What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-03 · 151 added, 119 removed, 554 unchanged (33% of the section changed)

13 unchanged sentences

Property and equipment, net

Long-term derivative instruments

Restricted investments

18 unchanged sentences

50,000,000 shares authorized;

no shares issued and outstanding at March 31, 2023 and December 31, 2022

no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock, $ 0.01 par value:

250,000,000 shares authorized;

38,969,742 and 38,459,731 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively

38,971,426 and 38,459,731 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

7 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Oil and natural gas sales

33 unchanged sentences

(In thousands)

For the Three Months Ended

For the Six Months Ended

Cash flows from operating activities:

7 unchanged sentences

Share-based compensation (see Note 10)

Settlement of asset retirement obligations

Amortization and write-off of deferred financing costs

13 unchanged sentences

Payments on revolving credit facility

Deferred financing costs

Shares withheld for taxes

13 unchanged sentences

Balance at March 31, 2023

Net income (loss)

Share-based compensation expense

Shares withheld for taxes

Balance at June 30, 2023

Stockholders' Equity (Deficit)

4 unchanged sentences

Balance at March 31, 2022

Net income (loss)

Share-based compensation expense

Shares withheld for taxes

Expiration of warrants

Balance at June 30, 2022

(1) The warrants expired on May 4, 2022.

40 unchanged sentences

For the Three Months Ended

For the Six Months Ended

(In thousands)

3 unchanged sentences

Accordingly, the Company’s contracts do not give rise to contract assets or liabilities.

Accounts receivable attributable to the Company’s revenue contracts with customers was $ 24.2 million at March 31, 2023 and $ 35.1 million at December 31, 2022.

Accounts receivable attributable to the Company’s revenue contracts with customers was $ 29.7 million at June 30, 2023 and $ 35.1 million at December 31, 2022.

Fair Value Measurements of Financial Instruments

6 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The carrying values of accounts receivables, accounts payables (including accrued liabilities), restricted investments and amounts outstanding under long-term debt agreements with variable rates included in the accompanying Unaudited Condensed Consolidated Balance Sheets approximated fair value at March 31, 2023 and December 31, 2022.

The fair value estimates are based upon observable market data and are classified within Level 2 of the fair value hierarchy.

1 unchanged sentence

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The fair market values of the derivative financial instruments reflected on the accompanying Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 were based on estimated forward commodity prices.

The fair market values of the derivative financial instruments reflected on the accompanying Unaudited Condensed Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022 were based on estimated forward commodity prices.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement in its entirety.

The significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

The following tables present the gross derivative assets and liabilities that are measured at fair value on a recurring basis at March 31, 2023 and December 31, 2022 for each of the fair value hierarchy levels:

Fair Value Measurements at March 31, 2023

The following tables present the gross derivative assets and liabilities that are measured at fair value on a recurring basis at June 30, 2023 and December 31, 2022 for each of the fair value hierarchy levels:

Fair Value Measurements at June 30, 2023

Quoted Prices in

35 unchanged sentences

The unobservable inputs used to determine fair value include, but are not limited to, estimates of proved reserves, estimates of probable reserves, future commodity prices, the timing of future production and capital expenditures and a discount rate commensurate with the risk reflective of the lives remaining for the respective oil and natural gas properties (some of which are Level 3 inputs within the fair value hierarchy).

● No impairment expense recorded on proved oil and natural gas properties during the three months ended March 31, 2023 and 2022.

● No impairment expense was recorded on proved oil and natural gas properties during the three and six months ended June 30, 2023 and 2022.

Risk Management and Derivative Instruments

18 unchanged sentences

The Company also enters into oil derivative contracts indexed to NYMEX-WTI.

At March 31, 2023, the Company had the following open commodity positions:

At June 30, 2023, the Company had the following open commodity positions:

Natural Gas Derivative Contracts:

9 unchanged sentences

Collar contracts:

Two-way collars

Average monthly volume (Bbls)

Weighted-average floor price

Weighted-average ceiling price

Three-way collars

5 unchanged sentences

The following table summarizes both:

(i) the gross fair value of derivative instruments by the appropriate balance sheet classification even when the derivative instruments are subject to netting arrangements and qualify for net presentation in the balance sheet and (ii) the net recorded fair value as reflected on the balance sheet at March 31, 2023 and December 31, 2022.

