Welcome to the Amplify Energy's Fourth Quarter 2019 Investor Conference Call. Amplify's Operating and Financial Results were released earlier today, and are available on Amplify's website at www.amplifyenergy.com. During this presentation, all participants will be placed on a listen-only mode. Today’s call is being recorded. A replay of the call will be accessible until Thursday, March 19th by dialing 855-859-2056 and then entering conference ID 6466309, or by visiting Amplify's website, www.amplifyenergy.com. I would now like to turn the conference over to Martyn Willsher, Senior Vice President and Chief Financial Officer of Amplify Energy Corp.

Good morning. And welcome to the Amplify Energy Conference Call to discuss operating and financial results for the fourth quarter of 2019. We appreciate you joining us today. Ken Mariani, Amplify's President and Chief Executive Officer will begin the call with comments on our fourth quarter operating results and full year 2020 guidance. I will follow with an update on our return of capital programs and our fourth quarter financial results. First, we would like to remind you of some remarks may contain forward-looking statements, and are based on certain assumptions and expectations of Amplify's management team. These remarks reflect management's current views with regard to future events and are subject to various risks, uncertainties and assumptions. While their management believes that the expectations reflected in such forward-looking things are reasonable, they 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. Forward-looking statements include, but not limited to our statement about and our discussion of, full year 2020 guidance. 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 Annual Report on Form 10-K, which we expect to file later today. Also non-GAAP financial measures may be disclosed during this call. Reconciliations of those measures to comparable GAAP measures may be found in our press release or on our website at www.amplifyenergy.com. This in mind, I will now turn the call over to Ken Mariani. Ken?

Thank you, Martyn. I appreciate everyone joining us today. My remarks on this call will provide an update of our operational performance for the fourth quarter, year-end 2019 proved reserves and guidance expectations for full year 2020. Production for the fourth quarter averaged approximately 29,900 BOE per day, which was at the low end of our guidance range for the quarter. This result was primarily driven by challenging operations at our Bairoil field in Wyoming and in Oklahoma. At Bairoil, start-up complications following the planned expansion and unrelated compressor outages materially impacted production. In Oklahoma, production was impacted by incremental submersible pump failures largely related to weather events and power outages. Lease operating expenses in the third quarter was $35.7 million, which on a total dollar basis were in line with expectations. However, on a per unit basis, Amplify's lease operating expense of $12.97 per BOE was slightly above the high end of our guidance range as a result of lower than expected production. Capital spending for the fourth quarter was approximately $12 million, which was at the high end of our guidance, due to additional costs related to the Beta capital workovers, new development activity at the company's non-operated Eagle Ford assets in the Bairoil expansion start-up. Earlier today, we announced Amplify's 2019 year-end proved reserves of approximately 163 million BOE based on flat SEC pricing for crude oil of $55.69 per barrel and natural gas pricing of $2.58 per MMBtu. The reserve mix for our proved reserves was approximately 43% crude oil, 18% natural gas liquids, and 39% natural gas and approximately 80% of the proved reserves were classified as proved developed. The SEC PV-10 or standardized measure for our proved reserves was $917 million, which was significantly impacted by price reductions. Compared to year-end 2018 SEC pricing…

Thank you, Ken. I'd like to first discuss the update on our dividend policy and the progress we've made on our return-of-capital programs, followed by an update on our fourth quarter financial results, liquidity and hedge positions. Amplify paid its quarterly dividend of $0.20 per share or approximately $8 million on December 18 to shareholders of record on December 4. As announced in our press release earlier today, we decided to reduce our first quarter 2020 dividend to $0.10 per share which while reduced still provides for an effective dividend yield of approximately 10% which is among the highest in our industry. While recent price reductions related to coronavirus induced demand destruction may prove to be transitory, we believe the best course of action at this time is to conservatively manage Amplify's balance sheet and liquidity to maximize the long-term value for our stakeholders. The upcoming quarterly dividend of $0.10 per share will be paid on March 30 to shareholders of record as of the close of business on March 16. Amplify had initiated an open market share repurchase program at the closing of the merger to repurchase up to $25 million of the company's outstanding shares of common stock. As of February 28, the company had repurchased approximately 4.2 million shares of common stock for a total cost of approximately $24.9 million. Moving on to our fourth quarter results, net cash from operating activities was $21 million and our adjusted EBITDA for the fourth quarter was $27 million both of which were below expectations due -- largely due to the production results discussed earlier. G&A for the fourth quarter was $8.3 million which included $1.5 million of transaction and severance costs which were primarily the final onetime adjustment from the Midstates merger. Excluding the onetime merger-related costs and $0.3…

[Operator Instructions] The first question will come from Jeff Grampp with Northland Capital. Please go ahead.

