Q1 2021 Amplify Energy Corp Earnings Call
Welcome to amplify Energy's first quarter 2021 Investor Conference call amplify is operating and financial results were released yesterday after market close on mate that 2021 and are available on amplify as website at www Dot amplify energy Dot com. During this conference call all participants will be placed.
Listen only mode. Today's call is being recorded a replay of the call will be accessible until Thursday may 20th by Dialling 8558592056, and then entering conference I'd number 6187 to eight nine or by visiting amplifies website www.
<unk> dot amplify energy Dot com.
I'd now like to turn the conference all 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 on financial results for the first quarter of 2021, joining me on the call today is Martin Wilshere, amplify as President and Chief Executive Officer before.
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.
Sharon 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. 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 10-Q that was filed yesterday afternoon also non-GAAP financial.
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 Dot amplify energy Dot Com I will now turn the call over to Martin.
Thank you Jason during the call I will start with comments on our first quarter performance provide an operational update and then run through some company highlights Jason will provide additional details on on our financial performance balance sheet and hedging program. Following our prepared remarks, we will take questions now conclude with closing remarks.
Production for the first quarter average approximately 24700 Boe per day, a decrease of 6% from 26300 BOE per day in the fourth quarter of 2020, approximately half of the decrease or 800 Boe per day with Judah Winter storm here, where the remainder attributable to anticipated natural production decline.
First quarter adjusted EBITDA of approximately $22 9 million exceeded internal projections on was $1 million more than the previous quarter. This increase was primarily attributable to stronger price realizations during the quarter.
Capital spending for the first quarter was approximately $5 $8 million focused on completion activity at our non operated Eagle Ford asset the enhanced Workover program in Oklahoma on rig upgrades and facility preparations for the beta development program, which will commence in the third quarter free.
Free cash flow defined as adjusted EBITDA less capex and cash interest expense was approximately $13 $6 million in the first quarter of 2021 amplify strong free cash flow generation. This quarter were supported by the prudent deployment of capital for the highest return projects relentless attention to operating efficiencies stronger price realizations and our.
<unk> controlling costs.
Now for an update on our operations a major milestone this quarter was beginning of the preparation for our previously announced beta development program. During the first quarter of 2021, we deployed approximately zero point $6 million towards rig and facility upgrades to prepare for the first re stimulation project scheduled in the third quarter of this year. In addition.
<unk> expects to drill too sidetracked from the fourth quarter of 2021, where the majority of the production coming on line in the first quarter of 2022.
All aspects of our development program are currently on schedule and we are eager to begin the exploitation phase of this asset amplify expects the low variable cost structure of our beta asset along with special cash royalty relief and a rising commodity price environment will lead to incremental cash flow generation from these projects, while adding additional reserves to our expensive and prolific bay.
The field.
Amplify intends to use a portion of the incremental cash flow to accelerate our Oklahoma Workover program and convert additional ESP to rod lift the additional conversions will help to mitigate the impact of future weather disruptions and reduce operational costs aligning operations in Oklahoma with our comprehensive strategy for the production optimization and free cash for.
Generation.
During the quarter. We also saw a 23 docks within our non operated Eagle Ford asset come on line. These wells have exceeded our type curves with average gross oil IP rates of 200 barrels of oil per day. We are pleased with the initial production rates from these non operated wells on our Eagle Ford strategy remains to Opportunistically participate in attractive projects with a highest economic viability.
<unk>.
Regarding our east, Texas, and North Louisiana assets, we remain committed to responsibly managing production decline, while pursuing high return workover projects as the area remains on the company's highest margin assets.
Amplify will continue to monitor potential joint development opportunities in the area and Opportunistically participate in projects based on economic feasibility at.
At barrel, we have been actively refining our wag patterns and cotr injection rates. The first quarter 2021 has experienced strong operational reliability and the injection and production facilities on the oil production trend has been increasing since the beginning of March the favorable results are attributable to technological improvements applied to the overall workflow and analysis of the reservoir.
On an injection patterns.