There was no cash collateral received or pledged associated with the Company’s derivative instruments since most of its counterparties, or certain of its affiliates, to its derivative contracts are lenders under its Revolving Credit Facility.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Balance Sheet Location

16 unchanged sentences

Long-term derivative instruments

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Loss (Gain) on Derivative Instruments

3 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Statements of

6 unchanged sentences

The Company’s asset retirement obligations primarily relate to the Company’s portion of future plugging and abandonment costs for wells and related facilities.

The following table presents the changes in the asset retirement obligations for the three months ended March 31, 2023 (in thousands):

The following table presents the changes in the asset retirement obligations for the six months ended June 30, 2023 (in thousands):

Asset retirement obligations at beginning of period

7 unchanged sentences

Asset retirement obligations - long-term portion

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Debt

5 unchanged sentences

Revolving Credit Facility

OLLC, the Company’s wholly owned subsidiary, is a party to a reserve-based revolving credit facility (the “Revolving Credit Facility”), subject to a borrowing base of $ 195.0 million as of March 31, 2023, which is guaranteed by the Company and all of its current subsidiaries.

The Revolving Credit Facility matures on May 31, 2024 .

The Company’s borrowing base under its Revolving Credit Facility is subject to redetermination on at least a semi-annual basis, primarily based on a reserve engineering report.

OLLC, the Company’s wholly owned subsidiary, was a party to a reserve-based revolving credit facility (the “Revolving Credit Facility”), subject to a borrowing base of $ 180.0 million as of June 30, 2023, which was guaranteed by the Company and all of its current subsidiaries.

The Revolving Credit Facility would have matured on May 31, 2024 .

The Company’s borrowing base under its Revolving Credit Facility was subject to redetermination on at least a semi-annual basis, primarily based on a reserve engineering report.

As of June 30, 2023, the Company was in compliance with all the financial (current ratio and total leverage ratio) and non-financial covenants associated with its Revolving Credit Facility.

Amended and Restated Credit Agreement

Subsequent Events .

On July 31, 2023, OLLC and Amplify Acquisitionco LLC (“Acquisitionco”), as the direct parent of OLLC and wholly owned subsidiary of the Company, amended and restated the Revolving Credit Facility with Keybanc Capital Markets Inc., Cadence Bank, N.A.

and Citizens Bank, N.A.

as joint lead arrangers and KeyBank National Association as the administrative agent (the “New Credit Facility”).

The New Credit Facility is a replacement in full of the Revolving Credit Facility.

The aggregate principal amount of loans outstanding under the New Credit Facility as of July 31, 2023, was $ 120.0 million.

The initial borrowing base under the facility is $ 150.0 million with elected commitments of $ 135.0 million, and, consistent with the prior Revolving Credit Facility, the New Credit Facility borrowing base will be redetermined on a semi-annual basis with the next redetermination expected to occur in the fourth quarter of 2023.

Certain key terms and conditions under the New Credit Facility include (but are not limited to):

● A maturity date of July 31, 2027;

● The loans shall bear interest at a rate per annum equal to (i) adjusted SOFR or (ii) an adjusted base rate, plus an applicable margin based on a utilization ratio of the lesser of the borrowing base and the aggregate commitments.

The applicable margin ranges from 2.00 % to 3.00 % for adjusted base rate borrowings, and 3.00 % to 4.00 % for adjusted SOFR borrowings;

● The unused commitments under the New Credit Facility will accrue a commitment fee of 0.50 % , payable quarterly in arrears;

● Certain financial covenants, including the maintenance of (i) a net debt leverage ratio not to exceed 3.00 to 1.00, determined as of the last day of each fiscal quarter for the four fiscal-quarter period then ending and (ii) a current ratio of not less than 1.00 to 1.00 , determined as of the last day of each fiscal quarter, in each case commencing with the fiscal quarter ending December 31, 2023;

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On December 9, 2022, OLLC entered into the Borrowing Base Redetermination Agreement and Seventh Amendment to Credit Agreement, among Amplify Acquisitionco LLC, a Delaware limited liability company (“Acquistionco”), the guarantors party thereto, the lenders party thereto and KeyBank National Association, as administrative agent (the “Seventh Amendment”).

