from the previous quarter was primarily a result of the increased capital spending mentioned earlier. We continue to project substantial free cash flow generation for the foreseeable future and consequently have increased our full year 2021 free cash flow guidance, which I will detail later on the call. Now for an update on our operations. During the second quarter 2021 we continue deploying capital towards rig and platform upgrades of beta. In addition to procuring materials for the development program. The first project, the case to re completion is progressing according to schedule with initial production results expected in September. This project will be followed by two sidetracks of existing wells in the fourth quarter 2021 with preliminary production results expected by year end. Because of the low variable cost nature of beta asset and the current strong commodity price environment, we believe these projects will produce significant free cash flow and add incremental reserves to our beta asset. Our Oklahoma work of a problem remains focused on high return rod lift conversions and ESP optimizations which reduce operational and work over costs and help mitigate production downtime from future weather events. Due to the strong commodity price environment, we accelerated the rod lift conversion program in the second quarter, which we expect to continue through at least the third quarter of 2021. As a result, we currently have converted nearly 45% of the field to rod lift and expect to have roughly 50% of the field converted by year end. The strong operational results in Oklahoma this quarter stand as a testament to the efficacy of these work over projects in aligning operations in Oklahoma with our corporate strategy for production optimization and free cash flow generation. Operational results in East Texas and North Louisiana again outperformed internal projections this quarter. We have continued to mitigate natural decline rates through cost-effective work over projects with quick payout periods. These efforts, coupled with improved gas and NGO prices, have yielded some of the company's best margins. The company also anticipates participating in accretive non-operated development opportunities beginning in the fourth quarter of 2021, which provides additional free cash flow starting in 2022. At barrel the annual facility turnaround was completed on time and under budget in June. During quarter we achieve strong operational reliability from injection and production facilities and the technical team continues to refine wag patterns and CO2 injection rates based on continuous evaluation of the reservoir. In the second half of 2021 we expect to continue using new technologies, along with targeted work over activity to drive further operational improvements and efficiencies. Production rates from new wells in our non-operated Eagleford asset continue to surpass type curves and drive incremental cash flow from the asset. We continue to evaluate joint development projects as they arise and have elected to participate in new development projects which are scheduled to be drilled in the second half of the year and completed in the second quarter of 2022. On to guidance. As detailed in the earnings release last night, we've increased our full year 2021 guidance ranges for production, adjusted EBITDA, and free cash flow. The midpoint for average daily production increased by 2% or 500 BOE per day to 24,500 BOE per day. We've also increased the midpoint of adjusted EBITDA to $100 million, which was an increase of 11% or $10 million above our prior guidance as a result of the increase in commodity prices, strong production performance, and the acceleration of our workover program in Oklahoma. Most importantly, we've materially increased the midpoint of our free cash flow guidance by 25% to $50 million, an increase of $10 million for prior guidance. Additional guidance details were provided in our earnings release yesterday and can be found in the latest investor presentation currently available on our website. With that, I will now turn the call over to Jason.