Barreled annual maintenance turnarounds are scheduled for approximately 10 days in June 2021, which will reduce production during the second quarter. Following the turnaround we will continue the implementation of enhanced technological capabilities, along with targeted workover activity to drive further operational improvements and efficiencies I will now turn the call over to Jason.
Thank you Martin I'll first provide details on the Companys first quarter production and expenses I will then give an update on our balance sheet and wrap up with our hedge book.
As previously mentioned production for the first quarter averaged approximately 24700 Boe per day with the production mix of approximately 41% oil, 16% Ngls and 43% gas, notably our oil composition in the first quarter represents an increase of approximately 14% from <unk>.
<unk>, 6% in the first quarter of 2020, this increase as a favorable shift, which we expect will continue moving for.
Lease operating expenses for the first quarter totaled $28 9 million or.
Our $13 <unk> per BOE, an increase of <unk> $4 million compared to $28 $5 million for $11 77 per Boe in the fourth quarter of 2020.
This increase was primarily attributed to the storm related impacts as we incurred a $7 million or <unk> 30 per Boe increase in Workover expenses in the quarter. The prompt actions of our operations team minimize the financial impact of the storm and serve as a Prime example of the Companys operational.
<unk> amplify remains dedicated to the disciplined operating expense management and the operational teams will continue to explore additional methods of reducing cost moving forward.
<unk> this quarter was $4 $6 million for $2 <unk> per BOE, a decrease from $5 5 million or $2 29 per Boe in the fourth quarter. The reduction is generally attributed to the natural production decline along with production impacts from winter storm hearing taxes this quarter totaled $4 6 million.
Our $2 eight per Boe compared to $3 million or $1 24 per Boe in the prior quarter. This increase was mainly associated with a positive tax adjustment in the fourth quarter of 2020 and higher commodity pricing, partially offset by natural production decline over the same period.
First quarter cash G&A totaled $6 6 million or $2 95 per Boe compared to $5 8 million or $2 38 per Boe in the fourth quarter of 2020 cash G&A expenses are typically the highest in the first quarter of the year and the quarter over quarter increase of <unk> $8 million was within expectations.
Our current projected full year 2021 cash G&A estimate remains approximately $23 million.
Capital spending in the first quarter was approximately $5 $8 million, an increase of $3 $6 million from the fourth quarter of 2020. This increase was largely attributable to the completion activity in the Eagle Ford and expenses incurred to prepare for the beta development program.
Moving on to the balance sheet and our current liquidity position as of April 32021, amplify had net debt of approximately $226 million with $240 million outstanding under its revolving credit facility.
Our current net debt to last 12 months EBITDA is two five times amplify as liquidity position is approximately $34 million consisting.
Consisting of $14 million of cash on hand, and $20 million of borrowing capacity for the remainder of 2021, we will continue allocating the majority of our free cash flow to improving our balance sheet and reducing our total debt outstanding.
Our spring borrowing base Redetermination process is underway and we do not anticipate any material changes to our existing borrowing base now.
Now to our hedge book since our last earnings call in March we have added crude oil hedges in 2023 across commodities, we were approximately 84% hedged and the balance of 2021, 58% hedged in 2022, and 5% hedged in 2023, specifically our crude oil production is 90% hedged for the.
Under the year, 65% hedged for 2022, and 12% hedged for 2023, we will continue to monitor the market for opportunities to lock in pricing that supports our strong free cash flow performance.
Amplify is may 2021 hedge presentation contains additional details regarding our current positions and was posted to our website yesterday under the Investor Relations section I'll now turn the call over to Martin.
Thank you, Jason as commodity prices have trended higher since our previous earnings call. Our 2020 year end total proved reserves of 166 million barrels of oil equivalent and now have a PV 10 value of $916 million at strip pricing as of April 28 for 2021.
Proved developed reserves of 122 million barrels of equivalent a valued at $689 million using the same strip pricing.
Our reserves on a volume and PV 10 valuation basis have materially increased since our previous update in March and we see this improvement as an important component of our positive outlook for amplify.
Additionally, we are reaffirming our guidance provided on March and have supplemented our initial guidance with full year projections for adjusted EBITDA and free cash flow our current guidance projects adjusted EBITDA in the range of $80 million to $100 million.