The Seventh Amendment amends the Revolving Credit Facility, to, among other things:

● extend the maturity date from November 2, 2023 to May 31, 2024;

● reduce the borrowing base under the Revolving Credit Facility to $ 215.0 million;

provided that, beginning on December 31, 2022, the borrowing base will be reduced by $ 5.0 million per month on the last calendar day of each month.

The borrowing base, as reduced on each date pursuant to the foregoing sentence, shall remain in effect until otherwise redetermined or adjusted in accordance with the provisions of the Credit Agreement;

● adjust the minimum hedging requirements;

● reduce the maximum consolidated net leverage ratio (as defined in the Revolving Credit Facility) requirement from 4.00 to 1.00 to 3.00 to 1.00;

● transition from London Inter-Bank Offered Rate to Secured Overnight Financing Rate based interest rates;

● remove the Borrower’s ability to pay dividends through the maturity date.

As of March 31, 2023, the Company was in compliance with all the financial (current ratio and total leverage ratio) and non-financial covenants associated with its Revolving Credit Facility.

● Certain events of default, including, without limitation:

non-payment; breaches of representations and warranties; non-compliance with covenants or other agreements; cross-default to material indebtedness; judgments; change of control; and voluntary and involuntary bankruptcy;

● Initial minimum hedging requirements covering 75 % of the reasonably projected monthly production of hydrocarbons from proved developed producing reserves for the 24-month period following the effective date of the New Credit Facility (the “First Period”) and (ii) 50 % for the 12-month period immediately following the First Period.

Weighted-Average Interest Rates

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Revolving Credit Facility

Letters of Credit

At March 31, 2023, the Company had no letters of credit outstanding.

At June 30, 2023, the Company had no letters of credit outstanding.

Unamortized Deferred Financing Costs

Unamortized deferred financing costs associated with the Company’s Revolving Credit Facility was $ 1.1 million at March 31, 2023.

For the three months ended March 31, 2023, the Company wrote-off $ 0.2 million of deferred financing costs in connection with the decrease in the Company’s borrowing base.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Unamortized deferred financing costs associated with the Company’s Revolving Credit Facility was $ 0.8 million at June 30, 2023.

For the six months ended June 30, 2023, the Company wrote-off $ 0.3 million of deferred financing costs in connection with the decrease in the Company’s borrowing base.

The Company’s authorized capital stock includes 250,000,000 shares of common stock, $ 0.01 par value per share.

The following is a summary of the changes in the Company’s common stock issued for the three months ended March 31, 2023:

The following is a summary of the changes in the Company’s common stock issued for the six months ended June 30, 2023:

Balance, December 31, 2022

2 unchanged sentences

Shares withheld for taxes (1)

Balance, March 31, 2023

Balance, June 30, 2023

(1) Represents the net settlement on vesting of restricted stock necessary to satisfy the minimum statutory tax withholding requirements.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Earnings per Share

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Net income (loss)

6 unchanged sentences

Net earnings (loss) per share:

Antidilutive warrants (1)

(1) Amount represents warrants to purchase common stock that are excluded from the diluted net earnings per share calculations because of their antidilutive effect .

Long-Term Incentive Plans

In May 2021, the shareholders approved a new Equity Incentive Plan (“EIP”) in which the Legacy Amplify Management Incentive Plan (the “Legacy Amplify MIP”) was replaced by the EIP and no further awards will be allowed to be granted under the Legacy Amplify MIP.

As of March 31, 2023, an aggregate of 1,153,461 shares were available for future grants under the EIP.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, an aggregate of 932,675 shares were available for future grants under the EIP.

Restricted Stock Units

3 unchanged sentences

Compensation costs are recorded as general and administrative expense.

The unrecognized cost associated with the TSUs was $ 6.4 million at March 31, 2023.

The unrecognized cost associated with the TSUs was $ 6.0 million at June 30, 2023.

The Company expects to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 2.2 years.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information regarding the TSUs granted under the EIP for the period presented:

2 unchanged sentences

TSUs outstanding at December 31, 2022

TSUs outstanding at March 31, 2023

TSUs outstanding at June 30, 2023

(1) Determined by dividing the aggregate grant-date fair value of awards by the number of awards issued.

(2) The aggregate grant-date fair value of TSUs issued for the three months ended March 31, 2023 was $ 4.1 million based on a grant date market price of $ 8.91 per share.

