I have repurchased AMPY over the last few days as it seems that following the exit of Avenue Capital the shares were placed in weak hands and have since been re dumped on to the market.
This is a huge overhang to be cleared through the open market. Do you know if they intend to sell the whole stake? Will they do it through the open market? Isn't this a catalyst for the business to retire a big chunk of shares?
This is a small block they had in another fund holding 203K shares. The rest was sold. Unfortunately the company is not in a position to buy the shares back because they still need to deleverage.
Did you tune in for the call today? Not sure what game they are playing, but finding links to join the CC is like an expert puzzle.
I am still surprised that the equity hasn't reacted more. Liabilities side of the balance sheet is stabilized and after these hedges, it is time for the equity holders to get some good news. Hedges in oil and NG derisk in great part the CF and they have line of sight to 80+M FCFE.
I have been out of town. I am glad they put those hedges on. Definitely de risks the FCF and gives them optionality to do a sizable Beta drilling program if prices stay above $75.
I don't see any links anywhere to a conference call.
Why do you think the ARO is understated? The obligation is a long way out and given inflation is increasing, doesn't this usually get more, not less, expensive?
Agree on your upside case/potential, but A LOT has to go right - need to stop bleeding 24m/yr in G&A right away, need good sales prices (what is PV-10 of Eagle Ford?), Beta decom will consume a lot of cash, getting killed on interest rates, revolver now forces hedging so no upside torque, etc. How do you think about this vs. something like UNTC with huge net cash balance sheet, better alignment, limited ARO, and paying out the $?
The estimated cost to remove was from a de commissioning study done by BSEE in 2016 and updated in 2020. The updated cost in 2020 was a worst case scenario and the costs varied from as little as $15M for smaller platforms to as much as $180 for large deep water platforms . I spoke to the previous CEO about this and I believe he was an honest about it, he indicated the cost was likely closer to $25M for the smaller 2 platforms and about $40M for the larger platform. So he thought $100M was fair and they got a big release of cash in 2020 when the regulator agreed. So my point was that in my mind you need to get to that level and then the interest earned on that amount should cover inflation.
The G&A is glaring and won't be fixed until the company is broken up. However, capitalizing G&A savings in various deals at 5x is fair so that is an opportunity in my mind.
The hedging is actually a positive in my mind for them at current levels. They can be very profitable at $70 and $3 gas. I don't need optionality to $100 oil to get to a much higher value.
The PV-10 of the Eagle Ford was $36M at year end. I am hoping they get close to Pv-10 but i believe the PV-10 is materially higher because the recompletions are leading to large reserve increases in old wells that had minimal reserves left. This is why I believe they can get $35-$40M.
The interest rate on the revolver is nasty but again, they will pay this down aggressively and of course a sale of Wyoming at $140-$160M vs. pv-10 of $195M would pay off all of the debt. That asset is fairly marketable IMO due to its ESG characteristics.
No opinion on UNTC. I don't doubt that is attractive as well but I know these assets very well and think there is a lot of upside.
This is an article on the largest platform in Beta field. The National Geographic article describes how it has become an artificial reef that is thriving with marine life and that it should not be removed. This is the biggest ARO expense at Beta
https://www.amplifyenergy.com/investor-relations/press-releases/press-release-details/2023/Amplify-Energy-Announces-Board-Changes/default.aspx seems like it is going to happen
Hi TtL,
Did you see the filing? https://d18rn0p25nwr6d.cloudfront.net/CIK-0001533924/6c7aa847-4440-44ce-8d9d-c6a97ea2d120.pdf
This is a huge overhang to be cleared through the open market. Do you know if they intend to sell the whole stake? Will they do it through the open market? Isn't this a catalyst for the business to retire a big chunk of shares?
This is a small block they had in another fund holding 203K shares. The rest was sold. Unfortunately the company is not in a position to buy the shares back because they still need to deleverage.
Did you tune in for the call today? Not sure what game they are playing, but finding links to join the CC is like an expert puzzle.
I am still surprised that the equity hasn't reacted more. Liabilities side of the balance sheet is stabilized and after these hedges, it is time for the equity holders to get some good news. Hedges in oil and NG derisk in great part the CF and they have line of sight to 80+M FCFE.
I have been out of town. I am glad they put those hedges on. Definitely de risks the FCF and gives them optionality to do a sizable Beta drilling program if prices stay above $75.
I don't see any links anywhere to a conference call.
https://www.amplifyenergy.com/investor-relations/events-and-presentations/event-details/2023/Amplify-Energy---September-2023-Investor-Presentation/default.aspx this is the event. Like always, I signed up for the event, but there was no link or number to join the call.
Why do you think the ARO is understated? The obligation is a long way out and given inflation is increasing, doesn't this usually get more, not less, expensive?
Agree on your upside case/potential, but A LOT has to go right - need to stop bleeding 24m/yr in G&A right away, need good sales prices (what is PV-10 of Eagle Ford?), Beta decom will consume a lot of cash, getting killed on interest rates, revolver now forces hedging so no upside torque, etc. How do you think about this vs. something like UNTC with huge net cash balance sheet, better alignment, limited ARO, and paying out the $?
Hi Avi,
The estimated cost to remove was from a de commissioning study done by BSEE in 2016 and updated in 2020. The updated cost in 2020 was a worst case scenario and the costs varied from as little as $15M for smaller platforms to as much as $180 for large deep water platforms . I spoke to the previous CEO about this and I believe he was an honest about it, he indicated the cost was likely closer to $25M for the smaller 2 platforms and about $40M for the larger platform. So he thought $100M was fair and they got a big release of cash in 2020 when the regulator agreed. So my point was that in my mind you need to get to that level and then the interest earned on that amount should cover inflation.
The G&A is glaring and won't be fixed until the company is broken up. However, capitalizing G&A savings in various deals at 5x is fair so that is an opportunity in my mind.
The hedging is actually a positive in my mind for them at current levels. They can be very profitable at $70 and $3 gas. I don't need optionality to $100 oil to get to a much higher value.
The PV-10 of the Eagle Ford was $36M at year end. I am hoping they get close to Pv-10 but i believe the PV-10 is materially higher because the recompletions are leading to large reserve increases in old wells that had minimal reserves left. This is why I believe they can get $35-$40M.
The interest rate on the revolver is nasty but again, they will pay this down aggressively and of course a sale of Wyoming at $140-$160M vs. pv-10 of $195M would pay off all of the debt. That asset is fairly marketable IMO due to its ESG characteristics.
No opinion on UNTC. I don't doubt that is attractive as well but I know these assets very well and think there is a lot of upside.
https://www.nationalgeographic.com/environment/article/oil-rig-eureka-reef-marine-wildlife#:~:text=Off%20the%20coast%20of%20California%2C%20an%20oil,the%20ocean%E2%80%94but%20it%20is%20home%20to%20a
This is an article on the largest platform in Beta field. The National Geographic article describes how it has become an artificial reef that is thriving with marine life and that it should not be removed. This is the biggest ARO expense at Beta