What changed in this filing

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Item 1. Financial Statements

2024-08-07 compared with 2024-05-08 · 107 added, 99 removed, 526 unchanged (28% of the section changed)

27 unchanged sentences

Asset retirement obligations

Long-term derivative instruments

Operating lease liability

5 unchanged sentences

50,000,000 shares authorized;

no shares issued and outstanding at March 31, 2024 and December 31, 2023

no shares issued and outstanding at June 30, 2024 and December 31, 2023

Common stock, $ 0.01 par value:

250,000,000 shares authorized;

39,612,030 and 39,147,205 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

39,637,947 and 39,147,205 shares issued and outstanding at June 30, 2024 and December 31, 2023, 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, 2024

Net income (loss)

Share-based compensation expense

Shares withheld for taxes

Balance at June 30, 2024

Stockholders' Equity (Deficit)

4 unchanged sentences

Balance at March 31, 2023

Net income (loss)

Share-based compensation expense

Shares withheld for taxes

Balance at June 30, 2023

See Accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

32 unchanged sentences

Revenue is recognized when the following five steps are completed:

(1) identify the contract with the customer, (2) identify the performance obligation (promise) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, (5) recognize revenue when the reporting organization satisfies a performance obligation.

(1) identify the contract with the customer, (2) identify the performance obligation (promise) in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when the reporting organization satisfies a performance obligation.

The Company has determined that its contracts for the sale of crude oil, unprocessed natural gas, residue gas and NGLs contain monthly performance obligations to deliver product at locations specified in the contract.

7 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 were $ 31.6 million at March 31, 2024 and $ 31.1 million at December 31, 2023.

Accounts receivable attributable to the Company’s revenue contracts with customers were $ 30.2 million at June 30, 2024 and $ 31.1 million at December 31, 2023.

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, 2024 and December 31, 2023.

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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 for each of the fair value hierarchy levels:

Fair Value Measurements at March 31, 2024

The following tables present the gross derivative assets and liabilities that are measured at fair value on a recurring basis at June 30, 2024 and December 31, 2023 for each of the fair value hierarchy levels:

Fair Value Measurements at June 30, 2024

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 was recorded on proved oil and natural gas properties during the three months ended March 31, 2024 and 2023.

● No impairment expense was recorded on proved oil and natural gas properties during the three and six months ended June 30, 2024 and 2023.

Risk Management and Derivative Instruments

10 unchanged sentences

The terms of the ISDA Agreements provide the Company and each of its counterparties with rights of set-off upon the occurrence of defined acts of default by either the Company or its counterparty to a derivative, whereby the party not in default may set-off all liabilities owed to the defaulting party against all net derivative asset receivables from the defaulting party.

As a result, had certain counterparties failed completely to perform according to the terms of the existing contracts, the Company would have the right to offset $ 7.6 million against amounts outstanding under our Revolving Credit Facility at March 31, 2024.

As a result, had certain counterparties failed completely to perform according to the terms of the existing contracts, the Company would have the right to offset $ 3.2 million against amounts outstanding under our Revolving Credit Facility at June 30, 2024.

See Note 7 for additional information regarding the Company’s Revolving Credit Facility.

Commodity Derivatives

The Company may use a combination of commodity derivatives (e.g., floating-for-fixed swaps, put options, costless collars and three-way collars) to manage exposure to commodity price volatility.

The Company may use a combination of commodity derivatives (e.g., floating-for-fixed swaps, put options and costless collars) to manage exposure to commodity price volatility.

The Company recognizes all derivative instruments at fair value.

3 unchanged sentences

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

At March 31, 2024, the Company had the following open commodity positions:

At June 30, 2024, the Company had the following open commodity positions:

Natural Gas Derivative Contracts:

18 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, 2024 and December 31, 2023.

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.

24 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Statements of

4 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, 2024 (in thousands):

The following table presents the changes in the asset retirement obligations for the six months ended June 30, 2024 (in thousands):

Asset retirement obligations at beginning of period

Liabilities added from acquisition or drilling

Liabilities settled

17 unchanged sentences

The Revolving Credit Facility matures on July 31, 2027, and is a replacement in full of the prior Revolving Credit Facility by and among OLLC, Acquisitionco, the guarantors party thereto, the lenders party thereto and KeyBank National Association, as the administrative agent (as amended, the “Prior Revolving Credit Facility”).