(2) The aggregate grant-date fair value of TSUs issued for the six months ended June 30, 2023 was $ 4.8 million based on a grant-date market price ranging from $ 6.52 to $ 8.91 per share.

Restricted Stock Units with Market and Service Vesting Conditions

5 unchanged sentences

Compensation costs are recorded as general and administrative expense.

The unrecognized cost associated with these awards was $ 1.9 million at March 31, 2023.

The unrecognized cost associated with these awards was $ 2.9 million at June 30, 2023.

The Company expects to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 2.5 years.

7 unchanged sentences

Vesting of PRSUs can range from zero to 200 % of the target units granted based on the Company’s relative total shareholder return as compared to the total shareholder return of the Company’s performance peer group over the applicable performance period.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2022 and 2023 PRSU Awards

3 unchanged sentences

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The below table reflects the ranges for the assumptions used in the Monte Carlo model for the 2023 PRSUs awards:

February 2023

Expected volatility

5 unchanged sentences

PSUs and PRSUs outstanding at December 31, 2022

PSUs and PRSUs outstanding at March 31, 2023

PSUs and PRSUs outstanding at June 30, 2023

(1) Determined by dividing the aggregate grant-date fair value of awards by the number of awards issued.

(2) The aggregate grant-date fair value of PRSUs issued for the three months ended March 31, 2023 was $ 2.2 million based on a calculated fair value price ranging from $ 1.27 to $ 15.04 per share.

(2) The aggregate grant-date fair value of PRSUs issued for the six months ended June 30, 2023 was $ 3.4 million based on a calculated fair value price ranging from $ 1.27 to $ 15.04 per share.

Compensation Expense

1 unchanged sentence

For the Three Months Ended

For the Six Months Ended

Equity classified awards

PSUs and PRSUs

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company has leases for office space and equipment in its corporate office and operating regions as well as warehouse space, vehicles, compressors and surface rentals related to its business operations.

2 unchanged sentences

Most of the Company’s leases can be terminated with 30-day prior written notice.

The majority of its month-to-month leases are not included as a lease liability in its balance sheet under ASC 842 because continuation of the lease is not reasonably certain.

The majority of its month-to-month leases are not included as a lease liability in its balance sheet because continuation of the lease is not reasonably certain.

Additionally, the Company elected the short-term practical expedient to exclude leases with a term of twelve months or less.

For the quarter ended March 31, 2023, all of the Company’s leases qualified as operating leases and it did not have any existing or new leases qualifying as financing leases or variable leases.

For the quarter ended June 30, 2023, all of the Company’s leases qualified as operating leases and it did not have any existing or new leases qualifying as financing leases or variable leases.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company’s corporate office lease does not provide an implicit rate.

2 unchanged sentences

The Company uses a reasonable market interest rate for its office equipment and vehicle leases.

For the three months ended March 31, 2023 and 2022, the Company recognized approximately $ 0.5 million and $ 0.4 million, respectively, of costs relating to the operating leases in the Unaudited Condensed Consolidated Statements of Net Income.

For the six months ended June 30, 2023 and 2022, the Company recognized approximately $ 1.1 million and $ 0.7 million, respectively, of costs relating to the operating leases in the Unaudited Condensed Consolidated Statements of Net Income.

Supplemental cash flow information related to the Company’s lease liabilities is included in the table below:

For the Three Months Ended

For the Six Months Ended

(In thousands)

8 unchanged sentences

Total lease liability

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table reflects the Company’s maturity analysis of the minimum lease payment obligations under non-cancelable operating leases with a remaining term in excess of one year (in thousands):

3 unchanged sentences

Present value of lease liabilities

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The weighted average remaining lease terms and discount rate for all of the Company’s operating leases for the period presented:

5 unchanged sentences

Office equipment

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Disclosures to the Unaudited Condensed Consolidated Balance Sheets and Unaudited Condensed Consolidated Statements of Cash Flows