And free cash flow in the range of $30 million to $50 million for full year 2021.
In addition to the guidance update we provided greater detail on our operational and financial performance on our in our earnings release and Investor presentation. We are including this additional information in order to better provide our investors with transparency and to amplify is a multi year financial outlook.
Our strategy remains focused on continuously enhancing our free cash flow profile, we have materially improved our profitability and free cash flow generation through transformative reductions for our corporate and operational expenses during 2020, which we expect will carry over through 2021 on beyond.
As a result, our internal projections currently forecast more than a $140 million in cumulative free cash flow over the next three years at strip pricing as of April 28, 2021, given our low decline long lived asset base on a low variable cost nature of our oil assets. This cumulative free cash flow has the potential to increase materially as a forward commodity pricing environment.
<unk> continues to recover.
Our dedication to enhancing corporate and operational efficiencies, coupled with our diverse a mature asset base differentiate to amplify the leader in generating sustainable free cash flow and creating significant long term value for shareholders with our significant reserve value and strong free cash flow outlook, we believe that amplify remains substantially undervalued in the current market.
But with that in mind, we are now open for questions.
And at this time, if you'd like to ask a question simply press star followed by the number one on your telephone keypad again that is star one for any questions. We'll pause for just a moment to compile the Q&A roster.
Once again for any questions. Please press star one our first question will come from the line of John White with Roth Capital. Please go ahead.
Good morning, guys.
Congratulations.
Congratulations I thought it was a very strong quarter and as we all know the focus one of the main focus this year is on debt reduction.
You are ahead.
At my estimates on debt reduction for.
For the first quarter so.
Really good to see that.
Looking forward to your work later in the year at beta.
And I'll start off with kind of a housekeeping question.
The barrels turnaround. That's obviously included in the guidance that you published.
Yes, John that's correct. We include the barrel turnaround for approximately 10 days.
Thats a complete shutdown. So it takes a little bit of time to recover from that as well. So that's fully projected into our projections and into our long term projections that we've put into the investor deck as well so.
We include that every second quarter for over the next few years.
Okay. Thank you and again in ROA and your comments on their oil.
You used for capitalized term W. A G patterns.
Can you explain that.
Sure.
<unk> is a water alternating gas that's the the method that's using these tertiary recovery projects to basically where youre flooding it with cotwo in order to adhere to the oil and then hitting it with water to get basically push it towards the low producing wells. So it's obviously a mixture.
<unk>.
Those two its water then alternate them over to gas. The concept. There is obviously that we are managing pressure throughout the field. There is a number of different zones in different areas within the field.
As you as you move through the field, sometimes you need to adjust those.
Obviously, as we had new compressors on line over the last year. We've we've made some modifications for our patterns in order to basically manage the pressures.
The field and so that's why I think we're getting better and better with these with this additional throughput through the through the plant at managing the pressure it well as well and so that's kind of what youre starting to see.
Matriculate through the results and obviously, we will have a little bit of an interruption in June as we do the turnaround, but I feel like we are like I said, we'll have better results from barrel moving forward.
After we get from turnaround, especially.
Thank you for that.
You had higher.
Realized a net.
Natural gas liquids prices than I expected in a couple of other companies have reported similar low rate higher than expected NGL prices you want to talk about the <unk> NGL market, a little bit and what's driving the strength here.
Yes. This is something we've talked about previously and the reason we have not added any NGL had just specifically is that.
Seen a very strong recovery across all of the NGL components, especially once you get the C III propane plus.
We have a broader mix kind of a heavier mix on Oklahoma than we do on east, Texas, but theres, a few higher fixed cost in Oklahoma. So as those costs as those prices have gone up the increase in Oklahoma, specifically has been very impressive I think it's almost three X what we're getting at this time last year.
And then obviously in East, Texas is probably close to double.
We see this trend continuing.
And have the forward curve is starting to catch up in.
It Hasnt been there previously where we've had very high spot prices, but the forward curve hasnt been when catching up it is starting to catch up and like I said, we project. There's a continued need for Ngls.