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of March 31, 2024, was $ 115.0 million.

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of June 30, 2024, was $ 118.0 million.

The 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 Revolving Credit Facility borrowing base will be subject to redetermination on at least a semi-annual basis, primarily based on a reserve engineering report.

10 unchanged sentences

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As noted above, the Company is required to maintain a minimum current ratio of 1.00 to 1.00 , which is measured on the last day of each quarter.

On March 31, 2024, the Company’s current ratio was 0.98 to 1.00 .

On May 2, 2024, the Company received a letter agreement from its lenders waiving any default or event of default as a result of such noncompliance related to the minimum current ratio requirement for the quarter ended March 31, 2024.

As a result, the Company was in compliance with all financial covenants as of March 31, 2024.

Subsequent event.

On May 2, 2024, OLLC completed its spring 2024 borrowing base redetermination, which reaffirmed the borrowing base of $ 150.0 million with elected commitments of $ 135.0 million.

The next redetermination is expected in the fourth quarter of 2024.

As of June 30, 2024, the Company was in compliance with all the financial (current ratio and total leverage ratio) and non-financial covenants associated with the Revolving Credit Facility.

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, 2024, the Company had no letters of credit outstanding.

At June 30, 2024, the Company had no letters of credit outstanding.

Unamortized Deferred Financing Costs

Unamortized deferred financing costs associated with the Company’s Revolving Credit Facility were $ 4.1 million at March 31, 2024.

Unamortized deferred financing costs associated with the Company’s Revolving Credit Facility were $ 3.8 million at June 30, 2024.

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, 2024:

The following is a summary of the changes in the Company’s common stock issued for the six months ended June 30, 2024:

Balance, December 31, 2023

2 unchanged sentences

Shares withheld for taxes (1)

Balance, March 31, 2024

Balance, June 30, 2024

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

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Net income (loss)

7 unchanged sentences

Long-Term Incentive Plans

In May 2021, the shareholders approved a new Equity Incentive Plan (“EIP”) which replaced the Legacy Amplify Management Incentive Plan (the “Legacy Amplify MIP”).

As such, no further awards have been granted under the Legacy Amplify MIP.

In April 2024, the board of directors of the Company (the “Board”) approved and adopted the Amplify Energy Corp.

2024 Equity Incentive Plan (the “2024 Plan”), subject to stockholder approval at the Company’s Annual Meeting of Stockholders to be held on May 15, 2024.

EIP awards are, and, under the Legacy Amplify MIP, were, granted in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, stock awards and other incentive awards.

To the extent that an award under the EIP or Legacy Amplify MIP is expired, forfeited or canceled for any reason without having been exercised in full, the unexercised award would then be available again for future grants under the EIP.

The EIP is administered by the Board.

On May 15, 2024, the Company’s shareholders approved the Amplify Energy Corp.

2024 Equity Incentive Plan (the “2024 EIP”), which had previously been approved by the board of directors of the Company.

No further awards will be granted under the prior Legacy Equity Incentive Plan (“EIP,” and together with the 2024 EIP, the “EIP Plans”).

The 2024 EIP provides for awards that can be granted in the form of nonqualified stock options, incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, performance awards, stock awards and other incentive awards.

To the extent that an award, other than stock options or stock appreciation rights, under the 2024 EIP has expired or been forfeited or canceled for any reason without having been exercised in full, the unexercised award would then be available again for future grants under the 2024 EIP.

The 2024 EIP is administered by the board of directors of the Company.

Restricted Stock Units

2 unchanged sentences

The grant-date fair value is recognized as compensation cost on a straight-line basis over the requisite service period and forfeitures are accounted for as they occur.

The Company considered its intent and ability to settle awards in cash or shares of stock in determining whether to classify the awards as equity or liability awards.

Compensation costs for equity-classified awards are recorded as general and administrative expense.

1 unchanged sentence

Changes in the fair value of liability-classified awards are recorded to general administrative expense and are remeasured at fair value each reporting period.

In February 2024, the Company granted contingent cash-settlement awards in the form of TSUs (the “2024 TSUs”).

In May 2024, the Company received shareholder approval of the 2024 EIP, which removed the contingent consideration around the 2024 TSUs.

As of June 30, 2024, the 2024 TSUs were reclassified as equity awards.