2 unchanged sentences

Accrued liability - pipeline incident

Accrued liability - current portion of pipeline incident settlement

Accrued lease operating expense

Accrued commitment fee and other expense

Accrued production and ad valorem tax

Accrued general and administrative expense

Accrued current income taxes

Accrued liability - current portion of pipeline incident settlement

Accrued capital expenditures

Accrued general and administrative expense

Accrued production and ad valorem tax

Accrued commitment fee and other expense

Operating lease liability

Asset retirement obligations

Accrued current income taxes

Accrued liabilities

7 unchanged sentences

Total accounts receivable, net

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Supplemental Cash Flows

Supplemental cash flows for the periods presented (in thousands):

For the Three Months Ended

For the Six Months Ended

Supplemental cash flows:

Cash paid for interest, net of amounts capitalized

Cash paid for taxes

Noncash investing and financing activities:

Increase (decrease) in capital expenditures in payables and accrued liabilities

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Related Party Transactions

Related Party Agreements

There have been no transactions between the Company and any related person in which the related person had a direct or indirect material interest for the three months ended March 31, 2023 and 2022.

There have been no transactions between the Company and any related person in which the related person had a direct or indirect material interest for the three and six months ended June 30, 2023 and 2022.

Commitments and Contingencies

2 unchanged sentences

Although the Company is insured against various risks to the extent it believes it is prudent, there is no assurance that the nature and amount of such insurance will be adequate, in every case, to indemnify it against liabilities arising from future legal proceedings.

At March 31, 2023 and December 31, 2022, the Company had no environmental reserves recorded in its Unaudited Condensed Consolidated Balance Sheet.

At June 30, 2023 and December 31, 2022, the Company had no environmental reserves recorded in its Unaudited Condensed Consolidated Balance Sheet.

Southern California Pipeline Incident

6 unchanged sentences

The Company also has agreed to implement certain compliance measures including installation of a new leak detection system and increased Remote Operated Vehicle inspections of the pipeline.

As of March 31, 2023, the Company recorded $ 2.0 million in “Accrued liability – pipeline incident” and $ 3.1 million in “Other long-term liabilities” for the remaining payments related to this settlement on its Unaudited Condensed Consolidated Balance Sheet.

As of June 30, 2023, the Company recorded $ 2.0 million in “Accrued liability – pipeline incident” and $ 3.1 million in “Other long-term liabilities” for the remaining payments related to this settlement on its Unaudited Condensed Consolidated Balance Sheet.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On September 8, 2022, the Company reached an agreement with the state of California to resolve all related state criminal matters.

2 unchanged sentences

The Company also will serve a one-year term of probation and has agreed to certain compliance enhancements to its operations.

As of March 31, 2023, the Company recorded $ 2.9 million in “Accrued liability – pipeline incident” for the remaining payments related to this settlement on its Unaudited Condensed Consolidated Balance Sheet.

On March 1, 2023, the Company announced that the vessels that struck and damaged the pipeline and their respective owners and operators have agreed to pay the Company $ 96.5 million in a settlement.

The Marine Exchange of Los Angeles-Long Beach Harbor (the “Marine Exchange”) has agreed to non-monetary terms as well.

The overall resolution includes subrogation claims by Amplify’s property damage and loss of production income insurers, with Amplify ultimately receiving a net payment of approximately $ 85.0 million.

The settlement resolves Amplify’s affirmative claims related to the Incident.

As part of the settlement, Amplify has dismissed its legal claims against those parties.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2023, the Company recorded $ 2.9 million in “Accrued liability − pipeline incident” for the remaining payments related to this settlement on its Unaudited Condensed Consolidated Balance Sheet.

On March 1, 2023, the Company announced that the vessels that struck and damaged the pipeline and their respective owners and operators agreed to pay the Company $ 96.5 million in a settlement.

The Marine Exchange of Los Angeles-Long Beach Harbor (the “Marine Exchange”) agreed to non-monetary terms as well.

The overall resolution included subrogation claims by Amplify’s property damage and loss of production income (“LOPI”) insurers, with Amplify ultimately receiving a net payment of approximately $ 85.0 million.

The settlement resolved Amplify’s affirmative claims related to the Incident.

As part of the settlement, Amplify dismissed its legal claims against those parties.

The Company is also participating in a related claims process organized under the Oil Pollution Act of 1990, 33 U.S.C.

6 unchanged sentences

Minimum Volume Commitment

The Company is party to a gas purchase, gathering and processing contract in Oklahoma, which includes certain minimum NGL commitments.