The debt.
For the production at these current levels and the NGL needs in a recovering economy, we feel very good about where the Ngls are and like that thats kind of where we've that's why you've seen that particular area and not be as hedged we see upside too.
We wanted to be locked in in and obviously, we had to hedge some of the oil last year in the low to mid forties due to RBI requirements, but we've been able to kind of keep the Ngls. There was an upside piece to allow for as the recovery we've seen like I said.
Outsized.
Returns on the NGL piece of our East, Texas, and Oklahoma assets.
Well, thank you for that and smart smart read on your part on on that market.
Those are all the questions I have.
But I also wanted to tell you I appreciate the additional guidance items and the extra information.
In this quarter's company presentation nice job.
Yes.
We wanted to be.
Very transparent I think we've provided significant additional details by area. We've provided a multi year free cash flow and adjusted EBITDA outlook that really gives investors comfort and kind of what they're investing in for the long term and just a little bit of a view on kind of some of the upside thats that's present as well.
We've stated that we think we're highly undervalued at this moment.
Our investors should feel assured that we are doing everything we can to continue executing and eventually the market will catch up with some of the.
The numbers that we are capable of producing over the next several quarters. So like I said, we will continue to Delever and.
We have a lot of value left to capture.
Well for a company your size it.
It's a very good amount.
As of disclosure and it's good to see so.
Again I appreciate it.
Yes.
Thank you John Thanks, Sean.
At this time I will turn the call back over to Martin <unk> for any closing remarks.
We are strongly encouraged by the overall recovery in market conditions and expect that the transformative steps. We took last year will have lasting improvements on our profitability and cash flow profiles with our strong free cash flow outlook significant reserve value on margin improvement, we believe that amplify remains substantially undervalued in the current market for.
Focusing on our executing on our key initiatives for 2021, we intend to continue delivering for our stakeholders and demonstrating the long term potential of the company.
Closing I would like to express my appreciation to the company's employees for their outstanding efforts and dedication and I'd also like to thank our stakeholders for their continued support. Thank you for joining us today and as always please don't hesitate to reach out if you have any additional questions.
That does conclude today's call. Thank you all for joining you may now disconnect.
[music].
Yeah.
[music].
[music].
[music].
Welcome to amplify Energy's first quarter 2021 Investor Conference call amplify the operating and financial results were released yesterday after market close on May 5th 2021 and are available on amplify as website at www Dot amplify energy Dot com during this conference call on.
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 may 20th by Dialling 8558592056, and then entering conference I'd number 6187 to eight nine or by visiting amplifies.
Website, www dot amplify energy Dot com.
I would now like to turn the conference all 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 on financial results for the first quarter of 2021, joining me on the call today is Martin wheelchair amplify as 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 for a 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. 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 10-Q that was filed yesterday afternoon and also non-GAAP financial.
<unk> may be disclosed during this call a reconciliation of those measures to comparable GAAP measures may be found in our earnings release or on our website at www Dot amplify energy Dot Com I will now turn the call over to Martin.
Thank you Jason during the call I will start with comments on our first quarter performance provide an operational update and then Brian through some company highlights Jason will provide additional details on our financial performance balance sheet and hedging program. Following our prepared remarks, we will take questions now conclude with closing remarks.
Production for the first quarter average approximately 24700 Boe per day, a decrease of 6% from 26300 BOE per day in the fourth quarter 2020, approximately half of the decrease or 800 Boe per day with Judah Winter storm here for the remainder attributable to anticipated natural production decline.
First quarter adjusted EBITDA of approximately $22 9 million exceeded internal projections on was $1 million more than the previous quarter. This increase was primarily attributable to stronger price realizations during the quarter cash.
<unk> spending for the first quarter was approximately $5 $8 million focused on completion activity at our non operated Eagle Ford asset the enhanced Workover program in Oklahoma and rig upgrades from the facility preparations for the beta development program, which will commence in the third quarter free.