The compensation cost related to these awards is determined by the fair value of the award on the modification date.

The 2024 TSUs will vest in substantially equal installments over a three-year period.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company granted contingent cash-settlement awards in the form of TSUs (the “Contingent TSUs”) under the EIP in February 2024 that will be settled in shares of stock, subject to stockholder approval of the 2024 Plan.

In the event the Company’s stockholders do not approve the 2024 Plan, the Contingent TSUs will be settled in cash pursuant to the terms of the applicable award agreement.

The Contingent TSUs are accounted for as liability-classified awards and vest in substantially equal installments over a three-year period.

The unrecognized cost associated with the TSUs was $ 7.8 million at March 31, 2024.

The unrecognized cost associated with the TSUs was $ 7.0 million at June 30, 2024.

The Company expects to recognize the unrecognized compensation cost for these awards over a weighted average period of approximately 2.1 years.

Of the unrecognized share-based compensation expense for TSUs, $ 4.1 million relates to liability-classified awards and will be subsequently remeasured at each reporting period.

The Company recognized $ 0.3 million in liability-classified share-based compensation expense at March 31, 2024 for the Contingent TSUs.

The following table summarizes information regarding the TSUs activity for the period presented:

2 unchanged sentences

TSUs outstanding at December 31, 2023

TSUs outstanding at March 31, 2024 (3)

TSUs outstanding at June 30, 2024

(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, 2024 was $ 4.3 million based on a grant-date market price of $ 6.09 per share.

(3) As of March 31, 2024, 709,402 of the unvested TSUs were accounted for as liability awards in “accrued liabilities” in the Unaudited Condensed Consolidated Balance sheet.

(2) The aggregate grant-date fair value of TSUs issued for the six months ended June 30, 2024 was $ 4.5 million based on a grant-date market price ranging from $ 6.26 per share to $ 6.30 per share.

Restricted Stock Units with Market and Service Vesting Conditions

4 unchanged sentences

The Company accounts for forfeitures as they occur.

Vesting of PSUs can range from zero to 200 % of the target awards 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.

Vesting of PSUs can range from 0 % to 200 % of the target awards 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.

The 2022 and 2023 PSU awards are accounted for as equity-classified awards and were issued with a three-year vesting period beginning on the grant date and ending on the third anniversary of the grant date.

1 unchanged sentence

The three-year performance period for the 2023 awards is January 1, 2023 through December 31, 2025.

The Company granted contingent cash-settlement awards in the form of PSUs (the “Contingent PSUs”) in February 2024 that will be settled in shares of stock, subject to stockholder approval of the 2024 Plan.

In the event the Company’s stockholders do not approve the 2024 Plan, the Contingent PSUs will be settled in cash pursuant to the terms of the applicable award agreement.

The Contingent PSUs are accounted for as liability-classified awards and were issued with a three-year vesting period beginning on the grant date and ending on the third anniversary of the grant date.

The three-year performance period for the Contingent PSUs is January 1, 2024 through December 31, 2026.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Compensation costs related to the awards are recorded as general and administrative expense.

The unrecognized cost associated with these awards was $ 4.3 million at March 31, 2024.

The Company expects to recognize the unrecognized compensation cost for these awards over a weighted-average period of approximately 2.3 years.

Of the unrecognized share-based compensation expense, $ 2.3 million relates to liability-classified awards and will be subsequently remeasured at each reporting period.

The Company recognized $ 0.2 million in liability-classified share-based compensation expense at March 31, 2024 for the Contingent PSUs.

The below table reflects the ranges for the assumptions used in the Monte Carlo model for the Contingent PSU awards:

In February 2024, the Company granted contingent cash-settlement awards in the form of PSUs (the “2024 PSUs”).

In May 2024, the Company received shareholder approval of the 2024 EIP, which removed the contingent consideration around the 2024 PSUs.

As of June 30, 2024, the 2024 PSUs are reclassified as equity awards with a three-year vesting period.

The compensation cost related to these awards is determined by the fair value of the award on the modification date.

The three-year performance period for the 2024 PSUs is January 1, 2024 through December 31, 2026.

Compensation costs related to PSU awards are recorded as general and administrative expense.

The unrecognized cost associated with PSU awards was $ 4.2 million at June 30, 2024.