Good morning guys.

Good morning, Jeff.

I was wondering first I'll start on the dividend front. And obviously I appreciate where you guys are coming from and maintaining the balance sheet integrity. But just really wanted to focus on kind of two specific topics within evaluating, how you guys are kind of thinking about the dividend after this $0.10 rate that they're looking at least for the first quarter. Can you guys just talk maybe high level, how comfortable are you I guess with kind of maintaining or seeing maybe even if leverage creep up to maintain or improve that dividend? Or is leverage reduction something that you guys would prioritize over getting that dividend back up after towards that $0.20 a quarter rate? And then kind of a related topic, if you guys have given any consideration internally or at the board level to more of a maybe a fixed plus variable type of strategy in terms of the dividend whereby -- and you can have a more sustainable dividend rate and maybe use kind of periods of cash flow outperformance to layer on a variable component?

Jeff, I'll take that. Obviously, we had long discussions about the dividend and whether we felt we should maintain the $0.20 dividend or be a little bit more conservative in cutting it back down to the $0.10. Obviously, we're in a period of a lot of uncertainty with where -- what's happening globally on supply chains and the demand destruction. While we -- this could rebound quickly. We also realize that sometimes these things can take a long time to play out. And we want to make sure that our balance sheet and our leverage remains at a reasonable level. And so we just took a proactive what we thought was a reasonable step to kind of balance the two, leverage liquidity, while also maintaining our commitment to return capital to shareholders. So, really a combination of all of them and really just not wanting to take additional risk during a period of increased uncertainty.

And Jeff this is Ken, I'll just add to that. Our dividend decisions are made on a quarterly basis by the Board. And obviously, we have a lot of robust discussions centered around company performance, external factors, et cetera, et cetera. So, everything is on the table on a quarterly basis. So, to Martyn's point you never want to get ahead of your skis to make short-term decisions that have significant long-term implications. But I will assure you the Board is along with the management team monitors the situation closely. And our next quarterly discussion regarding the dividend again everything will be on the table.

Got it. Appreciate those comments. And for my follow-up on the operational side how should we think about kind of the ramp progressing for Bairoil given, I guess, a little bit of a slower start that you saw in the fourth quarter. Can you kind of maybe give us a little bit more sense of maybe what's baked into the first quarter guide in terms of kind of incremental production from that field? And how you guys are maybe seeing that ramp play out over the remainder of the year?

Yes, great question Jeff. We basically deferred that ramp about three months. We're still very excited about the project. As you can imagine it was a very large complex project. It had some start-up complications some of which we anticipate some which we didn't. And just as importantly, while we were going live with the expansion some of our legacy compressors had some unexpected outages that we were able to overhaul and revamp during the start-up timeframe. So, basically these waterflood, CO2 floods, it's not like flipping a switch once you get everything lined up there is a delay in seeing the benefits of your work at the wellhead. And so to be specific with your question we're forecasting a three-month lag in our initial forecast. But our expectations have not changed with regards to peak rates, ultimate benefits, ultimate recoveries, et cetera, et cetera. And we're still really excited about the project. With the exception of the three months delay. Did I answer that question Jeff?

No, that's perfect. I'll let someone else hop on. I Appreciate it.

Thank you.

[Operator Instructions] The next question will come from John White with ROTH Capital. Please go ahead.

I caught your hedge position on oil at 77%, but I missed your hedge percentage on a boe basis?

Hey, John this is Martyn. We're at approximately 61% hedged across commodities. So, if you're including that gas and NGLs to the component, so we're between 40% and 50% hedged on gas and NGLs with the rest obviously hedged on oil.