Free cash flow defined as adjusted EBITDA less capex and cash interest expense was approximately $13 $6 million in the first quarter of 2021 amplify strong free cash flow generation. This quarter were supported by the prudent deployment of capital to the highest return projects relentless attention to operating efficiencies stronger price realizations and our <unk>.
<unk> controlling costs.
Now for an update on our operations a major milestone this quarter was beginning of the preparation for our previously announced beta development program. During the first quarter of 2021, we deployed approximately zero point $6 million towards rig and facility upgrades to prepare for the first re stimulation project scheduled in the third quarter of this year. In addition.
<unk> drilled two sidetrack from fourth quarter 2021, where the majority of the production coming on line in the first quarter of 2022.
All aspects of our development program are currently on schedule on we are eager to begin the exploitation phase of this asset.
Amplify expects the low variable cost structure of our beta asset along with special case for royalty relief and a rising commodity price environment will lead to incremental cash flow generation from these projects, while adding additional reserves to our expensive and prolific beta field.
Amplify intends to use a portion of the incremental cash flow to accelerate our Oklahoma Workover program and convert additional ESP to rod lift the additional conversions will help to mitigate the impact on future weather disruptions and reduce operational costs aligning operations in Oklahoma with our comprehensive strategy for the production optimization and free.
Cash flow generation.
During the quarter. We also saw a 23 docks within our non operated Eagle Ford assets come on line. These wells have exceeded our type curves with average gross oil IP rates of 200 barrels of oil per day. We are pleased with the initial production rates from these non operated wells on our Eagle Ford strategy remains to Opportunistically participate in attractive projects with a highest economic viability.
<unk>.
Regarding our east, Texas, and North Louisiana assets, we remain committed to responsibly managing production decline, while pursuing high return workover projects as the area remains on the company's highest margin assets.
Amplify will continue to monitor potential joint development opportunities in the area and Opportunistically participate in projects based on economic feasibility at.
At barrel, we have been actively refining our wag patterns and <unk> rates for first quarter of 2021 has experienced strong operational reliability on the injection and production facilities on the oil production trend has been increasing since the beginning of March the favorable results are attributable to technological improvements apply to the overall workflow and analysis of the reservoir.
Or an injection patterns.
Barreled annual maintenance turnarounds are scheduled for approximately 10 days in June 2021, which will reduce production during the second quarter. Following the turnaround we will continue the implementation of enhanced technological capabilities, along with targeted workover activity to drive further operational improvements and efficiencies I will now turn the call over to Jason.
Thank you Martin I'll first provide details on the Companys first quarter production and expenses I will then give an update on our balance sheet and wrap up with our hedge book.
As previously mentioned production for the first quarter averaged approximately 24700 Boe per day with the production mix of approximately 41% oil, 16% Ngls and 43% gas, notably our oil compositions in the first quarter represents an increase of approximately 14% from <unk>.
<unk>, 6% in the first quarter of 2020, this increase as a favorable shift, which we expect will continue moving forward.
Lease operating expenses for the first quarter totaled $28 9 million or $13 <unk> per BOE, an increase of <unk> 4 million compared to $28 5 million for $11 77 per Boe in the fourth quarter of 2020.
Yeah.
This increase was primarily attributed to the storm related impacts as we incurred $8 $7 million or <unk> 30 per Boe increase in Workover expenses in the quarter. The prompt actions of our operations team minimize the financial impact of the storm and serve as a Prime example of the Companys operational efficiency.
Amplify remains dedicated to the disciplined operating expense management and the operational teams will continue to explore additional methods of reducing cost moving forward.
<unk> this quarter was $4 6 million for $2 <unk> per BOE, a decrease from $5 5 million.
Our $2 29 per BOE in the fourth quarter. The reduction is generally attributed to the natural production decline along with production impacts from winter storm hearing taxes. This quarter totaled $4 6 million or $2 eight per Boe compared to $3 million or $1 24 per Boe in the prior quarter.
This increase was mainly associated with a positive tax adjustment in the fourth quarter of 2020 and higher commodity pricing, partially offset by natural production decline over the same period first quarter cash G&A totaled $6 6 million or $2 95 per Boe compared to $5 8 million or $2 38.