To the extent the Company does not deliver natural gas volumes in sufficient quantities to generate, when processed, the minimum levels of recovered NGLs, it would be required to reimburse the counterparty an amount equal to the sum of the monthly shortfall, if any, multiplied by a fee.

The Company is not meeting the minimum volume required under this contractual provision.

The commitment fee expense for the three months ended March 31, 2023 and 2022 was approximately $ 0.1 million and $ 0.4 million, respectively.

The minimum volume commitment for Oklahoma expires on June 30, 2023.

The Company was party to a gas purchase, gathering and processing contract in Oklahoma, which included certain minimum NGL commitments.

To the extent the Company did not deliver natural gas volumes in sufficient quantities to generate, when processed, the minimum levels of recovered NGLs, it was required to reimburse the counterparty an amount equal to the sum of the monthly shortfall, if any, multiplied by a fee.

The commitment fee expense for the six months ended June 30, 2023 and 2022 was approximately $ 0.3 million and $ 1.1 million, respectively.

The minimum volume commitment for Oklahoma ended on June 30, 2023.

Sinking Fund Trust Agreement

3 unchanged sentences

The obligation to fund ceases when the aggregate value of the account reaches $ 4.3 million.

As of March 31, 2023, the account balance included in restricted investments was approximately $ 4.3 million.

As of June 30, 2023, the account balance included in restricted investments was approximately $ 4.4 million.

Supplemental Bond for Decommissioning Liabilities Trust Agreement

1 unchanged sentence

The Company supports its decommissioning obligation with $ 161.3 million of A-rated surety bonds.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In December 2021, the Company entered into two escrow funding agreements with its surety providers to fund interest-bearing escrow accounts on a quarterly basis to reimburse and indemnify the surety providers for any claims arising under the surety bonds related to the decommissioning of our Beta properties.

The obligation ceases when the aggregate value of the escrow accounts reaches $ 172.6 million.

As of March 31, 2023, the Company has funded $ 9.1 million into the escrow accounts which is reflected in “Restricted investments” on the Unaudited Condensed Consolidated Balance Sheet.

As of June 30, 2023, the Company has funded $ 11.2 million into the escrow accounts which is reflected in “Restricted investments” on the Unaudited Condensed Consolidated Balance Sheet.

Net deferred tax assets relate to net operating loss carryforwards, interest expense carryforwards, tax credits, and other temporary differences expected to produce tax deductions in future periods.

The realization of these assets depends on recognition of sufficient future taxable income in specific federal and state tax jurisdictions in which those temporary differences are deductible.

In assessing the need for a valuation allowance on our deferred tax assets, the Company followed GAAP guidance to consider whether it is more likely than not that some portion of or all our deferred tax assets will not be realized.

On December 31, 2022, our valuation allowance was $ 284.9 million, which offset all net deferred tax assets as of such date.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of each reporting date, management considers new evidence, both positive and negative in accordance with GAAP guidance, that could affect its view of the future realization of deferred tax assets.

In assessing the need for a valuation allowance on its deferred tax assets, the Company considers whether it is more likely than not that some portion of or all its deferred tax assets will not be realized.

On December 31, 2022, the Company valuation allowance was $ 284.9 million, which offset all net deferred tax assets as of such date.

As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

The assessment considers all available information including historical and forecasted taxable income and operating history.

The three months ended March 31, 2023 marks the first time that the Company has achieved three years of cumulative book income.

The three months ended March 31, 2023 marked the first time that the Company had achieved three years of cumulative income.

Furthermore, management determined that the Company’s ability to maintain long-term profitability despite near-term changes in commodity prices and capital and operating costs demonstrated that there is sufficient positive evidence to conclude that it is more likely than not that all net deferred tax asset is realizable.

As a result of the Company’s assessment, during the quarter ended March 31, 2023, the Company released substantially all of its valuation allowance previously recorded.

The result of the valuation allowance released during the three months ended March 31, 2023 was a tax benefit of $ 269.5 million.

The Company’s current income tax expense was $ 12.5 million for the three months ended March 31, 2023.

No current income tax expense was recorded for the three months ended March 31, 2022.

The Company’s deferred income tax benefit was $ 259.5 million for the three months ended March 31, 2023.

No deferred income tax benefit was recorded for the three months ended March 31, 2022.