Thank you. And again on the dividend. In fourth quarter 2019, admittedly with higher commodity prices, I had modeled a dividend coverage for 2020 of 1.7 times free cash flow divided by the dividend. And I was pretty well updated my numbers this morning with your new CapEx and your new dividend and $2 gas and $50 oil. And I see about 2.4 times dividend coverage. So it looks like you're being more conservative at this point in time with dividend coverage than you were in the fourth quarter and if you could comment on that? And given the 2.4 times coverage, what are your – if commodity prices stay flat, what are your expectations on maybe increasing the dividend later this year?

Hey, John, this is Martyn again. We obviously look at some of those same metrics. And it's a balancing between – obviously, when you're looking at $47 oil and $1.80 gas. And we're looking at where that strip could go over the course of the year, we are being a little conservative. But at the same time we want to make sure this is a long-term decision here in regards to maintaining a dividend for our shareholders. We will obviously look at potentially raising it back up if prices come back to a more reasonable level. But what you're seeing obviously with the coverage is low as well as obviously wanting to maintain leverage and with overall EBITDA dropping due to the price drop, we want to make sure that we're managing our leverage profile adequately as well, as well as maintaining that free cash flow cushion that you're referring to.

Okay. Thanks very much.

Next question is a follow-up from Jeff Grampp with Northland Capital. Please go ahead.

Hey, guys. Just one more quick follow-up. On the capital side is it fair to conclude that the capital program is maybe a little bit more resilient or kind of locked in relative to commodity price fluctuations? And I guess, I'm just kind of thinking since a lot of the capital is more kind of non-D&C related and a lot more driven on kind of optimizing efficiencies and the cost structure that is maybe not necessarily dictated by what the front end of the curve is necessarily moving up or down on is that a fair conclusion? Or – and if not can you guys just talk about the level of flexibility in that program?

Yes. Jeff, this is Ken. I'll take that question. When you look at our guidance of $46 million. We already – you can break that up into four buckets. One bucket is what we call discretionary and it's related to drilling and completions. And obviously, $12 million of the $46 million is focused in the Eagle Ford in our non-op position that we have in Karnes County. And these are some just very superior well economics that makes sense even at $47 oil, they have very attractive returns. So taking that aside, we have another bucket of capital what we call cost reduction initiatives. That's predominantly related to our Mississippi Lime position, where we're replacing submersible pumps with rod-lift installations. And what happens there is, you have a significant savings, cost savings with regards to power and electricity. In addition to that, we mentioned in our fourth quarter, we had weather and power-related issues in Mississippi Lime that affected a lot of our operations. That impact from weather and power outages is much reduced when you have rod-lift installations versus submersible pumps. So, again, that initiative is independent of commodity price. It's related to cost savings and making our operations more resilient relative to weather and power outages. And then the third is, what we call, just, when wells go down, good wells go down; we look them on a case-by-case basis. We want to return those good wells back to production. And again, so that's -- a typical example might be a submersible pump going down and we run the economics at the current strip and it makes economic sense to return that well to production. And oftentimes, that may include purchasing a new submersible pump or a larger pump. So, again, that is evaluated on a case-by-case basis. And, again, it's related to our existing production versus new production. And then, the last bucket is just basic facility expense type expenditures, to maintain our operations. So, that was a long-winded answer. But to answer your question, a chunk of the money is related to great well economics in the Eagle Ford that makes sense even at current prices. And the rest of the three buckets I detailed are basically independent of oil prices. They're more on the cost savings side, or returning wells to production.

Got it. Yes, understood. I appreciate it, Ken. Thank you.

There are no further questions at this time. I would like to turn the conference back over to management for any closing comments.

Thank you, again, for joining us today. I want to thank our employees for making 2019 a transformative year, successfully integrating all the Midstates assets and operations within 90 days, while also delivering annual cost savings of more than $22 million for our shareholders, with an outstanding accomplishment for our team. Although, the overall environment presents many challenges, we remain focused on executing our strategy of free cash flow generation and are ready to execute on a new consolidation opportunities. We believe this platform will create long-term value for our investors and we appreciate your support as we move forward. This completes our earnings conference call today. And as always, please don't hesitate to reach out to us with any additional questions. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. You may now disconnect.