Per Boe in the fourth quarter of 2020 cash G&A expenses are typically the highest in the first quarter of the year and the quarter over quarter increase of <unk> 8 million was within expectations. Our current projected full year 2021 cash G&A estimate remains approximately $23 million cash.
<unk> spending in the first quarter was approximately $5 8 million an increase of $3 6 million from the fourth quarter of 2020. This increase was largely attributable to the completion activity in the Eagle Ford and expenses incurred to prepare for the beta development program moving onto the balance sheet and our current liquidity position.
As of April 32021, amplify had net debt of approximately $226 million with $240 million outstanding under its revolving credit facility. Our current net debt to last 12 months EBITDA is two five times amplify as liquidity position is approximately $34 million.
Consisting of $14 million of cash on hand, and $20 million on borrowing capacity for the remainder of 2021, we will continue allocating the majority of our free cash flow to improving our balance sheet and reducing our total debt outstanding.
Our spring borrowing base Redetermination process is underway and we do not anticipate any material changes to our existing borrowing base now.
Now to our hedge book since our last earnings call in March we have added crude oil hedges in 2023 across commodities, we were approximately 84% hedged and the balance of 2021, 58% hedged in 2022, and 5% hedged in 2023, specifically our crude oil production is 90% hedged for the.
Under the year, 65% hedged for 2022, and 12% hedged for 2023, we will continue to monitor the market for opportunities to lock in pricing that supports our strong free cash flow performance amplify as May 2021 hedge presentation contains additional details regarding our current positions and was posted to our web.
Site yesterday under the Investor Relations section I'll now turn the call over to Martin.
Thank you, Jason as commodity prices have trended higher since our previous earnings call. Our 2020 year end total proved reserves of 166 million barrels of oil equivalent and now have a PV 10 value of $916 million at strip pricing as of April 28, 2021.
Proved developed reserves of 122 million barrels of equivalent a valued at $689 million using the same strip pricing our reserves on a volume and PV 10 valuation basis had materially increased since our previous update in March and we see this improvement as an important component of our positive outlook for amplify.
Additionally, we are reaffirming our guidance provided on March and have supplemented our initial guidance with full year projections for adjusted EBITDA and free cash flow our current guidance projects adjusted EBITDA in the range of $80 million to $100 million.
And free cash flow in the range of $30 million to $50 million for full year 2021.
In addition to the guidance update we provided greater detail on our operational and financial performance and.
In our earnings release, and Investor presentation, we are including this additional information in order to better provide our investors with transparency and to amplify the multiyear financial outlook our.
Our strategy remains focused on continuously enhancing our free cash flow profile, we have materially improved our profitability and free cash flow generation through transformative reductions for our corporate and operational expenses during 2020, which we expect will carry over through 2021 on beyond as a result, our internal projections currently forecast more than $140 million in Q.
On the free cash flow over the next three years at strip pricing as of April 28, 2021, given our low decline long lived asset base on a low variable cost nature of our oil assets. This cumulative free cash flow has a potential to increase materially as a forward commodity pricing environment continues to recover.
Our dedication to enhancing corporate and operational efficiencies coupled with our diverse on mature asset base differentiate to amplify the leader in generating sustainable free cash flow and creating significant long term value for shareholders with our significant reserve value and strong free cash flow outlook, we believe that amplify remains substantially undervalued in the current market.
With that in mind, we are now open for questions.
And at this time, if you'd like to ask a question simply press star followed by the number one on your telephone keypad again that is star one for any questions. We'll pause for just a moment to compile the Q&A roster.
Once again for any questions. Please press star one our first question will come from the line of John White with Roth Capital. Please go ahead.
Good morning, guys.
Congratulations.
Congratulations on I thought it was a very strong quarter and as we all know the focus one of the main focus this year is on debt reduction.
You are ahead.
At my estimate on debt reduction for.
For the first quarter so.
Really good to see that.
Looking forward to your work later in the year at beta.
And I'll start off with kind of a housekeeping question.
The barrels turnaround. That's obviously included in the guidance that you published.