The Company expects to recognize the unrecognized compensation cost for PSU awards over a weighted-average period of approximately 2.1 years.

The below table reflects the ranges for the assumptions used in the Monte Carlo model for the 2024 PSUs:

Date of Grant:

February 2024

Modification Date:

Expected volatility

1 unchanged sentence

Risk-free interest rate

The following table summarizes information regarding the PSUs activity for the period presented:

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes information regarding the PSU activity for the period presented:

Average Grant-

1 unchanged sentence

PSUs outstanding at December 31, 2023

PSUs outstanding at March 31, 2024 (3)

PSUs outstanding at June 30, 2024

(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 PSUs issued for the three months ended March 31, 2024 was $ 2.6 million based on a calculated fair value price ranging from $ 2.63 to $ 9.18 per share.

(3) As of March 31, 2024, 269,897 of the unvested PSUs were accounted for as liability awards in “accrued liabilities” in the Unaudited Condensed Consolidated Balance sheet.

(2) The aggregate grant-date fair value of PSUs issued for the six months ended June 30, 2024 was $ 2.4 million based on a calculated fair value price ranging from $ 2.63 to $ 8.33 per share.

Compensation Expense

The following table summarizes the amount of recognized compensation expense associated with the EIP, which are reflected in the accompanying Unaudited Condensed Consolidated Statements of Operations for the periods presented (in thousands):

The following table summarizes the amount of recognized compensation expense associated with the EIP Plans, which are reflected in the accompanying Unaudited Condensed Consolidated Statements of Operations for the periods presented (in thousands):

For the Three Months Ended

For the Six Months Ended

Share-based compensation costs

Share-based compensation - equity awards

Share-based compensation - liability awards

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

4 unchanged sentences

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, 2024, 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, 2024, 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.

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, 2024 and 2023, the Company recognized approximately $ 0.5 million and $ 0.5 million, respectively, of costs relating to the operating leases in the Unaudited Condensed Consolidated Statements of Operations.

For the six months ended June 30, 2024 and 2023, the Company recognized approximately $ 1.0 million and $ 1.1 million, respectively, of costs relating to the operating leases in the Unaudited Condensed Consolidated Statements of Operations.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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):

35 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, 2024 and 2023.

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, 2024 and 2023.

Commitments and Contingencies

8 unchanged sentences

In accruing for environmental remediation liabilities, costs of future expenditures for environmental remediation are not discounted to their present value, unless the amount and timing of the expenditures are fixed or reliably determinable.

At March 31, 2024 and December 31, 2023, the Company had no environmental reserves recorded in its Unaudited Condensed Consolidated Balance Sheet.

At June 30, 2024 and December 31, 2023, the Company had no environmental reserves recorded in its Unaudited Condensed Consolidated Balance Sheet.

Revenue Payables in Suspense

During 2024, the Company determined that it had improperly classified certain non-operated revenue within revenues payable in suspense from 2015 through 2024 and had also retained revenue suspense on assets previously sold in 2018 for which no obligation existed subsequent to the date of close.

As a result, the Company recorded an out-of-period adjustment of $ 2.8 million in 2024 to release such amounts as previously accrued within revenue payables in suspense, of which $ 2.2 million and $ 0.6 million included in oil and natural gas revenue and other income, respectively, in the Unaudited Condensed Consolidated Statements of Operations.

Management considered qualitative and quantitative factors and concluded the out-of-period adjustment is immaterial to 2024 and each of the applicable periods.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Beta Pipeline Incident

5 unchanged sentences

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

As of March 31, 2024, the account balance included in restricted investments was approximately $ 4.5 million.

As of June 30, 2024, the account balance included in restricted investments was approximately $ 4.5 million.

Supplemental Bond for Decommissioning Liabilities Trust Agreement

5 unchanged sentences

The obligation for these agreements ceases when the total aggregate value of the escrow accounts reaches $ 172.6 million.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The below table outlines the updated funding commitment for these agreements at March 31, 2024 (in thousands):

The below table outlines the updated funding commitment for these agreements at June 30, 2024 (in thousands):

Payment Due by Period

4 unchanged sentences

Total sinking fund payments

As of March 31, 2024, the Company has funded $ 17.6 million into the escrow accounts which is reflected in “Restricted investments” on the Unaudited Condensed Consolidated Balance Sheet.