The effective tax rates for the three months ended March 31, 2023 and March 31, 2022 were ( 233.4 %) and 0 %, respectively.

As a result of the Company’s assessment, the Company released substantially all of its valuation allowance previously recorded.

The result of the valuation allowance release for the six months ended June 30, 2023 was a tax benefit of $ 279.3 million.

The Company’s current income tax benefit (expense) was $ 6.9 million and ($ 5.7 ) million for the three and six months ended June 30, 2023, respectively.

No current income tax expense was recorded for the three and six months ended June 30, 2022.

The Company’s deferred income tax benefit (expense) was less than ($ 0.1 ) million and $ 259.4 million for the three and six months ended June 30, 2023, respectively.

No deferred income tax benefit was recorded for the three and six months ended June 30, 2022.

The effective tax rates for the three and six months ended June 30, 2023 were ( 226.0 %) and ( 233.2 %), respectively.

The effective tax rate was 0 % for the three and six months ended June 30, 2022.

The item that had the most significant impact on the difference between the statutory U.S.

federal income tax rate of 21 % and the effective tax rate for the three months ended March 31, 2023 was the release of the valuation allowance.

federal income tax rate of 21 % and the effective tax rate for the three and six months ended June 30, 2023 was the release of the valuation allowance.

The items that had the most significant impact on the difference between the statutory U.S.

federal income tax rate of 21 % and the effective tax rate for the three months ended March 31, 2022, was primarily due to our recorded valuation allowances.

federal income tax rate of 21 % and the effective tax rate for the three and six months ended June 30, 2022, was primarily due to our recorded valuation allowances.

Southern California Pipeline Incident

3 unchanged sentences

Coast Guard and California Department of Fish and Wildlife’s Office of Spill Prevention and Response, was established to respond to the Incident.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On October 5, 2021, the Unified Command announced that reports from its contracted commercial divers and Remotely Operated Vehicle footage indicated that a 4,000 -foot section of the Company’s pipeline had been displaced with a maximum lateral movement of approximately 105 feet and that the pipeline had a 13 -inch split, running parallel to the pipe.

12 unchanged sentences

Amplify is grateful to its Unified Command partners for their collaboration and professionalism over the course of the response.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In response to the Incident, all operations were suspended and the pipeline was shut-in pending the Company’s receipt of the required regulatory approvals to restart operations.

12 unchanged sentences

The Company will serve a one-year term of probation and has agreed to certain compliance enhancements to its operations.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company is currently subject to a number of ongoing investigations related to the Incident by certain federal and state agencies.

10 unchanged sentences

On April 6, 2023, PHMSA provided the Company notice of PHMSA’s positions regarding “probable violations of the Pipeline Safety Regulations” in connection with the Incident;

the Company will respond to that notice per the applicable regulatory process.

the Company has responded to that notice with the Company’s positions and is conferring with PHMSA regarding a resolution.

Other federal agencies may or have commenced investigations and proceedings, and may initiate enforcement actions seeking penalties and other relief under the Clean Water Act and other statutes.

3 unchanged sentences

Plaintiffs filed a consolidated class action complaint on January 28, 2022 and an amended complaint on March 21, 2022.

Plaintiffs assert claims against the Company, Beta Operating Company, LLC, San Pedro Bay Pipeline Company, MSC Mediterranean Shipping Company, Dordellas Finance Corp., the MSC Danit (proceeding in rem), Costamare Shipping Co.

Plaintiffs asserted claims against the Company, Beta Operating Company, LLC, San Pedro Bay Pipeline Company, MSC Mediterranean Shipping Company, Dordellas Finance Corp., the MSC Danit (proceeding in rem), Costamare Shipping Co.

S.A., Capetanissa Maritime Corporation of Liberia, V.Ships Greece Ltd., and the COSCO Beijing (proceeding in rem).

3 unchanged sentences

Ltd., Mediterranean Shipping Company S.r.l., and MSC Shipmanagement Limited.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MSC Mediterranean Shipping Company, Dordellas Finance Corp., and Capetanissa Maritime Corporation of Liberia also filed petitions for limitations of liability under maritime law in the United States District Court for the Central District of California.

4 unchanged sentences

The Court preliminarily approved the settlement on December 7, 2022 and granted final approval on April 24, 2023.