Yes, John that's correct. We include the barrel turnaround for approximately 10 days.
Thats a complete shutdown. So it takes a little better time to recover from that as well. So that's fully projected into our projections and into our long term projections that we put into the investor deck as well so.
We include that every second quarter for over the next few years.
Okay. Thank you and again in <unk> in your comments on their oil you used a capitalized term W. A G patterns.
Can you explain that.
Sure.
<unk> is a water alternating gas that's the the method that's used in these tertiary recovery projects to basically where youre flooding it with cotwo in order to adhere to the oil and then hitting it with water to get basically push it towards the producing wells. So it's obviously a mixture.
For us.
Those two its water then alternate then over to gas. The concept. There is obviously that we are managing pressure throughout the field. There is a number of different zones in different areas within the field.
As you as you move through the field, sometimes you need to adjust those.
Obviously, as we had new compressors on line over the last year. We've we've made some modifications for our patterns in order to basically manage the pressures throughout the field and so that's why I think we're getting better and better at with these with this additional throughput through the through the plant at managing the pressure it well as well and so that's.
What you're starting to see.
Matriculate through the results in.
Obviously, we will have a little bit of an interruption in June as we do the turnaround, but I feel like we are like I said, we'll have better results from barrel moving forward.
After we get from turnaround, especially.
Thank you for that.
You had higher.
Realized natural.
Natural gas liquids prices than I expected in a couple of other companies have reported similar rate higher than expected NGL prices you want to talk about the <unk> NGL market, a little bit and what's driving the strength here.
Yes. This is something we've talked about previously and the reason we have not added any NGL had just specifically is that we've seen a very strong recovery across all of the NGL components, especially once you get the C III propane plus.
We have a broader mix kind of a heavier mix on Oklahoma than we do on east, Texas, but.
Few higher fixed costs in Oklahoma, So as those costs as those prices have gone up the increase in Oklahoma, specifically, it's been very impressive I think it's almost three X what we're getting at this time last year.
And then obviously in East, Texas is probably close to double.
We see this trend continuing.
And have the forward curve is starting to catch up.
It Hasnt been there previously where we've had very high spot prices, but the forward curve hasnt been when catching up it is starting to catch up and like I said, we project. There's a continued need for Ngls.
The debt.
On the production at these current levels and the NGL needs in a recovering economy, we feel very good about where the Ngls are and that's kind of where we that's why you've seen that particular area and not be as hedged we see upside too.
We wanted to be locked in in and obviously, we had to hedge some of the oil last year in the low to mid forties due to RBI requirements, but we've been able to kind of keep the ngls as an upside piece to allow for as the recovery we've seen like I said.
Outsized growth.
Returns on the NGL piece of our East, Texas, and Oklahoma assets.
Well, thank you for that and for Smart Smart read on your part on on that market.
Those are all the questions I have but I also wanted to tell you I appreciate the additional guidance items and the extra information in in this quarter's company presentation.
This job.
Yes.
We wanted to be.
Very transparent I think we've provided significant additional details by area, we provided a multi year free cash flow and adjusted EBITDA outlook.
For producing over the next several quarters. So like I said, we will continue to Delever and we have a lot of value left to capture.
Well for a company your sides. It's it's just very good amount.
Of disclosure and it's good to see so.
Again I appreciate it.
<unk>.
Thank you John Thanks, Sean.
At this time I'll turn the call back over to Martin wheelchair for any closing remarks.
We are strongly encouraged by the overall cover a mark and conditions and expect that the transformed of steps. We took last year will have lasting improvements on our profitability and casually profiles with our strong free cash flow outlook significant reserve value on margin improvement, we believe that amplify remains substantially undervalued in the current market for.
Focusing on our executing on our key initiatives for 2021, we can tend to continue delivering for our stakeholders and demonstrating the long term potential of the company in closing I'd like to express my appreciation to the company's employees for their outstanding efforts and dedication and I'd also like to thank our stakeholders for their continued support thank you for joining us today and as always.
He is please don't hesitate to reach out if you have any additional questions.
That does conclude today's call. Thank you all for joining you may now disconnect.