The Company’s current income tax expense was $ 1.4 million and $ 12.5 million for the three months ended March 31, 2024 and 2023, respectively.

The Company’s deferred income tax benefit was $ 4.7 million and $ 259.5 million for the three months ended March 31, 2024 and 2023, respectively.

The effective tax rates for the three months ended March 31, 2024 and 2023 were 26.0 % and ( 233.4 %), respectively.

As of June 30, 2024, the Company has funded $ 20.4 million into the escrow accounts which is reflected in “Restricted investments” on the Unaudited Condensed Consolidated Balance Sheet.

The Company’s current income tax benefit (expense) was ($ 0.6 ) million and ($ 2.0 ) million for the three and six months ended June 30, 2024, respectively.

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.

The Company’s deferred income tax benefit (expense) was ($ 2.1 ) million and $ 2.6 million for the three and six months ended June 30, 2024, respectively.

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.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The effective tax rates for the three and six months ended June 30, 2024 were 27.4 % and 21.3 %, respectively.

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

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, 2024 was the weighted state accrual rate.

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, 2023 was the release of the valuation allowances.

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 its deferred tax assets, the Company considers whether it is more likely than not that all of its deferred tax assets will be realized.

On December 31, 2023, the Company release all of its valuation allowance of $ 284.9 million, which increased net deferred tax assets as of such date .

federal income tax rate of 21 % and the effective tax rate for the three months ended June 30, 2024 was higher income earned in the current quarter.

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 and six months ended June 30, 2023, was the release of the valuation allowance.

Beta Pipeline Incident

7 unchanged sentences

Since such date, the pipeline has been operated in accordance with the restart procedures that were reviewed and approved by PHMSA.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On December 15, 2021, a federal grand jury in the Central District of California returned a federal criminal indictment against the Company, Beta LLC, and San Pedro Bay Pipeline Company in connection with the Incident.

9 unchanged sentences

The Company, Beta LLC, and San Pedro Bay Pipeline Company were named as defendants in a consolidated putative class action in the United States District Court for the Central District of California, asserting claims against the Company, Beta LLC, San Pedro Bay Pipeline Company, among others.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On August 25, 2022, the Company reached an agreement in principle with plaintiffs in the class action to resolve all civil claims against it and its subsidiaries.

10 unchanged sentences

While the Company anticipates insurance will reimburse it for expenses related to the Natural Resource Damage Assessment, any potentially uncovered expenses may be material and could impact the Company’s business and results of operations and could put pressure on its liquidity position going forward.

Based on presently enacted laws and regulations and currently available facts, the Company estimates that the total costs it has incurred or will incur with respect to the Incident to be approximately $ 190.0 million to $ 210.0 million.

The range of total costs is based on the Company’s assumptions regarding (i) settlement of costs associated with certain vendors for response and remediation expenses, (ii) resolution of certain third-party claims, excluding claims with respect to losses, which are not probable or reasonably estimable, and (iii) future claims and lawsuits.

1 unchanged sentence

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.

AMPLIFY ENERGY CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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, including regulatory 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 operations at Beta.

1 unchanged sentence

However, the Company can provide no assurance that its coverage will continue to 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, 2024, and December 31, 2023, the Company’s insurance receivables were $ 1.4 million and $ 3.6 million, respectively.

Excluding the costs associated with the resolution of the federal and state matters discussed above, for the three months ended March 31, 2024, the Company incurred response and remediation expenses and legal fees of $ 0.7 million, which primarily relates to certain legal costs that are not expected to be recovered under an insurance policy and are classified as “Pipeline Incident Loss” on the Company’s Unaudited Condensed Consolidated Statements of Operations.

On June 30, 2024, and December 31, 2023, the Company’s insurance receivables were $ 1.6 million and $ 3.6 million, respectively.

Excluding the costs associated with the resolution of the federal and state matters discussed above, for the six months ended June 30, 2024, the Company incurred response and remediation expenses and legal fees of $ 1.2 million, which primarily relates to certain legal costs that are not expected to be recovered under an insurance policy and are classified as “Pipeline Incident Loss” on the Company’s Unaudited Condensed Consolidated Statements of Operations.

For more information, please see our annual report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 7, 2024.

Subsequent Events

Borrowing Base Redetermination

See Note 7 for additional information relating to the Company’s borrowing base redetermination.

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