On March 1, 2023, the Company announced that the vessels that struck and damaged the pipeline and their respective owners and operators have agreed to pay the Company $ 96.5 million in a settlement.

The Marine Exchange has agreed to non-monetary terms as well.

The overall resolution includes subrogation claims by Amplify’s property damage and loss of production insurers, with Amplify ultimately receiving a net payment of approximately $ 85.0 million.

The settlement resolves Amplify’s affirmative claims related to the Incident.

As part of the settlement, Amplify has dismissed its legal claims against those parties.

On March 1, 2023, the Company announced that the vessels that struck and damaged the pipeline and their respective owners and operators agreed to pay the Company $ 96.5 million in a settlement.

The Marine Exchange agreed to non-monetary terms as well.

The overall resolution included subrogation claims by Amplify’s property damage and LOPI insures, with Amplify ultimately receiving a net payment of approximately $ 85.0 million.

The settlement resolved Amplify’s affirmative claims related to the Incident.

As part of the settlement, Amplify dismissed its legal claims against those parties.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Under the OPA 90, the Company’s pipeline was designated by the U.S.

8 unchanged sentences

Accordingly, as the Company’s assumptions and estimates may change in future periods based on future events, the Company can provide no assurance that total costs will not materially change in future periods.

The Company’s estimates do not include (i) the nature, extent and cost of future legal services that will be required in connection with all lawsuits, claims and other matters requiring legal or expert advice associated with the Incident, (ii) any lost revenue associated with the suspension of operations at Beta, (iii) any liabilities or costs that are not reasonably estimable at this time or that relate to contingencies where the Company currently regards the likelihood of loss as being only reasonably possible or remote and (iv) the costs associated with the permanent repair of the pipeline and the restart of the Beta operations.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In accordance with customary insurance practice, the Company maintains insurance policies, including loss of production income insurance, against many potential losses or liabilities arising from its operations and at costs that the Company believes to be economic.

In accordance with customary insurance practice, the Company maintains insurance policies, including LOPI insurance, against many potential losses or liabilities arising from its operations and at costs that the Company believes to be economic.

The Company regularly reviews its risk of loss and the cost and availability of insurance and revises its insurance accordingly.

1 unchanged sentence

While the Company expects its insurance policies will cover a material portion of the total aggregate costs associated with the Incident, including but not limited to response and remediation expenses, defense costs and loss of revenue resulting from suspended operations, it can provide no assurance that its coverage will adequately protect it against liability from all potential consequences, damages and losses related to the Incident and such view and understanding is preliminary and subject to change.

On March 31, 2023, and December 31, 2022, the Company’s insurance receivables were $ 38.5 million and $ 42.0 million, respectively.

Excluding the costs associated with the resolution of the federal and state matters discussed above, for the three months ended March 31, 2023, the Company incurred response and remediation expenses and legal fees of $ 17.3 million.

On June 30, 2023, and December 31, 2022, the Company’s insurance receivables were $ 30.4 million and $ 42.0 million, respectively.

Excluding the costs associated with the resolution of the federal and state matters discussed above, for the six months ended June 30, 2023, the Company incurred response and remediation expenses and legal fees of $ 29.5 million.

Of these costs, the Company has received, or expects that it is probable that it will receive, $ 14.4 million in insurance recoveries.

The remaining amount of $ 15.1 million, which primarily relates to certain legal costs that are not expected to be recovered under an insurance policy, are classified as “Pipeline Incident Loss” on the Company’s Unaudited Condensed Consolidated Statements of Net Income.

For the three months ended March 31, 2023, the Company received $ 18.1 million in insurance recoveries.

Additionally, during the three months ended March 31, 2023, the Company recognized $ 13.5 million related to approved loss of production income (“LOPI”) insurance proceeds, which is classified as “Other Revenues” in the Company’s Unaudited Condensed Consolidated Statements of Net Income.

For the six months ended June 30, 2023, the Company received $ 26.0 million in insurance recoveries.

Additionally, during the six months ended June 30, 2023, the Company recognized $ 17.9 million related to approved LOPI insurance proceeds, which is classified as “Other Revenues” in the Company’s Unaudited Condensed Consolidated Statements of Net Income.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Subsequent Events

Amended and Restated Credit Agreement

See Note 7 for additional information relating to the Company’s refinancing of its Revolving Credit Facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements